Pretivm Reports First Quarter 2020 Operating and Financial Results; Steady Production at Brucejack Continues to Generate Significant Cash Flows

Impact of COVID-19

The Company’s primary commitment is the safety and health of our workforce and neighbouring communities in northwest British Columbia. A significant number of steps have been taken to limit the risk of COVID-19 exposure for our staff, their families and communities (see news release dated April 2, 2020). There are no confirmed cases of COVID-19 at Brucejack as of April 30, 2020.

Throughout the COVID-19 pandemic, the Brucejack Mine has operated continuously under the strict guidance and directives of federal, provincial and regional health authorities, while ensuring the well-being of our employees, communities and other stakeholders.

Only personnel necessary to support gold production continue to work at the mine while COVID-19 restrictions are in place. Consequently, all capital projects and expansion drilling have been placed on hold and crews have been demobilized.

Supplies and Inventory

At present, interruptions to the supply chain are not anticipated. Supply chains are being monitored and increased inventory levels have been established with supplies on order accordingly.

Doré and Concentrate Sales

Doré and flotation concentrate sales are proceeding as planned without any disruptions to date. With multiple off-takers for both doré and flotation concentrate, no sales disruptions are anticipated at this time.

Production

The COVID-19 pandemic did not impact first quarter gold production. Milled tonnes for the quarter totaled 345,139 or 3,793 tonnes per day. A shortage of personnel at the outset of the COVID-19 crisis in March resulted in a minor impact on development and a delay to the start of the reverse circulation grade control drill program. A total of 2,784 meters of lateral development and 60 meters of vertical development were achieved. We are reviewing the future impact to development, stope availability and production should the restrictions related to COVID-19 persist.

Looking ahead, the Company currently expects a modest impact on costs should operations continue with enhanced safety measures in effect. However, COVID-19 may have a significant impact on cost and production if the current situation continues or if government authorities mandate temporary closures or if the Company is not able to maintain operations.

2020 Guidance

2020 Production and Financial Guidance Maintained

The Company produced 82,888 ounces of gold during the first quarter of 2020 and expects to achieve its 2020 gold production guidance at the Brucejack Mine of 325,000 ounces to 365,000 ounces. With the expectation that Brucejack continues to operate within the current framework of the restrictions, production is planned to continue for 2020 at a rate of 3,800 tonnes per day with the average annual gold grade ranging between 7.6 grams per tonne and 8.5 grams per tonne at an average gold recovery of 97%.

The all-in sustaining cost¹ (“AISC”) was $996 per ounce of gold sold for the first quarter 2020. The Company expects to achieve its 2020 financial guidance with AISC ranging from $910 to $1,060 per ounce gold sold. AISC estimates include costs associated with continued lateral development at a rate of approximately 1,000 meters per month through 2020. In addition, the AISC estimates include costs associated with a high-density reverse circulation drill program to increase the volume of grade information necessary to enhance mine planning and optimize gold production. This program has been placed on hold while COVID-19 restrictions are in place.  

2020 Free Cash Flow Forecast Maintained

First quarter free cash flow¹ was $41.8 million at an average realized gold price¹ of $1,605 per ounce. The Company remains on target to achieve free cash flow for 2020 in the range of $100.0 million to $170.0 million. The 2020 free cash flow forecast is based on an average gold price of $1,450 per ounce.

Capital expenditures include approximately $30.0 million of sustaining capital expenditures, approximately $15.0 million in expansion capital expenditures, and approximately $10.0 million for regional exploration. Certain of these capital expenditures are on hold and may be deferred as only personnel necessary to support gold production continue to work at the mine while COVID-19 restrictions are in place.

Subsequent to quarter end, as a precautionary measure in response to the continuing operational risks related to COVID-19, the Company drew down $16.0 million of the Company’s revolving portion of the Loan Facility to increase available liquidity. The Company will focus on liquidity rather than discretionary debt reduction until the restrictions related to the COVID -19 pandemic have been lifted.

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1} Refer to the “Non-IFRS Financial Performance Measures” section at the end of this news release for reconciliation.

First Quarter 2020 Operating and Financial Highlights

Key Operating Metrics

Abbreviations: t (tonnes), tpd (tonnes per day), g/t (grams per tonne), Au (gold) and oz (ounces).

Key Financial Metrics

1. Refer to the “Non-IFRS Financial Performance Measures” section at the end of this news release for reconciliation.
2. As at March 31, 2020, long-term debt does not include the current portion of the Company’s Loan Facility in the amount of $66,667 (2019 – $75,687).

