Non-exhibitor • pretivm.com • 604.558.1784
President & CEO
After retiring in January 2010 as CEO of Silver Standard, Robert Quartermain burst back into the exploration scene within months to launch Pretivm Resources Inc (PVG:TSX), “Pretivm”, a gold exploration and development company that controls one of the five largest gold deposits in North America. Following a successful $265-million IPO in the fall of 2010, Mr Quartermain is ready to nurture Pretivm with the same leadership qualities that helped grow Silver Standard into one of the world’s leading primary silver miners over a 25-year career. He discusses the next few milestones he expects to see for this fast-moving company.
Resource Intelligence: What does the name “Pretium” mean, and why the “v”?
Robert Quartermain: Pretium is a Latin word meaning “value,” or “return,” which is what we intend to deliver to our shareholders through growth in gold resources. We like using the Latin-style “v” in our brand because it stands not only for “value” but also “visible” – visible gold.
RI: To what would you attribute the success of Pretivm’s IPO?
RQ: I think there are three aspects to the IPO’s success, the most important one being the asset. We own the Snowfield and Brucejack projects, which on a combined basis contain 26 million ounces of measured and indicated gold and another 16 million ounces of inferred gold, with excellent exploration potential. Then there’s timing: the IPO was done when gold prices were high and investor interest for a new opportunity in gold was also high. Finally, you have the management team and my reputation of taking Silver Standard from a $2-million to a $2-billion company over a 25-year career.
RI: Could you give us an overview of the two projects and numbers that would help investors evaluate them?
RQ: There are two opportunities: the first is a bulk-tonnage opportunity for Snowfield and Brucejack. The second is a high-grade opportunity at Brucejack. In respect of the bulk-tonnage opportunity, at Snowfield there are a billion tonnes of measured and indicated resources grading 0.63 grams/tonne gold for a total of 22 million ounces of gold and another 11 million ounces of inferred gold, plus copper, silver, molybdenum and rhenium. At Brucejack, there are 120 million tonnes of measured and indicated resources grading 1 gram/tonne gold for 4 million ounces of gold and another 4.9 million ounces of inferred gold, plus silver. This very large bulk tonnage project was the focus of the preliminary assessment which was completed and filed in September 2010. The preliminary assessment contemplates a 120,000 tonne/day open pit operation with a capital cost of $3.5 billion, operating costs of $9.38/tonne, 27-year mine life and low strip ratio. Using an $878 gold price and a 5% discount rate, the base case NPV is about US$2.3 billion giving a 12% rate of return and five-year payback. At a $1,200 gold price, the base case NPV is about $6 billion giving a 22% rate of return and 3.5-year payback, which shows the project’s leverage to the gold price. Annual production in the first eight years would be about 960,000 ounces of gold, and thereafter about 700,000 ounces of gold and about 40 million pounds of copper over the life of the mine.
Sunset shot of Brucejack camp
The high-grade opportunity at Brucejack is in the early stages. Later in the 2009 drill season at Brucejack, Silver Standard had a spectacular intersection in hole 12 of 1.5 metres of 16.9 kg/tonne of gold plus 8.7 kg/tonne of silver and another in hole 29 of 0.5 metres of 5.3 kg/tonne gold and 3.7 kg/tonne silver. In follow-up drilling in 2010, Silver Standard had a number of additional high-grade intersections, including hole 40 of 1.6 metres of 5.8 kg/tonne gold and hole 84 of 0.4 metres of 5.5 kg/tonne gold.
Since we acquired the Snowfield and Brucejack projects in December 2010, we have been focused on advancing resource estimates for the projects incorporating the 51,100 metres of drilling that was completed during the third quarter of 2010. An update of the September 2010 Snowfield resource estimate is underway incorporating the approximately 18,000 metres of drilling in 44 drill holes completed in 2010. For Brucejack, two resource estimates are underway incorporating the 33,100 metres of drilling in 73 drill holes completed in 2010: a higher-grade resource estimate focusing on gold mineralization grading greater than three grams of gold per tonne; and an update of the December 2009 bulk tonnage resource estimate. All three of these resource estimates will be completed this quarter.
