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Newcrest closes in on Pretium as shareholders vote looms

Commercial production at Brucejack began in July 2017, reaching full capacity a year later. (Image courtesy of Pretium Resources.)

Australia’s Newcrest Mining (ASX, TSX: NCM) is poised to cement its $2.8 billion- (C$3.5bn) acquisition of Canada’s Pretium Resources, which will grant it access to the target company’s Brucejack underground gold mine in British Columbia.

Newcrest, Australia’s largest gold producer, has set it focus on organic and mergers and acquisitions-based growth in the Americas.

In 2019, it acquired a 70% stake in Canada’s Red Chris copper and gold mine from Imperial Metals (TSX: III).

Despite initial opposition from New York-based asset administration agency VanEck, Pretium’s largest shareholder, Newcrest is likely to add the Canadian company to its portfolio on Thursday, as two major proxy advisory firms have already given it the green light

Glass, Lewis & Co. has called investors to approve Newcrest’s acquisition of Pretium Resources, saying it will end in traders gaining publicity to a “larger, more diversified gold producer.”

Institutional Shareholder Services, another proxy advisory agency, told Pretium shareholders that by accepting shares in Newcrest, they will likely receive revenue from the Melbourne-based gold major’s “enviable” asset base.

Brucejack – Red Chris synergies

Pretium recently made new discovery at the Brucejack mine.  In October, it intercepted a new high-grade gold exploration discovery at the Golden Marmot zone on the Brucejack property, located roughly 3.5km north of its Valley of the Kings deposit.  

The company said it had received assays for the first nine drill holes, eight of which intersected gold, with a highlight of 53.5m grading 72.5 grams per tonne gold including 50cm grading 6,700 g/t gold and 3,990 g/t silver.

Brucejack began commercial production in July 2017 and is one of the highest-grade operating gold mines in the world. Pretium’s technical report of March 9, 2020, estimated gold production of 311koz per annum at an all-in sustaining cost of $743 per ounce of gold over a projected 13-year mine life.

The mine and surrounding tenements are within the traditional territories asserted by the Tsetsaut Skii km Lax Ha (TSKLH) and Tahltan Nation, and in the Nass Area of Nisga’a Nation as defined in the Nisga’a final agreement.

Brucejack is approximately 140 km from Newcrest’s majority-owned and operated Red Chris mine, located on Tahltan territory.

Newcrest needs a minimum of two-thirds of Pretium shareholders to vote in favour of the deal. If approved, investors will have the choice of accepting money for their holdings, or taking up shares in the gold major, which has also been expanding into copper in recent months.