B.C.’s next new gold mine is a go, at least from a regulatory standpoint.
Pretium Resources Inc. (TSX:PVG) has received a mine permit and has passed all provincial and federal environmental agency approvals, B.C. Mines and Energy Minister Bill Bennett announced July 31.
Construction is set to begin soon on the US$750 million underground gold and silver mine, located 65 kilometres north of Stewart.
“With Brucejack, an unprecedented eight new mines have now opened or started construction since June 2011 - an achievement unmatched by any other jurisdiction in Canada,” B.C. Energy and Mines Minister Bill Bennett said in a news release.
One of the darlings of the B.C. junior mining sector, Brucejack, though small, has high grades of gold.
It also has the cooperation of – and benefits agreements with – First Nations in the region and requires no tailings pond. Half the tailings will go back underground, and the rest will go into Brucejack Lake, which supports no fish population.
New gold mines face serious financing challenges, however, as gold continues its slide below the $1,100 per ounce mark – the point where some newer mines become uneconomic.
Brucejack’s economics are based on a sustaining cost of US$448 per ounce ($586 Canadian).
“A hallmark of the project is that it is a high-grade project, so that really offers a big benefit in times when you have uncertain gold prices or low gold prices,” said Michelle Romero, Pretium’s vice-president of corporate relations.
Even if gold goes to US$800 an ounce, Romero said, “it’s still a double-digit internal rate of return. It’s still a profitable gold mine at $800 gold.”
Last year, Pretium has raised $81 million from Zijin Mining Group Co., which took a 9.9% position in the project. About half of the balance of the US$750 million needed to put the mine into production will be raised through debt financing.
The Brucejack project will employ a workforce of up to 900 people during construction and 500 on a permanent basis over a 20-year period. The company is aiming to pour first gold in late 2017.
For the first eight years, Brucejack would produce 504,000 ounces of gold per year, dropping to 400,000 ounces per year after that.
Pretium’s stock closed at $6.53 per share on July 31, up 4.5%, following the announcement that it had received a mine permit.
