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Message: Pretium's stock slumps as gold sample consultant quits
VANCOUVER, Oct 9 (Reuters) - Shares in Pretium Resources Inc
lost more than a quarter of their value on Wednesday
after the independent consultant conducting a gold sampling
program on the company's flagship exploration project in Western
Pretium said that Strathcona Mineral Services Ltd, which was
conducting a 10,000 tonne bulk sample program at its Brucejack
project in northern British Columbia, had quit. It gave no
reason for Strathcona's resignation.
By early afternoon, Pretium's stock was down 27.5 percent,
or C$1.93, at C$5.08 on the Toronto Stock Exchange in heavy
trading of more than 2.5 million shares.
Strathcona President Graham Farquharson declined to comment
on the company's resignation from the project and Pretium was
not immediately available for comment.
Dan Rollins, an analyst at RBC Capital Markets, said in a
note to clients that a conversation with company management lead
him to believe that the resignation was due to a "difference in
opinion" between Strathcona and a second consultant working on
the project, Snowden Mining Industry Consultants, on what method
to use to estimate how much gold the project could contain.
That was echoed by Adam Graf, an analyst with Cowen and
Company, who added that the market was perhaps drawing the wrong
conclusion from Strathcona's resignation.
"You have a QP (Qualified Person) resign and everybody's
going to be saying, 'something must be wrong,'" he said. "My
understanding is that this is no reflection on the project.
Snowden is a perfectly good and reputable QP, and they are
Snowden Mining, which prepared the 2012 resource estimate at
the project, will now take over as the independent Qualified
Person and issue the final report on the program, Pretium said
in a news release on Wednesday morning.
Although still at an early stage of development, the
Brucejack project has garnered investor and industry attention
due to its high gold grades.
Brucejack's Valley of the Kings area hosts a probable
mineral reserve of 6.6 million ounces and the project is
expected to produce an average of 321,500 ounces of gold
annually over its life, according to a feasibility study
released in June. Pretium is targeting 2016 for the start of
commercial production at the planned underground mine.
The company's management is also well-regarded in the mining
industry and includes chief executive Robert Quartermain, who
was previously president of Silver Standard Resource Inc.
, owner of one of the world's largest silver mines.
Before Wednesday's slide by Pretium, the stock was down 46
percent so far this year, in line with other small gold stocks,
which have been hurt by a weaker gold price and a dearth of
(Reporting By Nicole Mordant and Julie Gordon in Vancouver and
Euan Rocha in Toronto; Editing by Kenneth Barry)
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