Mining stock headlines feat. Pretivm Resources, Midway Gold, and Sandstorm Gold
Pretivm Resources – (PVG:TSXV) – A very important step in the moving the high grade Brucejack project forward to production was announced this morning with a signed agreement between Pretium and the Nisha’a Nation. The deal will be a win/win for both parties under the agreement with the Nisga’a Nation providing support for the development and operation of Brucejack as a safe and environmentally sound mine with participation in its economic benefits. Pretium will provide jobs and contracting opportunities, education and training, as well as financial payments.
“Nisga’a Nation strives for sustainable prosperity and self-reliance,” stated President H. Mitchell Stevens, “and the benefits from the Brucejack project will make an important contribution towards our improved quality of life. Our Treaty brings certainty to this type of development and we look forward to working with Pretivm.”
“We are pleased that a strong relationship with the Nisga’a Nation has grown out of our work with them over the last four years,” said Pretivm President and CEO Robert Quartermain. “We look forward to their collaboration as we advance Brucejack to production.”
Pretivm continues to check off milestones as they develop the uber high grade (15.7 g/t) 6.9 million gold ounce (P+P) Brucejack project in northern British Columbia. Last week Pretium received an environmental assessment from the BC government. The federal review by the Canadian Environmental Assessment Agency is nearing completion and is expected later this spring.
Using a base case scenario of $1100 gold Pretium generates an after tax IRR of 28.5% after tax with net cash flow of $2.72 billion (post tax). The plan is to begin construction this summer on the $746.9 million dollar mine which would have PVG in commercial production in 2017.
Pretium has the support of Zijin Mining who purchased 9.9% of the company for $80 million in January. Pretium will need to find another partner to help fund the $746.9 initial CAPEX.
Is PVG fairly valued at a $921 million dollar market cap?
One thing is for sure Brucejack is an extremely unique world class deposit.
Midway Gold (MDW:TSX) – Midway has provided an operations update from the Pan Mine in Nevada. The Pan Mine is the newest gold producer in Nevada and today’s news announced a second gold pour has been completed. In March 500 ounces were poured as commissioning of the plant is under way.
One thing that caught my eye was that MDW managed to manage its project working capital in March without the need for external financing. This is positive news but Midway will need to finance soon to meet covenants, financial tests and obligations to its lender. Management believes a non-dilutive source(s) of financing is highly likely to materialize.
Mining operations have performed above expectations with 3.4 million tons stacked on the leach pad of which 2.6 million are under leach.
The second issue regarding ore grades not is still under review by an independent engineering firm and is expected to take several weeks to complete.
I wrote a detailed post on the opportunity in Midway stock which can be found here.
I still hold my entire position and believe significant upside potential remains as production ramps up. It will be interesting to see how they handle the financing issue.
The current stock price is up from my original article price and currently sits at $0.47.
Lots of running room still to go in my opinion as MDW was as high as 93 cents on February 27th.
Sandstorm Gold – (SSL:TSX) – An update from Sandstorm on the current portfolio of assets which include 60 royalties and 10 streams. Of those assets 15 are producing with expected production of 40-50,000 gold equivalent ounces this year.
- Silvercrest Mines – Silvercrest released an updated PFS for the Santa Elena mine showing another 8 years of mine life. Sandstorm owns a 20% stream on the gold produced at Santa Elena at a price of $350 per ounce increasing to $450 per ounce when 50,000 ounces have been produced.
- Primero – Primero has a $13.2 million exploration budget for 2015. Drill results are looking positive at depth and could potentially increase the mine life. 8% of all gold produced can be purchased by SSL at $518 per ounce.
- Metanor – Metanor recently closed a $3 million dollar private placement. The raise puts Metanor in a better financial position. Sandstorm has a 20% stream on the Bachelor Lake mine at a purchase price of $500 per ounce.
- Gold Royalties – The previously announced takeover of Gold Royalties is expected to close in April.
Sandstorm also provided updates on the assets held by Luna Gold, True Gold, and Canadian Zinc.
Sandstorm continues to look for acquisitions as they feel this is a “buyers” market. The stock does trade cheaper than any of the bigger royalty players on a EV/cash flow basis.
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This is not investment advice.All facts are to be checked and verified by reader. As always please do your own due diligence. Author owns a position in Midway Gold stock and therefore should be considered biased.