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Analyst Raises Target Price of Canadian Miner Given 'Continued Momentum'

Streetwise Reports
0 Comments|September 12, 2019

Key points management made on a recent investor tour are presented in a BMO Capital Markets report.


In a Sept. 5 research note, analyst Andrew Kaip reported that BMO Capital Markets raised its target price on Pretium Resources Inc. (PVG:TSX; PVG:NYSE) to CA$24 per share from CA$20 given that "we continue to see upside for shares of Pretium."

After BMO took Joe Ovsenek, CEO, and John Hayes, senior vice president of corporate development, through Toronto to meet with investors, Kaip wrote, "we sense investors are beginning to become more comfortable with the company's execution and are now more focused on future priorities such as upcoming catalysts."

In his report, Kaip summarized the highlights from management's comments.

1. As for H1/19 performance, Pretium is expected to increase production quarter over quarter and achieve its H1/19 guidance of 170,000 ounces (170 Koz) gold along with its 2019 guidance of 390–420 Koz.

2. By the end of September, Pretium must decide whether or not to buy back 75% of the gold sales offtake. Kaip indicated that "at current metal prices, it makes sense to spend the $60 million."

3. Pretium will continue to pay down debt throughout the rest of this year and next. Ovsenek said he'd like the company debt free.

4. Expansion plans to 3,800 tons per day (3.8 Ktpd) by year-end 2019 are on track. Only minor mill upgrades still need to be done. Kaip added that "permitting has opened the door to further expansion to 5 Ktpd."

5. By September's end, Pretium will finish a 70 kilometer infill drill program aimed at converting half of the Indicated resource to Measured. "We expect infill drilling to improve the quality of the resource and lead to a more robust reserve estimate," commented Kaip. Pretium will need to decide whether or not to revise the mine plan to encompass longitudinal hole stoping.

6. Starting in 2020, Pretium can start allocating $40 million toward a dividend or an NCIB, under the terms of the debt facility, and the leaning seems be toward a dividend.

BMO removed the Speculative component of its Outperform rating on Pretium, "given improved execution year to date," noted Kaip.

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