Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Pretium Resources Gained as Much as 12.8% Today

By Maxx Chatsko – May 3, 2019 at 11:51AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The gold producer reported a strong start to 2019.

What happened

Shares of Pretium Resources (PVG) rose today after the company reported first-quarter 2019 operating results. The gold miner generated $29 million in operating income from mine operations and $40 million in cash from operating activities, which allowed it to repay $20 million in debt ahead of schedule. It ended March with nearly $51 million in cash and cash equivalents. As of 11:39 a.m. EDT, the stock had settled to a 14% gain.

The strong results are expected to just be the beginning of a great year for the company. While Pretium Resources produced just 79,180 ounces of gold in Q1 2019 (an annual run rate of 317,000 ounces), it expects full-year 2019 production to settle between 390,000 ounces to 420,000 ounces of gold. A successful ramp-up at the Brucejack mine will be the driver of that impressive step up in production -- and so far, the business has executed.

A pair of hands holding gold nuggets.

Image source: Getty Images.

So what

Pretium Resources delivered year-over-year increases of 15% and 73%, respectively, in revenue and operating income from mine operations. Importantly, the company lowered its all-in sustaining costs (AISC) to $868 per ounce of gold, marking a 14% decrease compared to the year-ago period. The boost to operating efficiency came just in time, as average realized selling prices actually decreased slightly year over year.

The business generated $4.2 million in quarterly net income as a result, or $0.02 in earnings per share (EPS). That's not significant, but if production volumes are successfully ramped through the end of 2019, then investors stand to benefit from the gold miner's focus on efficiency.

Now what

Pretium Resources thinks Brucejack can average 520,000 ounces of gold production annually for the first five years of its life. That would be enough to generate about $350 million in annual operating cash flow based on current market fundamentals. While selling prices can always change, there figures to be a lot of wiggle room for the business to achieve profitable operations if the mine delivers on its potential. All signs from Q1 2019 operations suggest it's on a promising trajectory, but there's still a ways to go.

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Pretium Resources Stock Quote
Pretium Resources
PVG

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
338%
 
S&P 500 Returns
108%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.