Top Picks 2016: Pretium Resources

01/12/2016 7:00 am EST


Stephen Leeb

Founder and Research Chairman, Leeb Group

Our Top Pick for speculative investors for 2016 is a company with a great shot at becoming a major mining player, forecasts growth stock expert Stephen Leeb, editor of The Complete Investor.

Pretium Resources (PVG) is now developing what will be a world-class gold mine in British Columbia. The property, called Brucejack, is slated to begin commercial production in 2017.

In December 2015, the company announced its completion of regional exploration drilling at Brucejack for the year, and meanwhile, it continues to advance the project towards 2017 production.

The company, also in 2015, received important provincial and federal government approvals, including an environmental assessment certificate and an environmental permit. The underground mine holds 6.9 million ounces of proven and probable gold reserves.

Assuming a base case of $1,100/ounce gold, the project carries a pre-tax net present value of $2.25 billion with an expected annual production of more than 500,000 ounces in the first eight years of production.

It has already attracted the attention of China’s state-owned Zijin Mining Group, one of China’s largest gold producers, who now owns about 10% of Pretium’s common stock.

The exploration-stage Pretium went public in late 2010. Besides the aforementioned Brucejack, the company owns the Snowfield project—which lies next to Brucejack in northern British Columbia—representing one of the world’s largest undeveloped goldfields.

Pretium has put this project on the backburner and doesn’t expect to exploit its sizeable assets until the Brucejack project goes fully operational.

Keep in mind that even with its strong management team, and relatively near-term production schedule, investors should still consider Pretium a speculative investment.

Its projects are located in very rugged terrain with no infrastructure to speak of in place. But once on line, the mine is anticipated to have a long life.

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