First Quarter 2020 Production Overview

• Production totaled 82,888 ounces of gold and 123,926 ounces of silver in the first quarter 2020. Gold production was similar to the comparable period in 2019 when 79,180 ounces of gold and 108,234 ounces of silver were produced. Gold production increased primarily due to an increase in tonnes milled offset by a decrease in head grade.
• In the first quarter, 345,139 tonnes of ore were processed, equivalent to a throughput rate of 3,793 tonnes per day. This was an increase from the comparable period in 2019, in which a total of 295,122 tonnes of ore were processed, equivalent to a throughput rate of 3,279 tonnes per day. During the quarter, the mill operated at the permitted level of 3,800 tonnes per day whereas, in the comparable period in 2019, the mill was in the early phases of the planned production ramp-up, following receipt of our amended permits in late 2018.
• The mill feed grade averaged 7.8 grams per tonne gold for the quarter compared to 8.7 grams per tonne gold in the comparable period in 2019. The first quarter 2020 mill feed grade is within the estimated 2020 guidance range as we are processing all immediately available stopes above the grade cut-off to ensure consistent mill supply while continuing to advance development.
• Gold recovery for the first quarter of 2020 was 96.4% compared to 96.8% in the comparable period in 2019. We continue to review the mill process to optimize recoveries.
• In the first quarter, 357,674 tonnes of ore were mined, equivalent to a mining rate of 3,930 tonnes per day. This was an increase from the comparable period in 2019, in which a total of 308,387 tonnes of ore were mined, equivalent to a mining rate of 3,427.  Through 2020 mining will continue to focus on advancing underground development to open up the mine to operate at a production rate of 3,800 tonnes per day. Through the first half of 2020 development will advance at depth on the 1080-meter Level and west to the Brucejack Fault Zone. The increased development should provide sufficient access to build the stope inventory required to allow mining operations to optimize gold production.    

First Quarter 2020 Financial Overview

• In the first quarter, the Company generated revenue of $126.6 million compared to revenue of $103.1 million in the first quarter 2019. Revenue in the first quarter of 2020 includes a $0.4 million loss on trade receivables at fair value related to provisional pricing adjustments.
• In the first quarter 2020, the Company sold 80,460 ounces of gold at an average realized price¹ of $1,605 per ounce, generating $125.1 million in revenue from contracts with customers. In the comparable period in 2019, the Company sold 81,434 ounces of gold at an average realized price¹ of $1,319 per ounce, generating $102.4 million in revenue from contracts with customers. The average London Bullion Market Association AM and PM market price over the three months ended March 31, 2020 was $1,583 (2019 – $1,304) per ounce of gold.
• Total cost of sales¹ for the first quarter 2020 was $89.5 million or $1,112 per ounce of gold sold¹ compared to $74.0 million or $908 per ounce of gold sold¹ in the comparable period in 2019.  Total cost of sales increased primarily due to higher production costs for additional lateral development and drilling as well as the higher depreciation and depletion charges resulting from the 2020 updated Mineral Reserve update.
• Total cash cost for the first quarter 2020 was $787 per ounce of gold sold² compared to $686 per ounce of gold sold¹ in the comparable period in 2020. Total cash costs increased due to higher production costs for additional lateral development and drilling.
• AISC¹ for the first quarter 2020 totaled $996 per ounce of gold sold compared to $868 per ounce of gold sold in the comparable period in 2019. AISC increased primarily due to higher production costs for additional lateral development and drilling.
• Sustaining capital expenditures in the first quarter 2020 amounted to $6.0 million (including $0.4 million deferred development costs incurred during production) compared to $3.7 million in the first quarter 2019.
• Earnings from mine operations were $37.1 million in the first quarter 2020 compared to $29.2 million in the first quarter 2019.
• Net earnings were $6.2 million in the first quarter 2020 compared to $4.2 million in the first quarter 2019 with the increase primarily a result of higher gold prices, a decrease in loss on financial instruments at fair value offset by an increase depreciation and depletion expense and deferred income tax expense. Deferred income tax expense increased due to foreign exchange movements impacting Canadian denominated tax pools.
• Adjusted earnings¹ were $25.9 million in the first quarter 2020 compared to $16.5 million in the first quarter 2019.
• Cash generated from operating activities in the first quarter 2020 was $52.5 million compared to $39.9 million in the first quarter 2019.
• Free cash flow¹ generated in the first quarter 2020 was $41.8 million compared to $35.0 million in the first quarter 2019.
• Average realized cash margin¹ in the first quarter 2020 was $768 per ounce of gold sold compared to $571 per ounce of gold sold in the first quarter of 2019.
• Cash and cash equivalents were $40.6 million as at March 31, 2020 increasing by $17.4 million from $23.2 million as at December 31, 2019.
• The Company repaid $16.7 million of its $480 million senior secured loan facility (the “Loan Facility”).  At the end of the first quarter 2020 the outstanding balance on the Loan Facility was $367.3 million.
• At March 31, 2020, $16.5 million was available under the Loan Facility for additional liquidity. Subsequent to quarter end, as a precautionary measure to increase available liquidity, the Company drew down $16.0 million of the revolving portion of the Loan Facility.

