0001199835-19-000025.txt : 20191031 0001199835-19-000025.hdr.sgml : 20191031 20191031150529 ACCESSION NUMBER: 0001199835-19-000025 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20191031 FILED AS OF DATE: 20191031 DATE AS OF CHANGE: 20191031 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Pretium Resources Inc. CENTRAL INDEX KEY: 0001508844 STANDARD INDUSTRIAL CLASSIFICATION: METAL MINING [1000] IRS NUMBER: 000000000 STATE OF INCORPORATION: A1 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-35393 FILM NUMBER: 191183372 BUSINESS ADDRESS: STREET 1: SUITE 2300, 1055 DUNSMUIR STREET STREET 2: PO BOX 49334 CITY: VANCOUVER STATE: A1 ZIP: V7X 1L4 BUSINESS PHONE: 604-558-1784 MAIL ADDRESS: STREET 1: SUITE 2300, 1055 DUNSMUIR STREET STREET 2: PO BOX 49334 CITY: VANCOUVER STATE: A1 ZIP: V7X 1L4 6-K 1 form-6k.htm PRETIUM RESOURCES, INC. FORM 6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

under the Securities Exchange Act of 1934

For the month of October 2019

Commission File Number: 001-35393

PRETIUM RESOURCES INC

(translation of registrant’s name into English)

1055 Dunsmuir Street, Suite 2300

Vancouver, British Columbia

Canada V7X 1L4

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F o Form 40-F x

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes o No x

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes o No x

Exhibit Index

Exhibit Number		Description of Exhibit
99.1		Condensed Consolidated Interim Financial Statements for the Three and Nine Months Ended September 30, 2019 and 2018
99.2		Management’s Discussion and Analysis for the Three and Nine Months Ended September 30, 2019 and 2018
99.3		News Release dated October 30, 2019

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PRETIUM RESOURCES INC.

	By:	/s/ Vlada Cvijetinovic
Date: October 31, 2019	Name:	Vlada Cvijetinovic
	Title:	Vice President, Legal

EX-99.1 2 ex99-1.htm CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Exhibit 99.1

(PRETIUM LOGO)

PRETIUM RESOURCES INC.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2019 AND 2018

(Expressed in thousands of United States Dollars)

Suite 2300, Four Bentall Centre
1055 Dunsmuir Street, PO Box 49334
Vancouver, BC V7X 1L4

Phone:604-558-1784
Email: invest@pretivm.com

PRETIUM RESOURCES INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

(Unaudited - Expressed in thousands of United States dollars)


		September 30,			December 31,
	Note	2019			2018
ASSETS
Current assets
Cash and cash equivalents		$	16,583		$	45,407
Receivables and other	3		19,696			18,312
Inventories	4		23,067			24,751
			59,346			88,470
Non-current assets
Mineral properties, plant and equipment	5		1,519,702			1,522,919
Restricted cash			57			2,029
Total assets		$	1,579,105		$	1,613,418

LIABILITIES

Current liabilities
Accounts payable and accrued liabilities	6	$	71,842		$	50,672
Current portion of long-term debt	7		64,423			78,385
Current portion of offtake obligation	8		20,000			7,576
			156,265			136,633
Non-current liabilities
Other liabilities	6		12,176			1,072
Long-term debt	7		413,222			475,911
Offtake obligation	8		-			62,493
Decommissioning and restoration provision	9		22,164			18,947
Deferred income tax liability			41,902			15,236
			645,729			710,292

EQUITY

Share capital	13		1,152,115			1,140,890
Contributed surplus	13		47,043			48,886
Equity component of convertible notes			17,603			17,603
Accumulated other comprehensive loss			(193,997	)		(193,997	)
Deficit			(89,388	)		(110,256	)
			933,376			903,126
Total liabilities and equity		$	1,579,105		$	1,613,418

Contingencies	16

On behalf of the Board of Directors:

“David S. Smith”		“George N. Paspalas”
David S. Smith		George N. Paspalas
(Chair of the Audit Committee)		(Director)

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

PRETIUM RESOURCES INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS

(Unaudited - Expressed in thousands of United States dollars, except for share data)


		For the three months ended						For the nine months ended
		September 30,			September 30,			September 30,			September 30,
	Note	2019			2018			2019			2018
Revenue	10	$	132,735		$	110,060		$	349,056		$	345,960

Cost of sales	11		86,150			72,452			243,530			231,448

Earnings from mine operations			46,585			37,608			105,526			114,512

Corporate administrative costs			5,286			3,142			13,558			9,030

Operating earnings			41,299			34,466			91,968			105,482

Interest and finance expense	12		(7,952	)		(17,132	)		(26,134	)		(49,193	)
Interest and finance income			301			1,156			824			1,778
Foreign exchange (loss) gain			369			402			(326	)		335
Loss on financial instruments at fair value	8		(4,422	)		(7,321	)		(15,415	)		(6,377	)

Earnings before taxes			29,595			11,571			50,917			52,025

Current income tax expense			(1,406	)		(1,112	)		(3,383	)		(3,446	)
Deferred income tax (expense) recovery			(21,930	)		275			(26,666	)		(14,806	)

Net earnings for the period		$	6,259		$	10,734		$	20,868		$	33,773

Other comprehensive earnings, net of tax
Items that will not be reclassified to earnings or loss:
Change in fair value attributable to change in credit risk of financial instruments designated at fair value through profit or loss			-			991			-			4,855

Comprehensive earnings for the period		$	6,259		$	11,725		$	20,868		$	38,628

Earnings per common share
Basic		$	0.03		$	0.06		$	0.11		$	0.19
Diluted	13f	$	0.03		$	0.06		$	0.11		$	0.19

Weighted average number of common shares
Basic			184,962,191			183,069,568			184,521,449			182,634,260
Diluted	13f		186,683,911			184,529,626			185,806,634			183,950,555

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

PRETIUM RESOURCES INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(Unaudited - Expressed in thousands of United States dollars)


		For the three months ended						For the nine months ended
		September 30,			September 30,			September 30,			September 30,
	Note	2019			2018			2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings for the period		$	6,259		$	10,734		$	20,868		$	33,773
Items not affecting cash:
Current income tax expense			1,406			1,112			3,383			3,446
Deferred income tax expense (recovery)			21,930			(275	)		26,666			14,806
Depreciation and depletion			22,876			16,981			59,902			50,912
Interest and finance expense, net			7,691			15,792			25,481			46,984
Gain on disposal of plant and equipment			(55	)		-			(45	)		-
Loss on financial instruments at fair value	8		4,422			7,321			15,415			6,377
Settlement of offtake obligation	8		(1,324	)		(1,378	)		(3,068	)		(3,659	)
Share-based compensation	13		2,946			1,503			6,775			4,092
Unrealized foreign exchange loss (gain)			14			(251	)		1,211			117
Write-down of inventories	11		2,475			-			2,475			-
Changes in non-cash working capital items:
Receivables and other			6,516			(1,857	)		(1,911	)		(875	)
Inventories			(549	)		(304	)		(2,100	)		4,751
Accounts payable and accrued liabilities			4,612			4,061			7,271			(2,577	)
Income taxes paid			(1,406	)		(1,075	)		(3,383	)		(3,789	)
Net cash generated by operating activities			77,813			52,364			158,940			154,358

CASH FLOWS FROM FINANCING ACTIVITIES
Common shares issued			-			2,304			-			2,304
Offtake obligation repurchase payment	8		(62,416	)		-			(62,416	)		-
Payment of lease obligations			(1,649	)		(86	)		(4,833	)		(229	)
Proceeds from exercise of stock options			5,066			3,460			7,344			4,564
Repayment of loan facility	7		(16,666	)		-			(81,333	)		-
Share issue costs			-			(31	)		-			(31	)
Transaction costs associated with loan facility			-			-			(267	)		-
Interest paid			(6,997	)		(1,125	)		(22,286	)		(2,250	)
Net cash generated by (used in) financing activities			(82,662	)		4,522			(163,791	)		4,358

CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures on mineral properties, plant and equipment	5		(14,648	)		(10,840	)		(27,333	)		(26,353	)
Proceeds from sale of plant and equipment			96			-			96			-
Restricted cash			1,564			-			1,974			-
Interest received			301			1,156			824			1,778
Net cash used in investing activities			(12,687	)		(9,684	)		(24,439	)		(24,575	)
Increase (decrease) in cash and cash equivalents for the period			(17,536	)		47,202			(29,290	)		134,141

Cash and cash equivalents, beginning of the period			34,281			142,495			45,407			56,285
Effect of foreign exchange rate changes on cash and cash equivalents			(162	)		621			466			(108	)
Cash and cash equivalents, end of the period		$	16,583		$	190,318		$	16,583		$	190,318

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

PRETIUM RESOURCES INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

(Unaudited - Expressed in thousands of United States dollars, except for share data)


	Note	Number of common shares		Share capital			Contributed surplus			Equity component of convertible notes		Accumulated other comprehensive loss			Deficit			Total
Balance - December 31, 2017			182,337,874	$	1,125,932		$	49,942		$	17,603	$	(193,772	)	$	(152,644	)	$	847,061

Adjustment on adoption of IFRS 9, net of tax			-		-			-			-		(5,768	)		5,768			-

Adjusted balance - January 1, 2018			182,337,874	$	1,125,932		$	49,942		$	17,603	$	(199,540	)	$	(146,876	)	$	847,061

Shares issued upon exercise of options	13		793,325		7,007			(2,443	)		-		-			-			4,564

Shares issued under flow-through agreement	13		227,273		1,913			-			-		-			-			1,913

Share issue costs	13		-		(31	)		-			-		-			-			(31	)

Value assigned to options vested	13		-		-			2,727			-		-			-			2,727

Other comprehensive earnings for the period, net of taxes			-		-			-			-		4,855			-			4,855

Earnings for the period			-		-			-			-		-			33,773			33,773

Balance - September 30, 2018			183,358,472	$	1,134,821		$	50,226		$	17,603	$	(194,685	)	$	(113,103	)	$	894,862

Balance - December 31, 2018			184,163,091	$	1,140,890		$	48,886		$	17,603	$	(193,997	)	$	(110,256	)	$	903,126

Shares issued upon exercise of options	13		1,151,709		11,225			(3,881	)		-		-			-			7,344

Value assigned to options vested	13		-		-			2,038			-		-			-			2,038

Earnings for the period			-		-			-			-		-			20,868			20,868

Balance - September 30, 2019			185,314,800	$	1,152,115		$	47,043		$	17,603	$	(193,997	)	$	(89,388	)	$	933,376

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

PRETIUM RESOURCES INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2019 and 2018

(Expressed in thousands of United States dollars, except for share data)

NATURE OF OPERATIONS

Pretium Resources Inc. (the “Company”) was incorporated under the laws of the Province of British Columbia, Canada on October 22, 2010. The address of the Company’s registered office is Suite 2300, Four Bentall Centre, 1055 Dunsmuir Street, PO Box 49334, Vancouver, BC, V7X 1L4.

The Company was formed for the acquisition, exploration, development and operation of precious metal resource properties in the Americas. The Company’s primary asset is its wholly-owned underground Brucejack Mine located in northwestern British Columbia.

STATEMENT OF COMPLIANCE

These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting using accounting policies consistent with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board and interpretations of the International Financial Reporting Standards Interpretations Committee.

These condensed consolidated interim financial statements should be read in conjunction with the Company’s most recent annual consolidated financial statements. The Company’s significant accounting policies applied in these condensed consolidated interim financial statements are the same as those applied in note 3 of the Company’s annual consolidated financial statements as at and for the year ended December 31, 2018, except for the adoption of IFRS 16, Leases effective January 1, 2019. The details of the impact on adoption and the revised accounting policies were disclosed in our condensed consolidated interim financial statements for the three months ended March 31, 2019.

As at September 30, 2019, the Company has cash and cash equivalents of $16,583 and a working capital (current assets less current liabilities) deficit of $96,919. Based on management’s cash flow projections, the Company expects that future operating and debt settlement requirements will be satisfied from operating cash flows.

These condensed consolidated interim financial statements are presented in United States dollars (“USD”), which is the Company’s functional currency. All dollar amounts are expressed in thousands of USD, except for share data, unless otherwise noted as Canadian dollars (“CAD” or “C”).

These condensed consolidated interim financial statements were authorized for issue by the Board of Directors on October 30, 2019.

RECEIVABLES AND OTHER

	September 30,		December 31,
	2019		2018
Trade receivables	$	13,029	$	14,487
Prepayments and deposits		4,184		3,332
Tax receivables		1,761		420
Other receivables		722		73
	$	19,696	$	18,312

PRETIUM RESOURCES INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2019 and 2018

(Expressed in thousands of United States dollars, except for share data)

INVENTORIES

	September 30,		December 31,
	2019		2018
Materials and supplies	$	13,954	$	11,548
Finished metal		8,627		12,745
In-circuit		486		458
	$	23,067	$	24,751

As at September 30, 2019, $2,257 (2018 – $3,138) of depreciation and depletion and $354 (2018 – $199) of site share-based compensation was included in inventory.

MINERAL PROPERTIES, PLANT AND EQUIPMENT

	Mineral properties		Construction in progress			Plant and equipment			ROU assets		Exploration and evaluation assets		Total
Cost
Balance - December 31, 2018	$	812,627	$	9,183		$	556,056		$	-	$	252,007	$	1,629,873
Adjustment on adoption of IFRS 16		-		-			-			11,891		-		11,891
Transfer from plant and equipment to right-of-use assets		-		-			(888	)		888		-		-
Adjusted balance - January 1, 2019		812,627		9,183			555,168			12,779		252,007		1,641,764
Additions		-		26,511			3,089			6,496		7,868		43,964
Transfer from construction in progress to plant and equipment		-		(8,782	)		8,782			-		-		-
Transfer from construction in progress to mineral properties		16		(16	)		-			-		-		-
Disposals		-		-			(535	)		-		-		(535	)
Balance - September 30, 2019	$	812,643	$	26,896		$	566,504		$	19,275	$	259,875	$	1,685,193
Accumulated depreciation and depletion
Balance - December 31, 2018	$	50,990	$	-		$	55,964		$	-	$	-	$	106,954
Transfer from plant and equipment to right-of-use assets		-		-			(42	)		42		-		-
Adjusted balance - January 1, 2019		50,990		-			55,922			42		-		106,954
Depreciation and depletion		29,909		-			25,147			3,965		-		59,021
Disposals		-		-			(484	)		-		-		(484	)
Balance - September 30, 2019	$	80,899	$	-		$	80,585		$	4,007	$	-	$	165,491

Net book value - September 30, 2019	$	731,744	$	26,896		$	485,919		$	15,268	$	259,875	$	1,519,702

(a) Depreciation and depletion

For the nine months ended September 30, 2019, $59,021 (2018 – $49,758) of depreciation and depletion was recognized in the statement of earnings.

PRETIUM RESOURCES INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2019 and 2018

(Expressed in thousands of United States dollars, except for share data)

MINERAL PROPERTIES, PLANT AND EQUIPMENT (Cont’d)

(b) Right-of-use (“ROU”) assets

As at September 30, 2019, the Company’s ROU assets consisted of the following:

	ROU asset Mobile equipment		ROU asset Buildings		ROU asset Other		Total
Cost
Balance - December 31, 2018	$	-	$	-	$	-	$	-
Adjustment on adoption of IFRS 16		9,325		2,509		57		11,891
Transfer from plant and equipment to right-of-use assets		888		-		-		888
Adjusted balance - January 1, 2019		10,213		2,509		57		12,779
Additions		2,136		3,115		1,245		6,496
Balance - September 30, 2019	$	12,349	$	5,624	$	1,302	$	19,275
Accumulated depreciation and depletion
Balance - December 31, 2018	$	-	$	-	$	-	$	-
Transfer from plant and equipment to right-of-use assets		42		-		-		42
Adjusted balance - January 1, 2019		42		-		-		42
Depreciation and depletion		3,146		748		71		3,965
Balance - September 30, 2019	$	3,188	$	748	$	71	$	4,007

Net book value - September 30, 2019	$	9,161	$	4,876	$	1,231	$	15,268

The Company is a party primarily to lease contracts for mining related mobile equipment and buildings. Other ROU assets include office-related equipment and shipping containers for concentrate.

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

	September 30,			December 31,
	2019			2018
Trade payables	$	44,973		$	24,814
Lease obligations		15,282			748
Accrued liabilities		10,776			16,945
Restricted share unit liability		6,122			1,502
Employee benefit liability		4,531			4,398
Deferred share unit liability		1,356			997
Royalty payable		856			629
Accrued interest on convertible notes		93			660
Accrued interest on loan facility		29			1,051
	$	84,018		$	51,744
Non-current portion of lease obligations		(9,458	)		(518	)
Non-current portion of restricted share unit liability		(2,718	)		(554	)
Current portion of accounts payable and accrued liabilities	$	71,842		$	50,672

PRETIUM RESOURCES INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2019 and 2018

(Expressed in thousands of United States dollars, except for share data)

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Cont’d)

(a) Lease obligations

As at September 30, 2019, the Company’s undiscounted lease obligations consisted of the following:

	September 30,			December 31,
	2019			2018
Gross lease obligation - minimum lease payments
1 year	$	6,458		$	277
2-3 years		7,742			527
4-5 years		2,223			35
	$	16,423		$	839
Future interest expense on lease obligations		(1,141	)		(91	)
	$	15,282		$	748

For the nine months ended September 30, 2019, interest expense on lease obligations was $624 (2018 – $9). Total cash payments on lease obligations and short-term leases were $4,833 (2018 - $229) and $815, respectively.

Variable lease payments not included in the measurement of lease obligations were nil as at September 30, 2019. There were no extension options, which were reasonably certain to be exercised, included in the measurement of the lease obligation. As at September 30, 2019, there were no significant leases with residual value guarantees or leases not yet commenced to which the Company is committed.

LONG-TERM DEBT

As at September 30, 2019, the Company’s long-term debt consisted of the following:

	Term			Revolving			Convertible		Total
	facility			facility			notes		long-term debt
Balance - December 31, 2018	$	246,784		$	225,362		$	82,150	$	554,296
Accretion of convertible notes		-			-			4,165		4,165
Repayment of loan facility		(33,333	)		(48,000	)		-		(81,333	)
Amortization of loan facility transaction costs		203			247			-		450
Reversal of loan facility transaction costs		28			39			-		67
Balance - September 30, 2019	$	213,682		$	177,648		$	86,315	$	477,645
Current portion of long-term debt		(65,419	)		996			-		(64,423	)
Non-current portion of long-term debt	$	148,263		$	178,644		$	86,315	$	413,222

(a) Senior secured loan facility

On December 18, 2018, the Company closed a $480,000 senior secured loan facility (the “loan facility”) with a syndicate of financial institutions arranged by The Bank of Nova Scotia, ING Capital LLC and SG Americas Securities, LLC. The loan facility is comprised of a $250,000 senior secured amortizing non-revolving credit facility (the “term facility”) and a $230,000 senior secured revolving credit facility (the “revolving facility”). The loan facility is secured by substantially all of the assets of the Company and its subsidiaries.

PRETIUM RESOURCES INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2019 and 2018

(Expressed in thousands of United States dollars, except for share data)

LONG-TERM DEBT (Cont’d)

The term of the loan facility is four years, maturing on December 18, 2022. The available amount on the revolving facility at September 30, 2019 was $16,415 with $1,585 (C$2,100) used for a letter of credit supporting a reclamation deposit requirement.

