The head of Strathcona Mineral Services is speaking out about why his company recently chose to walk away from high profile gold-silver project in British Columbia.
Graham Farquharson said his firm resigned from its role as consultant to Pretium Resources Inc. (TSX: T.PVG, Stock Forum) and its Brucejack project because it disagreed with resource estimates prepared by another consulting firm in late 2012.
“We recommended to the company that it publicly disclose some of our observations,’’ said Farquharson in an interview with Stockhouse Thursday.
“When they decided not to it was time to walk away,’’ he said.
Farquharson’s comments, made during a telephone interview from Toronto Thursday are sure to add fuel to the controversy surrounding Pretium and its high-grade Brucejack gold silver project in northwestern B.C.
Slated for a possible startup in 2016, the project is being run by Pretium CEO Bob Quartermain, a highly experienced mining executive, who is known for building Silver Standard Resources Inc. (TSX: T.SSO, Stock Forum) from small beginnings into an international mining firm with a market cap of $520 million.
At the age of 58 he has previously worked for the Geological Survey of Canada and metals giant Teck Resources Ltd. (TSX: T.TCK.B, Stock Forum).
Ironically, Brucejack was recognized earlier this year with a discovery award from the Prospectors and Developers Association of Canada.
That was before the project was caste in a different kind of spotlight following the resignation of Strathcona. Best known for its work in confirming that the Bre-X discovery was a scam, it was hired to help validate underground work and confirm a resource estimate that was prepared by Snowden Mining Industry Consultants for Brucejack’s Valley of Kings deposit.
Strathcona planned to use a sample tower that was designed to extract 30-kilogram samples from every 100 tonnes processed from a 10,000-tonne underground bulk sample.
The aim was to add to the level of confidence in resource estimates that Pretium will use secure financing for a mine that is expected to cost around $600 million to develop.
But on October 9, 2013, Pretium shares plunged 30.5%, closing at $4.87 after Pretium announced that Strathcona had resigned.
Asked if Pretium shareholders should be concerned, Farquharson said “it’s up to the individual shareholders to decide.’’
Farquharson has clarified in published reports that his beef with Pretium centres on when it is appropriate to disclose material facts.
When reached by phone in Vancouver, Pretium President and CEO Robert Quartermain said he was disappointed by Strathcona’s decision to resign.
“We contracted both Snowden and Strathcona to work collaboratively on this project for us going forward. So we were disappointed that a consultant would withdraw preliminarily from the project.”
Pretium has already released parts of Strathcona's letter of resignation. It reads: "There are no valid gold mineral resources for the [Valley of Kings] zone, and without mineral resources there can be no mineral reserves, and without mineral reserves there can be no basis for a feasibility study,'' Strathcona said.
However, Quartermain said Snowden continues to maintain that its November 2012 mineral resource estimate for the project is valid.
He also said it may be that the sample tower was an inappropriate methodology for the type of gold deposit that Pretium is working with.
Pretium has elected instead to process the entire 10,000-tonne sample through a mill to see how much gold can be produced.
Meanwhile, Pretium recovered some lost value Thursday, rising 20.5% to $3.99 after the company released more drill results from drilling that was completed as part of the Valley of Kings bulk sample program, as well as drilling in other areas of the Valley of Kings.
Quartermain said he is relying on Snowden to deliver an updated mineral resource estimate for the project before the end of this year.
Brucejack’s Valley of Kings hosts a probable mineral reserve of 6.6 million ounces of gold (15.1 million tonnes grading 13.6 grams gold per tonne). The company is hoping to develop a 2,700 per day underground mine with commercial production targeted for 2016.
By early next year, Quartermain hopes to have permits in hand, allowing his company to proceed with construction in 2015.
