There is a lot of buzz regarding this stock and I for one believe that if you own a 6-12 stocks this should be one of them but people should know what they are getting into.
Pretium Resources is a Exploration company located in BC Canada in an area that is known as the "Golden Triangle" which is currently identified as one of the biggest gold deposits in North America.
The Management, the President and CEO is Robert Quatermain, the former head of Silver Standard Resources, considered by many to be one of the best run Silver Miners out there. Robert came out of retirement to head this company because of the world class/bonanza resources and potential the property had. The resources are estimated to be anywhere from 26-60 million oz of gold. In combination with Seabridge, next door, the two combined are said to have about 100 million oz of au in resouces. When the number of deposits found that is over 5 million oz (the size needed for most senior producers to consider an acquisition) in the low single digits in a year, it makes for an interesting story. The size of the deposit also actually also limits the number of seniors that can afford to buy them so if acquisition was their plan, there will probably be a long song and dance before a courtship even begins. Also, the 26-60 mil of gold are resources NOT reserves yet and the economics that they company published on their website shows that it would cost 3-4 billion dollars to build in the infrastructure. The market cap is at 700 million, so where is this money coming from? Needless to say the project is years, thats right, years away from producing a single ounce of gold and a lot things still have to go right.
Bob Chapman, (love him/hate him) sent me an email about them and he believes that this stock will be worth $30 by the end of the year and other Gold Mining experts like Jay Taylor really like them so I guess betting them is like drafting a major leaguer's son for your baseball team. A friend of mine (a guy who is a former investment banker from TD and converted Gold/Mining nut by me) looked into their financials and believes that a lot of the potential has been priced in so he thinks it is undervalued but he sees it potentially being a double in the short term. He's hot on other stocks that are actually producing and have as much short term potential (I can't really argue with him there). That said, if the gold price goes to 1800-2000 in the next 6 months and the world finally wakes up to the smell of money in the gold mines, I think it should be more than a double and if you're able to hold long enough, I think it has a great chance of being a 10-100 bagger, if you are willing to wait another 4-8 years. Some simple math tells me that that if the resources end up being say, 15 million oz in reserves, and the market values the gold in the ground at $300/oz then we are talking about a value of $4.5 billion, still not shabby (please slap me upside the head if these numbers are off).
Pretium recently announced that they are going to share resources and work together with Seabridge. Makes sense in that it is essentially one large deposit and if one is going to get bought, the other will probably get bought with it.
Love to know your guys thoughts on this stock. I haven't bought yet but is on my very short wishlist for the summer bargain hunting season that's to come. The stock recently broke out of a bull flag pattern after a sharp increase in value and is currently going sideways so it is definitely consolidating and technically speaking, I could be wrong, but I don't expect it to move up or down significantly for a few more weeks. Stock hasn't really been listed long to do crazy technicals on it anyways.
Edited by: KiniK on Nov 8, 2014 - 5:20am