Credit crunch no problem for Quartermain’s Pretium

Robert Quartermain’s Pretium Resources (PVG-T, PVG-N) has started the new year with a bang, announcing plans on Jan. 19 to raise $18.5-million in flow-through funds at $18.50 a share. The bought-deal financing led by Salman Partners represents a sweet 18% premium to Pretium’s closing price on Jan. 18 of $15.63.

News of the 1-million-share placement helped the company’s shares up 40¢ at presstime on Jan. 19 to reach a new all-time high of $16.03. The stock has risen from a low of $8.40 in November 2011 and is up significantly from when the company completed its $265-million IPO at $6 a share in December 2010.

The financing follows Pretium’s listing on the New York Stock Exchange on Jan. 12.

Proceeds from the offering will be used to conduct exploration and infill drilling this year at the high-grade Valley of the Kings zone, part of the company’s flagship Brucejack gold-silver project in northwestern British Columbia. The drilling will help support an ongoing feasibility study for an underground mine at the project, expected to be completed by year-end 2012.

Underwriters of the financing have been granted an option to buy an additional 250,000 flow-through shares at the issue price, which if exercised would bring an extra $4.62 million into the company’s coffers.

Pretium had $33 million in working capital as at Sept. 30, 2011. The company has 86.8 million shares outstanding excluding the recently proposed financing and a market capitalization of $1.4 billion.

When setting up the company in 2010, Pretium’s president Quartermain structured the deal so he received 2.5% of its common shares after the IPO in exchange for his one Series A preferred share of Pretium. According to Pretium’s prospectus, he received the preferred share in return for capitalizing the company by way of a $1.5-million investment. Quartermain’s 2.75 million shares have since increased in value from $16.5 million in December 2010 to $44 million in January 2012, representing a praiseworthy 2,833% return on his original $1.5-million investment. He also receives $400,000 a year for his services as president and CEO.

Insider trading reports show Quartermain has yet to sell a single share in the public market despite the higher prices. Indeed, he has added 126,100 shares to his position since March 2011 at prices ranging from $9.05 to US$15.54. His latest trade was buying 100 shares of Pretium at US$15.54 on the company’s first day trading in the U.S.