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Monday, July 9, 2018

Pretium - at last....

Brucejack's Q2 production figures were released today (link), and from the nearly >C$2.50 share price increase over the last month (including 13% today) you can tell that the market was happy, as  for the first time, the mine has expectations!

At last the head grade is approaching the reserve grade!
Let us break down the figures.

Au production


Blue = actual; red = planned (PEA); Green - difference

They were slightly under (3,300 ounces) from the Planned production figure outlined in the PEA, but a 3% difference isn't a huge amount for a nuggety gold deposit.


Au Head-grades


A huge change
Slightly under (14.9 vs 15.4), but a huge turnaround from the previous quarter.

Recovery


Still great!


Mill Throughput - quarterly




Slight dip, probably due to a planned shutdown for maintenance (probably 3 days in total).

Mill throughput - daily




We can see a dip in Q2, the mill was operating ~100 tonnes below capacity (2604 tpd vs 2700 tpd).


Now the hard part - they have to maintain it, as they can't use the 'ramping-up' excuse anymore if they don't meet their projected production figures.








20 comments:

  1. Time will tell if the grade through the mill issue is solved. If it is then a lot of naysayers had it wrong.

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  2. From the share price reaction, obviously many were surprised, however, there was enough information available to have known conditions were improving. There was far too much negativity, as I had said turn off the internet and look over the reports and information. The Snowden report gave a good basis to conclude that this project had a high probability of working out. Remarkable geology local and regional, good deposit, good geometry, suitable for high production rates, good geotechnical conditions, no need for vertical hoisting shafts. It need not have attracted so much doubt...

    Paths (stockhouse)

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  3. It's meaningless to compare results to a PEA at this point. In fact, the PEA is no longer current because the project has new reports (FS) with reserves and a mine plan.

    It looks like accelerated development and tighter definition drilling are helping.

    What was not reported and should be of great interest was the planned grade of the areas mined in this reporting period. Were they mining above reserve grade and if so what does the reconciliation look like?

    I agree completely that they now have to keep it up. A bad third quarter would not inspire confidence in investors.

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  4. From this section of the NR it looks like they are still struggling to be able to produce the grades that were projected from the mine plan from the original stope sequence.

    "To improve access and build stope inventory, the rate of underground development was increased to 700 metres per month, up from the 420 metres contemplated in the 2014 Brucejack feasibility study. The development rate increase began in January and is expected to remain at an average of 700 metres per month during the duration of stope inventory build-up in 2018.

    With the results of the infill drill program now available for the benefit of short-term stope design, the stope inventory build-up is expected to increase to 10 to 12 stopes during the third quarter. The increased stope inventory will improve the management of production grades."

    If they now need 10 or 12 active production areas to be able to meet grade expectations that sounds like a short-term solution to the fact that that the actual grade is lower than projected. If that is the case they won't be able to high-grade for too long before it starts showing up as higher costs and inefficiencies.

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    Replies
    1. The accelerated development gives them the opportunity to drill on a tighter pattern. The information gained from tighter drilling can be used to more accurately design stopes. The results of this approach would manifest themselves as smaller stopes with higher grade and lower dilution. Smaller stopes means they need more active mining areas to meet production tonnage targets.

      Reserve tonnes per vertical foot (or meter) becomes an important mining parameter, particularly if plans to increase mine output are given the OK. It will drive the amount of monthly development needed to sustain production.

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    2. Yes, sounds like the in-fill drilling program and additional stope development is less of a grade control program and perhaps more of a high-grading operation. Would be interesting to know how many of the q2 stopes were the narrower modified design seen in the April 11 presentation.

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    3. I think they are high-grading it already.

      The conference call was very short on details.

      One analyst asked about the costs of all of the extra development and I don't recall hearing a clear answer on that.

      I agree that with these additional costs just to get to the high grade coupled with the LOM decrease that will have to happen since much of the previously planned lower grades will be lost and lost forever, eventually they will be facing a situation of not expanding production but collapsing production. The planned production increase from 2700 tpd to 3800 tpd will only add to the problem. We could be seeing partly what PVG could have been... a smaller, high grade mine with lower overall resource and lower LOM.