Each borrowing under the term and revolving facilities is available by way of USD London Inter-Bank Offered Rate (“LIBOR”) loans or USD base rate loans. The revolving facility is also available in various other forms, including Canadian prime loans, bankers’ acceptances, bankers’ acceptance equivalent loans, and letters of credit.

Borrowings comprising USD LIBOR loans bear interest at LIBOR plus an applicable margin of 2.5% to 3.5% based on the Company’s net leverage ratio. As at September 30, 2019, the LIBOR on the Company’s borrowings was 2.1%. Borrowings comprising USD base rate loans bear interest at the administrative agent’s base rate plus an applicable margin of 1.5% to 2.5% based on the Company’s net leverage ratio. Interest is payable on the last day of the interest period related to a borrowing. For the nine months ended September 30, 2019, $19,014 (2018 – nil) of interest expense was expensed as interest and finance expense in the statement of earnings.

The term facility is required to be repaid in equal installments of principal until maturity. The Company has paid two quarterly installments on the term facility in the amount of $33,333.

The required principal repayment of $30,000 on the revolving facility was repaid by the Company prior to June 30, 2019 reducing the available facility to $200,000. The remaining principal of the revolving facility is required to be repaid as a bullet payment in full on the maturity date. Any unused portion of the revolving facility is subject to a standby fee of 0.6% to 0.8%. The Company made additional voluntary principal repayments totaling $18,000, reducing the outstanding balance on the revolving facility to $182,000.

Transaction costs associated with the term facility were $3,244 (2018 – $3,271) and the revolving facility were $4,638 (2018 – $4,678). The transactions costs have been recorded as a loan discount and will be amortized over the term of the loan. For the nine months ended September 30, 2019, a total of $450 (2018 – nil) of amortization of the transaction costs were expensed to interest and finance expense in the statement of earnings.

The effective interest rate for the loan facility as at September 30, 2019 is 5.5%. The Company is subject to financial covenants including interest coverage ratio, leverage ratio, tangible net worth and minimum liquidity under the terms of the loan facility. As at September 30, 2019, the Company was in compliance with all financial covenants.

OFFTAKE OBLIGATION

As at September 30, 2019, the Company’s offtake obligation is as follows:

	Offtake
	obligation
Balance - December 31, 2018	$	70,069
Settlement of offtake obligation		(3,068	)
Loss on financial instruments at fair value		15,415
Offtake obligation repurchase payment		(62,416	)
Balance - September 30, 2019	$	20,000
Current portion of offtake obligation		(20,000	)
Non-current portion of offtake obligation	$	-

PRETIUM RESOURCES INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2019 and 2018

(Expressed in thousands of United States dollars, except for share data)

OFFTAKE OBLIGATION (Cont’d)

In September 2015, the Company entered into an agreement pursuant to which it would deliver 100% of refined gold production up to 7,067,000 ounces. The final purchase price to be paid by the purchaser would be, at the purchaser’s option, a market referenced gold price in USD per ounce during a defined pricing period before and after the date of each sale.

The Company had the option to reduce the offtake obligation by up to 75% by paying $13 per ounce effective December 31, 2019 on the then remaining undelivered gold ounces.

On September 15, 2019, the Company entered into an agreement with the holders of the offtake obligation to repurchase 100% of the outstanding obligation effective September 30, 2019. In exchange, the Company agreed to pay the holders of the offtake obligation $13 per ounce for 100% of the refined gold remaining to be delivered under the offtake agreement, equating to $82,416. Under the terms of the agreement, the Company paid $62,416 on September 30, 2019, with the remaining balance due on November 30, 2019.

For the nine months ended September 30, 2019, the Company delivered 234,378 (2018 – 280,035) ounces of gold under the offtake agreement. Of the amount settled, the Company physically delivered 158,268 (2018 – 186,545) ounces from doré production and purchased 76,110 (2018 – 93,490) ounces to satisfy delivery of gold produced from concentrate sales. The settlement of the gold ounces resulted in a decrease in the offtake obligation of $3,068 (2018 – $3,659).

Until the repurchase of the offtake agreement on September 30, 2019, the offtake obligation was recorded at fair value at each statement of financial position date. For the nine months ended September 30, 2019, the change in fair value of the offtake obligation was a fair value loss of $15,415 (2018 – gain of $7,408).

DECOMMISSIONING AND RESTORATION PROVISION

(a) Reclamation bonds

In support of the closure plan for the Brucejack Mine, the Company increased its security through a surety bond by C$9,000, for total surety bonds of C$31,700 in favour of the Ministry of Energy and Mines. The Company was not required to provide collateral for the additional bond.

(b) Decommissioning and restoration provision

The Company has a liability for remediation of current and past disturbances associated with the exploration, development and production activities at the Brucejack Mine.

PRETIUM RESOURCES INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2019 and 2018

(Expressed in thousands of United States dollars, except for share data)

DECOMMISSIONING AND RESTORATION PROVISION (Cont’d)

The decommissioning and restoration provision is as follows:

	For the nine months ended			For the year ended
	September 30,			December 31,
	2019			2018
Opening balance	$	18,947		$	18,436
Change in discount rate		2,960			215
Accretion of decommissioning and restoration provision		369			568
Settlement of decommissioning and restoration provision		(49	)		-
Change in amount and timing of cash flows		(63	)		(272	)
Ending balance	$	22,164		$	18,947

For the nine months ended September 30, 2019, the provision increased due to a decrease in the discount rate. The Company used an inflation rate of 1.8% (2018 – 1.9%) and a discount rate of 1.3% (2018 – 2.4%) in calculating the estimated obligation. The liability for retirement and remediation on an undiscounted basis before inflation is $20,694 (2018 – $20,369). The majority of the expected expenditures to settle the decommissioning and restoration provision are expected to occur after the end of the mine life.

10.

REVENUE

Revenue by metal was:

	For the three months ended					For the nine months ended
	September 30,		September 30,			September 30,		September 30,
	2019		2018			2019		2018
Gold revenue	$	129,142	$	110,407		$	339,144	$	345,092
Silver revenue		1,771		1,251			4,729		4,212
Revenue from contracts with customers	$	130,913	$	111,658		$	343,873	$	349,304
Gain (loss) on trade receivables at fair value		1,822		(1,598	)		5,183		(3,344	)
	$	132,735	$	110,060		$	349,056	$	345,960

Revenue from contracts with customers by product was:

	For the three months ended				For the nine months ended
	September 30,		September 30,		September 30,		September 30,
	2019		2018		2019		2018
Gold revenue - doré	$	89,016	$	75,404	$	230,318	$	236,941
Gold revenue - concentrate		40,126		35,003		108,826		108,151
Silver revenue - concentrate		1,182		673		3,148		2,342
Silver revenue - doré		589		578		1,581		1,870
	$	130,913	$	111,658	$	343,873	$	349,304

PRETIUM RESOURCES INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2019 and 2018

(Expressed in thousands of United States dollars, except for share data)

11.

COST OF SALES

Total costs of sales were:

	For the three months ended					For the nine months ended
	September 30,			September 30,		September 30,			September 30,
	2019			2018		2019			2018
Production costs	$	56,069		$	49,809	$	165,039			155,862
Depreciation and depletion		21,256			16,588		58,566			49,662
Royalties and selling costs		4,662			5,200		13,754			15,889
Site share-based compensation		1,182			589		2,793			1,633
Write-down of inventories		2,475			-		2,475			-
Change in inventories		561			266		948			8,402
Gain on disposal of plant and equipment		(55	)		-		(45	)		-
	$	86,150		$	72,452	$	243,530		$	231,448

On November 2, 2018, Miami Metals I, Inc. (formerly known as, Republic Metals Refining Corporation) (“RMC”), a refinery used by the Company announced it filed for chapter 11 bankruptcy protection. A settlement agreement was reached among the Company, RMC and its affiliated debtors and debtors in possession and RMC’s senior lenders. The settlement is subject to approval by the United States Bankruptcy Court for the Southern District of New York. The finished goods inventory held by RMC was written down by $2,475 to reflect the cash settlement value.

Production costs by nature of expense were:

	For the three months ended				For the nine months ended
	September 30,		September 30,		September 30,		September 30,
	2019		2018		2019		2018
Consultants and contractors	$	24,659	$	24,234	$	69,443	$	80,502
Salaries and benefits		13,526		10,698		44,360		30,375
Supplies and consumables		8,931		6,786		25,711		21,486
Energy		2,969		2,651		9,001		9,352
Travel and camp accommodation		2,488		1,732		5,943		5,082
Freight		1,502		1,247		4,326		3,173
Camp administrative costs		1,179		1,152		4,004		2,657
Insurance		446		365		1,179		1,099
Rentals		369		944		1,072		2,136
	$	56,069	$	49,809	$	165,039	$	155,862

PRETIUM RESOURCES INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2019 and 2018

(Expressed in thousands of United States dollars, except for share data)

12.

INTEREST AND FINANCE EXPENSE

	For the three months ended					For the nine months ended
	September 30,			September 30,		September 30,			September 30,
	2019			2018		2019			2018
Interest expense on loan facility	$	5,684		$	-	$	19,464		$	-
Interest expense on convertible notes		1,971			1,971		5,848			5,848
Interest expense on leases		232			4		624			9
Accretion of decommissioning and restoration provision		105			136		369			432
Interest expense on construction credit facility		-			14,841		-			42,482
Other interest expense (income)		(40	)		180		(171	)		422
	$	7,952		$	17,132	$	26,134		$	49,193

13.

CAPITAL AND RESERVES

(a) Share capital

At September 30, 2019, the authorized share capital consisted of an unlimited number of common shares without par value and an unlimited number of preferred shares with no par value.

On July 25, 2018, the Company completed a non-brokered private placement of 227,273 flow-through common shares at a price of C$13.20 per share for gross proceeds of $2,304 before share issuance costs of $31. The Company bifurcated the gross proceeds between share capital of $1,913 and flow-through share premium of $391.

(b) Share options

The following table summarizes the changes in share options for the nine months ended September 30:

	2019					2018
				Weighted					Weighted
				average					average
	Number of			exercise price		Number of			exercise price
	options			(in CAD)		options			(in CAD)
Outstanding, January 1,		4,562,919		$	9.47		6,454,327		$	9.32
Granted		80,000			15.35		215,000			12.13
Exercised		(1,151,709	)		8.48		(793,325	)		7.48
Expired		(19,800	)		12.97		(874,250	)		13.53
Forfeited		(5,100	)		12.97		(31,250	)		12.58
Outstanding, September 30,		3,466,310		$	9.91		4,970,502		$	8.98

For options exercised during the period, the related weighted average share price at the time of exercise was C$14.91 (2018 – C$11.06).

PRETIUM RESOURCES INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2019 and 2018

(Expressed in thousands of United States dollars, except for share data)

13.

CAPITAL AND RESERVES (Cont’d)

The following table summarizes information about share options outstanding and exercisable at September 30, 2019:

	Share options outstanding				Share options exercisable
							Weighted
	Number of		Weighted		Number of		average
	options		average years		options		exercise price
Exercise prices (in CAD)	outstanding		to expiry		exercisable		(in CAD)
$6.00 - $7.99		1,074,250		1.00		1,074,250		7.01
$8.00 - $9.99		1,198,719		2.38		798,127		9.35
$10.00 - $11.99		78,000		2.30		51,600		10.75
$12.00 - $13.99		1,010,341		3.19		369,896		12.97
$14.00 - $15.99		105,000		4.13		25,000		15.17
		3,466,310		2.24		2,318,873	$	8.94

The total share-based compensation expense for the nine months ended September 30, 2019 was $2,038 (2018 – $2,727), which was expensed in the statement of earnings.

The following are the weighted average assumptions employed to estimate the fair value of options granted for the nine months ended September 30, 2019 and 2018 using the Black-Scholes option pricing model:

	For the nine months ended
	September 30,	September 30,
	2019	2018
Risk-free interest rate	1.41%	2.16%
Expected volatility	54.95%	63.31%
Expected life	5 years	5 years
Expected dividend yield	Nil	Nil

Option pricing models require the input of subjective assumptions including the expected price volatility and expected option life. Changes in these assumptions may have a significant impact on the fair value calculation.

The following table summarizes the changes in RSU’s for the nine months ended September 30:

	2019					2018
				Weighted					Weighted
	Number of			average fair		Number of			average fair
	RSU’s			value (in CAD)		RSU’s			value (in CAD)
Outstanding, January 1,		741,886		$	11.31		729,064		$	14.41
Forfeited		(30,760	)		12.21		(43,521	)		11.07
Outstanding, September 30,		711,126		$	16.19		685,543		$	10.16

PRETIUM RESOURCES INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2019 and 2018

(Expressed in thousands of United States dollars, except for share data)

13.

CAPITAL AND RESERVES (Cont’d)

At September 30, 2019, a liability of $5,277 (2018 – $1,271) was outstanding and included in accounts payable and accrued liabilities. For the nine months ended September 30, 2019, $3,957 (2018 – $1,049) was expensed in the statement of earnings as share-based compensation expense.

(d) 2015 RSU plan – Performance share units (“PSU’s”)

The following table summarizes the changes in PSU’s for the nine months ended September 30:

	2019				2018
			Weighted				Weighted
	Number of		average fair		Number of		average fair
	PSU’s		value (in CAD)		PSU’s		value (in CAD)
Outstanding, January 1,		166,085	$	11.31		74,140	$	14.41
Outstanding, September 30,		166,085	$	16.19		74,140	$	10.16

At September 30, 2019, a liability of $845 (2018 – $231) was outstanding and included in accounts payable and accrued liabilities. For the nine months ended September 30, 2019, $607 (2018 – $140) was expensed in the statement of earnings as share-based compensation expense.

(e) 2018 DSU Plan – Deferred share units (“DSU’s”)

The Company established a DSU plan for the benefit of the directors of the Company. Pursuant to the plan, eligible directors can elect to receive all or part of their total cash compensation in the form of DSU’s. The number of DSU’s granted to an eligible director is determined by dividing the portion of the compensation to be paid in DSU’s by the fair market value of the Company’s common shares on the conversion date. In addition, the Board may, at its discretion, grant additional DSU’s to plan participants. Each eligible director will be required to hold DSU’s received until the eligible director ceases to be a director of the Company, following which the DSU’s will be settled in cash.

The following table summarizes the changes in DSU’s for the nine months ended September 30:

	2019				2018
			Weighted				Weighted
	Number of		average fair		Number of		average fair
	DSU’s		value (in CAD)		DSU’s		value (in CAD)
Outstanding, January 1,		117,587	$	11.57		-	$	-
Outstanding, September 30,		117,587	$	15.27		-	$	-

At September 30, 2019, a liability of $1,356 (2018 – $997) was outstanding and included in accounts payable and accrued liabilities. For the nine months ended September 30, 2019, $328 (2018 – nil) was expensed in the statement of earnings as share-based compensation expense.

PRETIUM RESOURCES INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2019 and 2018

(Expressed in thousands of United States dollars, except for share data)

13.

CAPITAL AND RESERVES (Cont’d)

(f) Earnings per share

The calculation of diluted earnings per share was based on earnings attributable to ordinary shareholders and the weighted-average number of shares outstanding after adjustments for the effect of potential dilutive shares. For the three and nine months ended September 30, 2019, potential share issuances arising from the exercise of share options and the settlement of restricted share units in common shares were included in the calculation of diluted weighted average shares outstanding as well as their impact on earnings attributable to shareholders of the Company. Potentially dilutive shares associated with the convertible notes and share options (out of the money) were not included in the diluted earnings per share calculation as their effect was anti-dilutive.

The following table summarizes the calculation of basic and diluted earnings per share:

	For the three months ended				For the nine months ended
	September 30,		September 30,		September 30,		September 30,
	2019		2018		2019		2018

Net earnings for the period	$	6,259	$	10,734	$	20,868	$	33,773

Basic weighted average number of common shares outstanding		184,962,191		183,069,568		184,521,449		182,634,260
Effective impact of dilutive securities:
Share options		1,410,411		1,130,740		973,876		986,977
Restricted share units		311,309		329,318		311,309		329,318
Diluted weighted average number of common shares outstanding		186,683,911		184,529,626		185,806,634		183,950,555

Earnings per share
Basic	$	0.03	$	0.06	$	0.11	$	0.19
Diluted	$	0.03	$	0.06	$	0.11	$	0.19

14.

RELATED PARTIES

Key management includes the Company’s directors (executive and non-executive) and executive officers including its Executive Chairman (“Exec Chair”), its President and Chief Executive Officer, its Executive Vice President and Chief Financial Officer, its Vice President, Operations, its Executive Vice President, Corporate Affairs and Sustainability, and its Vice President and Chief Exploration Officer.

Directors and key management compensation:

	For the nine months ended
	September 30,		September 30,
	2019		2018
Salaries and benefits	$	1,662	$	1,985
Share-based compensation		4,148		1,801
	$	5,810	$	3,786

Under the terms of the Exec Chair’s employment agreement, effective January 1, 2017, the Exec Chair is entitled to a retirement allowance which remains due and payable in full in the event the Exec Chair terminates his employment with the Company. The retirement allowance remains a current liability as at September 30, 2019 in the amount of $4,531 (C$6,000).

PRETIUM RESOURCES INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2019 and 2018

(Expressed in thousands of United States dollars, except for share data)

15.

FINANCIAL RISK MANAGEMENT

The Company’s financial assets and liabilities are measured and recognized according to a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs.

The three levels of fair value hierarchy are as follows:

Level 1:

Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2:

Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3:

Inputs for the asset or liability that are not based on observable market data

The carrying values of cash and cash equivalents, receivables and other, accounts payable and accrued liabilities, the loan facility and the offtake obligation approximate their fair values due to the short-term maturity of these financial instruments.

The following tables present the Company’s financial assets and liabilities by level within the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

As at September 30, 2019	Carrying value				Fair value
	FVTPL		Amortized cost		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	-	$	16,583	$	-	$	-	$	-
Trade receivables		13,029		-		-		13,029		-
Restricted cash		-		57		-		-		-
	$	13,029	$	16,640	$	-	$	13,029	$	-
Financial liabilities
Accounts payable and accrued liabilities	$	-	$	56,698	$	-	$	-	$	-
Lease obligations		-		15,282		-		-		-
Restricted share unit liability		6,122		-		-		6,122		-
Deferred share unit liability		1,356		-		-		1,356		-
Senior secured loan facility		-		391,330		-		-		-
Offtake obligation		-		20,000		-		-		-
Debt portion of convertible note		-		86,315		-		86,315		-
	$	7,478	$	569,625	$	-	$	93,793	$	-

PRETIUM RESOURCES INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2019 and 2018

(Expressed in thousands of United States dollars, except for share data)

15.

FINANCIAL RISK MANAGEMENT (Cont’d)

As at December 31, 2018	Carrying value				Fair value
	FVTPL		Amortized cost		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	-	$	45,407	$	-	$	-	$	-
Trade receivables		14,487		-		-		14,487		-
Restricted cash		-		2,029		-		-		-
	$	14,487	$	47,436	$	-	$	14,487	$	-
Financial liabilities
Accounts payable and accrued liabilities	$	-	$	43,048	$	-	$	-	$	-
Restricted share unit liability		1,502		-		-		1,502		-
Deferred share unit liability		997		-		-		997		-
Senior secured loan facility		-		472,146		-		-		-
Offtake obligation		70,069		-		-		-		70,069
Debt portion of convertible note		-		82,150		-		82,150		-
	$	72,568	$	597,344	$	-	$	84,649	$	70,069

16.

