Newcrest makes Pretium bid for BC growth
Offers C$3.5B to buy owner of high-grade Brucejack gold mine North of 60 Mining News - November 9, 2021
Last updated 11/18/2021 at 3:54pm
In a bid to add the Brucejack Mine to its operations in British Columbia's Golden Triangle, Newcrest Mining Ltd. has entered into an agreement to pay roughly C$3.5 billion (US$2.8 billion) to acquire Pretium Resources Inc.
"We are delighted to be expanding our presence in this highly prospective region in British Columbia," said Newcrest Mining CEO Sandeep Biswas. "Brucejack is a tier one mine in a tier one jurisdiction and will deliver immediate production, free cash flow and earnings diversification to Newcrest and will fit seamlessly into our long-life, low-cost portfolio."
Located about 140 kilometers (87 miles) south of Newcrest's majority-owned Red Chris copper-gold mine, Brucejack is a high-grade underground gold mine that is estimated to produce 311,000 ounces of gold per year at an all-in sustaining cost of US$743 per oz, according to a technical report published in March of last year.
Going into 2021, the Valley of the Kings deposit at Brucejack hosted 11.5 million metric tons of proven and probable reserves averaging 8.7 grams per metric ton (3.2 million oz) gold and 9.8 g/t (3.6 million oz) silver.
An extensive exploration program carried out this year has outlined several expansion targets immediately surrounding Valley of the Kings and found bonanza grade gold at exploration targets across the larger property.
Highlights from 2021 drilling at North Block, a Valley of the Kings expansion target, include:
• 19.5 meters averaging 306.6 g/t gold, including one meter averaging 5,910 g/t gold and 3,400 g/t silver.
• 15 meters averaging 561.5 g/t gold, including one meter averaging 8,400 g/t gold and 4,900 g/t silver.
• 34.5 meters averaging 93.4 g/t gold, including one meter averaging 3,140 g/t gold and 2,000 g/t silver.
• Seven meters averaging 676.8 g/t gold, including 1.5 meters averaging 3,150 g/t gold and 1,870 g/t silver.
• 15 meters averaging 493.2 g/t gold, including one meter averaging 7,360 g/t gold and 4,400 g/t silver.
Highlights from drilling at Golden Marmot, a discovery zone about 3,500 meters northwest of Valley of the Kings, include:
• 38 meters averaging 22.8 g/t gold, including 2.1 meters averaging 188.4 g/t gold.
• 53.5 meters averaging 72.5 g/t gold, including 0.5 meters averaging 6,700 g/t gold and 3,990 g/t silver.
"Following due diligence, we believe that as the owner and operator of Brucejack we can build on the strong foundations established by Pretium and deliver significant additional shareholder value by leveraging our experience in operating epithermal gold mines and applying our exploration and innovation expertise to realize potential resource and reserve growth," added Biswas.
To realize this potential, Newcrest has offered to buy all of the Pretium shares it does not already own for C$18.50 each. Pretium shareholders have the option to receive C$18.50 in cash or 0.8084 Newcrest shares in exchange for each Pretium share held. Those shareholders that do not select either option will receive C$9.25 in cash and 0.4042 Newcrest shares per Pretium share.
The Pretium board of directors unanimously recommends the buyout by Newcrest, which represents a 29% premium to the 20-day average price of Pretium shares.
"The acquisition of Pretium by Newcrest is an outstanding opportunity for the company and its shareholders, employees, First Nations partners, and the local communities in northwest British Columbia," said Pretium Resources President and CEO Jacques Perron. "The transaction delivers an immediate and compelling premium for Pretium shareholders that reflects the excellent work of our employees and contractors in developing and operating the Brucejack gold mine, while also offering an opportunity to benefit from potential upside as Newcrest shareholders."
This upside includes Red Chris, an open pit mine 70% owned by Newcrest that produced 88.3 million pounds of copper and 73,787 oz of gold during 2020.
Newcrest has much bigger plans for this Northern BC operation.
A prefeasibility study published in October outlined plans for an underground block cave mine at Red Chris that is forecast to produce 316,000 oz of gold annually over the first six years at a cost of negative US$144/oz after accounting for the value of the 80,000 metric tons of copper also recovered each year.
"The combination of Newcrest and Pretium will create the leading gold miner in British Columbia's Golden Triangle, operating both the Brucejack and Red Chris mines," said Biswas. "Both companies share similar philosophies with respect to safety, the environment, developing their people, engaging with local communities and investing for growth."
Newcrest's acquisition of Pretium is expected to close early in 2022.