Pretium sketches larger mine at Brucejack

Pretium Resources’ (PVG-T, PVG-N) updated preliminary economic assessment (PEA) for the Brucejack gold-silver project in northern B.C. foresees an even larger and more robust mine.

The project is envisioned as a 1,500-tonne-per-day underground operation, processing 11.8 million tonnes from the Valley of the Kings and West zones over a 24-year mine life. Over that time, Brucejack would produce 6.9 million oz. gold and 17 million oz. silver at an average head grade of 18.9 grams gold and 59.3 grams silver per tonne.

Annual production is estimated at 325,000 oz. gold for the first 12 years and 287,000 oz. over the life-of-mine. The previous PEA in June 2011 had pegged the mine’s life at 16 years and foresaw total production of 2.1 million oz. gold and 14.6 million oz. silver.

However, along with the updated production forecast, the cost to build the project has ballooned to US$436 million — a 55% hike over the previous estimate of US$282 million.

Pretium says the higher capital cost is owing to the underground development starting a year earlier to access higher-grade ore sooner in the production schedule. As a result, projected pre-production mining costs more than doubled to US$128 million from US$52 million. Also pushing up anticipated costs is a US$42-million decision to connect the mine site to the province’s electrical grid.

Using a 5% discount rate and gold and silver prices of US$1,100 and US$21 per oz., the project has an updated pre-tax net present value of US$2.2 billion and a 29.8% internal rate of return. Payback is expected in four years.

Last November, the company reported that measured and indicated resources at the 900-sq.-km project grew by 460% to 5.06 million oz. gold, in 9.3 million tonnes grading 16.92 grams gold per tonne. The project contains another 3.33 million oz. gold from 4 million inferred tonnes at 25.67 grams gold.

The updated PEA did little to the company’s stock, which was up less than a percent, or 11¢, to close at $16.47 per share.