CONTINGENCIES

The Company is involved in various claims, litigation and other matters in the ordinary course and conduct of business. Some of these pending matters will take a number of years to resolve. While it is not possible to determine the ultimate outcome of such actions at this time, and inherent uncertainties exist in predicting such outcomes, it is the Company’s belief that the ultimate resolution of such actions is not reasonably likely to have a material adverse effect on its consolidated financial position or results of operations.

(a) Canadian class action

On October 29, 2013, David Wong, a shareholder of the Company, filed a proposed class action claim (the “Wong Action”) against the Company, Robert Quartermain (a director, and the President and the CEO of the Company at such time) and Snowden Mining Industry Consultants Ltd. (“Snowden”). The Wong Action was filed in the Ontario Superior Court of Justice.

The Wong Action alleges that the price of the Company’s shares on the TSX and NYSE suffered a significant drop in value following the announcement on October 9, 2013 of the resignation of Strathcona Mineral Services Ltd. (“Strathcona”), the consultant responsible for overseeing and reporting on the 10,000-tonne bulk sample, and the announcement of Strathcona’s reasons for resigning on October 22, 2013.

The Wong Action claims C$60,000 in general damages on behalf of a class of persons who acquired the Company’s securities between July 23, 2013 and October 21, 2013. Snowden is no longer a defendant in the Wong Action.

The plaintiff in the Wong Action brought a motion for leave to commence an action under the secondary market provisions in Part XXIII.1 of the Ontario Securities Act. The motion was heard on May 29 and 30, 2017. The Court allowed the plaintiff’s motion on July 20, 2017. The Company was denied leave to appeal this decision. The Company and Robert Quartermain consented to, and on January 23, 2019 the Court granted, an order certifying the Wong Action as a class proceeding pursuant to the Class Proceedings Act (Ontario).

PRETIUM RESOURCES INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2019 and 2018

(Expressed in thousands of United States dollars, except for share data)

16.

CONTINGENCIES (Cont’d)

The Company believes that the allegations made against it in the Wong Action are meritless and will vigorously defend them, although no assurance can be given with respect to the ultimate outcome. The Company has not accrued any amounts for this action.

(b) United States class action

Two putative class action complaints were filed against the Company and certain of its officers in the United States District Court for the Southern District of New York, one on September 7, 2018 and the other on October 19, 2018. The complaints were filed on behalf of an alleged class of all persons and entities who purchased or acquired shares of the Company between July 21, 2016 and September 6, 2018, and relate to public disclosures of the Company made between July 2016 and September 2018 regarding the Brucejack Mine.

On April 8, 2019, the United States District Court for the Southern District of New York issued an order granting Aurico Gold Fund LP’s motion to consolidate the two cases under the case caption “In re Pretium Resources, Inc. Securities Litigation” (the “Aurico Action”), appoint itself as lead plaintiff, and approve lead plaintiff’s selection of counsel. On June 21, 2019, the plaintiffs in the Aurico Action filed a Consolidated Amended Class Action Complaint. The Company has retained legal counsel in connection with these matters and on August 27, 2019, filed its memorandum of law in support of its motion to dismiss the Aurico Action. The plaintiffs filed their opposition to the Company’s motion to dismiss on October 28, 2019 and the Company’s reply brief is due on December 12, 2019.

The Company believes that the allegations made against it and its officers in the Aurico Action are meritless and will vigorously defend them, although no assurance can be given with respect to the ultimate outcome. The Company has not accrued any amounts for this action.

(c) Construction claims

On April 24, 2017, Bear Creek Contracting Ltd. (“Bear Creek”) filed a Notice of Civil Claim against the Company (the “Bear Creek Action”) alleging that the Company owes Bear Creek C$14,563 in general damages in connection with work undertaken at the Brucejack Mine transmission line. The Bear Creek Action was filed in the Supreme Court of British Columbia.

The Company filed a Response to Civil Claim on July 31, 2017, opposing all of the claims and allegations made. Notices of Civil Claim have also been filed by Blue Max Drilling Inc. (April 24, 2017), More Core Diamond Drilling Services Ltd. (March 27, 2017), and Lakelse Air Ltd. (February 23, 2018) who were subcontractors working under Bear Creek. Responses to Civil Claim have been filed in those actions and the claims are understood to be subsumed in the amount claimed by Bear Creek. It is expected that the four actions will be joined.

The Company believes that the allegations made against it in the Bear Creek Action, and the other actions, are meritless and will vigorously defend the matter, although no assurance can be given with respect to the ultimate outcome of such proceedings. The Company has not accrued any amounts for any of the actions.

EX-99.2 3 ex99-2.htm MANAGEMENT'S DISCUSSION AND ANALYSIS

Exhibit 99.2

(PRETIUM LOGO)

PRETIUM RESOURCES INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2019 AND 2018

MANAGEMENT’S DISCUSSION AND ANALYSIS

This Management’s Discussion and Analysis (“MD&A”) of Pretium Resources Inc. (“Pretivm”, the “Company”, “we”, “our” or “us”) provides information that management believes is relevant to an assessment and understanding of the consolidated financial condition and results of operations of the Company. This MD&A should be read in conjunction with the condensed consolidated interim financial statements for the three and nine months ended September 30, 2019 and 2018 as publicly filed in Canada on the System for Electronic Document Analysis and Retrieval (“SEDAR”) website, and in the United States on the EDGAR section of the Securities and Exchange Commission (“SEC”) website.

We have prepared the condensed consolidated interim financial statements in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board applicable to the preparation of interim financial statements, including IAS 34, Interim Financial Reporting. The Company’s significant accounting policies and the nature of its critical accounting estimates are the same as those applied in the Company’s annual consolidated financial statements as at and for the years ended December 31, 2018 and 2017, except for the adoption of IFRS 16, Leases (“IFRS 16”) effective January 1, 2019. Refer to the section “Changes in Accounting Policies” in this MD&A for further details.

The Company’s functional and presentation currency is the United States dollar. References to “$” or “USD” are to United States dollars, while references to “C$” or “CAD” are to Canadian dollars. All dollar amounts in this MD&A are expressed in thousands of USD, except for share and per ounce data, unless otherwise noted or the context otherwise provides.

This MD&A is prepared as of October 30, 2019 and includes certain statements that may be deemed “forward-looking information”, “forward-looking statements”, “future-oriented financial information” and “financial outlook”. We direct readers to the section “Statement Regarding Forward-Looking Information” included within this MD&A.

Certain non-IFRS financial performance measures are included in this MD&A. We believe that these measures, in addition to measures prepared in accordance with IFRS, provide readers with an improved ability to evaluate the underlying performance of the Company and compare our results to other companies. These measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These measures do not have any standardized meaning prescribed under IFRS, and therefore may not be comparable to similar measures presented by other issuers. The non-IFRS financial performance measures included in this MD&A are: cost of sales per ounce of gold sold; total cash costs; all-in sustaining costs (“AISC”); average realized gold price and average realized cash margin; adjusted earnings and adjusted basic earnings per share; and working capital. Refer to the “Non-IFRS Financial Performance Measures” section for further details and reconciliations of such non-IFRS measures.

Additional information relating to us, including our Annual Information Form and Form 40-F, each dated March 28, 2019, is available on the SEDAR website at www.sedar.com and on the EDGAR section of the SEC website at www.sec.gov.

THIRD QUARTER 2019 – SUMMARY

Operating summary

●

Gold production totaled 88,227 ounces compared to 92,641 ounces in the comparable period in 2018.

●

Mill feed grade averaged 9.1 grams per tonne gold compared to 12.4 grams per tonne gold in the comparable period in 2018.

●

Gold recoveries averaged 97.0% compared to 97.4% in the comparable period in 2018.

●

Process plant throughput averaged 3,367 tonnes per day for a total of 309,754 tonnes of ore compared to 2,610 tonnes per day for a total of 240,122 tonnes of ore in the comparable period in 2018. The production ramp-up from 2,700 tonnes per day to 3,800 tonnes per day over the course of the year is advancing as planned.

Financial summary

●

The Company generated revenue of $132,735 compared to revenue of $110,060 in the comparable period in 2018. Revenue includes a gain (loss) on trade receivables at fair value related to provisional pricing adjustments of $1,822 (2018 – loss of $1,598).

●

The sale of 90,713 ounces of gold contributed $129,142 of revenue at an average realized price⁽¹⁾of $1,486 per ounce. In the comparable period in 2018, the sale of 94,458 ounces of gold contributed $110,407 of revenue at an average realized price⁽¹⁾of $1,214 per ounce.

●

Total cost of sales was $86,150 or $950 per ounce of gold sold⁽¹⁾. For the three months ended September 30, 2018, total cost of sales was $72,452 or $767 per ounce of gold sold⁽¹⁾. Total cost of sales includes production costs, depreciation and depletion and royalties and selling costs.

●

Total cash cost⁽¹⁾ was $640 per ounce of gold sold resulting in an average realized cash margin⁽¹⁾ of $784 per ounce of gold sold. In the comparable period in 2018, total cash cost⁽¹⁾ was $568 per ounce of gold sold resulting in an average realized cash margin⁽¹⁾ of $601 per ounce of gold sold.

●

AISC⁽¹⁾was $878 per ounce of gold sold compared to $709 per ounce of gold sold in the comparable period in 2018.

●

Earnings from mine operations were $46,585 compared to $37,608 in the comparable period in 2018.

●

Net earnings were $6,259 compared to $10,734 in the comparable period in 2018. Adjusted earnings⁽¹⁾ were $34,024 compared to $26,327 in the comparable period in 2018.

●

Cash generated by operations was $77,813 compared to $52,364 in the comparable period in 2018.

●

The Company paid $62,416 (as first of two tranches of payments) to repurchase the Offtake Obligation (defined below) and repaid $16,666 of the Loan Facility (defined below) using cash generated from operations.

Refer to the “Non-IFRS Financial Performance Measures” section for a reconciliation of these amounts.

YEAR TO DATE 2019 – SUMMARY

Operating summary

●

Gold production totaled 258,168 ounces compared to 279,670 ounces in the comparable period in 2018.

●

Mill feed grade averaged 8.9 grams per tonne gold compared to 12.0 grams per tonne gold in the comparable period in 2018.

●

Gold recoveries averaged 96.9% compared to 97.4% in the comparable period in 2018.

●

Process plant throughput averaged 3,403 tonnes per day for a total of 929,047 tonnes of ore compared to 2,705 tonnes per day for a total of 738,555 tonnes of ore in the comparable period in 2018.

Financial summary

●

The Company generated revenue of $349,056 compared to revenue of $345,960 in the comparable period in 2018. Revenue includes a gain (loss) on trade receivables at fair value related to provisional pricing adjustments of $5,183 (2018 – loss of $3,344).

●

The sale of 258,100 ounces of gold contributed $339,144 of revenue at an average realized price⁽¹⁾of $1,378 per ounce. In the comparable period in 2018, the sale of 278,417 ounces of gold contributed $345,092 of revenue at an average realized price⁽¹⁾of $1,284 per ounce.

●

Total cost of sales was $243,530 or $944 per ounce of gold sold⁽¹⁾. For the nine months ended September 30, 2018, total cost of sales was $231,448 or $831 per ounce of gold sold⁽¹⁾. Total cost of sales includes production costs, depreciation and depletion, and royalties and selling costs. Total cost of sales was impacted by an increase in depreciation and depletion related to the updated 2019 Mineral Reserve (defined below) in April 2019 and in production costs primarily due to additional development and drilling.

●

Total cash cost⁽¹⁾ was $675 per ounce of gold sold resulting in an average realized cash margin⁽¹⁾ of $639 per ounce of gold sold. In the comparable period in 2018, total cash cost⁽¹⁾ was $627 per ounce of gold sold resulting in an average realized cash margin⁽¹⁾ of $612 per ounce of gold sold.

●

AISC⁽¹⁾was $896 per ounce of gold sold compared to $758 per ounce of gold sold in the comparable period in 2018.

●

Earnings from mine operations were $105,526 compared to $114,512 in the comparable period in 2018.

●

Net earnings were $20,868 compared to $33,773 in the comparable period in 2018. Adjusted earnings⁽¹⁾ were $67,564 compared to $79,172 in the comparable period in 2018.

●

Cash generated by operations was $158,940 compared to $154,358 in the comparable period in 2018.

●

The Company repaid $81,333 of the Loan Facility and paid $62,416 (as first of two tranches of payments) to repurchase the Offtake Obligation using cash generated from operations. Our outstanding balance on the Loan Facility is $398,667. The Company has now achieved and surpassed the initial debt repayment target of $140,000 and is on track to repay $180,000 of debt in 2019.

Refer to the “Non-IFRS Financial Performance Measures” section for a reconciliation of these amounts.

KEY OPERATING AND FINANCIAL STATISTICS

The operating and financial data for the periods are as follows:

In thousands of USD,		For the three months ended				For the nine months ended
except where noted		September 30,		September 30,		September 30,		September 30,
		2019		2018		2019		2018
Operating data
Ore mined (wet tonnes)	t		325,228		255,227		970,659		772,072
Mining rate	tpd		3,535		2,774		3,556		2,828
Ore milled (dry tonnes)	t		309,754		240,122		929,047		738,555
Head grade	g/t Au		9.1		12.4		8.9		12.0
Recovery	%		97.0		97.4		96.9		97.4
Mill throughput	tpd		3,367		2,610		3,403		2,705
Gold ounces produced	oz		88,227		92,641		258,168		279,670
Silver ounces produced	oz		124,958		95,741		368,989		308,676
Gold ounces sold	oz		90,713		94,458		258,100		278,417
Silver ounces sold	oz		108,250		87,110		309,666		289,710
Financial data
Revenue	$		132,735		110,060		349,056		345,960
Earnings from mine operations	$		46,585		37,608		105,526		114,512
Net earnings for the period	$		6,259		10,734		20,868		33,773
Per share - basic	$/share		0.03		0.06		0.11		0.19
Per share - diluted	$/share		0.03		0.06		0.11		0.19
Adjusted earnings⁽¹⁾	$		34,024		26,327		67,564		79,172
Per share - basic⁽¹⁾	$/share		0.18		0.14		0.37		0.43
Total cash and cash equivalents	$		16,583		190,318		16,583		190,318
Cash generated by operating activities	$		77,813		52,364		158,940		154,358
Total assets	$		1,579,105		1,771,543		1,579,105		1,771,543
Long-term debt⁽²⁾	$		413,222		140,357		413,222		140,357
Production costs (milled)	$/t		181		207		178		211
Total cash costs⁽¹⁾	$/oz		640		568		675		627
All-in sustaining costs⁽¹⁾	$/oz		878		709		896		758
Average realized price⁽¹⁾	$/oz		1,486		1,214		1,378		1,284
Average realized cash margin⁽¹⁾	$/oz		784		601		639		612

⁽¹⁾

Refer to the “Non-IFRS Financial Performance Measures” section for a reconciliation of these amounts.

⁽²⁾

Long-term debt does not include the current portions of the Company’s Loan Facility in the amount of $64,423 as at September 30, 2019. For the comparable period in 2018, long-term debt does not include the current portions of the Company’s Credit Facility (defined below) and stream obligation in the amount of $641,468.

The following abbreviations were used above: t (tonnes), tpd (tonnes per day), g/t (grams per tonne), Au (gold) and oz (ounces).

TABLE OF CONTENTS

THIRD QUARTER 2019 –SUMMARY	3
YEAR TO DATE 2019 –SUMMARY	4
KEY OPERATING AND FINANCIAL STATISTICS	5
BUSINESS OVERVIEW	7
OPERATING RESULTS	7
2019 OUTLOOK	10
2019 BRUCEJACK MINE DRILL PROGRAM	11
UPDATED 2019 MINERAL RESERVE ESTIMATE, MINERAL RESOURCE ESTIMATE AND LIFE OF MINE PLAN	12
REGIONAL EXPLORATION	12
ADDITIONAL CLAIMS	13
FINANCIAL RESULTS	13
LIQUIDITY AND CAPITAL RESOURCES	22
SUMMARY OF QUARTERLY FINANCIAL RESULTS	24
COMMITMENTS	25
CONTINGENCIES	26
OFF-BALANCE SHEET ARRANGEMENTS	28
RELATED PARTY TRANSACTIONS	28
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS	28
CHANGES IN ACCOUNTING POLICIES	30
NEW ACCOUNTING POLICIES	30
NEW ACCOUNTING STANDARDS AND RECENT PRONOUNCEMENTS	30
FINANCIAL INSTRUMENTS	30
EVENTS AFTER REPORTING DATE	33
NON-IFRS FINANCIAL PERFORMANCE MEASURES	33
OUTSTANDING SHARE DATA	38
INTERNAL CONTROL OVER FINANCIAL REPORTING	38
RISKS AND UNCERTAINTIES	38
STATEMENT REGARDING FORWARD-LOOKING INFORMATION	39
CAUTIONARY NOTE TO UNITED STATES INVESTORS	43

BUSINESS OVERVIEW

The Company was incorporated on October 22, 2010 under the laws of the Province of British Columbia and is listed on the Toronto Stock Exchange (TSX.PVG) and New York Stock Exchange (NYSE.PVG). The Company was formed for the acquisition, exploration, development and operation of precious metal resource properties in the Americas.

We operate our 100% owned Brucejack Mine located in northwestern British Columbia. The Brucejack Mine is comprised of four mining leases and six mineral claims totaling 3,304 hectares in area and forms part of our contiguous claims package that comprises over 122,000 hectares. The Brucejack Mine is a low-cost, high-grade gold underground mine that started commercial production in July 2017 and achieved steady state production in the second quarter of 2018. Amended permits were received in December 2018 to increase throughput 40% to an annual average of 1.387 million tonnes (3,800 tonnes per day) from 0.99 million tonnes (2,700 tonnes per day). Our current focus is opening up the mine in order to ramp-up mill throughput to 3,800 tonnes per day on a sustainable basis and improving our understanding of the grade profile of the mine.

Our exploration and evaluation assets are the Snowfield Project, Bowser Claims and the Porphyry Potential Deep Drilling (“PPDD”) Project. The Snowfield Project mineral claims are in good standing until 2029, and we continue to conduct baseline environmental studies for potential future development of that project. Grassroots exploration is on-going at the Bowser Claims, with several gold prospects identified for further evaluation. The Bowser Claims are in good standing until 2029. The PPDD Project is a deep underground exploration program involving the testing of the extent of Brucejack-style mineralization and the porphyry potential directly below the Brucejack Mine at depth.

OPERATING RESULTS

Gold and silver production and sales

During the three months ended September 30, 2019, the Brucejack Mine produced 88,227 ounces of gold and 124,958 ounces of silver. Gold production decreased 5% compared to the comparable period in 2018 where the Company produced 92,641 ounces of gold. The decrease in production was the result of a decrease in head grade partially offset by an increase in tonnes milled.

During the three months ended September 30, 2019, the Company sold 90,713 ounces of gold and 108,250 ounces of silver compared to 94,458 ounces of gold and 87,110 ounces of silver in the comparable period in 2018. The decrease in gold ounces sold was the result of decreased gold production.

