VANCOUVER - Pretium Resources Inc. (TSX/NYSE: PVG) ('Pretivm' or the 'Company') announces operating and financial results for the second quarter 2021.
All amounts are in US dollars unless otherwise noted. This release should be read in conjunction with the Company's Financial Statements and Management's Discussion and Analysis ('MD&A') for the three and six months ended June 30, 2021 and 2020, available on the Company's website and on SEDAR and EDGAR.
'The second quarter of 2021 started under some challenging circumstances, but thanks to the hard work of our team we made consistent improvements through the quarter and we remain on track to achieve our annual guidance,' said Jacques Perron, President and Chief Executive Officer of Pretivm. 'We accomplished another profitable quarter with $152.3 million in revenue, generated $50.7 million in free cash flow and we have reached a key turning point where our cash position now exceeds our debt.'
'Our resource expansion drill programs continue to successfully intercept high-grade mineralization immediately adjacent to existing underground infrastructure. Follow-up drilling is currently underway targeting the potential expansion of the Valley of the Kings deposit. Drilling results are expected to be released throughout the remainder of the year and will contribute to the updated Mineral Resource estimate we plan to release in the first half of next year.'
Second Quarter 2021 Highlights
Our top priority continues to be the health and safety of our employees, contractors and neighbouring communities in northwest British Columbia ('BC'). We worked 707,834 hours with one lost-time injury during the second quarter 2021. There were no outbreaks of COVID-19 at the Brucejack Mine in the second quarter.
Production was 83,083 ounces of gold in the second quarter of 2021, compared with 90,419 ounces in the second quarter of 2020. Lower production in the second quarter 2021 reflects the residual effects of the COVID-19 outbreak in the first quarter, as well as performance issues with several stopes during and following the outbreak. Stope performance improved over the course of the quarter and at the end of the second quarter there were 7,718 ounces of gold remaining in-circuit compared to 998 ounces in the second quarter 2020.
Revenues of $152.3 million from the sale of 84,618 ounces of gold. Revenue in the second quarter 2021 represents an 8.6% decrease from the second quarter of 2020 driven primarily by a 11.9% reduction in gold ounces sold, partially offset by a 3.8% increase in the average realized price(1) of gold to $1,804 per ounce.
Another profitable quarter, with $0.16 in net earnings per share and $0.15 in adjusted earnings per share ( 1,2 ) . Net earnings were $30.7 million and adjusted earnings(1,2) were $28.5 million for the quarter, compared to the second quarter of 2020 when net earnings were $36.1 million and adjusted earnings(1,2) were $32.9 million. The decrease was primarily due to lower ounces of gold sold, partially offset by decreases in deferred income tax expenses and cost of sales.
Revenues drove EBITDA (1) of $72.7 million and free cash flow ( 1 ) of $50.7 million. EBITDA and free cash flow in the second quarter 2021 decreased compared to the second quarter 2020 ($86.1 million and $82.7 million, respectively) due to lower revenues and increased levels of capital expenditures.
AISC (1) of $1,099 per ounce of gold sold is within annual guidance. AISC in the second quarter 2021 was higher than AISC of $911 per ounce of gold sold in the second quarter of 2020. The strengthening Canadian dollar, reduced sales volumes as well as higher levels of planned sustaining capital expenditures contributed to higher AISC. Planned sustaining capital expenditures include accelerated rates of underground development, comprehensive drill programs and improvement oriented capital expenditures.
We remain on track to achieve our 2021 guidance of 325,000 to 365,000 ounces of gold produced at an AISC between $1,060 and $1,190 per ounce of gold sold. We have lowered the expected range of sustaining capital expenditures by $10.0 million to $40.0 -$45.0 million and we are increasing our expected range of expansion capital expenditures by $10 million to $65.0 - $75.0 million. Free cash flow(1) is expected to be within the existing guidance range of $120.0 to $170.0 million.
Cash and cash equivalents increased to $202.5 million as at June 30, 2021 from $174.8 million as at December 31, 2020 and included the repayment of $54.7 million in debt in the quarter. As at June 30, 2021, we had long term debt of $195.2 million and available liquidity of $400.8 million including cash and cash equivalents and the undrawn revolving portion of our senior secured loan facility (the 'Loan Facility').
