Pretivm repurchases 100% of Gold Offtake Agreement; exploration update

by Keith Powell
Inside of Brucejack Mine.

The Brucejack Mine is a high-grade underground mine located in northern British Columbia. — Photo courtesy Pretium Resources Inc.

Pretium Resources Inc. (TSX/NYSE:PVG) (“Pretivm” or the “Company”) has reached an agreement (the “Offtake Repurchase Agreement”) to repurchase 100% of its gold offtake (the “Offtake Agreement”), on September 30, 2019. With the repurchase of the Offtake Agreement, all components of the 2015 construction financing package will be extinguished.

“Brucejack’s robust cash flow has enabled us to pay down the construction financing package quickly.  In 2018, the first year after the start of commercial production, we repurchased 100% of the precious metals stream for $237 million and refinanced the construction credit facility with a $480 million bank debt facility. Now, we are repurchasing 100% of the offtake agreement for roughly $80 million.  With the construction financing package cleaned up, we have set our sights on paying off the bank debt facility as rapidly as possible,” said Joseph Ovsenek, President and CEO of Pretivm.

Repurchase of Offtake Agreement

The Offtake Agreement, dated September 15, 2015, was entered into by Pretivm as part of the construction financing package for the Brucejack Mine. The Offtake Agreement applied to sales from the first 7,067,000 ounces of refined gold, which were to be sold to the offtake purchasers, in each case, at a price based on a market referenced gold price in U.S. dollars per ounce during a defined pricing  period  before  and  after  the  date  of  each  sale. Pursuant to the terms of the Offtake Agreement, Pretivm had the option to reduce its offtake obligation on December 31, 2019 to 25% in exchange for a payment equal to US$13 per ounce of refined gold for 75% of the ounces of refined gold remaining to be delivered under the agreement. Under the terms of the Offtake Repurchase Agreement, Pretivm will eliminate 100% of the offtake obligation.

Under the Offtake Repurchase Agreement, the Offtake Agreement and Pretivm’s obligations thereunder will terminate on September 30, 2019. In exchange, Pretivm will pay the offtake purchasers, Triple Flag Mining Finance Bermuda Ltd. and Osisko Bermuda Limited, an aggregate amount of approximately US$80 million, representing US$13 per ounce for 100% of the refined gold remaining to be delivered under the Offtake Agreement. The purchase price will be paid in two tranches, with approximately US$60 million payable on September 30, 2019 and approximately US$20 million payable in the fourth quarter.

Exploration Drilling for Porphyry Source

Results from 2019 deep underground exploration drilling at Brucejack continue to confirm potential for a porphyry deposit at depth.

A deep hole with a length of 1,677 meters was drilled northeast under the Valley of the Kings deposit, following up on the underground exploration drilling completed earlier this year (see news release dated June 5, 2019). Hole VU-2019, drilled at a -85 degree angle from the 1130-meter level in the Valley of the Kings underground development, intersected two zones of anomalous copper and molybdenum mineralization at depth, indicative of porphyry-style mineralization and similar to that encountered during the 2018 deep exploration drilling (see news releases dated June 18, 2018 and June 5, 2019).  The first intersection, between 1,130 meters to 1,330 meters down hole, corresponds to a zone of propylitic alteration with sporadic intersections of tourmaline, porphyry-style veinlets, and intermediate dikes.  The second intersection, between 1,400 meters to 1,675 meters down hole, corresponds to a zone of variable phyllic, propylitic, and sodic-calcic alteration.  Geological observations noted in VU-2019 indicate an increased proximity to porphyry-style mineralization compared to the previous deep drilling.

Based on a review of the results of Hole VU-2019 in conjunction with results from previous deep underground exploration drilling and geophysical data, a fourth drill hole was recently initiated to target the porphyry potential to the northwest of drill hole VU-2019.

An update will be provided following the receipt of assay results and further evaluation. 

Extension of Brucejack-style Gold Mineralization

Hole VU-2019 intersected several zones of Brucejack-style veining and alteration from the collar to a depth of 980 meters down hole. Of particular note were two zones of mineralized carbonate stockwork that contained visible gold at 270 meters and 694 meters downhole, including 6.21 grams of gold per tonne intersected over 2.5 meters. (See Table 1 below for assays.)

The hole was drilled in an area uninformed by previous drilling, suggesting the potential extension of Brucejack-style mineralization at depth below the Brucejack Mine.

For a section view of the reported drilling please see the following link:

Warwick Board, Ph.D., P.Geo, Pr.Sci.Nat., Vice President, Geology and Chief Geologist, Pretium Resources Inc. is the Qualified Person (“QP”) responsible for the Brucejack Mine exploration drilling and has reviewed and approved the scientific and technical information in this news release relating thereto.

Regional Grassroots Exploration

The 2019 regional grassroots exploration program is well underway on the Bowser Claims to the east of the Brucejack Mine with four drills turning.  Two drills are targeting a volcanogenic massive sulphide (“VMS”) system at the A6 Zone, a third drill is targeting a VMS system at the Canoe Zone, and a fourth drill is targeting an intrusion related gold system at the Koopa Zone.  Drilling earlier this summer also focused on the Tuck and Lilliane zones, both epithermal gold system targets.  To date, approximately 15,300 meters have been drilled, with drilling expected to continue through the end of September.

At the A6 Zone, approximately 14 kilometers northeast of the Brucejack Mine, drilling is testing an area in the Iskut River Formation that hosts the same stratigraphy as the Eskay Creek Mine, with primitive pillow and massive basalt flows overlying mudstones overlying a rhyolite dome, which is up to 150 meters thick. The rhyolite is moderately to intensely sericite and sericite plus chlorite altered. Felsic volcaniclastics along the periphery of the dome are sericite altered, depleted in copper and enriched in sodium and barium.

Of assays received to date for the A6 Zone, hole BR-038 intersected high-grade silver plus copper mineralization within the overlying mudstones. (See Table 2 below for assays.)

Selected drill highlights from Hole BR-038 include:

  • 1,010 grams per tonne silver and 0.28% copper over 1.5 meters, 153 meters downhole
  • 2,890 grams per tonne silver and 1.81% copper over 1.5 meters, 187.5 meters downhole

Additional drilling and down hole geophysics are being undertaken to locate the core of the system and the associated polymetallic mineralization.  Assay results will continue to be reported as they are received.

Kenneth C. McNaughton, M.A.Sc., P.Eng., Chief Exploration Officer, Pretium Resources Inc. is the QP responsible for the regional grassroots exploration program and has reviewed and approved the scientific and technical information in this news release relating thereto.

All samples were submitted for preparation and analysis by ALS Chemex at its facilities in Terrace, B.C., and North Vancouver, B.C. All samples were analyzed using multi-digestion with ICP finish and fire assay with AA finish for gold. Samples with over 10 ppm gold were fire assayed with a gravimetric finish. Samples over 100 ppm silver were reanalyzed using four acid digestion with an ore grade AA finish. Samples over 1,500 ppm silver were fire assayed with a gravimetric finish. One in 20 samples was a blank control sample, one in 20 samples was a standard control sample, and one in 20 samples was a half-core field duplicate. Half HQ core was assayed and the remainder stored on-site. ALS Chemex is independent of Pretivm.

About Pretivm

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

Forward-Looking Statements Apply. 

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