Viceroy detail Pretium’s unannounced departure of Brucejack’s General Manager just 12 days after our initial report (NYSE:PVG).
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SEPTEMBER 18, 2018 – Viceroy continues its coverage on Pretium Resources Inc. This report will detail what appears to be an exodus of personnel from Pretium since the start of the operation at the Brucejack mine.
Notably the General Manager of Pretium’s Brucejack mine, Kevin Torpy, has just resigned from the company. This was not announced by Pretium, but instead by Torpy’s new employers: Titan Mining Corporation – a microcap zinc explorer – on 17 September 2018.
Yet again it is left to Viceroy to inform stakeholders of key developments.
Viceroy addresses Pretium’s revised ARR and presents new evidence supporting overmining thesis. (PVG:TSX / PVG:NYSE)
Download link – Pretium’s Catch 22
SEPTEMBER 11, 2018 – On 6 September, 2018, Viceroy research published its first report on Pretium Resources detailing what we believe is a scheme to distort the company’s mining results and inflate the projected reserves of the company’s Brucejack mine.
On September 10 Pretium issued a press release correcting its 2017 Annual Reclamation Report, the contents of which were used in Viceroy’s original report. We believe this is a badly thought-out attempt at damage control for the following reasons:
- Pretium’s new ARR figures are internally inconsistent and imply that Pretium misreported the Brucejack mine underground void by the volume of 140 Olympic-size swimming pools.
- The decrease in the change of underground void volume continues to present major discrepancies to Pretium’s feasibility study, particularly around expected and historical bulk density figures obtained from the Brucejack mine
- If investors choose to accept that no overmining has occurred, a pandora’s box of serious operational issues continues to plague Pretium. Specifically, it becomes inexplicable that Pretium’s COGS and Capex have blown totally out of proportion and why explosive has dramatically exceeded expectation.
- Viceroy present new evidence of accelerated mine development from comments by Pretium management in last week’s Rodman Conference. Pretium appear to have accelerated stoping by 18-24 months, moving well into the VOK lower zone well ahead of schedule. If investors choose to accept no overmining has occurred, Pretium’s accelerated mine development and excess dore recoveries imply the company is selectively mining high grade deposits, and has already exhausted a large portion of these in the VOK-lower/upper zones.
- Viceroy present new evidence of excess waste generated by Pretium throughout its development phase. Pretium sought indefinite extension of time to dispose of excess waste in extracted from its mines. Viceroy’s consultants confirm This is further evidence that the rate of mining and development at Brucejack mine far exceeds the design of the mine site, given that as far back as 2015 it was clear that Pretium lacked the correct equipment to dispose of waste ore.
Investors must seriously consider the implications of Pretium’s financial and operational figures should they choose to accept that no overmining has occurred. Further, they should question management as to their responses to our findings, instead of confining their responses to fireside chats with sell-side analysts.
Viceroy continue to believe that Pretium’s grades will fall significantly, operating metrics/analysis has been distorted, and assets will be seized by its secured creditors as collateral as the company is overburdened by debt.
Viceroy maintains its belief that Pretium’s equity is likely worthless.
Distorted grades, involvement of SEC sanctioned entities, and high turnover of mineral consultants – Pretium flies many red flags. (PVG:TSX / PVG:NYSE)
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SEPTEMBER 6, 2018 — Pretium Resources owns and operates the purportedly high-grade Brucejack gold mine in Northwest British Columbia in Canada. Viceroy is short Pretium Resources, as our research suggests its mining results have been distorted and the equity likely worthless as the overindebted company bleeds cash over the next 12 months:
- Strathcona Mineral Services Limited (Strathcona), the mining consultancy that famously declared Bre-X to be a fraud, resigned from Pretium’s 2013 bulk sample program later stating, “…they will not have a mine producing 425,000 oz. a year for the next 20 years, as they have been advertising so far”. The entire Pretium investment thesis rests on the validity of the 2013 bulk sample program.
- After Strathcona’s resignation, Pretium hired Strategic Minerals LLC (Strategic Minerals), an entity owned and managed by disgraced investment manager Serofim “Sima” Muroff to handle the testing of its bulk sample program. Muroff was charged by the SEC for securities fraud after misappropriating millions of dollars of investor funds and siphoning away millions more. Our research suggests that Muroff has knowingly assisted Pretium in overselling the quality of Brucejack Mine to investors.
- The funds embezzled by Muroff were partially invested in numerous early-stage gold mining assets which to date have produced no gold. We believe Muroff’s entity was created to similarly distort gold grades for these gold mining assets. Muroff’s investors funds were also used to invest in equities and derivatives of other gold mining assets which we believe included Pretium.
- The overwhelming majority of our research indicates Pretium manipulated the results of its bulk sample program through an overreliance on samples taken from the Cleopatra vein, thereby artificially inflating Pretium’s grades and reserve projections for the Brucejack Mine.
- The manipulated bulk sampling test performed by Strategic Minerals was used by the courts in Wong v. Pretium Resources, 2017 as the basis of their decision that the Strathcona analysis was incorrect. This did not exempt the company from withholding Strathcona’s preliminary analysis from investors.