During the nine months ended September 30, 2019, the Brucejack Mine produced 258,168 ounces of gold and 368,989 ounces of silver. Gold production decreased 8% compared to the comparable period in 2018 where the Company produced 279,670 ounces of gold. The decrease in production was the result of a decrease in head grade partially offset by an increase in tonnes milled.

During the nine months ended September 30, 2019, the Company sold 258,100 ounces of gold and 309,666 ounces of silver compared to 278,417 ounces of gold and 289,710 ounces of silver in the comparable period in 2018. The decrease in gold ounces sold was the result of decreased gold production in the period.

As at September 30, 2019, there were 6,236 ounces of gold doré and 2,396 ounces of gold in concentrate in finished goods inventory recorded at cost of $999 per ounce which includes depreciation and depletion.

Processing

During the three months ended September 30, 2019, a total of 309,754 tonnes of ore, equivalent to a throughput rate of 3,367 tonnes per day, were processed. This was an increase from the comparable period in 2018, in which a total of 240,122 tonnes of ore, equivalent to a throughput rate of 2,610 tonnes per day, were processed. During the nine months ended September 30, 2019, a total of 929,047 tonnes of ore, equivalent to a throughput rate of 3,403 tonnes per day, were processed. This was an increase from the comparable period in 2018, in which a total of 738,555 tonnes of ore, equivalent to a throughput rate of 2,705 tonnes per day, were processed. The tonnes of ore processed increased in the 2019 periods due to the planned production ramp-up to 3,800 tonnes per day following receipt of our amended permits in late 2018.

All critical modifications and upgrades required to sustain processing at the increased production rate of 3,800 tonnes per day are completed. The concentrate filter press upgrade is now complete, as are all process-related pump upgrades. Modifications to the flotation circuit and flocculent systems continue and will be completed during regularly scheduled shutdowns as the final components are delivered.

The mill feed grade averaged 9.1 grams per tonne gold for the third quarter of 2019 compared to 12.4 grams per tonne gold in the comparable period in 2018. For the nine months ended September 30, 2019, the mill feed grade averaged 8.9 grams per tonne gold compared to 12.0 grams per tonne gold in the comparable period in 2018. The decrease in mill feed grade in the 2019 periods was the result of the mine progressing through lower grade areas and processing immediately available stopes that met the grade cut-off.

Gold recovery for the third quarter of 2019 was 97.0% compared to 97.4% in the comparable period in 2018. Gold recovery for the nine months ended September 30, 2019 was 96.9% compared to 97.4% in the comparable period in 2018. We continue to review the mill process to optimize recoveries.

Mining

During the three months ended September 30, 2019, 325,228 tonnes of ore were mined, equivalent to a mining rate of 3,535 tonnes per day compared to 255,227 tonnes of ore, equivalent to a mining rate of 2,774 tonnes per day in the comparable period in 2018. During the nine months ended September 30, 2019, 970,659 tonnes of ore were mined, equivalent to a mining rate of 3,556 tonnes per day compared to 772,072 tonnes of ore, equivalent to a mining rate of 2,828 tonnes per day in the comparable period in 2018.

A combination of limited stope inventory and operational issues resulted in lower-than-planned tonnes, grade and ounces in September, which impacted third quarter gold production.

Mining during the quarter focused on advancing development to open up the mine to provide sufficient stope access to operate at 3,800 tonnes per day on a steady state basis. The additional focus for mining during the quarter was to increase grade to the mill by limiting internal dilution through the optimization of stope design - which reduces the amount of lower-grade tonnes processed. However, the reduction in stope tonnage as the quarter closed reduced our overall tonnage available for processing. This also impacted our ability to maximize grade through limiting internal dilution.

In addition, as mining progressed through mid-September, operational issues with two stopes prevented expected higher grade ore from being mined as planned. There was a hang-up of a key production stope and complications with sequencing another stope. As a result, readily available lower grade tonnage from operating stopes was substituted for the expected higher grade tonnage.

Due to limited stope inventory, production mining in the fourth quarter will focus on maximizing tonnes to the mill, and all stopes above cut-off grade of approximately 5.0 grams per tonne gold will be mined and processed as they become available. The updated life of mine plan, which is planned to be released in the first quarter of 2020, will include a stope inventory plan for steady state production at a rate of 3,800 tonnes per day (see 2020 Updated Mineral Resource and Mineral Reserve Estimates and Life of Mine Plan below).

As planned at the outset of 2019, production ramp-up is expected to supply the mill at 3,800 tonnes per day on a consistent basis by year end, with steady state production at 3,800 tonnes per day slated for 2020.

Lyle Morgenthaler, B.A.Sc., P.Eng., Pretivm’s Chief Mine Engineer is the Qualified Person (“QP”), as defined by National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”), responsible for Brucejack Mine development and has reviewed and approved the scientific and technical information contained in this MD&A relating thereto.

2020 Updated Mineral Resource and Mineral Reserve Estimates and Life of Mine Plan

The Company plans to release updated Mineral Resource and Mineral Reserve estimates in the first quarter of 2020, as well as an updated life of mine plan. The Mineral Resource will be updated with the results from underground drilling completed by the end of the third quarter which includes 89,380 meters from 1,483 holes.

The updated life of mine plan will incorporate longitudinal longhole stoping (mining along the direction of the corridors of high-grade gold mineralization) as the mining method in areas of the mine where corridors of high-grade gold mineralization are defined. The mine plan, which will be based on a production rate of 3,800 tonnes per day, will include a plan for stope inventory. The availability of stopes representing a range of grades, including multiple higher-grade stopes, allows mining operations to optimize stope blending and provides alternative stopes for mining if required.

With the expected increase in the confidence level resulting from the Mineral Resource update and the transition to longitudinal longhole stoping in certain areas, we anticipate improved grade predictability and management of internal dilution, which will in turn allow for improved production forecasting.

Warwick Board, Ph.D., P.Geo, Pr.Sci.Nat., Pretivm’s Vice President, Geology and Chief Geologist is the QP responsible for the Brucejack Mine reserve definition and expansion drilling, and has reviewed and approved the scientific and technical information contained in this MD&A relating thereto.

Sustaining capital expenditures

During the three months ended September 30, 2019, the Company incurred $7,967 on sustaining capital compared to $5,189 in the comparable period in 2018. Significant sustaining capital expenditures during the period included access road development, a truck shop expansion and capitalized development costs. In the comparable period in 2018, sustaining capital expenditures were focused on capitalized development costs, road re-alignment and the installation of ground water wells.

During the nine months ended September 30, 2019, the Company incurred $19,596 of sustaining capital expenditures compared to $12,813 in the comparable period in 2018. Significant sustaining capital expenditures during the period included access road development, the purchase of underground reverse circulation drills, capitalized development costs and the concentrate bulk loading system. In the comparable period in 2018, sustaining capital expenditures included the Smithers warehouse purchase, the grade control sampling station and gravity lab, capitalized development costs and the installation of ground water wells.

Vertical development costs, such as the costs to build new ventilation raises and access ramps that enable the Company to physically access ore underground on multiple mining levels, are capitalized. All level development is expensed.

2019 OUTLOOK

Adjusted 2019 production and financial guidance

Gold production in the first nine months of the year was 258,168 ounces. As a result of limited stope availability, gold production in the fourth quarter is expected to be in-line with third quarter production. Accordingly, we have adjusted our full year 2019 production guidance to between 340,000 ounces to 350,000 ounces of gold.

AISC⁽¹⁾in the first nine months of the year was $896 per ounce of gold sold. As a result of the lower production, annual AISC⁽¹⁾guidance has also been modified and now ranges from $900 to $950 per ounce of gold sold. AISC⁽¹⁾ guidance for the year includes approximately $25,000 for sustaining capital, of which $19,596 has been spent to date.

Refer to the “Non-IFRS Financial Performance Measures” section for a reconciliation of these amounts.

2019 BRUCEJACK MINE DRILL PROGRAM

Exploration drilling for porphyry source

Results from 2019 deep underground exploration drilling at Brucejack continue to confirm potential for a porphyry deposit at depth.

A deep hole with a length of 1,677 meters was drilled northeast under the Valley of the Kings deposit, following up on the underground exploration drilling completed earlier this year (see news release dated June 5, 2019). Hole VU-2019, drilled at a -85 degree angle from the 1130-meter level in the Valley of the Kings underground development, intersected two zones of anomalous copper and molybdenum mineralization at depth, indicative of porphyry-style mineralization and similar to that encountered during the 2018 deep exploration drilling (see news releases dated June 18, 2018 and June 5, 2019). The first intersection, between 1,130 meters to 1,330 meters down hole, corresponds to a zone of propylitic alteration with sporadic intersections of tourmaline, porphyry-style veinlets, and intermediate dikes. The second intersection, between 1,400 meters to 1,675 meters down hole, corresponds to a zone of variable phyllic, propylitic, and sodic-calcic alteration. Geological observations noted in VU-2019 indicate an increased proximity to porphyry-style mineralization compared to the previous deep drilling.

Based on a review of the results of Hole VU-2019 in conjunction with results from previous deep underground exploration drilling and geophysical data, a fourth drill hole was recently initiated to target the porphyry potential to the northwest of drill hole VU-2019.

An update will be provided following the receipt of assay results and further evaluation.

Extension of Brucejack-style gold mineralization

Hole VU-2019 intersected several zones of Brucejack-style veining and alteration from the collar to a depth of 980 meters down hole (see news release dated September 16, 2019). Of particular note were two zones of mineralized carbonate stockwork that contained visible gold at 270 meters and 694 meters downhole, including 6.21 grams of gold per tonne intersected over 2.5 meters (see news release dated September 16, 2019 for assay results).

The hole was drilled in an area uninformed by previous drilling, suggesting the potential extension of Brucejack-style mineralization at depth below the Brucejack Mine.

Warwick Board, Ph.D., P.Geo, Pr.Sci.Nat., Pretivm’s Vice President, Geology and Chief Geologist is the QP responsible for the Brucejack Mine exploration drilling, and has reviewed and approved the scientific and technical information contained in this MD&A relating thereto.

UPDATED 2019 MINERAL RESERVE ESTIMATE, MINERAL RESOURCE ESTIMATE AND LIFE OF MINE PLAN

On April 4, 2019, we announced our updated Mineral Reserve (the “2019 Mineral Reserve”), Mineral Resource (the “2019 Mineral Resource”) and Life of Mine Plan (collectively, the “2019 Updates”) incorporating the production ramp-up to 3,800 tonnes per day for the Brucejack Mine, which highlight the continued robust economics of the low-cost, long-life operation.

The 2019 Updates are detailed in the NI 43-101 Technical Report (the “2019 Report”), prepared by Tetra Tech Canada Inc. (“Tetra Tech”) entitled “Technical Report on the Brucejack Gold Mine, Northwest British Columbia” dated effective April 4, 2019. The 2019 Report updates the operating parameters contemplated in the Brucejack Feasibility Study entitled “Feasibility Study and Technical Report Update on the Brucejack Project, Stewart, BC” with an effective date of June 19, 2014 before the mine was constructed and operating, and confirms Brucejack as a low-cost, high-grade gold producer.

For more information on the 2019 Updates, including milestones and estimates of associated capital and operating costs, refer to the 2019 Report, which is available on the SEDAR website at www.sedar.com and on the EDGAR section of the SEC website at www.sec.gov.

REGIONAL EXPLORATION

The wholly-owned, approximately 1,200-square-kilometer Bowser Claims, located east of the Brucejack Mine, are comprised of 337 claims with an area of 120,811 hectares and include the A6, Lillianne, Virginia K, Canoe, Tuck and Koopa Zones.

The 2019 regional grassroots exploration program is now complete. In total, 19,942 meters of drilling was completed by four drills. Drilling focused on testing a volcanogenic massive sulphide (“VMS”) system at the A6 Zone, a VMS system at the Canoe Zone, a structurally controlled gold system at the Koopa Zone, and epithermal gold systems at the Tuck and Lillianne Zones.

At the A6 Zone, approximately 14 kilometers northeast of the Brucejack Mine, drilling tested an area in the Iskut River Formation that hosts the same stratigraphy as the Eskay Creek Mine, with primitive pillow and massive basalt flows overlying mudstones overlying a rhyolite dome, which is up to 250 meters thick. The rhyolite is moderately to intensely sericite and sericite plus chlorite altered and hosts pyrite stringers. Felsic volcaniclastics along the periphery of the dome are sericite altered, depleted in copper and enriched in sodium and barium.

In addition to drilling, prospecting and geologic mapping focused on prospective areas across the property. 138 magnetotelluric stations were acquired across the property, and downhole and surface electromagnetic surveys were conducted in the A6 Zone.

Final assay results are pending and will be reported once received.

Kenneth C. McNaughton, M.A.Sc., P.Eng., Pretivm’s Vice President and Chief Exploration Officer is the QP responsible for the regional grass-roots exploration program and has reviewed and approved the scientific and technical information in this MD&A related thereto.

ADDITIONAL CLAIMS

Our claims also include the Snowfield Project which borders Brucejack to the north and is comprised of one mineral claim with an area of 1,217 hectares. Since we acquired the Snowfield Project in 2010, we have continued to carry out environmental studies in conjunction with Brucejack. Snowfield represents a longer-term gold opportunity for our shareholders.

FINANCIAL RESULTS


	For the three months ended						For the nine months ended
	September 30,			September 30,			September 30,			September 30,
	2019			2018			2019			2018
Revenue	$	132,735		$	110,060		$	349,056		$	345,960

Cost of sales		86,150			72,452			243,530			231,448

Earnings from mine operations		46,585			37,608			105,526			114,512

Corporate administrative costs		5,286			3,142			13,558			9,030

Operating earnings		41,299			34,466			91,968			105,482

Interest and finance expense		(7,952	)		(17,132	)		(26,134	)		(49,193	)
Interest and finance income		301			1,156			824			1,778
Foreign exchange (loss) gain		369			402			(326	)		335
Loss on financial instruments at fair value		(4,422	)		(7,321	)		(15,415	)		(6,377	)

Earnings before taxes		29,595			11,571			50,917			52,025

Current income tax expense		(1,406	)		(1,112	)		(3,383	)		(3,446	)
Deferred income tax (expense) recovery		(21,930	)		275			(26,666	)		(14,806	)

Net earnings for the period	$	6,259		$	10,734		$	20,868		$	33,773

Other comprehensive earnings, net of tax
Items that will not be reclassified to earnings or loss:
Change in fair value attributable to change in credit risk of financial instruments designated at fair value through profit or loss		-			991			-			4,855
Comprehensive earnings for the period	$	6,259		$	11,725		$	20,868		$	38,628

Three months ended September 30, 2019 compared to the three months ended September 30, 2018

Net earnings for the three months ended September 30, 2019 were $6,259 compared to $10,734 for the comparable period ended September 30, 2018. The decrease in net earnings was mainly attributed to an increase in deferred income tax expense arising from the settlement of the Offtake Obligation offset by an increase in earnings generated from operations due to higher gold prices, a decrease in the loss on financial instruments at fair value and a decrease in interest and finance expense. Earnings from mine operations were $46,585 for the three months ended September 30, 2019 compared to $37,608 for the three months ended September 30, 2018.

Net comprehensive earnings for the three months ended September 30, 2019 were $6,259 compared to net comprehensive earnings of $11,725 for the comparable period ended September 30, 2018. With the repurchase of the stream obligation on December 18, 2018, there was no fair value change attributable to the change in credit risk of financial instruments designated at fair value through profit or loss (“FVTPL”) (2018 – gain of $991).

Revenue

For the three months ended September 30, 2019, the Company generated revenue of $132,735, which included $130,913 of revenue from contracts with customers plus a gain on trade receivables at fair value related to provisional pricing adjustments of $1,822. During the comparable period in 2018, the Company generated revenue of $110,060 which included $111,658 of revenue from contracts with customers and a loss on trade receivables at fair value related to provisional pricing adjustments of $1,598.

For the three months ended September 30, 2019, the Company sold 90,713 ounces of gold, at an average realized price⁽¹⁾ of $1,486 per ounce generating $129,142 in revenue from contracts with customers. The Company sold 108,250 ounces of silver generating $1,771 in revenue. The average London Bullion Market Association AM and PM market price over the three months ended September 30, 2019 was $1,472 (2018 - $1,213) per ounce of gold.

Cost of sales

Total cost of sales for the three months ended September 30, 2019 were $86,150 or $950 per ounce of gold sold⁽¹⁾ compared to $72,452 or $767 per ounce of gold sold⁽¹⁾ in the comparable period in 2018. Cost of sales includes production costs, depreciation and depletion, royalties and selling costs, site share-based compensation, write-down of inventories, changes in inventories, reflecting the difference between produced and sold ounces, and gain on the disposal of plant and equipment.

Refer to the “Non-IFRS Financial Performance Measures” section for a reconciliation of these amounts.

Production costs

Production costs, after adjustments for changes in inventories, for the three months ended September 30, 2019 were $55,149 compared to $50,303 in the comparable period in 2018. Production costs include mining, processing, surface services and other and mine general and administrative costs. Production costs, before adjustments for changes in inventories, were as follows:

In thousands of USD,	For the three months ended
except for tonnes and per tonne data	September 30,				September 30,
	2019				2018
Ore mined (tonnes)		325,228				255,227
Ore milled (tonnes)		309,754				240,122
Mining⁽¹⁾	$	31,073	$/t	96	$	23,234	$/t	91
Processing⁽²⁾		6,381		21		5,472		23
Surface services and other⁽²⁾		7,968		26		10,363		43
Mine general and administrative⁽²⁾		10,647		34		10,740		45
Total production costs⁽²⁾	$	56,069	$/t	181	$	49,809	$/t	207

⁽¹⁾

Cost per tonne data is based on mined tonnes.

⁽²⁾

Cost per tonne data is based on milled tonnes.

Production costs increased in respect of salaries and benefits due to increased head count at the Brucejack Mine and supplies and consumables due to higher tonnes mined and milled. During the quarter, costs were incurred for level development at the Brucejack Mine at an average of approximately 1,010 meters (2018 – 700 meters) per month.

A majority of production costs were incurred in Canadian dollars. During the three months ended September 30, 2019, the average foreign exchange rate was C$1.3204 to $1.00 (2018 – C$1.3070 to $1.00).

Depreciation and depletion

Depreciation and depletion, after adjustments for changes in inventories, for the three months ended September 30, 2019 was $22,706 compared to $16,949 in the comparable period in 2018. The increase in depreciation and depletion was due to the decrease in the Mineral Reserve in the 2019 Updates and timing of sales (movement of costs in inventory), offset by a decrease in production.

The majority of the Company’s depreciation and depletion is determined using the units of production method based on total ounces produced over the estimated Proven and Probable Mineral Reserves.

Site share-based compensation

Site share-based compensation, after adjustments for changes in inventories, for the three months ended September 30, 2019 was $1,135 compared to $569 in the comparable period in 2018. The increase in site share-based compensation was due to an increase in the Company’s share price for valuation of its cash-settled restricted share units offset by timing of sales (movement of costs in inventory).

Royalties and selling costs

Royalties and selling costs, after adjustments for changes in inventories, for the three months ended September 30, 2019 were $1,658 (2018 – $204) and $3,082 (2018 – $4,996), respectively. The increase in royalty expense was due to the 1.2% NSR Royalty (defined below) which began in December of 2018. Refer to the “Commitments” section of this MD&A.

Selling costs includes transportation costs which were $2,940 (2018 – $4,715). The decrease in transportation costs were primarily due to our transition from trucking container shipments of concentrate inventory out of Prince Rupert, British Columbia to bulk shipments through Stewart, British Columbia.