On August 9, 2021, we completed a refinancing of our Loan Facility. The amended Loan Facility (the 'Amended Loan Facility') consists of a $100.0 million amortizing, non-revolving term credit facility (the 'Term Facility') and a $250.0 million revolving credit facility (the 'Revolving Facility'), further increasing our liquidity as well as reducing our quarterly repayments to $5.9 million under the Term Facility from $16.7 million under the term facility of our former Loan Facility.
Underground drilling continues to confirm potential for Mineral Resource expansion at Brucejack. Resource expansion drilling intercepted high-grade gold mineralization, demonstrating the potential to extend the Valley of the Kings deposit directly to the north and at depth, adjacent to existing infrastructure. Follow-up drill programs and near-mine exploration programs are currently under way and results are expected through the third and fourth quarters of 2021.
Executing on our objective to reduce carbon emissions. We have committed to purchase battery electric vehicles to replace our fleet of diesel-powered underground haul trucks. We forecast a reduction of approximately 24% or 6,900 tonnes of carbon dioxide equivalent (tCO2e) annually after the roll out of this multi-year plan from 2021 to 2023.
We established COVID-19 management plans and implemented enhanced protocols and preventative measures to mitigate the spread of COVID-19 at the onset of the pandemic in 2020.
We continue to follow our COVID-19 management plans as well as directives of federal, provincial and regional authorities. We also continue to enhance our commitment to preventative measures for our workforce and local communities, and under the guidance of the local health authority, a program to administer COVID-19 vaccinations was initiated at the Brucejack Mine.
There have been no outbreaks of COVID-19 at the Brucejack Mine during or since the end of the second quarter 2021.
During the three months ended June 30, 2021, a total of 330,480 tonnes of ore, equivalent to a throughput rate of 3,632 tonnes per day, were processed. This was a 1% increase from the comparable period in 2020, in which a total of 327,262 tonnes of ore, equivalent to a throughput rate of 3,596 tonnes per day, were processed.
The mill feed grade averaged 8.6 grams per tonne gold for the second quarter of 2021 compared to 8.9 grams per tonne gold in the comparable period in 2020. Mill feed grade was lower due to planned mine sequencing and lower grade stopes mined in the period. Gold recovery for the second quarter of 2021 was 97.4% compared to 96.7% in the comparable period in 2020.
For the six months ended June 30, 2021 a total of 671,537 tonnes of ore, equivalent to a throughput rate of 3,710 tonnes per day, were processed at mill feed grade of 8.4 grams per tonne. The tonnes processed, mill feed grade and gold recovery for the first six months of 2021 were consistent with the comparable period in 2020.
We continued our lateral development during the three months ended June 30, 2021, achieving approximately 1,153 meters per month (2020 - 1,075 meters per month) for a total of 3,460 meters completed during the second quarter 2021 (2020 - 3,224 meters).
Diamond drilling activity continued to progress during the second quarter of 2021, with nine diamond drills on site conducting infill and resource expansion drilling. Infill diamond drilling targeted Mineral Reserves proximal to mine infrastructure to build stope inventory and provide flexibility for near term mining. A total of 50,680 meters of diamond drilling was completed for the three months ended June 30, 2021.
We expect to continue to focus on advancing underground development to expand mine access at depth and to the west. The increased development should provide sufficient access to build the stope inventory required to allow mining operations to optimize gold production and additional platforms for resource expansion drilling. As of June 30, 2021, we had 316,500 drilled tonnes of stope inventory, an increase of 14.7% from 276,000 tonnes at March 31, 2021.
During the three months ended June 30, 2021, the Brucejack Mine produced 83,083 ounces of gold and 110,645 ounces of silver. For the comparable period in 2020, we produced 90,419 ounces of gold and 123,926 ounces of silver. The decrease in gold production was due to the residual effects of the COVID-19 outbreak in the first quarter of 2021, as well as performance issues with several stopes during and following the outbreak. Stope performance improved over the course of the quarter and as at June 30, 2021 there were 7,718 ounces of gold remaining in-circuit compared to 998 ounces as of June 30, 2020.
The gold price rose over the course of 2020 amid economic uncertainty that was exacerbated by the COVID-19 pandemic starting in March 2020. The gold price declined in the first quarter of 2021 before increasing during the second quarter of 2021 and remained higher than in the comparative periods of 2020. The average London Bullion Market Association AM and PM market price over the three and six months ended June 30, 2021, was $1,815 (2020 - $1,711) and $1,806 (2020 - $1,646) respectively per ounce of gold.
