Pretium - PVG

[Fiat Metaler]

Here is an updated chart that shows the relative performance of PVG, SA and NAK. I used the start date of this thread as the beginning of the evaluation.

Definitely not impressive, but, considering the environment - not too shabby. I dont really follow NAK - anyone know why its been smashed so much? Is it simply a belief that the grades are too small and the costs too great for it to ever get mined?

I didn't recommend NAK until it got really cheap. that is really an unfair comparision.

a few years ago, NAK was at $7, rallied to $20 on metals prices, then has fallen below $3. The project is huge and has environmental concerns that have been knwon for a long time. an environmental agency put out a report indicating that those concerns may take longer to resolve.

SA and PVG are next door to each other and will have similar capex requirements. the only difference is that PVG trades for 2+ times as much as SA and a portion of PVG is high grade. i think its pretty far fetched to assume PVG can build a mine on its own, but if they do then SA will benefit from PVG's investment in infrastructure.

With PVG costing twice as much as SA, you are really assuming that their mine will be built sooner with less dilution. I dont like the risk/reward tradeoff of that because both SA and PVG require a 20 mile train tunnel to be cut. if all of PVG was high grade, it would be one thing but the portion which is high grade is less than half and not large enough by itself to justify the capex. so in other words, why invest in PVG when you can invest in SA?

the infrastructure needs at NAK are less challenging/expensive because they are not in high mountains but the negative is that they are in the 'watershed' for the salmon fishing area. If i had to guess, i would say NAK gets built first because its in Alaska rather than BC and because it already has a project partner. The environmental issues are nothing to sneeze at but will get worked through with time and money. however, currently, the stocks are priced like PVG will be built very soon and NAK next to never, and SA somewhere in between.

[Strawboss]

Good analysis FM.

With Pretium - I think its only a matter of time before they stumble across a zone that has high grade over lots of meters. That high grade gold came from somewhere and its doubtful that the distribution is entirely smooth (like a neat blanket that has been spread out).

The comparison on the chart is simply from the date I started this thread. I figured including all 3 stocks made sense since all have been used in this thread and are valid apples to apples comparisons with each other.

I didn't recommend NAK until it got really cheap. that is really an unfair comparision.

a few years ago, NAK was at $7, rallied to $20 on metals prices, then has fallen below $3. The project is huge and has environmental concerns that have been knwon for a long time. an environmental agency put out a report indicating that those concerns may take longer to resolve.

SA and PVG are next door to each other and will have similar capex requirements. the only difference is that PVG trades for 2+ times as much as SA and a portion of PVG is high grade. i think its pretty far fetched to assume PVG can build a mine on its own, but if they do then SA will benefit from PVG's investment in infrastructure.

With PVG costing twice as much as SA, you are really assuming that their mine will be built sooner with less dilution. I dont like the risk/reward tradeoff of that because both SA and PVG require a 20 mile train tunnel to be cut. if all of PVG was high grade, it would be one thing but the portion which is high grade is less than half and not large enough by itself to justify the capex. so in other words, why invest in PVG when you can invest in SA?

the infrastructure needs at NAK are less challenging/expensive because they are not in high mountains but the negative is that they are in the 'watershed' for the salmon fishing area. If i had to guess, i would say NAK gets built first because its in Alaska rather than BC and because it already has a project partner. The environmental issues are nothing to sneeze at but will get worked through with time and money. however, currently, the stocks are priced like PVG will be built very soon and NAK next to never, and SA somewhere in between.

[Fiat Metaler]

Good analysis FM.

With Pretium - I think its only a matter of time before they stumble across a zone that has high grade over lots of meters. That high grade gold came from somewhere and its doubtful that the distribution is entirely smooth (like a neat blanket that has been spread out).

The comparison on the chart is simply from the date I started this thread. I figured including all 3 stocks made sense since all have been used in this thread and are valid apples to apples comparisons with each other.

well your time period is critical because it implies a very specific price. I like NAK now because you can get it for less than a third of what it cost when this thread started (I sold NAK then, and am buying it now).

I am largely indifferent to these 3 companies - its mostly a matter of price. Oh, there are important differences among them. SA and PVG are in Canada in the mountains, and NAK is in Alaska in relatively easier terrain. SA and PVG are further along with engineering studies, and have lesser environmental concerns than NAK, but likely will have far higher infrastructure costs to traverse the mountains and won't be able to build a mill on site. None of them have power or good transport now, but the cost to bring this to NAK is least. All are low grade, although some of PVG is high grade. NAK has a partner who has committed funds through development, PVG and SA do not (likely dilution). so there are plusses and minusses to each of them.

i'm not against PVG. The problem i have with it is its at about 3X its IPO price becuase of the hype about its high grade zones. Well, the valley of the kings has about 5 million ounces of gold M&I, and there is almost another million high grade in the west zone which is really a very separate area. So pretium is a hybrid low grade high grade company. The amount of high grade ounces doesn't justify its rich valuation, particularly at this stage in its development and its location, and neither does its low grade resources. To put this in perspective, NAK and SA have 10 times that amount in low grade gold in the measured and inferred category.