Write-down of inventories

The Company incurred a loss on the write-down of inventories for the three months ended September 30, 2019 in the amount of $2,475 (2018 – nil). On November 2, 2018, Miami Metals I, Inc. (formerly known as, Republic Metals Refining Corporation) (“RMC”), a refinery used by the Company announced it filed for Chapter 11 bankruptcy protection. A settlement agreement was reached among the Company, RMC and its affiliated debtors and debtors in possession and RMC’s senior lenders. The settlement is subject to approval by the United States Bankruptcy Court for the Southern District of New York. The finished goods inventory held by RMC was written down to reflect the cash settlement value.

Total cash costs⁽¹⁾ and AISC⁽¹⁾

Total cash costs⁽¹⁾ for the three months ended September 30, 2019 were $640 per ounce of gold sold compared to $568 per ounce of gold sold in the comparable period in 2018. Total cash costs⁽¹⁾ increased due to higher production costs for additional drilling and lower gold ounces produced and subsequently sold in the period.

AISC⁽¹⁾for the three months ended September 30, 2019 totaled $878 per ounce of gold sold compared to $709 per ounce of gold sold in the comparable period in 2018. AISC⁽¹⁾ increased due to higher production costs for additional drilling, increased sustaining capital expenditures in the period and lower gold ounces produced and subsequently sold in the period. Sustaining capital expenditures amounted to $7,967 (including $343 deferred development costs incurred during production).

Corporate administrative costs

Corporate administrative costs for the three months ended September 30, 2019 were $5,286 compared to $3,142 in the comparable period in 2018.

Share-based compensation for the three months ended September 30, 2019 was $1,811 compared to $934 in the comparable period in 2018. The increase in share-based compensation was due to the increase in the Company’s share price for valuation of its cash-settled restricted share units.

Refer to the “Non-IFRS Financial Performance Measures” section for a reconciliation of these amounts.

Salaries and benefits for the three months ended September 30, 2019 were $1,388 compared to $967 in the comparable period in 2018. The increase in salaries and benefits was due to increased salaries and the accrual of bonuses for corporate employees.

Interest and finance expense

During the three months ended September 30, 2019, the Company incurred interest and finance expense of $7,952 compared to $17,132 in the comparable period in 2018. The Company incurred $5,684 (2018 – nil) in interest expense related to its $480,000 senior secured loan facility (the “Loan Facility”). In the comparable period, the Company incurred $14,841 in interest expense related to its $350,000 senior secured term construction credit facility (the “Credit Facility”). The decrease in interest expense was the result of a decrease in the overall effective interest rate on debt from 15.0% under the Credit Facility to 5.5% under the Loan Facility.

Interest and finance income

During the three months ended September 30, 2019, the Company earned interest and finance income of $301 compared to $1,156 in the comparable period in 2018. The decrease in interest and finance income was the result of a lower cash and cash equivalents balance throughout the period. In 2018, the Company was building cash and cash equivalents to repurchase the stream obligation whereas, in 2019, the Company used excess cash to reduce its Loan Facility.

Loss on financial instruments at fair value

Until the repurchase of the Offtake Obligation on September 30, 2019, the obligation was recorded at fair value at each statement of financial position date. The change in fair value of the Offtake Obligation for the three months ended September 30, 2019 resulted in a loss of $4,422 (2018 – gain of $1,355). The fair value adjustment in the period reflected an adjustment to the final settlement amount given the 100% repurchase of the Offtake Obligation. In the comparable period in 2018, the loss on financial instruments at fair value was also impacted by a fair value loss on the stream obligation of $5,522 and a fair value loss on the prepayment and extension options in the Credit Facility of $3,154.

Current and deferred income taxes

For the three months ended September 30, 2019, current income tax expense was $1,406 related to the 2% net current proceeds portion of the British Columbia Mineral Tax (“BCMT”) compared to $1,112 in the comparable period in 2018. For the three months ended September 30, 2019, deferred income tax expense was $21,930 compared to a $275 recovery in the comparable period in 2018.

The Company is subject to Canadian federal and British Columbia provincial income taxes with an aggregate rate of 27%. The Company is also subject to the BCMT, which is accounted for as an income tax. The BCMT requires initial payments of 2% of net current proceeds until initial construction tax pools are utilized, after which a rate of 13% applies. The BCMT is calculated in CAD. As the Brucejack Mine has reached steady-state operations and previously unrecognized tax benefits have been recorded, the anticipated effective tax rate on mine operating earnings is 36.5% in future periods. Corporate administrative costs, interest and finance expense and other items will be deductible for federal and provincial income taxes only.

For the three months ended September 30, 2019, our effective tax rate, including both current and deferred income taxes, was 78.9%. Excluding the effect of the reversal of a BCMT deferred tax asset due to the repurchase of the Offtake Obligation ($8,112) and the effect of foreign exchange on our BCMT pools ($2,484), our effective tax rate was 44.1%. We will continue to experience effective tax rate volatility from the CAD to USD foreign exchange on our BCMT pools until those pools are fully utilized.

Nine months ended September 30, 2019 compared to the nine months ended September 30, 2018

Net earnings for the nine months ended September 30, 2019 were $20,868 compared to $33,773 for the comparable period ended September 30, 2018. The decrease in net earnings was mainly attributed to an increase in deferred income tax expense, an increase in the loss on financial instruments at fair value and a decrease in earnings generated from operations offset by a decrease in interest and finance expense. Earnings from mine operations were $105,526 for the nine months ended September 30, 2019 compared to $114,512 for the nine months ended September 30, 2018.

Net comprehensive earnings for the nine months ended September 30, 2019 were $20,868 compared to net comprehensive earnings of $38,628 for the comparable period in 2018. With the repurchase of the stream obligation on December 18, 2018, there was no fair value change attributable to the change in credit risk of financial instruments designated at FVTPL (2018 – gain of $4,855).

Revenue

For the nine months ended September 30, 2019, the Company generated revenue of $349,056 which included $343,873 of revenue from contracts with customers plus a gain on trade receivables at fair value related to provisional pricing adjustments of $5,183. During the comparable period in 2018, the Company generated revenue of $345,960 which included $349,304 of revenue from contracts with customers and a loss on trade receivables at fair value related to provisional pricing adjustments of $3,344.

For the nine months ended September 30, 2019, the Company sold 258,100 ounces of gold, at an average realized price⁽¹⁾ of $1,378 per ounce generating $339,144 in revenue from contracts with customers. The Company sold 309,666 ounces of silver generating $4,729 in revenue. The average London Bullion Market Association AM and PM market price over the nine months ended September 30, 2019 was $1,364 (2018 - $1,283) per ounce of gold.

Cost of sales

Total cost of sales for the nine months ended September 30, 2019 were $243,530 or $944 per ounce of gold sold⁽¹⁾ compared to $231,448 or $831 per ounce of gold sold⁽¹⁾ in the comparable period in 2018. Cost of sales includes production costs, depreciation and depletion, royalties and selling costs, site share-based compensation, write-down of inventories, changes in inventories, reflecting the difference between produced and sold ounces, and gain on disposal of plant and equipment.

Refer to the “Non-IFRS Financial Performance Measures” section for a reconciliation of these amounts.

Production costs

Production costs, after adjustments for changes in inventories, for the nine months ended September 30, 2019 were $165,308 compared to $164,743 in the comparable period in 2018. Production costs include mining, processing, surface services and other and mine general and administrative costs. Production costs, before adjustments for changes in inventories, were as follows:

In thousands of USD,	For the nine months ended
except for tonnes and per tonne data	September 30,				September 30,
	2019				2018
Ore mined (tonnes)		970,659				772,072
Ore milled (tonnes)		929,047				738,555
Mining⁽¹⁾	$	89,975	$/t	93	$	73,364	$/t	95
Processing⁽²⁾		18,020		19		16,102		22
Surface services and other⁽²⁾		25,075		27		35,248		48
Mine general and administrative⁽²⁾		31,969		34		31,148		42
Total production costs⁽²⁾	$	165,039	$/t	178	$	155,862	$/t	211

⁽¹⁾

Cost per tonne data is based on mined tonnes.

⁽²⁾

Cost per tonne data is based on milled tonnes.

Production costs increased in respect of salaries and benefits due to increase head count at the Brucejack Mine and supplies and consumables due to higher tonnes mined and milled, offset by a decrease in consultants and contractors related to surface operations. During the nine months ended September 30, 2019, costs were incurred for level development at the Brucejack Mine at an average of approximately 925 meters (2018 – 700 meters) per month.

A majority of production costs were incurred in Canadian dollars. During the nine months ended September 30, 2019, the average foreign exchange rate was C$1.3292 to $1.00 (2018 – C$1.2876 to $1.00).

Depreciation and depletion

Depreciation and depletion, after adjustments for changes in inventories, for the nine months ended September 30, 2019 was $59,447 compared to $50,816 in the comparable period in 2018. The increase in depreciation and depletion was due to the decrease in the Mineral Reserve in the 2019 Updates and the addition of ROU assets (defined below) in the period as a result of transition to IFRS 16 offset by decreased production and timing of sales (movement of costs in inventory). The majority of the Company’s depreciation and depletion is determined using the units of production method based on total ounces produced over the estimated Proven and Probable Mineral Reserves.

Site share-based compensation

Site share-based compensation, after adjustments for changes in inventories, for the nine months ended September 30, 2019 was $2,638 compared to $1,809 in the comparable period in 2018. The increase in site share-based compensation was due to an increase in the Company’s share price for valuation of its cash-settled restricted share units offset by timing of sales (movement of costs in inventory).

Royalties and selling costs

Royalties and selling costs, after adjustments for changes in inventories, for the nine months ended September 30, 2019 were $4,369 (2018 – $413) and $9,338 (2018 – $15,476), respectively. The increase in royalty expense was due to the 1.2% NSR Royalty which began in December of 2018. Refer to the “Commitments” section of this MD&A.

Selling costs includes transportation costs which were $9,120 (2018 – $14,410). The decrease in transportation costs were primarily due to our transition from trucking container shipments of concentrate inventory out of Prince Rupert, British Columbia to bulk shipments through Stewart, British Columbia.

Total cash cost⁽¹⁾ and AISC⁽¹⁾

Total cash costs⁽¹⁾ for the nine months ended September 30, 2019 were $675 per ounce of gold sold compared to $627 per ounce of gold sold in the comparable period in 2018. Total cash costs⁽¹⁾ increased due to higher production costs for additional drilling and lower gold ounces produced and subsequently sold in the period.

AISC⁽¹⁾for the nine months ended September 30, 2019 totaled $896 per ounce of gold sold compared to $758 per ounce of gold sold in the comparable period in 2018. AISC⁽¹⁾ increased due to higher production costs for additional drilling, increased sustaining capital expenditures in the period and lower gold ounces produced and subsequently sold in the period. Sustaining capital expenditures amounted to $19,596 (including $1,553 deferred development costs incurred during production).

Corporate administrative costs

Corporate administrative costs for the nine months ended September 30, 2019 were $13,558 compared to $9,030 in the comparable period in 2018.

Share-based compensation for the nine months ended September 30, 2019 was $4,137 compared to $2,283 in the comparable period in 2018. The increase in share-based compensation was due to the increase in the Company’s share price for valuation of its cash-settled restricted share units.

Salaries and benefits for the nine months ended September 30, 2019 were $3,842 compared to $2,639 in the comparable period in 2018. The increase in salaries and benefits was due to increased salaries and the accrual of bonuses for corporate employees.

Refer to the “Non-IFRS Financial Performance Measures” section for a reconciliation of these amounts.

Interest and finance expense

During the nine months ended September 30, 2019, the Company incurred interest and finance expense of $26,134 compared to $49,193 in the comparable period in 2018. The Company incurred $19,464 (2018 – nil) in interest expense related to its Loan Facility. In the comparable period, the Company incurred $42,482 in interest expense related to the Credit Facility. The decrease in interest expense was the result of a decrease in the overall effective interest rate on debt from 15.0% under the Credit Facility to 5.5% under the Loan Facility.

Interest and finance income

During the nine months ended September 30, 2019, the Company earned interest and finance income of $824 compared to $1,778 in the comparable period in 2018. The decrease in interest and finance income was the result of a lower cash and cash equivalents balance throughout the period. In 2018, the Company was building cash and cash equivalents to repurchase the stream obligation whereas, in 2019, the Company used excess cash to reduce its Loan Facility.

Loss on financial instruments at fair value

Until the repurchase of the Offtake Obligation on September 30, 2019, the obligation was recorded at fair value at each statement of financial position date. During the nine months ended September 30, 2019, the changes in fair value of the Offtake Obligation was a function of changes to the estimated production schedule, as we move from 2,700 tonnes per day to 3,800 tonnes per day, an increase in future gold prices, a decrease in interest rates, a decrease in credit spread and adjustments to the final settlement amount on repurchase of the Offtake Obligation.

The change in fair value of the Offtake Obligation resulted in a loss of $15,415 (2018 – gain of $7,408). In the comparable period in 2018, the loss on financial instruments at fair value was also impacted by a fair value loss on the stream obligation of $15,297 and a fair value gain on the prepayment and extension options in the Credit Facility of $1,512.

Current and deferred income taxes

For the nine months ended September 30, 2019, current income tax expense was $3,383 related to the 2% net current proceeds portion of the BCMT compared to $3,446 in the comparable period in 2018. For the nine months ended September 30, 2019, deferred income tax expense was $26,666 compared to $14,806 in the comparable period in 2018.

For the nine months ended September 30, 2019, our effective tax rate, including both current and deferred income taxes, was 59.0%. Excluding the impact of the reversal of a BCMT deferred tax asset due to the repurchase of the Offtake Obligation ($8,112) and the effect of foreign exchange on our BCMT pools, our effective tax rate was 46.8%. We will continue to experience effective tax rate volatility from the CAD to USD foreign exchange on our BCMT pools until those pools are fully utilized.

LIQUIDITY AND CAPITAL RESOURCES

The Company manages liquidity risk by monitoring actual and projected cash flows and matching the maturity profile of financial assets and liabilities. Cash flow forecasting is performed regularly. The Company monitors forecasts of liquidity in the form of cash and cash equivalents to ensure it has sufficient cash to meet operational needs.

Factors that can impact the Company’s liquidity are monitored regularly and include assumptions of gold market prices, foreign exchange rates, production levels, operating costs and capital costs. Contractual obligations and other commitments that could impact the Company’s liquidity are detailed in the “Commitments” section of this MD&A. We prepare annual expenditure budgets that are approved by the Board of Directors.

Our capital structure consists of debt instruments, convertible debt instruments and equity attributable to common shareholders comprised of issued share capital, contributed surplus, accumulated comprehensive loss and accumulated deficit.

Liquidity and capital resources

Working capital⁽¹⁾

Our cash and cash equivalents as at September 30, 2019 totaled $16,583, decreasing by $28,824 from $45,407 as at December 31, 2018. The decrease in cash and cash equivalents was primarily due to an increase in cash outflows related to principal repayments on the Loan Facility and the repurchase of the Offtake Obligation, an increase in sustaining capital expenditures, offset by an increase in cash flows generated from operations of the Brucejack Mine.

The Company has a working capital⁽¹⁾ deficit of $96,919 as at September 30, 2019 compared to a deficit of $48,163 as at December 31, 2018. At current gold prices and our average realized cash margin⁽¹⁾, management believes future cash flows from operations are sufficient to fund our operations, as well as other planned and foreseeable commitments currently estimated for 2019 and 2020. With respect to medium- and longer-term capital requirements, management believes that operating cash flow, the Company’s active management of its operations and development activities, and where appropriate, capital available through financing sources such as debt funding, will enable the Company to meet its capital requirements.

At September 30, 2019, $16,415 was available under our Loan Facility for additional liquidity.

We generated cash from operations of $158,940 for the nine months ended September 30, 2019 compared to $154,358 in the comparable period in 2018. For the nine months ended September 30, 2019, the Company delivered 234,378 ounces of gold pursuant to its Offtake Obligation. The settlement of gold ounces resulted in a decrease in the Offtake Obligation of $3,068 (2018 – $3,659) due to the realized loss attributable to the final settlement price in the defined pricing period and the gold spot price on the date of delivery.

Refer to the “Non-IFRS Financial Performance Measures” section for a reconciliation of these amounts.

Working capital⁽¹⁾ items other than cash and cash equivalents and the current portion of long-term debt consisted of receivables and other of $19,696 and inventories of $23,067 (valued at cost) offset by accounts payable and accrued liabilities of $71,842.

Receivables and other is comprised primarily of $13,029 of trade receivables, $4,184 of prepayments and deposits and $1,761 of Goods and Services Tax refunds. Inventory is comprised of $13,954 in materials and supplies, $8,627 in finished metal and $486 in in-circuit inventory.

Accounts payable and accrued liabilities includes trade payables and accrued liabilities of $55,749, the current portion of lease obligations of $5,824, the employee benefit liability of $4,531 and the current portion of the restricted share unit liability of $3,404. Trade payables and accrued liabilities includes $6,212 of remaining construction related payables and holdbacks.

During the nine months ended September 30, 2019, the exercise of share options awards provided us with $7,344 (2018 – $4,564) of additional liquidity.

Cash flows

The Company’s cash flows from operating, investing and financing activities, as presented in the corresponding unaudited condensed consolidated interim statements of cash flows, are summarized in the following table for the three and nine months ended September 30, 2019 and 2018:

In thousands of USD	For the three months ended						For the nine months ended
	September 30,			September 30,			September 30,			September 30,
	2019			2018			2019			2018
Cash flow information
Cash generated by operations	$	77,813		$	52,364		$	158,940		$	154,358
Cash generated by (used in) financing activities		(82,662	)		4,522			(163,791	)		4,358
Cash used in investing activities		(12,687	)		(9,684	)		(24,439	)		(24,575	)
Effect of foreign exchange rate changes on cash and cash equivalents		(162	)		621			466			(108	)
Change in cash and cash equivalents	$	(17,698	)	$	47,823		$	(28,824	)	$	134,033

The Company generated $77,813 and $158,940 in operating cash flows for the three and nine months ended September 30, 2019 respectively, compared to $52,364 and $154,358 for the respective comparable period in 2018. The increase in cash flows generated from operations is primarily due to the increase in gold price per ounce partially offset by fewer gold ounces produced and subsequently sold in the period.

The Company used $82,662 in financing cash flow for the three months ended September 30, 2019 (2018 – generated $4,522). The increase in financing cash outflows was the result of a $62,416 payment to repurchase the Offtake Obligation, $16,666 in repayments on the Loan Facility, payment of $6,997 in interest related to the Loan Facility and convertible notes and lease payments of $1,649 offset by proceeds from the exercise of share options of $5,066. In the comparable period in 2018, the Company completed a flow-through share financing of $2,304 and generated $3,460 of proceeds from the exercise of share options, which were offset by payment of $1,125 in interest related to the convertible notes.

Refer to the “Non-IFRS Financial Performance Measures” section for a reconciliation of these amounts.

The Company used $163,791 in financing cash flows for the nine months ended September 30, 2019 (2018 – generated $4,358). The increase in financing cash outflows was the result of $81,333 in repayments on the Loan Facility, a $62,416 payment to repurchase the Offtake Obligation, payment of $22,286 in interest related to the Loan Facility and convertible notes and lease payments of $4,833. In the comparable period in 2018, the Company generated $4,564 of proceeds from the exercise of share options and $2,304 of proceeds from a flow-through share financing, which were offset by the payment of interest in the amount of $2,250 to the holders of the convertible notes.