For the three months ended June 30, 2021, we sold 84,618 ounces of gold, a 11.9% decrease from 96,047 ounces of gold sold in the comparable period in 2020. The reduction in gold ounces sold was due to lower production as well as changes in inventory due to the timing of sales relative to production and higher levels of gold remaining in-circuit as at June 30, 2021. The average realized gold price was $1,804, a 3.8% increase from the average realized gold price in the comparable period in 2020.
Revenue of $152.3 million for the second quarter 2021 decreased by 8.6% from $166.6 million in the second quarter 2020. The decrease in revenue was primarily the result of lower ounces of gold sold, partially offset by the increase in the average realized gold price.
Total cash costs(1) for the three months ended June 30, 2021 were $854 per ounce of gold sold compared to $749 per ounce of gold sold in the comparable period in 2020. Total cash costs increased primarily due to higher production costs and a lower amount of gold ounces sold in the period.
All-in sustaining costs ('AISC')(1) for the three months ended June 30, 2021 totaled $1,099 per ounce of gold sold compared to $911 per ounce of gold sold in the comparable period in 2020. AISC increased for the same reasons as total cash costs as well as higher levels of sustaining capital expenditures. Sustaining capital expenditures increased for the three months ended June 30, 2021 due to accelerated rates of underground development, comprehensive drill programs and improvement oriented capital expenditures.
The impact of the strengthening Canadian dollar on total production costs during the second quarter of 2021 increased total cash costs and AISC by approximately $85 per ounce of gold sold in the period compared to the comparable period in 2020.
Production costs associated with COVID-19 safety protocols and the COVID-19 outbreak impacted total cash costs and AISC by approximately $22 per ounce of gold sold in the second quarter of 2021, compared to approximately $50 in the comparable period of 2020.
Net earnings and comprehensive earnings for the three months ended June 30, 2021 were $30.7 million compared to $36.1 million for the comparable period in 2020. The decrease in net earnings was primarily attributed to lower revenues, partially offset by a decrease in interest and finance expense on the Loan Facility, a decrease in deferred income tax expense and a decrease in costs of sales.
Earnings before interest, taxes, depreciation and amortization ('EBITDA')(1) of $72.7 million in the second quarter of 2021, decreased from $86.1 million in the comparable period of 2020 primarily due to decreased revenues.
Adjusted earnings for the three months ended June 30, 2021 were $28.5 million, compared to $32.9 million for the comparable period in 2020. Adjusted earnings was impacted by the same reasons as net earnings as well as fluctuations in foreign exchanges rates during the period. During the three months ended June 30, 2021, we incurred $11.1 million on sustaining capital expenditures compared to $5.2 million in the comparable period in 2020. Sustaining capital expenditures during the period included underground development, resource drilling, and a purchase of the first electric haul truck. In the comparable period in 2020, sustaining capital expenditures included construction costs of the bulk gravity lab, capitalized development, and purchase of the underground ventilation regulators.
During the three months ended June 30, 2021, we incurred $18.9 million on expansion capital expenditures compared to $2.5 million in the comparable period in 2020. Significant expansion capital expenditures incurred during the period included construction costs for the new permanent camps at the Brucejack Mine, the new assay lab and integrated core shack. In the comparable period of 2020, expenditures included construction costs of the new mill dry.
Free cash flow for the three months ended June 30, 2021 were $50.7 million, compared to $82.7 million for the comparable period in 2020.
At June 30, 2021, the undrawn portion of the Loan Facility was $198.3 million with $1.7 million (C$2.1 million) used for a letter of credit supporting a reclamation deposit requirement.
Subsequent to the end of the quarter, on August 9, 2021, we refinanced the Loan Facility with the Amended Loan Facility. The Amended Loan Facility is comprised of the $100.0 million Term Facility and the $250.0 million Revolving Facility.
The Term Facility was used to refinance the existing term loan ($100.0 million on the closing date) and the Revolving Facility is available for general corporate purposes. The Amended Loan Facility will mature on August 8, 2025. The Term Facility is to be repaid by way of seventeen equal quarterly installments of principal plus accrued interest commencing on September 30, 2021. Any funds drawn on the Revolving Facility are repayable in a single, lump sum payment (principal and accrued and unpaid interest) on the maturity date.
