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Stocks Rise With Ounces: Investors Embrace Resource Estimates From Pretium & Golden Reign

|Includes: GRGNF, Pretium Resources Inc (PVG)

Two resource estimates announced November 20 received warm market welcomes. Pretium Resources (NYSE:PVG) increased the indicated category of its Brucejack Project in northwestern British Columbia by 66%. Golden Reign Resources (OTC:GRGNF), meanwhile, debuted the San Albino-Murra Property in western Nicaragua with its first-ever estimate.

Pretium last released updates on September 7 for both the Valley of the Kings zone and the West zone 500 metres north. The November 20 update concerns Valley of the Kings only.

Using a cutoff of 5 g/t gold-equivalent, the resource shows:

  • an indicated category of 16.1 million tonnes averaging 16.4 g/t gold and 14.2 g/t silver for 8.5 million gold ounces and 7.3 million silver ounces
  • an inferred category of 5.4 million tonnes averaging 17 g/t gold and 15.7 g/t silver for 2.9 million gold ounces and 2.7 million silver ounces

The Valley of the Kings resource now includes drilling from Galena Hill, previously thought to be a separate zone. The company stated that the Valley remains open to the east and west along strike and at depth.

By boosting the indicated category 66%, the resource pushes Brucejack further along its feasibility study, Pretium president/CEO Bob Quartermain tells ResourceClips. "This gives us a really good base to do the feasibility study and develop a mine plan around the high-grade resource at the Valley of the Kings," he says. He hopes to have feasibility complete by the first half of next year.

"We continue to de-risk the project and I think the next major catalyst for the company will be the feasibility study," he adds. "There's also the underground bulk sample, which we're hoping to take again in the second half of next year. Those continue to create value for our shareholders. Obviously the market likes the way we're de-risking the project and certainly reacted positively today."

Pretium opened November 20 at $13.07 and reached $13.25 before settling back at a $12.95 close-still comfortably above the previous day's $12.77 close. The stock has a 52-week high of $18.15 and low of $8.27. With 94.83 million shares outstanding, the press-time market cap came to $1.23 billion.

Quartermain says the company could put Brucejack into production itself. But the prospect of a high-grade Canadian gold deposit that's in a region known for past-producers like Barrick's Eskay Creek and the Silbak Premier mine, will likely attract covetous eyes. "I think we'll continue to be on the radar screen of the major mining companies and if there's interest expressed that'll reward our shareholders, it's always something we'll look at."

Golden Reign's announcement followed 15 months of drilling around the historic San Albino Mine. Using a 0.5 gram-per-tonne cutoff, the open-pit resource shows:

  • an indicated category of 247,000 tonnes averaging 9 g/t gold and 10.8 g/t silver for 71,000 gold ounces and 86,000 silver ounces
  • an inferred category of 682,000 tonnes averaging 8.25 g/t gold and 10.7 g/t silver for 181,000 gold ounces and 234,000 silver ounces

Using a 1.5 g/t cutoff, the underground resource shows:

  • an indicated category of 101,000 tonnes averaging 6.59 g/t gold and 9.7 g/t silver for 21,000 gold ounces and 31,000 silver ounces
  • an inferred category of 2.69 million tonnes grading 7 g/t gold and 10.6 g/t silver for 605,000 gold ounces and 912,000 silver ounces

The company stated that all mineralized zones remain open at depth and along strike in both directions. Drilling has so far taken place within 0.6 square kilometres of the two-square-kilometre area around the San Albino Mine. The historic mine forms part of a 138-square-kilometre property package.

Another recent achievement, announced October 31, involves the purchase of the remaining 20% of San Albino-Murra. The company had already earned the initial 80% a year and a half ahead of schedule.

Speaking to ResourceClips last March, Golden Reign president/CEO Kim Evans spoke highly of Nicaragua as a mining jurisdiction. "We've had nothing but great experiences and work very closely with the mining ministry and all the different mining groups. It is a very pro-mining country and a very good place to be doing business. It is the safest country by far in Central America."

San Albino's maiden resource sent the company's stock more than 15% higher than its November 19 close of $0.52. Shares opened November 20 at $0.56, reached a high of $0.63, then closed at $0.60. With 68.89 million shares outstanding at press time, Golden Reign's market cap totalled $41.33 million.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.