(Adds analyst comment, background, updates shares)
By Sneha Banerjee and Garima Goel
Nov 22 (Reuters) - Shares of Pretium Resources Inc nearly doubled after the Canadian miner said output from an ore sampling program at its flagship gold exploration project topped its target.
Pretium said it produced 4,215 ounces of gold from processing 8,090 tonnes of ore from the program, dubbed “Valley of the Kings”, at Brucejack in British Columbia.
The company had targeted an output of 4,000 ounces from the 10,000-tonne sampling program.
Vancouver-based Pretium said it would process the remaining bulk sample by the first week of December.
Pretium shares rose as much as 97 percent to their highest since Oct. 9, when the company said independent consultant Strathcona Mineral Services had resigned from the project.
“The news should definitely be important for the company, as the market had earlier punished the company on negative speculation, which drove the stock in half,” Cowen and Co analyst Adam Graf said.
The results imply average gold grades of 16.20 grams per ton of sample ore, higher than the 4.03 grams based on data announced in late October, Graf said, adding that total results available so far were more in line with expected overall grade to be mined.
Strathcona quit Pretium’s “Valley of the Kings” program, saying there were “no valid gold mineral resources” there.
Strathcona is best known for its role in exposing problems at miner Bre-X in the late 1990s, where investors lost billions after a massive gold find in Indonesia was found to be fake.
However, Pretium’s management and another independent consultant on the project, Snowden Mining Industry Consultants, had “significant concerns” with Strathcona’s conclusions.
Although still at an early stage of development, the Brucejack project has garnered attention due to its high gold grades and Pretium’s well-known management team.
“The market should regain confidence in the story and dismiss the negative speculation,” Graf told Reuters.
Shares of Pretium, which has a market value of C$325.5 million, were up about 79 percent at C$5.54 in afternoon trading on the Toronto Stock Exchange on Friday. (Additional reporting by Garima Goel; Editing by Kirti Pandey)