Cash used in investing activities for the three and nine months ended September 30, 2019 was $12,687 and $24,439 respectively, compared to $9,684 and $24,575 in the respective comparable period on 2018. For the 2019 periods, cash used in investing activities are related to sustaining capital expenditures and exploration and evaluation expenditures. In the comparable period in 2018, cash used in investing activities also included the payment of construction-related payables.

Sustaining capital and exploration and evaluation expenditures are higher during the summer months as a result of an increase in outdoor work due to favourable weather conditions.

SUMMARY OF QUARTERLY FINANCIAL RESULTS

The following table contains selected quarterly information derived from the Company’s unaudited quarterly condensed consolidated interim financial statements which are reported under IFRS applicable to interim financial reporting.

In thousands of USD,	2019		2019		2019		2018		2018		2018		2018			2017
except per share data	Q3		Q2		Q1		Q4		Q3		Q2		Q1			Q4
Revenue	$	132,735	$	113,202	$	103,119	$	108,596	$	110,060	$	146,478	$	89,422		$	107,058
Earnings from mine operations	$	46,585	$	29,789	$	29,152	$	36,117	$	37,608	$	60,070	$	16,834		$	26,890
Net earnings (loss)	$	6,259	$	10,443	$	4,166	$	2,847	$	10,734	$	31,097	$	(8,058	)	$	(2,720	)
Comprehensive earnings (loss)	$	6,259	$	10,443	$	4,166	$	3,535	$	11,725	$	33,023	$	(6,120	)	$	(2,720	)
Earnings (loss) per share -
Basic	$	0.03	$	0.06	$	0.02	$	0.01	$	0.06	$	0.17	$	(0.04	)	$	(0.01	)
Diluted	$	0.03	$	0.06	$	0.02	$	0.01	$	0.06	$	0.17	$	(0.04	)	$	(0.01	)
Total assets	$	1,579,105	$	1,609,644	$	1,625,855	$	1,613,418	$	1,771,543	$	1,731,950	$	1,678,657		$	1,671,537
Long-term liabilities⁽¹⁾	$	489,464	$	550,196	$	579,873	$	573,659	$	178,088	$	408,597	$	395,208		$	388,558
Cash dividends	$	-	$	-	$	-	$	-	$	-	$	-	$	-		$	-
Cash and cash equivalents	$	16,583	$	34,281	$	50,868	$	45,407	$	190,318	$	142,495	$	70,540		$	56,285
Mineral properties, plant and equipment	$	1,519,702	$	1,521,301	$	1,530,763	$	1,522,919	$	1,534,908	$	1,542,419	$	1,556,945		$	1,564,860

⁽¹⁾

Long-term liabilities does not include the current portions of the Company’s Loan Facility and Offtake Obligation in the amount of $84,423 as at September 30, 2019. For the comparable period in 2018, long-term liabilities does not include the current portions of the Company’s Credit Facility, stream obligation and Offtake Obligation in the amount of $648,876.

COMMITMENTS

The following table provides our contractual obligations as of September 30, 2019:

In thousands of USD	1 year		2-3 years		4-5 years		More than 5 years		Total
Operating activities:
Decommissioning and restoration provision	$	-	$	187	$	-	$	21,977	$	22,164
Lease obligations		6,458		7,742		2,223		-		16,423
Purchase commitments		9,688		-		-		-		9,688
Short-term lease commitments		313		-		-		-		313
Financing activities:
Principal repayments on Loan Facility		66,667		133,333		198,667		-		398,667
Repayment of convertible notes		2,250		103,366		-		-		105,616
Interest payments on Loan Facility⁽¹⁾		17,803		25,398		2,255		-		45,456
Offtake Obligation		20,000		-		-		-		20,000
	$	123,179	$	270,026	$	203,145	$	21,977	$	618,327

⁽¹⁾

Interest payments on Loan Facility represent management’s best estimate based on current LIBOR and the Company’s projected applicable margin in accordance with the terms of the Loan Facility.

Commitments – Brucejack Mine

The Company and the Nisga’a Nation have entered into a comprehensive Cooperation and Benefits Agreement in respect of the Brucejack Mine. Under the terms of this agreement, the Nisga’a Nation will provide ongoing support for the development and operation of Brucejack with participation in its economic benefits.

The Brucejack Mine is subject to a 1.2% net smelter returns royalty (“1.2% NSR Royalty”) on production in excess of a cumulative 503,386 ounces of gold and 17,907,080 ounces of silver. The gold ounce production threshold for the 1.2% NSR Royalty was met in December 2018. For the nine months ended September 30, 2019, $3,977 (2018 – nil) was expensed to royalties and selling costs in the statement of earnings.

Commitments – Offtake Obligation

Under the offtake agreement dated September 15, 2015 entered into by the Company in connection with the construction financing for the Brucejack Mine (the “Offtake Agreement”), we were obligated to sell 100% of refined gold up to 7,067,000 ounces to the offtake counterparties (the “Offtake Obligation”). The final purchase price to be paid by each purchaser under the Offtake Obligation was, at the purchaser’s option, a market referenced gold price in USD per ounce during a defined pricing period before and after the date of each sale.

The Company had the option to reduce the Offtake Obligation by up to 75% by paying $13 per ounce effective December 31, 2019 on the then remaining undelivered gold ounces.

On September 15, 2019, the Company entered into an agreement with the holders of the Offtake Obligation to repurchase 100% of the outstanding obligation effective September 30, 2019. In exchange, the Company agreed to pay the holders of the Offtake Obligation $13 per ounce for 100% of the refined gold remaining to be delivered under the Offtake Agreement, equating to $82,416. Under the terms of the agreement, the Company paid $62,416 on September 30, 2019, with the remaining balance due on November 30, 2019.

CONTINGENCIES

Class action lawsuits

Canadian Class Action

The Wong Action alleges that the price of our shares on the TSX and NYSE suffered a significant drop in value following the announcement on October 9, 2013 of the resignation of Strathcona Mineral Services Ltd. (“Strathcona”), the consultant responsible for overseeing and reporting on the 10,000-tonne bulk sample, and the announcement of Strathcona’s reasons for resigning on October 22, 2013.

United States of America Class Action

Construction claims

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any off-balance sheet arrangements.

RELATED PARTY TRANSACTIONS

Other than as expressed herein, and remuneration of key management personnel and the Board of Directors, in the ordinary course of their employment or directorship, as applicable, we had no transactions with related parties as defined in IAS 24, Related Party Disclosures.

We have entered into employment agreements with each of our officers, including our Executive Chairman (our “Exec Chair”), our President and Chief Executive Officer (our “CEO”), our Executive Vice President and Chief Financial Officer (our “CFO”), our Vice President, Operations (our “VP Ops”), our Executive Vice President, Corporate Affairs and Sustainability (our “EVP Corporate”), and our Vice President and Chief Exploration Officer (our “CExO).

Under his employment agreement, the Exec Chair is entitled to a retirement allowance which remains due and payable in full in the event the Exec Chair terminates his employment with the Company. The retirement allowance, in the amount of C$6,000 ($4,531), remains a current liability as at September 30, 2019. The Exec Chair is also entitled, on termination without cause, including following a change of control, to his base salary for the remainder of his term as the Exec Chair, the retirement allowance and a pro-rated bonus for any period for which the Exec Chair was not awarded a bonus up to the end of his term as the Exec Chair. On May 2, 2019, the Company announced that the Exec Chair will be retiring from the Company on December 31, 2019 at which time the retirement allowance will be paid.

Under the employment agreements, our officers, including the CEO, CFO, VP Ops, EVP Corporate and CExO receive a base salary, extended benefits and are eligible for an annual performance-based bonus and long-term incentive awards determined at the discretion of our Board of Directors.

Certain of our officers, including the CEO, CFO, VP Ops, EVP Corporate and CExO are also entitled, on termination without cause, including following a change of control, to twenty-four months’ salary and twice the average annual performance bonus earned in the three years immediately preceding termination.

CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The preparation of financial statements requires the use of accounting estimates. It also requires management to exercise judgment in the process of applying its accounting policies. Estimates and judgments are regularly evaluated and are based on management’s experience and other factors, including expectations about future events that are believed to be reasonable under the circumstances. The following discusses the most significant accounting judgments and accounting estimates that the Company has made in the preparation of the financial statements including those that could result in a material effect in the next financial year on the carrying amounts of assets and liabilities.

Key accounting policy judgments

Impairment of mineral properties, plant and equipment

The application of the Company’s accounting policy for impairment of mineral properties, plant and equipment requires judgment to determine whether indicators of impairment exist. The review of impairment indicators includes consideration of both external and internal sources of information, including factors such as market and economic conditions, metal prices and forecasts, capital expenditure requirements, future operating costs and production volumes. Management has assessed impairment indicators for the Company’s mineral properties, plant and equipment and has concluded that no impairment indicators exist as of September 30, 2019.

Impairment of exploration and evaluation assets

The application of the Company’s accounting policy for impairment of exploration and evaluation assets requires judgment to determine whether indicators of impairment exist including factors such as, the period for which the Company has the right to explore, expected renewals of exploration rights, whether substantive expenditures on further exploration and evaluation of resource properties are budgeted and evaluation of the results of exploration and evaluation activities up to the reporting date. Management has assessed impairment indicators on the Company’s exploration and evaluation assets and has concluded that no impairment indicators exist as of September 30, 2019.

Sources of estimation uncertainty

Mineral Reserves and Resources

The Company estimates its Mineral Reserves and Resources based on information compiled by qualified persons as defined in accordance with NI 43-101 requirements. The estimation of Mineral Reserves and Resources requires judgment to interpret available geological data, select an appropriate mining method and establish an extraction schedule. It also requires various assumptions, including those about future commodity prices, exchange rates, production costs and recovery rates. There are uncertainties inherent in estimating Mineral Reserves and Resources and assumptions that are valid at the time of estimation may change significantly when new information becomes available. New geological data as well as changes in the above assumptions may change the economic status of reserves and may, ultimately, result in the reserves being revised.

The changes in the Proven and Probable Mineral Reserves pursuant to the 2019 Updates impacted the calculation of depreciation and depletion expense beginning the second quarter of 2019.

CHANGES IN ACCOUNTING POLICIES

The Company adopted IFRS 16 effective January 1, 2019 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under IAS 17, Leases (“IAS 17”) and IFRIC 4, Determining Whether an Arrangement Contains a Lease. IFRS 16 provides a single lessee accounting model, requiring lessees to recognize a right of use asset (“ROU asset”) and a lease obligation at the lease commencement date.

Discussion and analysis of the changes in our accounting policies during the financial year ended December 31, 2018 and subsequent periods, including the details of the impact on adoption of IFRS 16 are included in our MD&A for the years ended December 31, 2018 and 2017 and our MD&A for the three months ended March 31, 2019 and 2018.

NEW ACCOUNTING POLICIES

Our significant accounting policies, including those initially adopted during the financial year ended December 31, 2018, are presented in note 3 to the audited consolidated financial statements for the years ended December 31, 2018 and 2017. New accounting policies adopted during the period related to the Company’s adoption of IFRS 16 and are described in our MD&A for the three months ended March 31, 2019 and 2018.

NEW ACCOUNTING STANDARDS AND RECENT PRONOUNCEMENTS

There are no other IFRS or International Financial Reporting Interpretations Committee interpretations that are not yet effective or early adopted that are expected to have a material impact on the Company.

FINANCIAL INSTRUMENTS

Classification of financial assets

We have the following financial assets: cash and cash equivalents, receivables and other and restricted cash.

Cash and cash equivalents and restricted cash are classified at amortized cost. Interest income is recognized by applying the effective interest rate method.

The Company’s trade receivables result from sales transactions in accordance with IFRS 15, Revenue from Contracts with Customers and contain provisional pricing arrangements. These trade receivables are classified as FVTPL with the gain (loss) included in revenue.

Classification of financial liabilities

We have the following financial liabilities: accounts payable and accrued liabilities which include lease obligations, the restricted share unit liability and deferred share unit liability, the Loan Facility, the Offtake Obligation settlement balance payable and the debt portion of the convertible notes.

Accounts payable and accrued liabilities, the Loan Facility and the debt portion of the convertible notes are classified as financial liabilities at amortized cost and are recognized initially at fair value, net of any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are held at amortized cost using the effective interest method.

The restricted share unit liability and deferred share unit liability are recorded at FVTPL and, accordingly, are recorded on the statement of financial position at fair value.

Derivative instruments, including embedded derivatives, are recorded at FVTPL and, accordingly, are recorded on the statement of financial position at fair value. Fair values for derivative instruments are determined using valuation techniques, with assumptions based on market conditions existing at the statement of financial position date or settlement date of the derivative.

The Company entered into an agreement with the holders of the Offtake Obligation to repurchase 100% of the outstanding obligation effective September 30, 2019. In exchange, the Company agreed to pay the holders of the Offtake Obligation $13 per ounce for 100% of the refined gold remaining to be delivered under the Offtake Agreement, equating to $82,416. Under the terms of the agreement, the Company paid $62,416 on September 30, 2019, with the remaining balance due on November 30, 2019. The outstanding Offtake Obligation settlement balance is recorded at amortized cost and the carrying value approximates fair value.

Financial risk management

We are exposed to a variety of financial risks: market risk (including currency risk, interest rate risk and commodity price risk), credit risk and liquidity risk from our financial instruments.

Risk management is the responsibility of management and is carried out under policies approved by the Board of Directors. Material risks are monitored and are regularly discussed with the Audit Committee and Board of Directors. The type of risk exposure and the way in which such exposure is managed is as follows:

Market risk

Currency risk

The Company is subject to currency risk on financial instruments which are denominated in currencies that are not the same as the functional currency of the entity that holds them. Exchange gains and losses would impact earnings.

The Company is exposed to currency risk through cash and cash equivalents, receivables and other excluding trade receivables, restricted cash and accounts payable and accrued liabilities including lease obligations, which are denominated in CAD. The Company has not hedged its exposure to currency fluctuations at this time.

In addition to currency risk from financial instruments, a significant portion of the Company’s mine production costs, capital expenditures and corporate administrative costs are denominated in CAD. Consequently, fluctuations in the USD exchange rate against the CAD increases the volatility of cost of sales and corporate administrative costs.

Interest rate risk

The Company is subject to interest rate risk with respect to its investments in cash and cash equivalents. The Company’s current policy is to invest cash at floating rates of interest and cash reserves are to be maintained in cash and cash equivalents in order to maintain liquidity, while achieving a satisfactory return for shareholders. Fluctuations in interest rates when cash and cash equivalents mature impact interest income earned.

The Company is subject to interest rate risk with respect to its Loan Facility. Interest rates associated with this facility are based on LIBOR and the administrative agents’ base rate which fluctuates based on market conditions.

The Company was subject to interest rate risk with respect to the fair value of the Offtake Obligation which was accounted for at FVTPL. The Offtake Obligation was repurchased on September 30, 2019.

Commodity price risk

The Company is subject to commodity price risk from fluctuations in the market prices for gold and silver. Commodity price risks are affected by many factors that are outside the Company’s control including global or regional consumption patterns, the supply of and demand for metals, speculative activities, the availability and costs of metal substitutes, inflation and political and economic conditions.

The financial instrument impacted by commodity prices is trade receivables. Price adjustments are made in subsequent periods to the customer receivables for concentrate sales transactions based on movements in market prices prior to final pricing. As a result, concentrate sales receivables are fair valued and adjusted each period to reflect forward market prices to the estimated settlement date.

The Company has not hedged the price of any commodity at this time.

Credit risk

Credit risk is the risk of potential loss to the Company if the counterparty to a financial instrument fails to meet its contractual obligations. The Company’s credit risk is primarily attributable to its liquid financial assets including cash and cash equivalents, trade receivables, tax receivables and restricted cash.

The Company limits its exposure to credit risk on financial assets through investing its cash and cash equivalents and restricted cash with high-credit quality financial institutions. Management believes the risk of loss related to these deposits to be low. The Company continually evaluates changes in the status of its counterparties.

We are exposed to credit risk through our trade receivables, which are principally with internationally recognized counterparties. The Company sold its doré gold to counterparties to its Offtake Obligation until September 15, 2019. Currently, the Company sells its doré gold on spot contracts to financial institutions and its concentrate gold to trading companies. The Company sells its silver to refineries located in Canada and other jurisdictions and trading companies. The Company has had limited instances of default from its counterparties. The Company continually evaluates the counterparties to which it sells its product. The Company is not economically dependent on a limited number of customers for the sale of its gold and silver as its products can be sold through numerous world-wide commodity markets.

Liquidity risk

Liquidity risk is the risk that we will not be able to meet our financial obligations as they fall due. The Company manages liquidity risk by monitoring actual and projected cash flows and matching the maturity profile of financial assets and liabilities. Cash flow forecasting is performed regularly, and we try to ensure that there is sufficient capital in order to meet short-term business requirements, after taking into account cash flows from operations and our holdings of cash and cash equivalents. Our cash and cash equivalents are currently invested in business and savings accounts with financial institutions of high credit quality which are available on demand by us for our programs. To the extent we do not believe there is sufficient liquidity to meet obligations, we will consider drawing on the Loan Facility, securing additional debt or equity funding. For further discussion, refer to the “Liquidity and Capital Resources” section of this MD&A.

EVENTS AFTER REPORTING DATE

The Company does not have any events after the reporting date to disclose.

NON-IFRS FINANCIAL PERFORMANCE MEASURES

The Company has included certain non-IFRS measures in this MD&A. The Company believes that these measures, in addition to measures prepared in accordance with IFRS, provide readers an improved ability to evaluate the underlying performance of the Company and to compare it to information reported by other companies. The non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These measures do not have any standardized meaning prescribed under IFRS, and therefore may not be comparable to similar measures presented by other issuers.

Cost of sales per ounce of gold sold

The Company reports cost of sales on a gold ounce sold basis. Management uses this metric as a tool to monitor total operating cost performance which includes non-cash items such as depreciation and depletion and site share-based compensation.

The following table reconciles this non-IFRS measure to the most directly comparable IFRS measure disclosed in the financial statements.

In thousands of USD,	For the three months ended				For the nine months ended
except for per ounce data	September 30,		September 30,		September 30,		September 30,
	2019		2018		2019		2018
Gold ounces sold		90,713		94,458		258,100		278,417
Cost of sales per ounce sold reconciliation
Cost of sales	$	86,150	$	72,452	$	243,530	$	231,448
Cost of sales per ounce of gold sold	$	950	$	767	$	944	$	831

Total cash costs

Total cash costs is a common financial performance measure in the gold mining industry but has no standard meaning. The Company reports total cash costs on a gold ounce sold basis. The Company believes that, in addition to measures prepared in accordance with IFRS, such as revenue, certain readers can use this information to evaluate the Company’s performance and ability to generate operating earnings and cash flow from its mining operations. Management uses this metric as an important tool to monitor operating cost performance. Total cash costs for the three and nine months ended September 30, 2019 and 2018 are not comparable due to the adoption of IFRS 16.

Total cash costs include cost of sales such as mining, processing, surface services and other, mine general and administrative costs, royalties and selling costs and changes in inventories less non-cash depreciation and depletion, write-down of inventories due to RMC bankruptcy, site share-based compensation and silver revenue divided by gold ounces sold to arrive at total cash costs per ounce of gold sold. Other companies may calculate this measure differently.