Pretium provides a nice graph comparing these companies at slide 29 here on its website: http://www.pretivm.com/Investors/Pre...s/default.aspx

Market caps right now - PVG - $1.4 B; SA = $650 million (less than half); and NAK - $225 million (less than one sixth).

I think quartermain might get some of PVG into development first, but that doesn't go far enough to justify such a larger market cap.

[StateofJefferson]

Some additional thoughts:

Natural Resource Holdings just completed a study of Global Gold Mines & Deposits 2012 Ranking. Lots of good information in this report.

One part of the study is the Top 50 Undeveloped Deposits by Global In-Situ Resources

#1 is the Pebble Deposit with Contained Ounces (perhaps a combination of M & I) of 107,300,000 ounces. Two potential problems here. The grade per ton is .33. This is the lowest grade of the Top 50 Undeveloped Deposits. Is this going to be financially feasible with rising costs and in particular rising energy costs? The second potential problem is does this ever get permitted? This is one of the finest steelhead and salmon fisheries in the State of Alaska. The environmental community is lined up and coordinated to stop this project. I sit on the board of a major fisheries non profit and I can assure you that the environmental community in Alaska, Canada and mainland USA is going to fall on their sword to stop the Northern Dynasty/Anglo American project.

#2 of the largest projects is the KSM Deposit with 63,979,000 Contained Ounces. This is the Seabridge Gold project. The grade is .51 grams per ton. Once again, with rising costs does this grade get developed? I do not know.

#6 project is Snowfield. This is Pretium. They show Contained ounces of 34,950,000. Same potential problem as Pebble and Seabridge with just .49 grams gold per ton. Does it get developed?

However #19 project on the list is Brucejack. This is Pretium's project next to Snowfield. This project has Contained Ounces of 17,056,000 with a grade of 17.45 grams per ton. This is by far the highest grade shown on the Top 50 Undeveloped Deposits. This project gets developed and perhaps Pretium will dilute but I would suspect Pretium is bought out by a major at a nice premium.

In any event, Pretium has been my top performing stock over the past 12 months and this is why it is in my portfolio.

[Fiat Metaler]

Some additional thoughts:

Natural Resource Holdings just completed a study of Global Gold Mines & Deposits 2012 Ranking. Lots of good information in this report.

One part of the study is the Top 50 Undeveloped Deposits by Global In-Situ Resources

#1 is the Pebble Deposit with Contained Ounces (perhaps a combination of M & I) of 107,300,000 ounces. Two potential problems here. The grade per ton is .33. This is the lowest grade of the Top 50 Undeveloped Deposits. Is this going to be financially feasible with rising costs and in particular rising energy costs? The second potential problem is does this ever get permitted? This is one of the finest steelhead and salmon fisheries in the State of Alaska. The environmental community is lined up and coordinated to stop this project. I sit on the board of a major fisheries non profit and I can assure you that the environmental community in Alaska, Canada and mainland USA is going to fall on their sword to stop the Northern Dynasty/Anglo American project.

#2 of the largest projects is the KSM Deposit with 63,979,000 Contained Ounces. This is the Seabridge Gold project. The grade is .51 grams per ton. Once again, with rising costs does this grade get developed? I do not know.

#6 project is Snowfield. This is Pretium. They show Contained ounces of 34,950,000. Same potential problem as Pebble and Seabridge with just .49 grams gold per ton. Does it get developed?

However #19 project on the list is Brucejack. This is Pretium's project next to Snowfield. This project has Contained Ounces of 17,056,000 with a grade of 17.45 grams per ton. This is by far the highest grade shown on the Top 50 Undeveloped Deposits. This project gets developed and perhaps Pretium will dilute but I would suspect Pretium is bought out by a major at a nice premium.

In any event, Pretium has been my top performing stock over the past 12 months and this is why it is in my portfolio.

all good points.

some additional ones.

pebble - early days here. you are right that it is so big that it will be a lightning rod for enviros. there are already west-coast restaurants lining up to claim pebble-free or some such nonsense. yet, mining is in the state's constitution, not fishing. so i think it gets built on the long time frame 2017 they have planned. yes, it is low grade but it has 3 things going for it. first, it will be open pit. second, it has lots of copper and moly, so the cost net of those credits is economic. third, its a lot cheaper to build because its a single resource on flat land, not several different resources on mountain tops.

seabridge - SA has a market cap of 3X NAK. don't know if its worth it, but its cheap relative to PVG.

