Analyst Raises Target Price on Canadian Gold Producer, Expects Higher Grades

In a Sept. 17 research note, CIBC analyst Anita Soni reported the highlights from the presentation by Pretium Resources Inc. (PVG:TSX; PVG:NYSE) President and CEO Joseph Ovsenek's at the recent 2019 Denver Gold Forum.

She also indicated that CIBC raised its target price on Pretium to CA$18 per share from CA$15.50 because "we continue to see consistent delivery of higher grades as a key catalyst for the stock."

Ovsenek noted the ramp-up and underground, longitudinal longhole stoping development are progressing well and Pretium is on track to reach 3,800 tons per day of mill throughput and mine production by late Q4/19, Soni relayed. Production guidance for 2019 remains at 390,000–420,000 ounces of gold at an all-in sustaining cost of CA$775–875 per ounce.

The company expects grades in H2/19 to be higher, averaging around 12 grams per ton. Grades in Q2/19 were similar to those in Q1/19. "Pretium delivered solid Q2/10 results with production up 15% quarter over quarter, driven by higher throughput," wrote Soni.

Another topic was exploration upside, for which the company is focused on Brucejack and Bowser, Soni wrote. Ovsenek said more value could be created by investing in Pretium's organic growth than by acquiring a marginal gold producer.

As for Pretium's financial situation, Ovsenek said the producer expects to generate strong free cash flow in the coming quarters. Spending priorities will be repaying debt, exploration, reinvestment in its assets and returning capital to shareholders.

CIBC has a Neutral rating on Pretium.

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Disclosures from CIBC, Pretium Resources Inc., September 17, 2019

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Important Disclosure Footnotes for Pretium Resources Inc. (GG)

CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from Pretivm Resources Inc. in the next 3 months.