The following table reconciles this non-IFRS measure to the most directly comparable IFRS measure disclosed in the financial statements.

In thousands of USD,	For the three months ended						For the nine months ended
except for per ounce data	September 30,			September 30,			September 30,			September 30,
	2019			2018			2019			2018
Gold ounces sold		90,713			94,458			258,100			278,417
Total cash costs reconciliation
Cost of sales	$	86,150		$	72,452		$	243,530		$	231,448
Less: Depreciation and depletion		(22,706	)		(16,949	)		(59,447	)		(50,816	)
Less: Write-down of inventories		(2,475	)		-			(2,475	)		-
Less: Site share-based compensation		(1,135	)		(569	)		(2,638	)		(1,809	)
Less: Silver revenue		(1,771	)		(1,251	)		(4,729	)		(4,212	)
Total cash costs	$	58,063		$	53,683		$	174,241		$	174,611
Total cash costs per ounce of gold sold	$	640		$	568		$	675		$	627

All-in sustaining costs

The Company believes that AISC more fully defines the total costs associated with producing gold. AISC is calculated based on the definitions published by the World Gold Council (“WGC”) (a market development organization for the gold industry comprised of and funded by 18 gold mining companies from around the world). The WGC is not a regulatory organization. The Company calculates AISC as the sum of total cash costs (as described above), sustaining capital expenditures (excluding expansion capital related to the 3,800 tonne per day expansion project), accretion on decommissioning and restoration provision, treatment and refinery charges, payments on lease obligations, site share-based compensation, and corporate administrative costs, all divided by the gold ounces sold to arrive at a per ounce amount.

Effective January 1, 2019, the Company adopted the WGC’s revised definition for AISC, which includes cash payments from sustaining leases to address the adoption of IFRS 16.

Other companies may calculate this measure differently as a result of differences in underlying principles and policies applied. Differences may also arise due to a different definition of sustaining versus non-sustaining capital.

The following table reconciles this non-IFRS measure to the most directly comparable IFRS measure disclosed in the financial statements.

In thousands of USD,	For the three months ended				For the nine months ended
except for per ounce data	September 30,		September 30,		September 30,		September 30,
	2019		2018		2019		2018
Gold ounces sold		90,713		94,458		258,100		278,417
All-in sustaining costs reconciliation
Total cash costs	$	58,063	$	53,683	$	174,241	$	174,611
Sustaining capital expenditures ⁽¹⁾		7,967		5,189		19,596		12,813
Accretion on decommissioning and restoration provision		105		136		369		432
Treatment and refinery charges		5,646		4,267		16,396		12,387
Payments on lease obligations		1,649		-		4,833		-
Site share-based compensation		1,135		569		2,638		1,809
Corporate administrative costs ⁽²⁾		5,116		3,110		13,103		8,934
Total all-in sustaining costs	$	79,681	$	66,954	$	231,176	$	210,986
All-in sustaining costs per ounce of gold sold	$	878	$	709	$	896	$	758

⁽¹⁾

Sustaining capital expenditures includes deferred development costs.

⁽²⁾

Includes the sum of corporate administrative costs per the statement of earnings and comprehensive earnings, excluding depreciation within those figures.

Average realized price and average realized cash margin

Average realized price and average realized cash margin per ounce of gold sold are used by management and readers to better understand the gold price and cash margin realized throughout a period.

Average realized price is calculated as revenue from contracts with customers plus treatment and refinery charges included in concentrate revenue less silver revenue divided by gold ounces sold. Average realized cash margin represents average realized price per gold ounce sold less total cash costs and treatment and refinery charges per ounce sold.

The following table reconciles these non-IFRS measures to the most directly comparable IFRS measures disclosed in the financial statements.

In thousands of USD,	For the three months ended						For the nine months ended
except for per ounce data	September 30,			September 30,			September 30,			September 30,
	2019			2018			2019			2018
Revenue from contracts with customers	$	130,913		$	111,658		$	343,873		$	349,304
Treatment and refining charges		5,646			4,267			16,396			12,387
Less: Silver revenue		(1,771	)		(1,251	)		(4,729	)		(4,212	)
Gold revenue⁽¹⁾	$	134,788		$	114,674		$	355,540		$	357,479
Gold ounces sold		90,713			94,458			258,100			278,417
Average realized price	$	1,486		$	1,214		$	1,378		$	1,284
Less: Total cash costs per ounce of gold sold		(640	)		(568	)		(675	)		(627	)
Less: Treatment and refining charges per ounce of gold sold		(62	)		(45	)		(64	)		(45	)
Average realized cash margin per ounce of gold sold	$	784		$	601		$	639		$	612

⁽¹⁾

Gold revenue excludes the gain (loss) on trade receivables at fair value related to provisional pricing adjustments in the amount of $1,822 and $5,183 (2018 – loss of $1,598 and $3,344) for the three and nine months ended September 30, 2019, respectively.

Adjusted earnings and adjusted basic earnings per share

Adjusted earnings and adjusted basic earnings per share are used by management and readers to measure the underlying operating performance of the Company. Presenting these measures helps management and readers evaluate earning trends more readily in comparison with results from prior periods.

Adjusted earnings is defined as net earnings adjusted to exclude specific items that are significant, but not reflective of the underlying operations of the Company, including: loss on financial instruments at fair value, amortization of discount on Credit Facility, amortization of Loan Facility transaction costs, accretion on convertible notes, impairment provisions and reversals and deferred income tax expense (recovery). Adjusted basic earnings per share is calculated using the weighted average number of shares outstanding under the basic method of earnings per share as determined under IFRS.

The following table reconciles these non-IFRS measures to the most directly comparable IFRS measures disclosed in the financial statements.

In thousands of USD,	For the three months ended					For the nine months ended
except for per share data	September 30,		September 30,			September 30,		September 30,
	2019		2018			2019		2018
Basic weighted average shares outstanding		184,962,191		183,069,568			184,521,449		182,634,260
Adjusted earnings and adjusted basic earnings per share reconciliation
Net earnings for the period	$	6,259	$	10,734		$	20,868	$	33,773
Adjusted for:
Loss on financial instruments at fair value		4,422		7,321			15,415		6,377
Amortization of discount on Credit Facility		-		7,143			-		20,051
Amortization of Loan Facility transaction costs		9		-			450		-
Accretion on convertible notes		1,404		1,404			4,165		4,165
Deferred income tax expense (recovery)		21,930		(275	)		26,666		14,806
Adjusted earnings	$	34,024	$	26,327		$	67,564	$	79,172
Adjusted basic earnings per share	$	0.18	$	0.14		$	0.37	$	0.43

Working capital

Working capital is defined as current assets less current liabilities and provides useful information to management and readers about liquidity of the Company.

The following table reconciles this non-IFRS measure to the most directly comparable IFRS measure disclosed in the financial statements.

In thousand of USD	September 30,			December 31,
	2019			2018
Current assets	$	59,346		$	88,470
Current liabilities⁽¹⁾		156,265			136,633
Working capital deficit	$	(96,919	)	$	(48,163	)

⁽¹⁾

As at September 30, 2019, current liabilities includes the current portion of the Loan Facility and Offtake Obligation in the amount of $84,423 (2018 - $85,961).

OUTSTANDING SHARE DATA

As at October 30, 2019, the Company had the following number of securities outstanding:

	Number of	Exercise price	Exercise price	Weighted average
	securities	($)	currency	remaining life (years)
Common shares	185,342,800			-
Stock options	3,438,310	$6.55 - $15.35	CAD	2.17
Convertible notes	6,250,000	$16.00	USD	2.38
Restricted share units⁽¹⁾	706,272		CAD	1.64
Performance share units⁽¹⁾	166,085		CAD	1.68
	195,903,467

⁽¹⁾

The Company may settle restricted share units (“RSUs”) and performance share units (“PSUs”) in cash or common shares of the Company, on a basis of one common share for each RSU and zero to two common shares for each PSU, as applicable.

INTERNAL CONTROL OVER FINANCIAL REPORTING

Management with the participation of the President and Chief Executive Officer and the Executive Vice President and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as at December 31, 2018. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework (COSO 2013).

Management, with the participation of the President and Chief Executive Officer and the Executive Vice President and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Any system of internal control over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable, not absolute, assurance with respect to financial statement preparation and presentation. There have been no significant changes in our internal controls during the nine months ended September 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

RISKS AND UNCERTAINTIES

Natural resources exploration, development and operation involves a number of risks and uncertainties, many of which are beyond our control. These risks and uncertainties include, without limitation, the risks discussed elsewhere in this MD&A and those identified in our Annual Information Form dated March 28, 2019 and filed in Canada under our profile on SEDAR at www.sedar.com, and in the United States on Form 40-F through EDGAR at the SEC’s website at www.sec.gov.

STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This MD&A contains “forward-looking information”, “forward looking statements”, “future oriented financial information” and “financial outlook” within the meaning of applicable Canadian and United States securities legislation (collectively herein referred to as ” “forward-looking information”), including the “safe harbour” provisions of Canadian provincial securities legislation and the U.S. Private Securities Litigation Reform Act of 1995, Section 21E of the U.S. Securities Exchange Act of 1934, as amended, and Section 27A of the U.S. Securities Act of 1933, as amended. The purpose of disclosing future oriented financial information and financial outlook is to provide a general overview of management’s expectations regarding the anticipated results of operations and costs thereof and readers are cautioned that future oriented financial information and financial outlook may not be appropriate for other purposes.

Wherever possible, words such as “plans”, “expects”, “guidance”, “projects”, “assumes”, “budget”, “strategy”, “scheduled”, “estimates”, “forecasts”, “anticipates”, “believes”, “intends”, “modeled”, “targets” and similar expressions or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative forms of any of these terms and similar expressions, have been used to identify forward-looking information. Forward-looking information may include, but is not limited to, statements with respect to: production and cost guidance, and our expectations around achieving such guidance; our future operational and financial results, including estimated cash flows and the timing thereof; the expected grade of gold and silver production; the Brucejack Mine production rate and the ramp-up to 3,800 tonnes per day production rate; capital modifications and upgrades, underground development, and estimated expenditures and timelines in connection therewith, including with respect to the ramp-up to, and achievement of steady state production of, 3,800 tonnes per day production rate; the repurchase of our Offtake Obligation, payment of debt, operating and other obligations and requirements including timing and source of funds; our mining (including mining methods), expansion, exploration and development activities, including longitudinal longhole stoping initiatives, our infill, expansion and underground exploration drill programs and our grassroots exploration program, and the results, costs and timing thereof; our operational grade control program, including plans with respect to our infill drill program and our local grade control model; grade reconciliation, updated geological interpretation and mining initiatives with respect to the Brucejack Mine; our operational plans and strategy; capital, sustaining and operating cost estimates and timing thereof; the future price of gold and silver; our liquidity and the adequacy of our financial resources (including capital resources); our intentions with respect to our capital resources; capital allocation plans; our financing activities, including plans for the use of proceeds thereof; the estimation of Mineral Reserves and Resources including any updates thereto; realization of Mineral Reserve and Resource estimates; our estimated life of mine and life of mine plan for the Brucejack Mine; production and processing estimates; estimated economic results of the Brucejack Mine, including net cash flow and net present value; predicted metallurgical recoveries for gold and silver; geological and mineralization interpretations; development of our Brucejack Mine and timing thereof; results, analyses and interpretations of exploration and drilling programs; timelines and similar statements relating to the economic viability of the Brucejack Mine, including mine life, total tonnes mined and processed and mining operations; updates to our Mineral Reserves and Resources and life of mine plan for the Brucejack Mine, and the anticipated effects and timing thereof; timing, receipt, and anticipated effects of, and anticipated capital costs in connection with, approvals, consents and permits under applicable legislation; our executive compensation policy, approach and practice; our relationship with community stakeholders; litigation matters; environmental matters; our effective tax rate and the recognition of our previously unrecognized income tax attributes; new accounting standards applicable to the Company, including methods of adoption and the effects of adoption of such standards; statements regarding USD cash flows, currency fluctuations and the recurrence of foreign currency translation adjustments; and management and board of directors succession plans. Statements concerning mineral resource estimates may also be deemed to constitute forward-looking information to the extent that they involve estimates of the mineralization that will be encountered if the property is developed. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance are not statements of historical fact and may be forward-looking information.

Forward-looking information is subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual results, actions, events, conditions, performance or achievements to materially differ from those expressed or implied by the forward-looking information, including, without limitation, those related to:

●

uncertainty as to the outcome of legal proceedings;

●

the effect of indebtedness on cash flow and business operations;

●

the effect of restrictive covenants in the Offtake Agreement and pursuant to the Loan Facility;

●

assumptions regarding expected capital costs, operating costs and expenditures, production schedules, economic returns and other projections;

●

our production and production cost estimates, including the accuracy thereof;

●

commodity price fluctuations, including gold price volatility;

●

the accuracy of our Mineral Resource and Reserve estimates (including with respect to size, grade and recoverability) and the geological, operational and price assumptions on which they are based;

●

our ability to maintain or increase our annual production of gold at the Brucejack Mine (as defined herein) or discover, develop or acquire Mineral Reserves for production;

●

dependency on the Brucejack Mine for our future operating revenue;

●

the development of our properties;

●

our ability to raise enough capital to mine, develop, expand or complete further exploration programs on our mineral properties;

●

our ability to generate operating revenues in the future;

●

our history of negative operating cash flow, incurred losses and accumulated deficit;

●

failure of counterparties to perform their contractual obligations;

●

general economic conditions;

●

the inherent risk in the mining industry;

●

the commercial viability of our current and any acquired mineral rights;

●

availability of suitable infrastructure or damage to existing infrastructure;

●

transportation and refining risks;

●

maintaining satisfactory labour relations with employees and contractors;

●

significant governmental regulations, including environmental regulations;

●

non-compliance with permits that are obtained or delay in obtaining or failure to obtain permits required in the future;

●

increased costs and restrictions on operations due to compliance with health, safety and environmental laws and regulations;

●

compliance with emerging climate change regulation;

●

adequate internal control over financial reporting;

●

various tax-related matters;

●

potential opposition from non-governmental organizations;

●

uncertainty regarding unsettled First Nations rights and title in British Columbia;

●

uncertainties related to title to our mineral properties and surface rights;

●

land reclamation requirements;

●

our ability to identify and successfully integrate any material properties we acquire;

●

currency fluctuations;

●

competition in the mining industry for properties, qualified personnel and management;

●

our ability to attract and retain qualified management and personnel;

●

some of our directors’ and officers’ involvement with other natural resource companies;

●

potential inability to attract development partners or our ability to identify attractive acquisitions;

●

compliance with foreign corrupt practices regulations and anti-bribery laws;

●

changes to rules and regulations, including accounting practices;

●

limitations in our insurance coverage and the ability to insure against certain risks;

●

risks related to ensuring the security and safety of information systems, including cyber security risks;

●

our anti-takeover provisions could discourage potentially beneficial third-party takeover offers;

●

significant growth could place a strain on our management systems;

●

share ownership by our significant shareholders and their ability to influence our governance;

●

failure to comply with certain terms of the convertible notes;

●

reputational risks;

●

future sales or issuances of our debt or equity securities;

●

the trading price of our common shares is subject to volatility due to market conditions;

●

we are limited in our ability to, and may not, pay dividends in the foreseeable future; and

●

certain actions under U.S. federal securities laws may be unenforceable.

This list is not exhaustive of the factors that may affect any of our forward-looking information. Although we have attempted to identify important factors that could cause actual results, actions, events, conditions, performance or achievements to differ materially from those contained in forward-looking information, there may be other factors that cause results, actions, events, conditions, performance or achievements to differ from those anticipated, estimated or intended.

Our forward-looking information is based on the assumptions, beliefs, expectations and opinions of management on the date the statements are made, many of which may be difficult to predict and beyond our control. In connection with the forward-looking information contained in this MD&A, we have made certain assumptions about, among other things: our business and that no significant event will occur outside of our normal course of business; planned exploration, development and production activities and the costs and timing thereof; future price of gold and silver and other metal prices; the accuracy of our Mineral Resource and Mineral Reserve estimates; the geology and mineralization of the Brucejack Project; operating conditions; capital and operating cost estimates; production and processing estimates; the results, costs and timing of future exploration and drilling; timelines and similar statements relating to the economic viability of the Brucejack Mine; timing and receipt of governmental, regulatory and third party approvals, consents, licenses and permits; obtaining required renewals for existing approvals, consents, licenses and permits; the geopolitical, economic, permitting and legal climate that we operate in; the adequacy of our financial resources, and our ability to raise any necessary additional capital on reasonable terms; our ability to satisfy the terms and conditions of our debt obligations; commodity prices; currency exchange rates and interest rates; political and regulatory stability; requirements under applicable laws; market competition; sustained labour stability and availability of equipment; positive relations with local groups; favourable equity and debt capital markets; and stability in financial capital markets. Although we believe that the assumptions inherent in forward-looking information are reasonable as of the date of this MD&A, these assumptions are subject to significant business, social, economic, political, regulatory, competitive and other risks and uncertainties, contingencies and other factors that could cause actual actions, events, conditions, results, performance or achievements to be materially different from those projected in the forward-looking information. The Company cautions that the foregoing list of assumptions is not exhaustive. Other events or circumstances could cause actual results to differ materially from those estimated or projected and expressed in, or implied by, the forward-looking information contained in this MD&A.

Additional information about the risks and uncertainties concerning forward-looking information and material factors or assumptions on which such forward-looking information is based is provided in our Annual Information Form and From 40-F, each dated March 28, 2019, for the year ended December 31, 2018, our MD&A for the years ended December 31, 2018 and 2017, and our other disclosure documents as filed in Canada on SEDAR at www.sedar.com and in the United States through EDGAR at the SEC’s website at www.sec.gov (collectively, “the Pretivm Disclosure Documents”).

Forward-looking information is not a guarantee of future performance. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Forward-looking information involves statements about the future and is inherently uncertain, and our actual achievements or other future events or conditions may differ materially from those reflected in the forward-looking information due to a variety of risks, uncertainties and other factors, including, without limitation, those referred to in this MD&A and the Pretivm Disclosure Documents. For the reasons set forth above, readers should not place undue reliance on forward-looking information.

We do not assume any obligation to update forward-looking information, whether as a result of new information, future events or otherwise, other than as required by applicable law. For the reasons set forth above, prospective investors should not place undue reliance on forward-looking information.

CAUTIONARY NOTE TO UNITED STATES INVESTORS

Technical disclosure set out in this MD&A has not been prepared in accordance with the requirements of United States securities laws and uses terms that comply with reporting standards in Canada with certain estimates prepared in accordance with NI 43-101. NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. Unless otherwise indicated, all Mineral Reserve and Mineral Resource estimates contained in this MD&A have been prepared in accordance with NI 43-101 and the Canadian Institute of Mining, Metallurgy and Petroleum Classification System.

Canadian standards, including NI 43-101, differ significantly from the requirements of the SEC under its Industry Guide 7 (“Guide 7”), and Mineral Reserve and Resource information contained in this MD&A may not be comparable to similar information disclosed by United States companies reporting pursuant to Guide 7. In particular, and without limiting the generality of the foregoing, the term “resource” does not equate to the term “reserves”.

