Quartermain’s Pretium is off to a good start

After 25 years at the helm of Silver Standard Resources (SSO-T, SSRI-Q), Robert Quartermain is back in action with a start-up company called Pretium Resources (PVG-T). 

Pretium listed on the TSX Venture Exchange last December at $6 per share and is trading today at about $10.50. It hit an all-time high of $11.49 on Feb. 16.

The initial public offering was one of Canada’s largest last year, and the company is advancing its adjoining Brucejack and Snowfield gold projects in northern British Columbia, which together represent one of the largest undeveloped gold resources in North America, he says.

Adam Graf, a mining analyst at Dahlman Rose & Co. in New York, estimates the company’s share price will reach a high of $33.85 per share over the next 12 months and has a buy on the stock.

“Hopefully I’ll be able to achieve that target,” Quartermain says in a telephone interview from Vancouver. “I started at Silver Standard when the share price was in the 80¢ range and it got as high as $45 per share.”

It was actually Quartermain who brought the two properties into the Silver Standard fold more than a decade ago and over the last five years has had the opportunity to look at the drill core. 

After leaving Silver Standard last year and taking some time off, which included a cross-country road trip and volunteering at the Vancouver Olympics, Quartermain learned that Silver Standard was interested in monetizing the Brucejack and Snowfield assets and jumped at the opportunity. The key reasons: the sheer size of the resource and the high-grade nature of some of the intersections.

“Combined these projects now have 34 million ounces of measured and indicated resources and 22 million ounces of inferred,” he says. “And at a time when we’re seeing so much tension in the global environment, I think people are going to continue to value gold higher.”

As a geologist, Quartermain adds, seeing visible gold was a huge motivation. “There is spectacular visible gold which I haven’t seen in my career except at museums or at the Red Lake mine,” he explains, adding that the past-producing Eskay Creek mine is just 15 km to the north of Pretium’s projects.

“I started my career back in gold in the late 1970s and early 1980s and I think these visible gold deposits are very unique. You don’t find them very often.” 

Recently Pretium – the Latin word for value – announced two resource estimates on the properties. On Feb. 22 it reported a 134% increase in the bulk-tonnage gold resource at Brucejack. In the measured and indicated category Brucejack contains 297 million tonnes grading 0.86 gram gold per tonne and 12.17 grams silver per tonne for 8.2 million  contained oz. gold and 116.2 million oz. silver. Inferred resources add 542.5 million tonnes of 0.72 gram gold and 8.67 grams silver for 12.6 million contained oz. gold and 151.2 million oz. silver. (The resource was based on a cutoff grade of 0.30 gram gold-equivalent per tonne.)

Then on Feb. 23, Pretium reported a resource estimate on Snowfield. At the same cutoff grade, measured and indicated resources at Snowfield stand at 1.37 billion tonnes grading 0.59 gram gold , 1.72 grams silver, 0.10% copper, 85.5 parts per million (ppm) molybdenum and 0.51 ppm rhenium for a total of 25.9 million contained oz. gold, 75.8 million oz. silver, 2.98 billion lbs. copper, 258.3 million lbs. molybdenum, and 22.5 million oz. rhenium.

Inferred resources at Snowfield add 833.2 million tonnes of 0.34 gram gold, 1.9 grams silver, 0.06% copper, 69.5 ppm molybdenum, and 0.45 ppm rhenium for 9.0 million contained oz. gold, 50.9 million oz. silver, 1.10 billion lbs. copper, 127.7 million lbs. molybdenum and 11.5 million oz. rhenium.

Pretium bought the two properties from Silver Standard for a total value of $450 million, $215 million in cash and the balance in Pretium shares (at $6 per share). Currently Silver Standard owns 42.3% of Pretium.

Exploration expenditures at Snowfield and Brucejack last year totaled about $21.5 million.  

The Snowfield resource was estimated from 192 drill holes completed by Silver Standard totaling 76.4 km in length.

Now Pretium is assessing its options for advancing the projects. The company has initiated a preliminary economic assessment examining the economics of a higher grade mining operation at the Brucejack project, which is expected to be completed in the third quarter of 2011. The company is also carrying out engineering studies to optimize the economics at Snowfield.

The company has 85.5 million shares outstanding.