Pretium Resources Inc. (TSX:PVG) is planning to raise $100 million through the sale of an exploration property northwest of Stewart, B.C. to KSM Mining, a subsidiary of Seabridge Gold (TSX:SEA).
Pretium built the Brucejack gold-silver mine, which went into operation in 2017. Seabridge Gold is the company behind the massive KSM copper-gold mine proposal in the Golden Triangle of northwest B.C.
Pretium announced Friday it plans to sell its Snowfield property for $100 million and a 1.5% net smelter royalty. The Snowfield property has copper, gold and molybdenum.
“This transaction provides us the opportunity to immediately realize the value of Snowfield, an undeveloped asset that we believe is not reflected in our share price,” said Pretium CEO Jacques Perron. “The cash proceeds will significantly strengthen our balance sheet and allow us to reduce our debt while the royalty will provide long-term participation in the progress of Snowfield.”
The Snowfield property is located 21 south-east of the Eskay Creek mine, immediately adjacent to Seabridge’s KSM property.
"This acquisition brings Seabridge a number of major benefits,” Seabridge CEO Rudi Fronk said in a press release.
“First, it adds appreciably to our ounces of gold per share, our most important measure of shareholder value, at a cost of approximately US$3 per oz. Second, Snowfield's measured and indicated mineral resources have the potential to significantly increase KSM's proven and probable reserves.”
Since going into operation, Brucejack has disappointed investors with lower than expected ore grades and volumes, and has gone through a series of senior management changes.
The company’s shares tanked at the beginning of 2018, following disappointing annual financial reporting, and again in March this year, after it published an updated mineral reserve estimate that lowered expectations. The company adjusted its anticipated gold production over the mine’s life from 441,000 ounces to 311,000 ounces, according to Kitco News.
The company’s shares dropped from $14.54 per share January 29, to a low of $7.60 per share on March 13. They have since recovered to $14.60 as of December 3..