RI: What are your priorities this year?
RQ: With the completion of the resource estimates, we want to focus on evaluating the potential for a smaller, higher-grade underground operation, which could be much quicker to market given a much lower capital cost and the ease in getting it through the permitting process. That could be the key catalyst which could help out the development of the bulk-tonnage opportunity. We also plan to move the bulk-tonnage preliminary assessment into pre-feasibility study and eventually into feasibility study.
RI: Let’s talk about the other features investors would look at when evaluating the project: infrastructure, jurisdiction, location and the team.
RQ: The project is located in northern British Columbia about 65 km north of Stewart. BC Hydro plans to construct a transmission line along Highway 37, roughly 40 km east of the project. The Eskay Creek mine is about 15 km to the north of the project so there is some infrastructure in the area. We’re ensuring that all of the stakeholders are properly engaged and have had good support from the local First Nations. With respect to the team, I have been joined by some key members of the Silver Standard team, which makes for a very seamless transition for the project.
Close-up of gold ore from Brucejack
RI: Do you have enough funds to see the project through to advanced stages?
RQ: After the IPO, we had about $46 million in cash and based on an annual budget of around $15 to $20 million for the project, that should see us through the next two years.
RI: How heavily invested is management in
RQ: Overall management owns about 4% of the company, with a significant portion purchased at the IPO price of $6. So like our shareholders we have put our money on the line.
RI: Since you devoted 25 years to growing Silver Standard one could say that your expertise are in the silver sector. What is the transition like for you and how can a gold exploration company like Pretivm benefit from your expertise?
RQ: I worked with Silver Standard for the last 25 years, but I’ve been in the business for 35 years. My first experience in exploration was with gold, having started my career back in 1976 working in the Northwest Territories looking for gold. I also spent some time in the Timmins gold camp, before working for Teck Corporation. I then spent three years at Hemlo drilling off the David Bell gold mine for Teck and worked on mapping the underground development of the mine. I bring to the table my early training in the gold camps and my experience at Silver Standard, which taught me how to manage precious metal projects.
RI: Does running a gold exploration company present different opportunities and challenges?
RQ: An exploration company is an exploration company. It’s a matter of focusing on the underlying asset and unlocking shareholder value; you use the same exploration tools – geophysics, geochemistry and drilling.
RI: What immediate opportunities are there on the horizon for Pretivm shareholders?
RQ: The most immediate catalyst is the resource estimates, which are underway.
RI: How do you plan on showing continued shareholder value for your shareholders?
RQ: We will start this year’s drill program in May with 60,000 metres budgeted and focused on the high-grade at Brucejack. We will also be advancing engineering on the bulk-tonnage opportunity. As a result, there will be lots of data flow through 2011 as we continue to create value for shareholders.
RI: Are you open to other acquisitions in the short-term or are you focusing your energies and resources on these two projects for now?
RQ: The plan is to focus our energies and activities on Snowfield and Brucejack as there is so much potential to unlock with those spectacular high-grade results. We are, however, always looking at opportunities and have an open-door policy.
RI: Where do you see Pretivm in three to five years? What milestones do you think you will have achieved during that time frame?
RQ: We want to complete a preliminary assessment on the high-grade project at Brucejack this year and advance it through pre-feasibility. We also want to complete the pre-feasibility study on the bulk-tonnage opportunity. After that it’s looking at what is the best way to create value for the shareholders going forward.
- Stage: Exploration-stage high grade and bulk tonnage opportunities at Brucejack and Snowfield projects
- Market cap: $714.5 million as of February 9, 2011
- Share price: $6.00 initial public offering price on December 21, 2010
- Recent share price: $8.73 as of February 9, 2011
- Commodity: Gold/copper/silver plus molybdenum and rhenium
- Resource: Combined projects contain 26 million oz gold measured and indicated, 15.9 million oz gold inferred, with resource update including 2010 exploration results underway
- Cash: $46 million in working capital as of February 9, 2011
- Brucejack and Snowfield comprise one of the largest gold deposits in North America
- High-grade gold potential
- High per share leverage to gold
- Proven management led by industry veteran Robert Quartermain