      In the end, will high-grading it for 2 or 3 years get them out of debt? Will high-grading it and the hype/spin that goes with it bring in the final bagholders and save and reward current PVG shareholders?

      Still too many questions unanswered.

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  5. Not an unusual approach in the early days for a mine to take. ..to set up a decent blend...

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    Replies
    1. true, unfortunately with Brucejack there is a negative 'history' due to the Strathcona incident.

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  6. Please delete the prostitution advertisement

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    Replies
    1. Done, it was one of the reasons I removed the comments section a few months ago. it was getting spammed with various ads. I normally remove them every other day.

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    2. Yes, as if there isn't enough of it already in the Mining sector with paid stock promoters!

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    3. Bill's first post. Agree. What was the FS grade for the mined out blocks? And reconciliation. What if they hi-grade it right now to show the market that they've managed to make the mine not only profitable but close to FS predictions/design? We will see what happens within a year.

      I am neutral to slightly negative on this story. Still it's recent past indicated possible major problems.

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    4. That's a shame, I didn't get the chance to note down the details

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    5. It's not just a grade reconciliation issue, it's tonnes. If they are developing at twice+ the rate required in the Feas (after switching to fan drilling from parallel drilling - which should have reduced development by 150m/month) this suggests they are burning through their stopes at at least twice the rate planned. Where are the new reserves numbers - 3rd party certified??

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    6. The important thing to remember up front is that all resource models are just representations of what's actually in the ground. They use limited data points to extrapolate an entire orebody by geostatistical analysis along with geological interpretation. No resource model is accurate, so all models must be reconciled to reality to understand where the model isn't accurate and what should be done to improve accuracy.

      Normally reconciliation is done on tonnes, grade and metal. Geology and engineering would compare actuals to the ore reserve model, the ore control model and finally the ORM to the OCM. The ORM and OCM will have different ore boundaries. The ORM was based on less drilling and longer holes and is therefore has smoother outlines and is less accurate. The OCM has tighter definition drilling and therefore more accurate grades and tonnes, or at least it SHOULD have.

      Reconciliation of actual to ORM is used for long term mine planning. (1 year to life of mine) It's important because the life of mine plan for tonnes, grades and production ounces is what drives the economics that all the analysts work with.

      Reconciliation of actual to OCM is used for short to medium term (up to a year if information is available) planning, including final estimates of stope tonnes and grades in detailed stope designs. The OCM reconciliation tells the engineers how well the model is estimating production for the next quarter or two. Of course the definition drilling results must be available, which means the development must be done in order to do the diamond drilling.

      Comparing the two different models...ORM to OCM is interesting. It gives geologists insight into how well the ORM estimates tonnes and grades. This allows them to tweak the ORM to reduce variability.

      As a miner I would never use ring drilling if reconciliation was an issue. Dilution will be higher, fragmentation will be worse and chance of misholes will be greater. Better to sill out top and bottom of stopes and drill parallel holes to breakthrough...and pick them up via survey to make sure they were not drilled off target.

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  7. There's zero indication, yet, of what all this is costing. Production numbers absolutely needed to improve, but presumably costs must have got juiced as well. If costs have skyrocketed as these guys whip through the high grade as fast as humanly possible, the 'problem' isn't solved at all, it's delayed for a while is all.

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    Replies
    1. Nowadays mines will publish production results in the first week or ten days. Costs are usually delayed by at least a month.

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    2. Whilst saying costs are something around $ 750 per, a better number will be AISC (All in Sustaining Costs) If that number explodes a body knows for certain all is not correct here. I suspect boys MIGHT BE selling out for the short term gain. It sounds that way.

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  8. Latest (July 19) is all about flow-through. "Pretium Resources Inc. has negotiated a non-brokered private placement consisting of 227,273 flow-through common shares of Pretium at a price of $13.20 per share for gross proceeds of approximately $3-million."

    This ain't good because the 'after tax' cost of dilutive FT paper is roughly half the $ 13.22. Juniors doing this I can understand, producers I absolutely DO NOT.

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