Pretium It's tough to get your head around the valuation on PVG of roughly $1.5 billion while we have 200,000 ounce / year producers trading for smaller market capitalizations. I watched the BNN excerpt and saw Frances (BNN) taking shots at PVG for having such a high market capitalization yet being 3 years from production at least. While PVG is expensive compared to producers, it's hardly expensive when compared as a resource.
In my opinion there are essentially 3 different deposits that PVG offers to investors:
High-Grade Brucejack:
8 milion ounces @ 19 g/t au average
8 X $300 / oz (avg. of takeover/market value for highest grade gold deposits) = $2.4 billion
Most high-grade deposits are currently trading for $250 / oz + in the 15.0 + g/t au range (RMX, CNL, XG)
Most deposits that have been acquired for grades above 5 g/t au have been acquired for $400 + / oz (Andean, Ventana, Aurelian)
Total value of Brucejack High-Grade alone = $2.4 billion
Brucejack Bulk Tonnage:
15 million ounces @ 3.0 g/t au
Guyana Goldfields Market Capitalization X 2 = $1.2 billion dollars
This deposit is most similar to Guyana Goldfields Aurora Gold project in size and grade in my opinion, besides the obvious differences in location. Guyana Goldfields has roughly 7 million ounces of gold at 3.6 g/t au or half the size of Pretium's Brucejack Bulk Tonnage but also 20% higher grades. Guyana Goldfields is closer to production than Pretium but nonetheless boasts a $650 million market capitalization.
Estimated value of Brucejack Bulk Tonnage: $1.2 billion dollars
Snowfield Deposit:
- 30 million ounces of gold at low grades with copper, silver, rhenium byproducts
- $700 million dollars based on balance of SEA/CUU market capitalizations on their B.C. projects
- Similar to Seabridge's polymetallic deposit as well as CUU's polymetallic deposit both in British Columbia.
- SEA valued at $1~ billion and CUU $500 million with similar size resources
Total Value of 3 Deposits:
= $4.3 B dollars
So for $1.5 billion dollars investors can essentially lock up $4.3 B dollars in gold resources by estimation. It's hard to make exact comparisons as so few deposits of this size exist in the world but to put things in perspective PVG is like 3 deposits in one:
PVG has the high-grade of RMX (Rubicon Minerals) but is over double the size and at a higher grade. It has the grades of Guyana's Aurora Project in Guyana but has over double the ounces and is just below them in grades and then PVG also has a similar polymetallic deposit to Copper Fox in British Columbia but double the size.
Andean was bought out by Goldcorp for $3.6 billion just for their high-grade resource of over 5 Moz of gold equivalent at 7.0 g/t au. Currently PVG has 8 million ounces at triple the grade in a better mining jurisdiction and is trading for less than half what Andean was acquired for.
Based on this metric you get the other 50 million ounces of gold for free (Snowfield, Brucejack Bulk).
While there could be some consolidation while we trade at 52 week highs and profit taking, I believe PVG is one of the largest take-over targets of 2012 and will easily surpass $25 this year. The chart is very reminsicent of RVC 3 months before they were taken over and it was very difficult to get shares without paying up as the down days would be less than 2-3% and if you missed it the next leg up would start.