Pretium sees greater high-grade potential at Brucejack

Pretium Resources (PVG-T, PVG-N) has added almost 9 million oz. gold to its high-grade Brucejack resource without any extra information.

The major spike in contained ounces follows a new resource estimate dedicated to looking at a high-grade mine option, whereas a resource update in November 2011 focused more on the bulk-tonnage option, despite including a high-grade component.

With the new estimate the combined Valley of the Kings and West zones contain 13.7 million measured and indicated tonnes grading 13.2 grams gold per tonne and 104 grams silver per tonne for 5.8 million contained oz. gold and 46 million oz. silver. Inferred resources add 16.7 million tonnes grading 20.9 grams gold and 28 grams silver for a further 11.3 million oz. gold and 15.3 million oz. silver.

The November estimate has 9.3 million measured and indicated tonnes grading 16.92 grams gold and 105.6 grams silver, and 4 million inferred tonnes grading 25.67 grams gold and 20.6 grams silver, for a combined total of 8.36 million contained oz. gold.

Both resource estimates use a 5-gram gold-equivalent cut-off, though the older resource is contained within the greater low-grade pit shell of the bulk-tonnage resource, and the new resource is based on a series of mineralized domains.

Modelling the deposit is complicated by the extremely high grades present on the project, with some samples hitting around 18,000 grams gold. The previous estimate caps grades at 900 grams gold for the Valley of the Kings zone while also splitting the deposit into low-grade and high-grade populations, and trying to balance them into a representative resource. The new resource passes on the grade cap and uses a somewhat different model of splitting the deposit into lower and higher-grade blocks, and restricting the influence of the higher-grade sections of the target.

The West zone is hosted by a band of intensely altered Lower Jurassic latitic to trachyandesitic volcanic and subordinate sedimentary rocks, which are as much as 400 metres to 500 metres thick. The deposit is made up of at least 10 quartz veins and mineralized quartz stockwork ore shoots, the longest of which has a strike length of 250 metres and a maximum thickness of 6 metres. The Valley of the Kings deposit sitting 500 metres south has a strike of over 450 metres and reaches up to 150 metres wide. The deposit is bound to the west by a fault but remains open at depth and to the east.  

In February Pretium launched a 24,000-metre drill program to upgrade inferred resources at Brucejack in anticipation of a high-grade feasibility study for year-end. The company has also applied for a permit to extend the existing decline at the West zone to the Valley of the Kings, and is working to link the project to Highway 37 by road this year.

A scoping study released in February on a high-grade option at Brucejack outlines a 1,500-tonne-per-day underground operation producing 287,000 oz. gold per year over the life-of-mine. Using a 5% discount rate and a US$1,100 per oz. gold price, the project has a pre-tax net present value of US$2.2 billion and a 29.8% internal rate of return.

In mid-March Pretium filed a final base-shelf prospectus, allowing the company to raise as much as $180 million through a variety of offering options whenever it wants over the next two years. Included in the allotted sum is up to $36 million in shares owned by Silver Standard Resources (SSO-T, SSRI-Q) because of a clause in the original deal, struck when Pretium bought the Brucejack and Snowfield projects from Silver Standard in 2010. Pretium has not announced plans to use the prospectus to raise money and has about $20 million cash-on-hand. The company is still figuring out how quickly it wants to move forward on Brucejack and the implications of the scoping study.

After filing the prospectus the company’s share price dropped $3.28 over three days to $13.32. But on news of the latest resource Pretium’s share price jumped 94¢, or 6.7%, to $15 on a million shares traded.