About Pretivm
Pretivm is an intermediate gold producer and owns 100% the high-grade underground Brucejack Mine in northern British Columbia.
Contact:
Troy Shultz
Tel: (604) 558-1784
Email: invest@pretivm.com
Forward-Looking Information
This news release contains 'forward-looking information', 'forward looking statements', 'future oriented financial information' and 'financial outlook' within the meaning of applicable Canadian and United States securities legislation (collectively herein referred to as 'forward-looking information'), including the 'safe harbour' provisions of Canadian provincial securities legislation and the U.S. Private Securities Litigation Reform Act of 1995, Section 21E of the U.S. Securities Exchange Act of 1934, as amended, and Section 27A of the U.S. Securities Act of 1933, as amended. The purpose of disclosing future oriented financial information and financial outlook is to provide a general overview of management's expectations regarding the anticipated results of operations including cash generated therefrom and costs thereof and readers are cautioned that future oriented financial information and financial outlook may not be appropriate for other purposes.
Wherever possible, words such as 'plans', 'expects', 'guidance', 'projects', 'assumes', 'budget', 'strategy', 'scheduled', 'estimates', 'forecasts', 'anticipates', 'believes', 'intends', 'modeled', 'targets' and similar expressions or statements that certain actions, events or results 'may', 'could', 'would', 'might' or 'will' be taken, occur or be achieved, or the negative forms of any of these terms and similar expressions, have been used to identify forward-looking information. Forward-looking information may include, but is not limited to, statements with respect to: the effects of the COVID-19 outbreak as a global pandemic and the Brucejack Mine, including anticipated operational and financial impacts (including, without limitation, impacts on our capital projects and associated costs and schedules) and our response and contingency plans; the effectiveness and costs of our COVID-19 management plans, including related protocols and procedures; business outlook and 2021 guidance, including production, expenditure, exploration, free cash flow and financial guidance, and our expectations around achieving such guidance; our future operational and financial results, including estimated costs and cash and the timing thereof; expectations around grade of gold and silver production; the Brucejack Mine processing and production rate and gold recovery rate; capital modifications and upgrades, and estimated expenditures and timelines in connection therewith; our Amended Loan Facility, including its terms, maturity and repayment obligations; debt, operating, decommissioning, restoration and other obligations and commitments including their payment, timing and source of funds; our mining (including mining methods), expansion, exploration and development activities, including the reverse circulation drill program, our definition, sustaining, expansion and underground exploration drill programs, our follow up and near-mine exploration programs and our grassroots exploration program, and the specifications, targets, results, benefits, costs and timing thereof; our operational grade control program, including plans with respect to our infill drill program and our local grade control model; grade reconciliation, updated geological interpretation and mining initiatives with respect to the Brucejack Mine; building stope inventory and providing flexibility in near-term mining; our management, operational plans and strategy; capital, sustaining and operating cost estimates and timing thereof; the future price of gold and silver; our liquidity, capital requirements and the adequacy of our financial resources (including capital resources); our intentions with respect to our capital resources and factors that could impact our liquidity; our capital allocation plans; our financing activities, including plans for the use of proceeds thereof; the estimation of Mineral Reserves and Mineral Resources, including any updates thereto; parameters, assumptions and interpretation models used to estimate Mineral Reserves and Mineral Resources; realization of Mineral Reserve and Mineral Resource estimates; our estimated life of mine and life of mine plan for the Brucejack Mine; production and processing estimates and estimated rates; estimated economic results of the Brucejack Mine, including net cash flow and net present value; predicted metallurgical recoveries for gold and silver; geological and mineralization interpretations; development of our Brucejack Mine and timing thereof; results, analyses and interpretations of exploration and drilling programs; timelines and similar statements relating to the economic viability of the Brucejack Mine, including mine life, total tonnes mined and processed and mining operations; updates to our Mineral Reserves and Mineral Resources and life of mine plan for the Brucejack Mine, and the anticipated effects and timing thereof; timing, receipt, and anticipated effects of, and anticipated capital costs in connection with, approvals, consents and permits under applicable legislation; our officer compensation policy, approach and practice; our relationship with community stakeholders; expected reduction in carbon emissions and expected timelines for such reductions; litigation matters, including our expectations with regards to the merits thereof and liability resulting therefrom; environmental matters; deferred income tax expenses, payment of taxes, our tax rate and the timeline for paying cash taxes based on expectations for existing tax pools; changes in accounting policies and new accounting standards applicable to the Company (including methods of adoption) and their effects and anticipated impacts; statements regarding United States dollar cash flows, currency fluctuations and the recurrence of foreign currency translation adjustments and the impact of financial instruments on our earnings. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance are not statements of historical fact and may be forward-looking information.
