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Pretium Resources: Digging Into The Q1 Results

May 02, 2020 2:02 PM ETNewcrest Mining Limited (NCMGF), NCM:CA9 Comments
Taylor Dart profile picture
Taylor Dart


  • Pretium Resources released its Q1 results on Friday, reporting quarterly gold production of 83,000 ounces at all-in sustaining costs of $996/oz.
  • While all-in sustaining costs continue to trend higher, the strong gold price is providing a bump to margins, allowing the company to generate $0.18 in earnings per share for Q2.
  • The company is one of the few companies that has not withdrawn its FY-2020 guidance, as it has seen only negligible impact on its operations from COVID-19 to date.
  • While further upside is possible as the stock remains reasonably valued compared to peers, I would view any rallies above the $10.25 level as an area to book some profits.

It's been a mixed start to the Q1 earnings season for the Gold Miners Index (GDX) as we've seen some companies like Agnico Eagle (AEM) significantly affected, and others barely affected at all. In a surprising turn of events, Pretium Resources (PVG) is one of the few companies maintaining its guidance, a definite trend change from prior years, as the company has seen minimal effects on its operations to date. While all-in sustaining costs continued to trend higher and came in at $996/oz last quarter, the robust gold (GLD) price and new leadership could be catalysts for a turnaround here finally, though we're still in the early stages. Given that Pretium is trading at a reasonable valuation at less than 12x free cash flow, further upside is possible towards the $10.00 area. However, given that Pretium remains a cost laggard with a complex mine on its hands, I would view any rallies above $10.25 as an area to book some profits.

(Source: Vancouver Sun)

Pretium Resources is one of the first names to release its Q1 earnings results, and the company reported gold production of 83,000 ounces in the quarter at all-in sustaining costs of $996/oz. Based on these Q1 results, the company is tracking just below its FY-2020 production guidance of 345,000 ounces, though the company made clear that it is sticking with FY-2020 guidance despite uncertainty surrounding COVID-19. From a cost standpoint, all-in sustaining costs were up 14% year-over-year, from $868/oz in Q1 2019 to $996/oz. However, these cost figures are sitting near the company's ultra-conservative guidance mid-point of $985/oz, so it's certainly possible the company could meet guidance if cash costs come in similarly through 2020. Let's take a closer look at the operations below:

(Source: Company Presentation)

As we can see from the table below, grades remain

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Taylor Dart profile picture
"A bull market is when you check your stocks every day to see how much they went up. A bear market is when you don't bother to look anymore."- John Hammerslough You can access more in-depth research, my current portfolios, new positions I am entering/exiting, and proprietary sentiment indicators for gold miners in my newsletter below.  Returns Link: https://imgur.com/a/6fcWjD6Subscription Link: https://buy.stripe.com/3cseV37nl9Y7dUcaEI - Disclosure: I am not a financial advisor. All articles are my opinion - they are not suggestions to buy or sell any securities. Perform your own due diligence and consult a financial professional before trading or investing.

Analyst’s Disclosure: I am/we are long GLD. 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.

Disclaimer: Taylor Dart is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Taylor Dart expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

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Comments (9)

Still of the same opinion on this one Taylor? Gold higher, PVG same price and it seems like market may eventually put more exploration upside on it given what is going on in Seabidge and the 3 amigos of Treaty Creek. I bought small position, looking to load up if they get crushed.
2020 Corona profile picture
Due to the strong dollar, is it better to own multinational miners VS US based miners?
Thanks again for your input. It means a lot to me. I may not like, or trade all miners individually. I do however have a few favorites. I think the overall matrix is bad for most US miners. Patented ground, and proven resources are key to survival in the future, IMO.
Taylor Dart profile picture
Hi Jamerson,

Flattered to hear it was of value, thank you for reading.
I had high hopes for Pretium but quarter to quarter over time those hopes turned to disappointment. This time a higher gold price disguised and interrupted that trend. My plan here is to react to any rally over $10 as a selling opportunity to raise funds for the inevitable sector pullback. That plan would be subject to change if some unexpected positive event, like finding another 3 or 4 million hi grade ounces on the property, were to happen. We can dream, right? Then deploy that capital to one or two other miners which project better prospects going forward.
Great article, Taylor. Right now I’m looking for good entries on Osisko and Evolution. What are your favorite smaller cap miners at this time?
Taylor Dart profile picture

Thank you! I only share my favorite small-cap, mid-cap miners in my private newsletter at www.tfsignals.com, there I list my top 12 takeover targets in the sector. Generally, on SA, I'm just covering mid-caps and large-caps more recently. Osisko is one of my top 12 though if it can pull back some more.
shawnaraghi profile picture
What are your thoughts on EGO?
Taylor Dart profile picture
Hi Shawn,

I haven't looked at their recent Q that closely, but there's many names I prefer to EGO, and I like GDX itself more than EGO. Reason being that EGO likely a market performer at best, based on average costs, but sub-par jurisdictions. The only thing I like about EGO is Lamaque and if they can expand annual gold production there, I would become a little more interested in the name.
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