Pretium soars after securing $540m for BC gold mine
Shares in Pretium Resources Inc (TSE:PVG) surged on Wednesday after the company announced it has secured a US$540 million (CAD 716 million) construction financing package for its Brucejack mine in northwest British Columbia.
During late morning dealings the Vancouver-based company was trading at $6.94, up just under 7% on the Toronto Stock Exchange in higher than usual volumes before paring some of the gains later in the day. Today's advance means the $902 million company is now one of a handful of gold developers listed in Toronto in positive territory for the year so far.
Pretium said in a statement the deal with Orion Mine Finance and Blackstone Tactical Opportunities provides for immediate access to $340 million and will fund more than 70% of the capital costs to develop the underground mine. The package consists of a credit facility for $350 million, a $150 million prepayment under a callable gold and silver stream agreement and a private placement of Pretium common shares for $40 million.
The company received final provincial and federal approval for the project at the end of July and construction of the new Brucejack mine is expected to get underway in 2015.
Pretium pegs capital expenditure for the Brucejack underground operation located about 65 km northwest of Stewart at just less than $750 million with targeted commercial production in 2017. The company received a $81 million investment from China's Zijin Mining in December for a stake just shy of 10%.
The gold and silver mine in the Valley of the Kings near the Alaskan border will create approximately 900 jobs during the two-year construction period and 500 jobs during an estimated 18-year operating life.
A feasibility study completed in June 2014 outlined proven and probable mineral reserves of 6.9 million ounces of gold (13.6 million tonnes grading 15.7 grams per tonne gold).
Average annual production of 504,000 ounces of gold over the first 8 years and 404,000 ounces of gold over the life of mine is expected with 2,700 tonnes milled every day.
Brucejack is the first mine greenlighted in BC since the failure of Imperial Metal’s Mount Polley tailings dam last summer.
The Ministry of Energy and Mines said Brucejack's tailings will be stored underground in spent mine workings, and in the nearby lake, which contains no fish.
130,000 tonnes per day over a mine life of 52 years