Forward-looking information is subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual results, actions, events, conditions, performance or achievements to materially differ from those expressed or implied by the forward-looking information, including, without limitation, those related to: uncertainty as to the outcome of legal proceedings; the effect of indebtedness on cash flow and business operations; the effect of a pandemic and particularly the COVID-19 outbreak as a global pandemic and at the Brucejack Mine on the Company's business, financial condition and results of operations and the impact of the COVID-19 outbreak on our workforce, suppliers and other essential resources and what effect those impacts, if they occur, would have on our business, financial condition and results of operations; the effectiveness of our COVID-19 management plans, related protocols and preventative measures; the effect of restrictive covenants pursuant to the Loan Facility (now Amended Loan Facility); assumptions regarding expected capital costs, operating costs and expenditures, production schedules, economic returns and other projections and timelines; our production, gold grade, milling recovery, cash flow and cost estimates, including the accuracy thereof; commodity price fluctuations, including gold and silver price volatility; the accuracy of our Mineral Resource and Reserve estimates (including with respect to size, grade and mining and milling recoverability) and the geological, operational costs and price assumptions on which they are based; uncertainties relating to inferred Mineral Resources being converted into Measured or Indicated Mineral Resources; our ability to maintain or increase our annual production of gold at the Brucejack Mine or discover, develop or acquire Mineral Reserves for production; dependency on the Brucejack Mine for our future operating revenue; the development of our properties and expansion of our operations; our need or ability to raise enough capital to mine, develop, expand or complete further exploration programs on our mineral properties; our ability to generate operating revenues and cash flow in the future; failure of counterparties to perform their contractual obligations; general economic conditions; the inherent risks in the mining industry; the commercial viability of our current and any acquired mineral rights; availability of suitable infrastructure or damage to existing infrastructure; transportation, processing and refining risks; maintaining satisfactory labour relations with employees and contractors; significant governmental regulations, including environmental regulations; non-compliance with permits that are obtained or delay in obtaining or renewing, failure to obtain or renew permits required in the future; increased costs and restrictions on operations due to compliance with health, safety and environmental laws and regulations; compliance with emerging climate change regulation and the detrimental effects of climate change; adequate internal control over financial reporting; various tax-related matters; potential opposition from non-governmental organizations; uncertainty regarding unsettled First Nations rights and title in British Columbia; maintaining our social license to operate; uncertainties related to title to our mineral properties and surface rights; land reclamation and mine closure requirements; our ability to identify and successfully integrate any material properties we acquire; currency exchange rate fluctuations; competition in the mining industry for properties, qualified personnel and management; our ability to attract and retain qualified management and personnel; disruption from changes in management team or failure to successfully transition new hires or promoted employees into their roles; some of our directors' and officers' involvement with other natural resource companies; potential inability to attract development partners or our ability to identify attractive acquisitions; compliance with foreign corrupt practices regulations and anti-bribery and other laws and regulations; changes to rules and regulations, including accounting practices; limitations in our insurance coverage and the ability to insure against certain risks; risks related to ensuring the security and safety of information systems, including cyber security risks; our anti-takeover provisions could discourage potentially beneficial third-party takeover offers; significant growth could place a strain on our management systems; share ownership by our significant shareholders and their ability to influence our operations and governance and, in case of sales of our shares by such significant shareholders, our share price; failure to comply with certain terms of the convertible notes; reputational risks; the adequacy of our environmental, social and governance practices and reporting, and their impact on our reputation and our ability to obtain financing; future sales or issuances of our debt or equity securities; the trading price of our common shares is subject to volatility due to market conditions and our operational and financial performance; our ability to pay dividends in the foreseeable future and certain actions under United States federal securities laws may be unenforceable. This list is not exhaustive of the factors that may affect any of our forward-looking information. Although we have attempted to identify important factors that could cause actual results, actions, events, conditions, performance or achievements to differ materially from those contained in forward-looking information, there may be other factors that cause results, actions, events, conditions, performance or achievements to differ from those anticipated, estimated or intended.
PRETIUM RESOURCES INC. 