PVG - SSRI is still a major shareholder, so a backdoor way to play this is to buy SSRI.

[Strawboss]

Pretium gave a buy signal today.

[Fiat Metaler]

relative valuations of NAK, SA, and PVG are starting to compress; undervalued companies NAK and SA have been increasing over the past month while overvalued companies like PVG have been giving back some of their gains. At the end of the day, NAK has the most gold (not to mention copper) so its the biggest lottery ticket of them all.

[Fiat Metaler]

The World's Greatest Investment Ideas: Resource 'Hoarding'
An Exclusive Interview with Rick Rule

The Daily Crux: Rick, of all the ways to invest in resources, the strategy of "hoarding" may be the simplest… But it can also be extremely profitable – and relatively safe – when done correctly. Before we get into how this idea works, can you define what hoarding is?

Rick Rule: Sure. Hoarding is simply buying resources in the ground and holding them, rather than mining or extracting them. Companies that do this are known as "hoarders."

Crux: What is the benefit of hoarding?

Rule: To fully appreciate the beauty of the strategy, you must first understand a fact about the mining business: It's a terrible business.

It's a business where your asset base – the resources in the mine – is declining consistently over time. You have huge capital costs for building the mines and maintaining expensive equipment. And you're often exposed to huge political risks because you can't just pack up a mine and move it. On top of all that, many mining executives are less than shareholder-friendly.

So when you buy a mining stock, you must understand that is the business you're buying into.

Now imagine if you could get many of the positives of owning the resources in a mine, but without the negatives associated with mining. That is the benefit of hoarding.

Hoarders accumulate mines and undeveloped resource deposits, and basically just sit on them. Because they don't operate mines, they don't have the huge capital costs and risks of traditional mining companies.

Their share price is simply a leveraged play on the price of the underlying resource. When prices rise, the value of the company's deposits increase as well.

Crux: You've been intimately involved with this strategy… Can you give us some examples of how profitable it can be?

Rule: Certainly. During the last secular bear market in resources during the 1990s and early 2000s, we were able to employ this strategy with great success.

At the time, there was no constituency for resource stocks at all. A group of us in the business came to the realization that exploring for things like heavy oil, natural gas, copper, uranium, and even gold and silver made no sense at the time. But we could buy the successful efforts of prior explorers – where the deposits weren't profitable at the then-prevailing prices – often for pennies on the dollar. Because we believed that commodity prices had nowhere to go but up, this made perfect sense.

As an example, during that time we financed Silver Standard – one of the world's biggest owners of silver mines – at $0.72 a share, or about $2 million. But instead of mining the deposits, we just held them. As other proven mines became available, we bought them, too. When silver soared in the bull market of the 2000s, it became a $1 billion-plus company.

Another great example was Paladin Resources, a uranium hoarder. It was buying uranium when absolutely nobody cared about it. We bought it at $0.10 a share, and I remember selling some of that stock at $10 a share.

As you can see, the leverage these companies can provide to rising commodity prices is just incredible.

Crux: What are the guidelines for hoarding stocks?

Rule: The ideal time to buy these stocks is at the bottom of a resource cycle or during times of great pessimism. When the price of a particular commodity is low, mining companies in the sector can't produce a profit, and most investors are completely uninterested.

It's at these times when the hoarder stocks are at their cheapest, safest, and most attractive. Take uranium after the Fukushima disaster as a great example.

Of course, because hoarders are so leveraged to the price of the underlying resource, they can be a good speculation on rising prices and a hedge against inflation. Just remember that leverage is a double-edged sword, so the volatility will typically be much greater than that of the actual commodity.

I should also mention that successfully owning these stocks requires a great deal of discipline and patience. These stocks can return hundreds and hundreds of times your money, but they often require several years to do so.

Are you prepared to wait five, 10, or more years for those kinds of returns? Most investors would impulsively say yes. But in practice, many have trouble holding a stock for 10 weeks, never mind 10 years. People want immediate gratification. But in my experience, immediate gratification is very seldom on offer in the financial markets.

Crux: That's a great point… Are there any significant risks to owning these stocks?

Rule: Because they aren't involved in the mining business, these stocks are generally less risky than the miners… But there are still some risks.

