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 Canada resigned.
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 continuing on.”
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 industry funding. (Reporting By Nicole Mordant and Julie Gordon in Vancouver and Euan Rocha in Toronto; Editing by Kenneth Barry)