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1} Refer to the “Non-IFRS Financial Performance Measures” section at the end of this news release for reconciliation.

Updated Mineral Resource, Mineral Reserve and Life of Mine Plan

In the first quarter, the Company announced an updated Mineral Reserve estimate, Mineral Resource estimate and Life of Mine Plan for the Brucejack Mine, which highlight the continued robust economics of the long-life underground operation.

Summary of the 2020 Updates

• 2020 Brucejack Mine Estimated Total Life of Mine Plan (Valley of the Kings and West Zone)
  • Average annual production of over 366,000 ounces of gold over the first 5 years with average annual cash flow of $171 million (post-tax) at $1,300/ounce gold.
  • Average annual production of over 357,000 ounces of gold over the first 10 years and average annual free cash flow of $181 million (post-tax) at $1,300/ounce gold.
  • Average operating costs of $164/tonne milled over the first 10 years and average LOM operating costs of $163/tonne milled.
  • At the mine level, average sustaining costs of $702/ounce of gold sold over the first 10 years and average LOM sustaining costs of $691/ounce.
  • At the corporate level, average AISC of $747/ounce of gold sold over the first 10 years and average LOM AISC of $743/ounce of gold sold.
  • After tax net present value at a 5% discount of $1.50 billion ($1.80 billion pre-tax) at $1,300/ounce gold, $16.90/ounce silver and exchange rate of US$0.76/C$1.00.
• 2020 Brucejack Mine Total Proven and Probable Mineral Reserve Estimate
  • 4.2 million ounces of gold (15.7 million tonnes grading 8.4 grams of gold per tonne after application of the Mine Call Factor).
  • The West Zone Mineral Reserve was not updated.
  • Excludes all Mineral Reserve material mined prior to January 1, 2020.
• 2020 Valley of the Kings Proven and Probable Mineral Reserve Estimate
  • 3.6 million ounces of gold (12.8 million tonnes grading 8.8 grams of gold per tonne after application of the Mine Call Factor).
  • Excludes all Mineral Reserve material mined prior to January 1, 2020.

The information in this “Updated Mineral Resource, Mineral Reserve and Life of Mine Plan” section has been extracted from our news release dated March 9, 2020. For additional information (including a list of qualified persons who have reviewed, approved and verified such information) see news release dated March 9, 2020 and the National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) technical report entitled “Technical Report on the Brucejack Gold Mine, Northwest British Columbia”, with an effective date of March 9, 2020.

Qualified Persons

Lyle Morgenthaler, B.A.Sc., P.Eng., Chief Mine Engineer, Pretium Resources Inc. is the Qualified Person as defined in NI 43-101 responsible for Brucejack Mine development, and has reviewed and approved the scientific and technical information contained in this news release relating thereto.

Our unaudited consolidated interim Financial Statements and MD&A for the three months ended March 31, 2020 and 2019 are filed on SEDAR and EDGAR and are available on our website at www.pretivm.com.

Webcast and Conference Call

The webcast and conference call to discuss the three months ended March 31, 2020 operating and financial results and updates will take place Friday, May 1, 2020 at 8:00 am PT (11:00 am ET).

Webcast and conference call details:

A recorded playback will be available until May 15, 2020:

About Pretivm

Pretivm is a low-cost intermediate gold producer with the high-grade underground Brucejack Mine in northern British Columbia.

For further information contact:
Troy Shultz
Manager, Investor Relations &
Corporate Communications

Pretium Resources Inc.
Suite 2300, Four Bentall Centre, 1055 Dunsmuir Street
PO Box 49334 Vancouver, BC V7X 1L4
(604) 558-1784
invest@pretivm.com
(SEDAR filings: Pretium Resources Inc.)

Non-IFRS Financial Performance Measures

The Company has included certain non-IFRS measures in this new release. Refer to the Company’s MD&A for an explanation, discussion and reconciliation of non-IFRS measures. The Company believes that these measures, in addition to measures prepared in accordance with International Financial Reporting Standards (“IFRS”), provide readers with an improved ability to evaluate the underlying performance of the Company and to compare it to information reported by other companies. The non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These measures do not have any standardized meaning prescribed under IFRS, and therefore may not be comparable to similar measures presented by other issuers.