Pretium sketches a larger mine at Brucejack

Pretium Resources’ (PVG-T, PVG-N) updated preliminary economic assessment (PEA) for the Brucejack gold-silver project in northern British Columbia outlines a larger and more robust mine.

The project is now envisioned as a 1,500-tonne-per-day underground operation, processing a total of 11.8 million tonnes from the Valley of the Kings and West zones over a 24-year mine life. Over that time, Brucejack should produce 6.9 million oz. gold and 17 million oz. silver at an average mill feed grade of 18.9 grams gold and 59.3 grams silver per tonne.

Annual average production is estimated at 325,000 oz. gold for the first 12 years and 287,000 oz. over the life of mine. The previous June 2011 PEA had pegged the life of mine at 16 years to churn out a total of 2.1 million oz. gold and 14.6 million oz. silver.

Along with the higher production forecast, the cost to build the project has ballooned to US$436.3 million, a 55% hike over the previous estimate of US$281.7 million.

Pretium says the higher capital cost is due to the underground development starting a year earlier to access higher-grade ore sooner in the production schedule. This increased pre-production mining costs to US$128 million from US$52 million. Also pushing up costs is the US$42-million decision to connect to the electrical transmission grid to power the mine.

Using a 5% discount and US$1,100 per oz. gold and US$21 per oz. silver prices, the project has an updated pre-tax net present value of US$2.2 billion and a 29.8% internal rate of return. Payback is expected within roughly four years.

Last November, the company reported that measured and indicated resources at the 900-sq.-km project grew by 460% to 5.06 million oz. gold (9.3 million tonnes grading 16.92 grams gold). The project contains another 3.33 million oz. gold from 4 million tonnes of 25.67 grams gold in inferred.

The updated PEA did little to the company’s stock, which was up less than a percent or 11¢ to close at $16.47 per share in Toronto.