- Government documents indicate Pretium is moving approximately double the tonnage from the underground mine than disclosed to investors. This suggests reported grades and reserves are significantly inflated, a much greater amount of waste is being dumped into local lakes, and more explosives are being utilized. Pretium’s operational plan has experienced dramatic changes in a short amount of time, leading us to believe that management is scrambling to find consistent, high-grade ore to maintain the charade that its debt and equity are viable.
- Pretium founder and chairman, Robert Quartermain’s only mine operating experience at Pirquitas, an Argentinian silver mine owned by Silver Standard, resulted in a ~53% reserve cut and subsequent shutdown. A number of Quartermain’s management team left Silver Standard to operate Pretium.
- As of Q2 2018, Pretium has ~$700M of debt (excl. convertible notes) with an effective interest rate of ~15%. If Pretium can’t make or re-negotiate the payment, then Pretium may be unable to remain a going concern. We believe this deadline has provided an incentive for Pretium to inflate its results through the near-term depletion of the Cleopatra vein and take more rock out of the ground than disclosed and planned.
The implications of our findings on grade, tonnage and life of mine are damning and lead us to believe that Pretium’s equity is highly likely to be worthless in its current state, and its credit significantly impaired.
Viceroy believe Pretium bears striking resemblance to Rubicon Minerals, now operating as a shadow of its former self after revising mineral reserve estimates down ~90%.
We believe the most likely scenario is that Pretium’s assets are seized by its secured creditors as collateral.
12 July 2018 – So we can carry on writing our “prolific” research reports, here is Viceroy Research’s comment on the Intellidex report:
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Intellidex <> Viceroy Correspondence
More ties to Forest Park, active breach of federal sales regulations, knockback of “independent” research and the dead-on-arrival of international expansion.
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The fraud at MiMedx continues to unravel as the company announced it would have to restate more than half a decade’s worth of financials, doctors receiving bribes from MiMedx and that its short selling commentary cannot be relied upon. Viceroy have identified further issues with the company including:
- The announcement of MiMedx’s international expansion was a sad attempt at distracting investors from the Company’s compliance updates.
- In the UK, the technology commentary from the NHS appears very skeptical as to the efficiency and economic viability of MiMedx’s EpiFix product compared to existing solutions. EpiFix has been available in the UK for 2 years as of January 2018, and the product was only stocked in 1 National Health Service (“NHS”) facility.
- Viceroy have begun contacting international regulators to present evidence.
- A major stumbling block to regulatory approval, as indicated by UK regulators, is the lack of independent research into MiMedx products’ efficacy and significant difference between company funded/sponsored reports and limited independent patient data.
- Viceroy have uncovered an AmnioFix study conducted by Forest Park Medical Center employee, John Dulemba, and MiMedx consultant and former Matria healthcare Director of Clinical Research, Niki Istwan.
- The study has no disclosures on compensation or relationships with MiMedx.
- Istwan appears on multiple MiMedx studies sometimes as a MiMedx consultant and other times as an “independent”. We believe this obfuscation of relationships to the company is intentional and used by MiMedx to create an illusion of independence. MiMedx does not report payments to Doctors despite the legal requirements.
- One of three individuals recently indicted for fraudulently accepting payments from MiMedx was also part of a clinical study into MiMedx products. The implication that MiMedx clinical research is directly influenced by the Company is likely to deter international approval altogether. More so for paying bribes to Doctors. MiMedx denied paying bribes or inducements in legal filings and illegal short selling commentary, but the Grand Jury disagrees.
- MiMedx is in breach of federal procurement regulations (FAR/DFAR) due to the conditioning of settlement agreements and litigation settlements with former employees and whistleblowers on a requirement for withdrawal of complaints to, and prohibition of communication with, regulatory authorities. We have reported this to the relevant authorities and believe their findings will corroborate our own.
For further background on this issue, please refer to Viceroy’s MiMedx Greatest Hits report:
Viceroy are happy to report that, as of this morning, MiMedx has removed ~50 incriminating “short selling commentary” responses to critics, including Viceroy Research, Aurelius Value, Marc Cohodes, journalists and employees.
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It is our belief that Capitec management have continued to mislead investors since our previous correspondence with the company.
End-of-financial-year announcements in 2018 are reflective deteriorating business conditions and corroborate the continuity of several intentionally misleading accounting practices we have reported in the past.
We have again entertained Capitec’s invitation to field questions regarding its business.
An open letter to Capitec’s Audit Committee can be downloaded below:
Viceroy Letter to Audit Committee – PDF Download
In this instance, we are addressing the audit committee with our concerns, as they relate to broader financial reporting transparency and flawed management analysis, corroborating our previous analysis of unsustainable business practices.
Our continued review of Capitec’s practices and financial results leads us to believe management’s delivery of analysis to stakeholders is extremely misleading, and not at all reflective of declining business fundamentals.
This report will follow issues we have raised in previous reports and correspondence with management. You can find all of these reports on our website: