Pretium Resources Inc. (TSX:PVG) (NYSE:PVG) announces operating and financial results for the third quarter 2021 (see “Key Operating Metrics” and “Key Financial Metrics” tables below).

All amounts are expressed in thousands of 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 nine months ended September 30, 2021 and 2020, available on the Company’s website and on SEDAR and EDGAR.

Third Quarter 2021 Highlights

• Our first priority is the health and safety of our employees, contractors and neighbouring communities in northwest British Columbia. As of September 19, 2021, direct Pretivm employees achieved one year of work with no lost-time injuries, which is equivalent to approximately 1.75 million hours. This is a significant achievement in our commitment to Health and Safety. Additionally, our employees and contractors worked over 780,000 hours with no lost-time injuries during the third quarter of 2021.
• Newcrest Mining Limited is to acquire Pretivm for C$18.50 in cash or shares, subject to proration (see news release dated November 8, 2021). The acquisition will require the approval of Pretivm shareholders and is subject to regulatory approvals. The acquisition is expected to be completed in the first quarter of 2022. Pretivm’s Board of Directors have determined the acquisition is in the best interest of the Company and unanimously recommend that shareholders vote in favour of the acquisition.
• Production was 90,673 ounces of gold in the third quarter of 2021, compared with 86,136 ounces in the third quarter of 2020. Higher production reflects the increased tonnes milled in the period and the reduction in gold remaining in-circuit from 7,718 ounces at June 30, 2021 to 1,677 ounces at September 30, 2021, partially offset by lower head grade.
• Revenue of $146.8 million from the sale of 81,626 ounces of gold. Revenue in the third quarter 2021 represents a 5.2% decrease from the third quarter of 2020 driven primarily by a 7.0% decrease in the average realized price⁽¹⁾ of gold to $1,799 per ounce, partially offset by a 0.7% increase in gold ounces sold. Gold sold in the quarter was lower than production due to mining of higher grade stopes at the end of the quarter and timing of gold sales.
• Another profitable quarter, with $0.12 in net earnings per share and $0.13 in adjusted earnings per share^(1,2). Net earnings were $22.0 million and adjusted earnings^(1,2) were $24.3 million for the quarter, compared to net earnings of $31.2 million and adjusted earnings^(1,2) of $32.0 million in the third quarter of 2020. The decrease in net earnings was primarily due to lower realized gold prices and higher production costs as well as higher relative deferred income tax expenses, partially offset by decreases in corporate and administrative, exploration and evaluation and interest and finance expenses.
• EBITDA⁽¹⁾ of $67.0 million and free cash flow⁽¹⁾ of $23.6 million. EBITDA⁽¹⁾ and free cash flow⁽¹⁾ in the third quarter 2021 decreased compared to the third quarter 2020 ($77.9 million and $66.8 million, respectively) due to substantial investment in expansion capital expenditures over the summer construction period at the Brucejack Mine, lower revenues and higher production costs reflecting higher levels of throughput and increased drilling.
• AISC⁽¹⁾ of $1,071 per ounce of gold sold is within annual guidance. AISC⁽¹⁾ in the third quarter 2021 was higher than AISC⁽¹⁾ of $1,016 per ounce of gold sold in the third quarter of 2020 due to the strengthening Canadian dollar and higher production costs.
• We remain on track to achieve our 2021 guidance of 325,000 to 365,000 ounces of gold produced at an AISC⁽¹⁾ between $1,060 and $1,190 per ounce of gold sold with $40.0 – $45.0 million of sustaining capital expenditures and $65.0 – $75.0 million of expansion capital expenditures.
• Cash and cash equivalents increased to $213.4 million as at September 30, 2021 from $174.8 million as at December 31, 2020 and included the repayment of $5.9 million in debt in the quarter. As at September 30, 2021, we had long term debt of $189.8 million and available liquidity of $461.8 million including cash and cash equivalents and the undrawn revolving portion of our Amended 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 under the Term Facility.
• Underground resource expansion drilling continues to confirm the opportunity to add to the mine life at Brucejack, while a high-grade gold exploration discovery affirms the district scale potential of Brucejack. Resource expansion drilling intercepted high-grade gold mineralization in the North Block, directly adjacent to existing infrastructure, demonstrating the potential to extend the Valley of the Kings deposit to the north. Near-mine exploration has led to the discovery of a new mineralized zone at Golden Marmot which demonstrates the district-scale potential of Brucejack. Additional results from the resource expansion and near-mine exploration drill programs are expected to continue to be released through the fourth quarter of 2021 and the first quarter of 2022.
• Our 2020 Sustainability Report highlighting our progress in health and safety, contributions to the local communities and our environmental management performance was released in the third quarter. We strive to be a leader in environmental, social and governance (“ESG”) performance and are proud of the sustainable operations we have been able to achieve at our Brucejack Mine.

¹ Refer to the “Non-IFRS Financial Performance Measures” section for a reconciliation of these amounts.
² Refer to the revised definition of adjusted earnings in the “Non-IFRS Financial Performance Measures” section.

Third Quarter 2021 Operations Overview

Key Operating Metrics

Abbreviations: t (tonnes), tpd (tonnes per day), g/t (gram per tonne) and oz (ounces).

Mining, processing and production

During the three months ended September 30, 2021, a total of 348,026 tonnes of ore, equivalent to a throughput rate of 3,783 tonnes per day, were processed. This was a 6.9% increase from the comparable period in 2020, in which a total of 325,420 tonnes of ore, equivalent to a throughput rate of 3,537 tonnes per day, were processed.

The mill feed grade averaged 7.8 grams per tonne gold for the third quarter of 2021, which was 9.3% lower than the 8.6 grams per tonne in the comparable period in 2020. Gold recovery for the third quarter of 2021 was 97.1% compared to 97.6% in the comparable period in 2020.

For the nine months ended September 30, 2021 a total of 1,019,563 tonnes of ore, equivalent to a throughput rate of 3,735 tonnes per day, were processed at a mill feed grade of 8.4 grams per tonne. The tonnes processed were 2% higher for the first nine months of 2021 compared to the prior year period, while mill feed grade and gold recovery were consistent with the comparable period in 2020.

We continued our lateral development at an advanced rate during the three months ended September 30, 2021, achieving approximately 1,140 meters per month (2020 – 1,029 meters per month) for a total of 3,420 meters completed during the third quarter 2021 (2020 – 3,086 meters).

Diamond drilling activity continued to progress during the third 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 53,193 meters of diamond drilling was completed for the three months ended September 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 September 30, 2021, we had 292,202 drilled tonnes of stope inventory.

During the three months ended September 30, 2021, the Brucejack Mine produced 90,673 ounces of gold and 112,051 ounces of silver. For the comparable period in 2020, we produced 86,136 ounces of gold and 130,975 ounces of silver. The increase in gold production was primarily due to increased mill throughput and the reduction in gold remaining in-circuit from 7,718 ounces at June 30, 2021 to 1,677 ounces at September 30, 2021, partially offset by lower head grade.

For the nine months ended September 30, 2021, the Brucejack Mine produced 259,551 ounces of gold and 347,956 ounces of silver compared to 259,443 ounces of gold and 364,223 ounces of silver in the comparable period of 2020.

Acquisition by Newcrest Mining Limited

On November 8, 2021, the Company announced that it had entered into a binding agreement with Newcrest Mining Limited under which Newcrest agreed to acquire all of the outstanding shares of Pretivm that it does not already own. Pursuant to the Transaction, Pretivm shareholders will have the option to elect to receive C$18.50 per Pretivm share in cash or 0.8084 Newcrest shares per Pretivm share, representing share consideration of C$18.50 based on the Canadian dollar equivalent of the 5 day volume-weighted-average-price of Newcrest shares on the Australian Securities Exchange ending on November 8, 2021, subject to proration to ensure aggregate cash and Newcrest share consideration each represent 50% of total transaction consideration. Pretivm shareholders who do not elect cash or Newcrest shares (subject to proration) will receive default consideration of C$9.25 per Pretivm share in cash and 0.4042 Newcrest shares per Pretivm share.

The Transaction, which is not subject to a financing condition, will be implemented by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia) and will require the approval of 66 2/3% of the votes cast by (i) the holders of Pretivm’s common shares and (ii) holders of options to acquire shares of Pretivm, voting together as a single class, at a special meeting of Pretivm securityholders to be held to consider the Transaction (the “Special Meeting”). In addition to approval by Pretivm shareholders and optionholders, the Transaction is also subject to the receipt of court approval, regulatory approvals, including approval under the Investment Canada Act and competition clearances in Canada, and other customary closing conditions for transactions of this nature. The Transaction is expected to be completed in the first quarter of 2022.

The Arrangement Agreement provides for customary deal-protection provisions, including a non-solicitation covenant on the part of Pretivm and a right for Newcrest to match any Superior Proposal (as defined in the Arrangement Agreement). The Arrangement Agreement includes a termination fee of C$125 million, payable by Pretivm, under certain circumstances (including if the Arrangement Agreement is terminated in connection with Pretivm pursuing a Superior Proposal).

A special committee comprised entirely of independent directors of Pretivm unanimously recommended the Transaction to the Board of Directors of Pretivm. The Board of Directors has evaluated the Arrangement Agreement with the Company’s management and legal and financial advisors and, following the receipt and review of a unanimous recommendation from the Special Committee, the Board of Directors unanimously determined that the Arrangement Agreement is in the best interest of the Company, and resolved to recommend that the Company’s shareholders vote in favour of the Transaction, all subject to the terms and conditions contained in the Arrangement Agreement.

Resource expansion drilling results

The 2021 resource expansion drill program was designed to test for Valley of the Kings style mineralization to the north and at depth adjacent to the defined Mineral Resource and the potential extension of mineralization underground towards Gossan Hill and the Bridge Zone.

On September 13, 2021 we announced Phase 3 drill results from the North Block resource expansion drill program. Phase 3 of the North Block resource expansion drill program was initiated to follow-up on the high-grade gold intersected directly to the north of the Valley of the Kings deposit during Phase 1 and Phase 2 of the North Block drill program.

Phase 3 results include seven intersections assaying above 1,000 grams per tonne gold. Drill hole VU-3255 assayed 493.2 grams per tonne gold over 15.0 meters, including 7,360 grams per tonne gold over 1.0 meter. Drill hole VU-3242 assayed 676.8 grams per tonne gold over 7.0 meters, including 3,150 grams per tonne gold over 1.5 meter. High-grade gold mineralization was intercepted up to 450 meters from the current Valley of the Kings resource shell and up to 300 meters from the West Zone resource shell.

One drill hole from each drill fan was extended to test the exploration potential to the north of the North Block Zone. These extended holes intersected stockwork veining and high-grade gold mineralization along trend from the West Zone. An intersection from drill hole VU-3252 assayed 3,660.0 grams per tonne gold over 1.0 meter at 330.5 meters down hole. See our news release dated September 13, 2021 for more information, including assay results and discussion of the process for the preparation and analysis of samples .

To follow-up on the success of the first three phases, Phase 4 of the North Block drilling program was completed to test the potential to the west of the first three phases of drilling, and assay results are pending.

Surface exploration drilling results

On October 25, 2021 we announced a high-grade gold exploration discovery at the Golden Marmot Zone, located 3.5 kilometers north of the Valley of Kings deposit and accessible via an exploration trail from the Brucejack Mine. Assay results have been received for the first nine drill holes, of which eight drill holes intersected gold.

A highlight was drill hole SU-786, which intersected 72.5 grams per tonne gold over 53.5 meters, including 6,700 grams per tonne gold and 3,990 grams per tonne silver over 0.5 meters. The 2021 drill program at Golden Marmot consisted of 26 drill holes totaling 8,466 meters. Assay results from the remaining 17 drill holes are expected to be released early next year. See our news release dated October 25, 2021 for more information, including assay results and discussion of the process for the preparation and analysis of samples.

COVID-19 management

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.

While we manage active cases of COVID-19 at the Brucejack Mine from time to time, there have been no outbreaks of COVID-19 declared by the BC Northern Health Office at the Brucejack mine during or since the end of the third quarter 2021.

Third Quarter 2021 Financial Overview

Key Financial Metrics

Abbreviations: t, tpd, g/t and oz.

1. Amounts included in the table above for the three and nine months ended September 30, 2020 have been restated to account for the voluntary change in accounting policy related to exploration and evaluation expenditures. Refer to the “Change in Accounting Policy” section at the end of this news release.
2. Refer to the “Non-IFRS Financial Performance Measures” section at the end of this news release.
3. In addition to the voluntary change in accounting policy related to exploration and evaluation expenditures, adjusted earnings has been restated to reflect management’s new definition as described in the “Non-IFRS Financial Performance Measures” section.

Gold sales and revenue

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 then decreasing in the third quarter. The gold price in the third quarter of 2021 was lower than in the comparative 2020 period while the price for the nine months ended September 30, 2021 was higher than in the comparative period. The average London Bullion Market Association AM and PM market price over the three and nine months ended September 30, 2021 was $1,790 (2020 – $1,909) and $1,800 (2020 – $1,736), respectively per ounce of gold.

For the three months ended September 30, 2021, we sold 81,626 ounces of gold, a 0.7% increase from 81,068 ounces of gold sold in the comparable period in 2020. The increase in gold ounces sold was due to higher production mostly offset by changes in inventory due to the timing of sales relative to production and the processing of higher grade stopes late in the quarter. The average realized gold price⁽¹⁾ was $1,799, a 7.0% decrease from the average realized gold price⁽¹⁾ in the comparable period in 2020.

Revenue of $146,825 for the third quarter 2021 decreased by 5.2% from $154,876 in the third quarter 2020. The decrease in revenue was primarily the result of a decrease in the average realized gold price⁽¹⁾.

For the nine months ended September 30, 2021 we sold 247,951 ounces of gold, a 3.7% decrease from 257,576 ounces of gold sold in the comparable period in 2020. The reduction in gold ounces sold was due to changes in inventory due to the timing of sales relative to production, the processing of higher grade stopes late in the quarter. The average realized gold price⁽¹⁾ was $1,802, a 2.5% increase from the average realized gold price⁽¹⁾ in the comparable period in 2020.

Revenue of $441,561 for the nine months ended September 30, 2021 was 1.4% lower than the $448,003 in the comparable period of 2020 as the increase in the average realized gold price was more than offset by the impact of lower ounces of gold sold.

Total cash costs⁽¹⁾ and AISC⁽¹⁾

Total cash costs⁽¹⁾ for the three months ended September 30, 2021 were $862 per ounce of gold sold compared to $755 per ounce of gold sold in the comparable period in 2020. Total cash costs⁽¹⁾ increased primarily due to higher production costs.

AISC⁽¹⁾ for the three months ended September 30, 2021 totaled $1,071 per ounce of gold sold compared to $1,016 per ounce of gold sold in the comparable period in 2020. AISC⁽¹⁾ increased for the same reasons as total cash costs⁽¹⁾ as well as higher levels of sustaining capital expenditures. Sustaining capital expenditures increased for the three months ended September 30, 2021 due to comprehensive drill programs and improvement‐oriented capital expenditures, partially offset by the sale of a cable bolter in the quarter.

The impact of the strengthening CAD on total production costs during the third quarter of 2021 increased total cash costs⁽¹⁾ and AISC⁽¹⁾ by approximately $35 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⁽¹⁾ and AISC⁽¹⁾ by approximately $8 per ounce of gold sold in the third quarter of 2021, compared to approximately $25 in the comparable period of 2020.

Total cash costs⁽¹⁾ for the nine months ended September 30, 2021 were $849 per ounce of gold sold compared to $763 per ounce of gold sold in the comparable period in 2020. Total cash costs⁽¹⁾ increased primarily due to higher production costs as well as a lower amount of gold ounces sold in the period.

AISC⁽¹⁾ for the nine months ended September 30, 2021 totaled $1,059 per ounce of gold sold compared to $971 per ounce of gold sold in the comparable period in 2020. AISC⁽¹⁾ increased for the same reasons as total cash costs⁽¹⁾ as well as due to higher levels of sustaining capital expenditures.

Sustaining capital expenditures increased for the nine months ended September 30, 2021 due to comprehensive drill programs, improvement‐oriented capital expenditures and the purchase of an electric Z50 truck and deposits on the additional six electric trucks in the fleet. This was partially offset by the sale of a cable bolter in the third quarter of 2021.

The impact of the strengthening CAD on total production costs during the first nine months of 2021 increased total cash costs⁽¹⁾ and AISC⁽¹⁾ by approximately $62 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⁽¹⁾ and AISC⁽¹⁾ by approximately $13 per ounce of gold sold in the first nine months of 2021, compared to approximately $27 in the comparable period of 2020.

Net earnings, EBITDA⁽¹⁾ and adjusted earnings⁽¹⁾

Net earnings and comprehensive earnings for the three month and nine months ended September 30, 2021 were $22,046 and $79,366 respectively, compared to $31,215 and $76,092 for the comparable periods in 2020. The decrease in net earnings in the third quarter of 2021 was primarily attributed to lower revenues and higher cost of sales, partially offset by decreases in interest and finance expense on the Loan Facility, corporate administrative costs and deferred income tax expenses. The increase in earnings for the nine months ended September 30, 2021 was primarily due to lower interest and finance expense, corporate administrative costs and deferred income tax expenses, partially offset by lower revenues and higher cost of sales.

EBITDA⁽¹⁾ of $67,011 and $207,820 in the third quarter and first nine months of 2021, respectively, decreased from $77,929 and $220,326 in the respective comparable periods of 2020 primarily due to decreased revenues and higher production costs.

Adjusted earnings⁽¹⁾ for the three and nine months ended September 30, 2021 were $24,328 and $78,150, respectively, compared to $31,985 and $80,152 for the respective comparable periods in 2020. Adjusted earnings were impacted by the same reasons as net earnings as well as fluctuations in foreign exchange rates during the period.

Liquidity and Capital Resources

Cash Flow

1. Amounts included in the table above for the three and nine months ended September 30, 2020 have been restated to account for the voluntary change in accounting policy related to E&E expenditures. Refer to the “Change in Accounting Policy” section at the end of this news release.
2. Refer to the “Non-IFRS Financial Performance Measures” section at the end of this news release.

During the three months ended September 30, 2021, we incurred $9,351 on sustaining capital expenditures compared to $9,151 in the comparable period in 2020. Sustaining capital expenditures during the period included resource drilling, a down payment for the six electric haul trucks, underground development, and purchase of surface operations trucks and trailers. In the comparable period in 2020, sustaining capital expenditures included underground development, resource drilling, purchase of one reverse circulation drill, repair of mill building exterior walls and construction costs of the bulk gravity lab.

During the three months ended September 30, 2021, we incurred $31,882 on expansion capital expenditures compared to $3,552 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, expansion capital expenditures included construction costs of the new mill dry.

Cash used in investing activities for the nine months ended September 30, 2021 was $73,093 compared to $28,412 for the comparable period in 2020. For the nine months ended September 30, 2021, cash used in investing activities related to sustaining and expansion capital expenditures in the amount of $77,229 (2020 – $29,016).

During the nine months ended September 30, 2021, we incurred $26,243 on sustaining capital expenditures compared to $20,343 in the same period in 2020. Sustaining capital expenditures incurred during the period included resource drilling, the purchase of one electric haul truck and down payment for the remaining fleet of six trucks, underground development and purchase of surface operations trucks and trailers. In the comparable period in 2020, sustaining capital expenditures included purchase of three reverse circulation drills, underground development, resource drilling, repair of mill building exterior walls and construction costs of the bulk gravity lab.

During the nine months ended September 30, 2021, we incurred $60,480 on expansion capital expenditures compared to $10,084 in the same 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, expansion capital expenditures included construction costs of the new mill dry and apron feeder.

Free cash flow⁽¹⁾ for the three and nine months ended September 30, 2021 was $23,587 and $125,296, respectively, compared to $66,809 and $191,359 for the respective comparable periods in 2020.

Our cash and cash equivalents as at September 30, 2021 totaled $213,450, increasing by $38,697 from $174,753 as at December 31, 2020. The increase in cash and cash equivalents was primarily due to free cash flow⁽¹⁾ of $125,296 less cash used in financing activities of $86,896 for the nine months ended September 30, 2021.

At September 30, 2021, the undrawn portion of the Amended Loan Facility was $248,352 with $1,648 (C$2,100) used for a letter of credit supporting a reclamation deposit requirement.

On August 9, 2021, we refinanced the Loan Facility with the Amended Loan Facility. The Amended Loan Facility consists of a $100,000 Term Facility and a $250,000 Revolving Facility. The Amended Loan Facility matures on August 8, 2025.

Qualified Persons

Patrick Godin, P.Eng., Vice President and Chief Operating Officer, Pretium Resources Inc. is a Qualified Person as defined in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”), and has reviewed and approved the scientific and technical information contained in this news release, other than in respect of our drilling programs.

Stephanie Wafforn, P.Geo., Pretivm’s Resource Manager is the QP, as defined by NI 43-101, responsible for our drilling programs and has reviewed and approved the scientific and technical information in this news release related thereto.

About Pretivm

Pretivm is a growing intermediate gold producer with the 100%-owned, high-grade gold underground Brucejack Mine located in northwestern BC. We strive for operating excellence and our first priority is the health and safety of our employees, contractors and neighbouring communities. We are committed to the principles of sustainable development and conducting our activities in an environmentally and socially responsible manner.