Entering text into the input field will update the search result below

Pretium Resources' Q1 In Line With The Guidance, But Some Questions Remain

May 02, 2020 5:35 AM ETNewcrest Mining Limited (NCMGF), NCM:CA4 Comments


  • Pretium Resources produced 82,888 toz gold in Q1.
  • The AISC increased to $996/toz.
  • Due to the lower production volumes and higher costs, the financial results worsened.
  • The new mine plan is much less ambitious than the old one.
  • At the Q1 production rate, the 2020 guidance should be met; however, the new mine plan target not.

Pretium Resources (PVG) released its Q1 2020 financial results. This time, the expectations were much lower. In February, Pretium released the 2020 guidance that envisioned production of 325,000-365,000 toz gold at an AISC of $910-1,060/toz. The guided numbers were a major disappointment as they were well below the mine plan updated only several quarters earlier. A new, more conservative mine plan was prepared in March. For now, it looks like the 2020 production target should be met. But the target set in the new mine plan not.

The Q1 2020 gold production equaled 82,888 toz. It is 4.7% more than during the same period of last year, but almost 14% less than in Q4 2019. The main reason for the decline was lower average throughput rate (3,793 tpd vs. 4,065 tpd) and lower mill feed grade (7.8 g/t gold vs. 8.3 g/t gold). The gold recoveries remain stable, in the 96%-97% range. Should Pretium maintain this production rate, its total 2020 production would equal 331,552 toz gold, which is in line with the guidance.

Source: Own processing, using data of Pretium Resources

The production costs increased quarter-over-quarter. The Q1 total cash cost equaled $787/toz, the AISC equaled $996/toz and the total cost of sales equaled $1,112/toz. Compared to Q4, the costs increased by 13.7%, 15%, and 15.7% respectively. The costs climbed to the highest level since Q1 2018. However, they are in line with the 2020 guidance that outlines an AISC of $910-1,060/toz gold.

Source: Own processing, using data of Pretium Resources

Pretium's average realized gold price increased to $1,605/toz, which means an 8.4% improvement in comparison to Q4. The increased gold price was able to mitigate the negative impact of the 13.7% decline in the volume of gold sales and the Q1 revenues decreased only by 6.6% to $126.6 million. However, due to the increased production costs, Pretium's operating

This article was written by

Peter Arendas profile picture

I am an associate professor at the University of Economics in Bratislava, Department of Banking and International Finance. My dissertation was focused on commodity markets and my habilitation was focused on the calendar anomalies. I have more than 15 years of investing experience. My investments mostly focus on small- and mid-cap companies in the resource sector. Since May 2019, I have been preparing regular monthly reports focused on the precious metals royalty & streaming industry. Based on positive feedbacks and numerous inquiries, I decided to launch a Marketplace Service named "Royalty & Streaming Corner", which provides an in-depth analysis of this exciting market segment, as well as investment ideas from the mining industry.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (4)

The Brucejack deposit by its nature, doesn't allow the stock to be a dependable investment. It may be a great trade at certain times but I held for years and finally bailed right before the last crash in 2019. Much better investments out there in the gold venue.
Peter Arendas profile picture
Yes, Pretium delivered much more profits to traders with good timing than to patient shareholders.
Good article. I would appreciate if you write a general update on gold mining in the golden triangle that is known for its tricky geology. There are some news out from Seabridge, Auryn, Skeena, and others.
Peter Arendas profile picture
I'm not sure whether a single article is a good idea, as there are too many different companies. But for example this week I wrote (besides this article) also an article about Seabridge (seekingalpha.com/...). Last month, I wrote about Ascot (seekingalpha.com/...). Skeena is on my radar too, I intend to write an article soon.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.