LAWRIE WILLIAMS: Newcrest’s Pretium gold mine acquisition moves it up the Tier 1 ladder
A few years back, at a conference meeting in Vancouver, a colleague and I were shown one of the most exciting core samples we had ever seen. We were shown the core by Bob Quartermain, who was about to launch Pretium Resources, whose Brucejack operation, from which the core sample came, has subsequently become one of Canada’s most productive and lowest cost gold mines. It has now effectively just been bought by Australian gold major, Newcrest, in an agreed acquisition deal worth a reported US$2.8 billion. Pretium’s Brucejack mine is rated as one of the world’s highest grade gold mining operations and will likely become the new jewel in the Newcrest crown.
Quartermain had been President and CEO of Silver Standard Resources – now SSR Mining – which had been the owner of the huge low grade Snowfield deposit of which Brucejack was an important part. Quartermain had built Silver Standard up from virtually nothing to become a $2 billion company, but in 2009 disagreements with the rest of the Board led to a somewhat rancorous parting of company. Quartermain, as I remember it, subsequently negotiated obtaining control of Snowfield/Brucejack from Silver Standard, with the latter retaining a major stake, and raising the money to bring Brucejack into production under his newly formed Pretium Resources banner. The remainder of Snowfield was subsequently sold off to Seabridge Gold, which owns the even bigger adjacent low grade KSM property, for $100 million.
After a major, and highly publicised, disagreement on Brucejack reserve size with independent consultancy Strathcona, Brucejack developed and expanded into what today is probably Canada’s most productive, and highest grade, operating gold mine with an annual gold output of around 350,000 ounces.
Quartermain resigned as Pretivm’s Executive Chairman at end 2019. He is a geologist by background and perhaps felt unsuited to lead such a large producing gold mining company. However there could well have been an element of having proved to the Silver Standard board that perhaps they should have stuck with him!
Australian headquartered Newcrest, which will become the new owner and operator of Brucejack, is the world’s eighth largest gold mining company. It already owns 5% of Pretium so is very well acquainted with Brucejack and its future potential. The Pretium acquisition will probably move it a couple of notches up the Tier 1 gold mining ladder bringing its annual gold output by end-2022 to comfortably above 2 million gold ounces a year.
While Brucejack’s current gold reserves give it around a 12 year life, a recent hugely promising high grade discovery on the Golden Marmot zone, some 3.5 km north of Brucejack’s main Valley of the Kings principal high grade section, suggests a longer operating life at a decent grade. This will further enhance the value of the Newcrest acquisition, and demonstrates there may also be further longer term growth potential at Brucejack.
The operation currently mines its gold at an all-in sustaining cost of around US$1,000 an ounce making it hugely profitable at current gold prices. Mining Brucejack is not without challenges though given that it is basically a low-grade deposit, but with some incredible high grade zones within it. Its proximity to the enormous low grade gold/copper porphyry deposits of Seabridge’s KSM and Snowfield could offer scope for a major joint venture operation should commodity prices rise sufficiently to make this a viable mining proposition. KSM and Snowfield combined probably comprise the world’s largest unmined low grade gold/copper resource.
