children of an idle brain

So Lobito, how’s that “big Pretium order” working out for you?

Casey’s Louis Lobito Little Wolf James’ update to Investment Alert clients #528, October 10th. It’s the way in which those stink bids get filled that makes him neverwrong, yaknowz. But hey, if it was a good buy at 5 it must be a great one at 4….buy more Lobito, buy more!

Pretium Resources (PVG.TO, C$4.87, 102.3M SO, 110.9M FD, C$498.2M MCap, www.pretivm.com)
As you probably saw on our portfolio page, we believe the market’s reaction is overdone. Given the skepticism prevailing among the company’s many outspoken critics, the fact that the company’s Qualified Person (Strathcona) for a major part of the critical bulk sample program quit is certainly alarming. But the reason why they quit matters, and the reason was a professional disagreement with the Other Qualified Person (Snowden) as to how to proceed. This is a very different thing from there being an actual problem with the bulk sample, or new doubts about the company’s resources in the ground.
As we understand it, Strathcona wanted to base the bulk sample on a fraction of material mined, prepared via the sampling tower the company has built on site. But this would mean storing the remainder of the material, which would contain several thousand ounces of gold. Pretium wanted to recover all the gold—which, as a shareholder I approve of, and so did Snowden. Strathcona said it wasn’t necessary, and the two Qualified Persons could not agree, so Strathcona quit.
Net: there’s no real reason to believe there’s anything wrong with Pretium’s Valley of the Kings deposit.
What about the persistent criticisms, alleging that the resource model depends too much on multiple narrow high-grade veins? Well, there are so many of these high-grade veins, over so large an area, and much of the material in between also carries gold, if at a lower grade, that the skepticism has long seemed more than a bit exaggerated to us. (Sour grapes?)
I may be wrong, but as mentioned yesterday, I’m putting my money where my mouth is, and have instructed my broker to place what is, for me, a large order. And I know I’m not the only one here at Casey Research doing so. We had active stink bid guidance to buy under $5, which I hope was filled for many of you.

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