While they don't have to pay the huge capital costs of mining, they do still have to pay for expenses like property taxes, fees, and overhead. They don't mine, so they're typically cash flow negative. This means they can get into trouble and be extraordinarily volatile during times when access to capital becomes difficult. You must be prepared for that.

Also, because these company's resource estimates are usually based on drilling and assays rather than actual production, the stocks trade at a significant discount to active mining companies. This isn't necessarily a risk, but it's another good reason to concentrate your purchases at times of great pessimism.

As I frequently say, you have to be a contrarian or you will be a victim.

Crux: Thanks for the insight, Rick.

Rule: My pleasure. Thanks for having me.

[Fiat Metaler]

Northern Dynasty (NAK) up 25% today, 40% this past month.

[Fiat Metaler]

Seabridge reported bonanza grades at a new zone; still looking for the core of the pophyry

[Fiat Metaler]

Seabridge had a real nice move today - up more than 10%! Somehow Pretium managed to lose 3% today, not sure how that was possible when everything PM was going up.

Pretium and Seabridge presented at the Denver Gold Forum - you can hear their CEO's give 15 minute presentations and see updated slide decks from these links.

http://www.denvergoldforum.org/dgf12...-webcast/SA:US

slide 23 re Courageous Lake shows fantastic leverage to higher gold prices.



Pretium

http://www.denvergoldforum.org/dgf12...webcast/PVG:CN

if you play around with that url, you can find presentations from most gold companies you have heard of, although NAK did not present.

[Strawboss]

Gotta hand it to NAK - it has been kicking Pretium's butt the past couple of weeks.

I have recently been mentally grouping the 3 companies together and watching their performance to each other - the ebbs and flows. Might even come up with a trading system around the 3 of them.

[Fiat Metaler]

I have recently been mentally grouping the 3 companies together and watching their performance to each other - the ebbs and flows. Might even come up with a trading system around the 3 of them.

exactly, that is the way to look at them. all 3 are long term options on the metals prices. NAK has a lot of copper, so it tends to be under priced. SA and PVG are neighbors and ought to be priced similarly. When PVG came out, it was priced at half of SA. Now SA is priced at half of PVG. so look at which is priced attractively and buy that one.

look at the news at SA and especially the video presentation. They are finding some high grade stuff at KSM and still haven't found the source-mother lode. They drilled where the oldprevious owners' camp was and found some high grade gold. Also, at Courageous Lake, they have a huge area open to discovery. There is a slide in thepresentation which explains the economics - its profitable now but marginally but with higher sustained metals prices the thing really takes off.

[phideaux]

More narrow bonanza intercepts.

Pretium Resources Inc.: Valley of the Kings Drilling Encounters Seven Intersections Grading Over 2,000 Grams Per Tonne Gold

Long detailed PR here: http://finance.yahoo.com/news/pretiu...090000019.html

[Fiat Metaler]

Here is an updated chart that shows the relative performance of PVG, SA and NAK. I used the start date of this thread as the beginning of the evaluation.

Definitely not impressive, but, considering the environment - not too shabby. I dont really follow NAK - anyone know why its been smashed so much? Is it simply a belief that the grades are too small and the costs too great for it to ever get mined?

you know the wonderful thing in life is there are choices. PVG is the most expensive of these three. At the start of this thread, it was NAK, which is why NAK wasn't mentioned until its price corrected. NAK has increased by more than 50% since i mentioned it, and its still priced more attractively than SA and PVG.

Yes, environmental permitting will be challenging but this is Alaska, not Marin County. And similar projects were permitted in British Columbia.

Anyway, on a relative value basis, NAK is still best. Ole Bob Quartermain may be the best at promoting his company, no argument there, but frankly its current valuation is more than fully valued so there is a limit to what further promotion can accomplish imho.

[Montecristo]

Investors dilemma.

I didn't think this stock would approach 10 again, now that it is, I'm wondering what's wrong with it and I'm hesitant to buy.

Thoughts?

[phideaux]

Investors dilemma.

I didn't think this stock would approach 10 again, now that it is, I'm wondering what's wrong with it and I'm hesitant to buy.

Thoughts?

A couple of weeks ago they did a $20 million financing/stock dilution. I'd guess that is putting some short-term pressure on the share price.

i can see it shaking out further to the $8 area, but WTF do I know.

JMHO DYODD

[Fiat Metaler]

Investors dilemma.

I didn't think this stock would approach 10 again, now that it is, I'm wondering what's wrong with it and I'm hesitant to buy.

Thoughts?

none of these companies is producing any metal yet, so there will be a number of dilutive financings before you see a dividend.

PVG has some high grade veins, and the idea they floated was they would mine that to pay to build the mine for the low grade. apparrently issuing more stock was also part of the plan.