Under Guide 7, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made and volumes that are not “reserves’ should not be disclosed. Among other things, all necessary permits would be required to be in hand or issuance imminent in order to classify mineralized material as reserves under Guide 7. Accordingly, Mineral Reserves estimates included in this MD&A may not qualify as “reserves” under Guide 7. Guide 7’s current disclosure standards normally do not permit the inclusion of information concerning “Measured Mineral Resources”, “Indicated Mineral Resources” or “Inferred Mineral Resources” or other descriptions of the amount of mineralization in mineral deposits that do not constitute “reserves” by Guide 7 standards in documents filed with the SEC.

United States investors should also understand that “Inferred Mineral Resources” have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of “Mineral Resources”, “Indicated Mineral Resources” or “Inferred Mineral Resource” will ever be upgraded to a higher category. Under Canadian rules, estimated “Inferred Mineral Resources” may not form the basis of feasibility or pre-feasibility studies except in rare cases. Investors are cautioned not to assume that all or any part of the “Mineral Resources”, “Measured Mineral Resources”, “Indicated Mineral Resources” or “Inferred Mineral Resource” reported in this MD&A exists or is economically or legally mineable. Disclosure of “contained ounces” in a resource is permitted disclosure under Canadian regulations; however, Guide 7 normally only permits issuers to report mineralization that does not constitute “reserves” by Guide 7 standards as in-place tonnage and grade without reference to unit measures. Investors are specifically cautioned not to assume that all or any part of the mineral deposits in these categories will ever be converted into Guide 7-defined mineral reserves. In addition, the definitions of “Proven Mineral Reserves” and “Probable Mineral Reserves” under reporting standards in Canada differ in certain respects from the standards of Guide 7. Accordingly, information concerning mineral deposits set forth or incorporated by reference herein may not be comparable with information made public by companies that report in accordance with Guide 7.

EX-99.3 4 ex99-3.htm NEWS RELEASE DATED OCTOBER 30, 2019

Exhibit 99.3

(PRETIVM LOGO)

October 30, 2019

News Release 19-16

Pretivm Reports Third Quarter 2019 Operating and Financial Results

Ninth Consecutive Quarter of Positive Earnings;

Record $77.8 Million Operating Cash Flow; Adjusts Guidance

Vancouver, British Columbia, October 30, 2019; Pretium Resources Inc. (TSX/NYSE:PVG) (“Pretivm” or the “Company”) reports operating and financial results for the third quarter 2019, Pretivm’s 9^th consecutive quarter of positive adjusted earnings and record operating cash flow.

All amounts are in US dollars unless otherwise noted. This release should be read in conjunction with the Company’s Financial Statements and Management’s Discussion and Analysis (“MD&A”) for the three and nine months ended September 30, 2019 and 2018, available on the Company’s website and on SEDAR and EDGAR.

Third Quarter 2019 Operating Summary

●

Production of 88,227 ounces of gold.

●

Mill feed grade of 9.1 grams per tonne gold.

●

Gold recovery rate of 97.0%.

●

Ore milled 309,754 tonnes.

●

Daily average ore milled 3,367 tonnes per day.

Third Quarter 2019 Financial Summary

●

Revenue of $132.7 million on 90,713 ounces of gold sold.

●

Total cost of sales of $86.2 million or $950 per ounce of gold sold¹.

●

Earnings from mine operations of $46.6 million.

●

Achieved an average realized cash margin¹ of $784 per ounce of gold sold, with a total cash cost of $640 per ounce of gold sold¹.

●

All-in Sustaining Cost (“AISC”)¹ of $878 per ounce of gold sold.

●

Generated $77.8 million in cash from operating activities.

●

Net earnings of $6.3 million ($0.03 per share).

●

Adjusted earnings¹ of $34.0 million ($0.18 per share¹).

●

The Company paid $62.4 million (as first of two tranches of payments) to repurchase the offtake obligation, and repaid $16.7 million of the loan facility using cash generated from operations.

●

The Company has now achieved and surpassed the initial debt repayment target of $140 million and is on track to repay $180 million of debt in 2019.


	¹	Refer to the “Non-IFRS Financial Performance Measures” section at the end of this news release.

“Brucejack generated $77.8 million in cash from operating activities, our highest cash flow quarter yet,” said Joseph Ovsenek, President & CEO of Pretivm. “During the third quarter, we continued to focus on opening up the mine while increasing grade to the mill. Pursuing both objectives simultaneously while stope inventory was constrained proved to be more challenging than anticipated, and we ended the quarter with gold production below our own expectations. As a result of limited stope inventory, we now expect that the fourth quarter will be consistent with the third quarter and have adjusted our full-year 2019 production guidance to between 340,000 to 350,000 ounces of gold production, an approximate 15% decrease from the midpoint of our prior production guidance range of 390,000 to 420,000 ounces of gold sold. We have adjusted our all-in sustaining cost guidance range to $900 to $950 per ounce of gold sold, reflecting the lower anticipated gold production and our spending, which is lower than previously guided. We do expect another quarter of robust cash flow in Q4, and with the repurchase of the offtake agreement we are on track to repay $180 million of debt in 2019, surpassing our initial target of $140 million.”

Third Quarter Production Ramp-up

A combination of limited stope inventory and operational issues resulted in lower-than-planned tonnes, grade and ounces in September, which impacted third quarter gold production.

Adjusted 2019 Production and Financial Guidance

AISC in the first nine months of the year was $896 per ounce of gold sold. As a result of the lower production, annual AISC guidance has also been modified and now ranges from $900 to $950 per ounce of gold sold. AISC guidance for the year includes approximately $25.0 million for sustaining capital, of which approximately $19.6 million has been spent to date.

Third Quarter 2019 Ramp-up Production Overview

●

Gold production totaled 88,227 ounces in the third quarter, compared to 90,761 ounces in the second quarter and 79,180 ounces in the first quarter of 2019.

●

The mill feed grade average improved slightly to 9.1 grams per tonne gold for the quarter compared to 8.9 grams per tonne gold in the previous quarter.

●

A total of 309,754 tonnes of ore, equivalent to a throughput rate of 3,367 tonnes per day, was processed. This represents a decrease of 4% from the previous quarter, when a total of 324,171 tonnes of ore, equivalent to a throughput rate of 3,562 tonnes per day, was processed.

●

Gold recoveries averaged 97.0% for the quarter, a slight improvement over 96.9% in the previous quarter.

Third Quarter 2019 Financial Overview

●

The Company generated revenue of $132.7 million compared to revenue of $113.2 million in the second quarter 2019. Revenue includes a gain on trade receivables at fair value related to provisional pricing adjustments of $1.8 million (Q2 2019 – $4.1 million).

●

During the quarter the Company sold 90,713 ounces of gold at an average realized price¹ of $1,486 per ounce. In the previous quarter 85,953 ounces of gold were sold at an average realized price of $1,319 per ounce.

●

Total cost of sales was $86.2 million or $950 per ounce of gold sold. For the previous quarter, total cost of sales was $83.4 million or $970 per ounce of gold sold.

●

Production costs for the third quarter were $56.1 million or $181 per tonne of ore milled, compared to $56.0 million or $173 per tonne of ore milled in the previous quarter.

●

Total cash cost was $640 per ounce of gold sold resulting in an average realized cash margin of $784 per ounce of gold sold. In the second quarter 2019, total cash cost was $702 per ounce of gold sold resulting in an average realized cash margin of $550 per ounce of gold sold.

●

AISC was $878 per ounce of gold sold in the quarter compared to $940 per ounce of gold sold in the previous quarter.

●

Earnings from mine operations were $46.6 million compared to $29.8 million in the previous quarter.

●

Net earnings were $6.3 million compared to earnings of $10.4 million in the previous quarter. Adjusted earnings were $34.0 million compared to $17.0 million in the previous quarter.

●

Cash generated by operations was $77.8 million compared to $41.2 million in the previous quarter.

●

The Company repaid $16.7 million of the $480.0 million loan facility with cash generated from operations this quarter, for a total of $81.3 million this year ($398.7 million outstanding). The Company also paid $62.4 million to repurchase of the Offtake Obligation using cash generated from operations. The Company has now achieved and surpassed the initial debt repayment target of $140 million and is on track to repay $180 million of debt in 2019.

2020 Updated Mineral Resource and Mineral Reserve Estimates and Life of Mine Plan

Warwick Board, Ph.D., P.Geo, Pr.Sci.Nat., Vice President, Geology and Chief Geologist, Pretium Resources Inc. is the Qualified Person (“QP”) responsible for the Brucejack Mine reserve definition, expansion and exploration drilling, and has reviewed and approved the scientific and technical information contained in this news release relating thereto.

Lyle Morgenthaler, B.A.Sc., P.Eng., Chief Mine Engineer, Pretium Resources Inc. is the QP responsible for Brucejack Mine development, and has reviewed and approved the scientific and technical information contained in this news release relating thereto.

Our unaudited condensed consolidated interim Financial Statements and MD&A for the three and nine months ended September 30, 2019 and 2018 are filed on SEDAR and EDGAR and are available on our website at www.pretivm.com.

Webcast and Conference Call

The webcast and conference call to discuss the third quarter 2019 operating and financial results will take place Thursday, October 31, 2019 at 8:00 am PT (11:00 am ET).

Webcast and conference call details:

Thursday, October 31, 2019 at 8:00 am PT (11:00 am ET)
Webcast	www.pretivm.com
Toll Free (North America)	1-800-319-4610
International and Vancouver	604-638-5340

A recorded playback will be available until November 14, 2019:

Toll Free (North America)	1-800-319-6413
Access Code	3558

About Pretivm

Pretivm is a low-cost intermediate gold producer with the high-grade underground Brucejack Mine in northern British Columbia.

For further information contact:

Joseph Ovsenek		Troy Shultz
President & CEO		Manager, Investor Relations &
		Corporate Communications

Pretium Resources Inc.
Suite 2300, Four Bentall Centre, 1055 Dunsmuir Street
PO Box 49334 Vancouver, BC V7X 1L4
(604) 558-1784
invest@pretivm.com
(SEDAR filings: Pretium Resources Inc.)

Operating Results

	Three months ended September 30,					Nine months ended September 30,
		2019		2018		2019		2018

Ore mined (wet tonnes)	t		325,228		255,227		970,659		772,072
Mining rate	tpd		3,535		2,774		3,556		2,828

Ore milled (dry tonnes)	t		309,754		240,122		929,047		738,555
Head grade	g/t Au		9.1		12.4		8.9		12.0
Recovery	%		97.0		97.4		96.9		97.4
Mill throughput	tpd		3,367		2,610		3,403		2,705

Gold ounces produced	oz		88,227		92,641		258,168		279,670
Silver ounces produced	oz		124,958		95,741		368,989		308,676

Gold ounces sold	oz		90,713		94,458		258,100		278,417
Silver ounces sold	oz		108,250		87,110		309,666		289,710

The following abbreviations were used above: t (tonnes), tpd (tonnes per day), g/t (grams per tonne), Au (gold) and oz (ounces).

Financial Results

	Three months ended September 30,					Nine months ended September 30,
In thousands of USD, except for per ounce data		2019		2018		2019		2018

Revenue		$	132,735		110,060		349,056		345,960
Earnings from mine operations		$	46,585		37,608		105,526		114,512
Net earnings for the period		$	6,259		10,734		20,868		33,773
Per share – basic	$/share		0.03		0.06		0.11		0.19
Per share – diluted	$/share		0.03		0.06		0.11		0.19

Adjusted earnings⁽¹⁾		$	34,024		26,327		67,564		79,172
Per share - basic⁽¹⁾	$/share		0.18		0.14		0.37		0.43

Total cash and cash equivalents		$	16,583		190,318		16,583		190,318
Cash generated from operating activities			77,813		52,364		158,940		154,358
Total assets		$	1,579,105		1,771,543		1,579,105		1,771,543
Long-term debt⁽²⁾		$	413,222		140,357		413,222		140,357

Production costs (milled)	$/t		181		207		178		211

Total cash costs⁽¹⁾	$/oz		640		568		675		627
All-in sustaining costs⁽¹⁾	$/oz		878		709		896		758

Average realized price⁽¹⁾	$/oz		1,486		1,214		1,378		1,284
Average realized cash margin⁽¹⁾	$/oz		784		601		639		612

⁽¹⁾

Refer to the “Non-IFRS Financial Performance Measures” section at the end of this news release.

⁽²⁾

Long-term debt does not include the current portions of the Company’s loan facility in the amount of $64,423 as at September 30, 2019. For the comparable period in 2018, long-term debt does not include the current portions of the Company’s then-outstanding credit facility and stream obligation in the amount of $641,468.

Non-IFRS Financial Performance Measures

The Company has included certain non-IFRS measures in this new release. Refer to the Company’s MD&A for an explanation, discussion and reconciliation of non-IFRS measures. The Company believes that these measures, in addition to measures prepared in accordance with IFRS, provide readers with an improved ability to evaluate the underlying performance of the Company and to compare it to information reported by other companies. The non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with International Financial Reporting Standards (“IFRS”). These measures do not have any standardized meaning prescribed under IFRS, and therefore may not be comparable to similar measures presented by other issuers.

Forward-Looking Information

This news release contains “forward-looking information”, “forward looking statements”, “future oriented financial information” and/or “financial outlook” within the meaning of applicable Canadian and United States securities legislation (collectively herein referred to as “forward-looking information”). The purpose of disclosing future oriented financial information and financial outlook is to provide a general overview of management’s expectations regarding the anticipated results of operations and costs thereof and readers are cautioned that future oriented financial information and financial outlook may not be appropriate for other purposes. Wherever possible, words such as “plans”, “expects”, “guidance”, “projects”, “assumes”, “budget”, “strategy”, “scheduled”, “estimates”, “forecasts”, “anticipates”, “believes”, “intends”, “modeled”, “targets” and similar expressions or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative forms of any of these terms and similar expressions, have been used to identify forward-looking information. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance are not statements of historical fact and may be forward-looking statements. Forward-looking information may include, but is not limited to, information with respect to: production and cost guidance and our expectations around achieving such guidance; our future operational and financial results, including estimated cash flows, and the timing thereof; the expected grade of gold and silver production; the Brucejack Mine production rate and the ramp-up to and achievement of steady state production at 3,800 tonnes per day production rate; capital modifications and upgrades, underground development, and estimated expenditures and timelines in connection therewith, including with respect to the ramp-up to 3,800 tonnes per day production rate; the repurchase of our Offtake Obligation; payment of debt, operating and other obligations and requirements, including timing and source of funds; our mining (including mining methods), expansion, exploration and development activities, including our longitudinal longhole stoping initiatives, infill, expansion and underground exploration drill programs and our grassroots exploration program, and the results, costs and timing thereof; our operational grade control program, including plans with respect to our infill drill program and our local grade control model; grade reconciliation, updated geological interpretation and mining initiatives with respect to the Brucejack Mine; our operational plans and strategy; capital, sustaining and operating cost estimates and timing thereof; the future price of gold and silver; our liquidity and the adequacy of our financial resources (including capital resources); our intentions with respect to our capital resources; capital allocation plans; our financing activities, including plans for the use of proceeds thereof; the estimation of Mineral Reserves and Resources including any updates thereto; realization of Mineral Reserve and Resource estimates; our estimated life of mine and life of mine plan for the Brucejack Mine; production and processing estimates; estimated economic results of the Brucejack Mine, including net cash flow and net present value; predicted metallurgical recoveries for gold and silver; geological and mineralization interpretations; development of our Brucejack Mine and timing thereof; results, analyses and interpretations of exploration and drilling programs; timelines and similar statements relating to the economic viability of the Brucejack Mine, including mine life, total tonnes mined and processed and mining operations; updates to our Mineral Reserves and Resources and life of mine plan for the Brucejack Mine, and the timing and anticipated effects thereof; timing, receipt, and anticipated effects of, and anticipated capital costs in connection with approvals, consents and permits under applicable legislation; our executive compensation policy, approach and practice; our relationship with community stakeholders; litigation matters; environmental matters; our effective tax rate and the recognition of our previously unrecognized income tax attributes; new accounting standards applicable to the Company, including methods of adoption and the effects of adoption of such standards; statements regarding United States dollar cash flows, currency fluctuations and the recurrence of foreign currency translation adjustments; and management and board of directors succession plans. Forward-looking information is subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual results, actions, events conditions, performance or achievements to materially differ from those expressed or implied by the forward-looking information, including, without limitation, those related to: uncertainty as to the outcome of legal proceedings; the effect of indebtedness on cash flow and business operations; the effect of restrictive covenants in our agreements; assumptions regarding expected capital costs, operating costs and expenditures, production schedules, economic returns and other projections; our production and production cost estimates, including the accuracy thereof; commodity price fluctuations, including gold price volatility; the accuracy of our Mineral Resource and Reserve estimates (including with respect to size, grade and recoverability) and the geological, operational and price assumptions on which they are based; uncertainties relating to Inferred Mineral Resources being converted into Measured or Indicated Mineral Resources; our ability to maintain or increase our annual production of gold at the Brucejack Mine or discover, develop or acquire Mineral Reserves for production; dependency on the Brucejack Mine for our future operating revenue; the development of our properties; general economic conditions; the inherent risk in the mining industry; significant governmental regulations, including environmental regulations; currency fluctuations, and such other risks, uncertainties and other factors as are identified in Pretivm’s Annual Information Form dated March 28, 2019, Form 40-F dated March 28, 2019, MD&A and other disclosure documents as filed in Canada on SEDAR at www.sedar.com and in the United States through EDGAR at the SEC’s website at www.sec.gov (collectively, the “Pretivm Disclosure Documents”). Our forward-looking information is based on the assumptions, beliefs, expectations and opinions of management on the date the statements are made, many of which may be difficult to predict and beyond our control. In connection with the forward-looking information contained in this news release, we have made certain assumptions about, among other things: our business and that no significant event will occur outside of our normal course of business; planned exploration and development activities and the costs and timing thereof; future prices of gold and silver and other metal prices; the accuracy of our Mineral Resources and Mineral Reserve estimates; the geology and mineralization of the Brucejack Project; operating conditions; capital and operating cost estimates; production and process estimates; the results, costs and timing of future exploration and drilling; timelines and similar statements relating to the economic viability of the Brucejack Project; timing and receipt of governmental, regulatory and third party approvals, consents, licenses and permits; obtaining required renewals for existing approvals, consents, licenses and permits; the geopolitical, economic, permitting and legal climate that we operate in; the adequacy of our financial resources and our ability to raise any necessary additional capital on reasonable terms; our ability to satisfy the terms and conditions of our debt obligations; commodity prices; currency exchange rates and interest rates; political and regulatory stability; requirements under applicable laws; market competition; sustained labour stability and availability of equipment; positive relations with local groups; favourable equity and debt capital markets; stability in financial and capital markets, and such other factors and assumptions as are identified in the other Pretivm Disclosure Documents. Although we believe that the assumptions inherent in the forward-looking information are reasonable as of the date of this news release, they are subject to significant business, social, economic, political, regulatory, competitive and other risks and uncertainties, contingencies and other factors that could cause actual actions, events, conditions, results, performance or achievements to be materially different from those projected in the forward-looking information. Forward-looking information is not a guarantee of future performance. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. We do not assume any obligation to update forward-looking information, whether as a result of new information, future events or otherwise, other than as required by applicable law. For the reasons set forth above, readers should not place undue reliance on forward-looking information. Neither the TSX nor the NYSE has approved or disapproved of the information contained herein.

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