U.S. SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549





FORM 40-F


☐
REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES
EXCHANGE ACT OF 1934.





☑
ANNUAL REPORT PURSUANT TO SECTION 13(a) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiscal year ended: December 31,
2016





Commission File Number: 001-35393





PRETIUM RESOURCES INC.





(Exact name of Registrant as specified in its charter)





British Columbia, Canada





(Province or other jurisdiction of incorporation or
organization)


1040

None(Primary Standard Industrial
Classification Code Number)

(I.R.S. Employer
Identification Number)





1055 Dunsmuir Street, Suite 2300


Vancouver, British Columbia


Canada V7X 1L4


(604) 558-1784





(Address and telephone number of Registrant’s principal
executive offices)





C T Corporation System


111 Eighth Avenue


New York, New York 10011


(212) 894-8940





(Name, address (including zip code) and telephone number (including
area code)


of agent for service in the United States)





Securities registered or to be registered pursuant to Section 12(b)
of the Act.


Title of each class

Name of each exchange on which registeredCommon Shares

New York Stock Exchange





Securities registered or to be
registered pursuant to Section 12(g) of the
Act.





None





(Title of Class)








Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act.





None





(Title of Class)





For Annual Reports indicate by check mark the information filed
with this Form:





☑ Annual information
form           
☑ Audited annual financial
statements





Indicate
the number of outstanding shares of each of the issuer’s
classes of capital or common stock as of the close of the period
covered by the annual report:





There
were 180,113,252 Common Shares, of no par value, outstanding as of
December 31, 2016.











Indicate
by check mark whether the Registrant (1) has filed all reports to
be filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the Registrant
was required to file such reports) and (2) has been subject to
filing requirements for the past 90 days.





Yes ☑ No ☐





Indicate
by check mark whether the registrant has submitted electronically
and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the Registrant
was required to submit and post such files).





Yes ☐ No
☐





This
Annual Report on Form 40-F shall be incorporated by reference into
or as an exhibit to, as applicable, the registrant’s
Registration Statement on Form F-10 (File No. 333-211073) and
Registration Statements on Form S-8 (File Nos. 333-203409 and
333-213450) and under the Securities Act of 1933, as
amended.











PRINCIPAL DOCUMENTS








The
following documents have been filed as part of this Annual Report
on Form 40-F as Appendices hereto:





A.
Annual Information Form





The
Annual Information Form of Pretium Resources Inc. (the
“Company” or “Registrant”) for the fiscal
year ended December 31, 2016 is included as Appendix A of this
Annual Report on Form 40-F.





B.
Audited Annual Financial Statements





The
Company’s audited consolidated financial statements for the
fiscal year ended December 31, 2016, including the
auditor’s report with respect thereto, are included as
Appendix B of this Annual Report on Form 40-F.





C.
Management’s Discussion and Analysis





The
Company’s Management’s Discussion and Analysis for the
year ended December 31, 2016 is included as Appendix C of this
Annual Report on Form 40-F.








CERTIFICATIONS AND DISCLOSURE REGARDING CONTROLS AND
PROCEDURES





Certifications. See Exhibits
99.13, 99.14, 99.15 and 99.16 to this Annual Report on Form
40-F.





Disclosure Controls and Procedures. The Registrant maintains disclosure controls and
procedures and internal control over financial reporting designed
to ensure that information required to be disclosed in the
Registrant’s filings under the Exchange Act is recorded,
processed, summarized and reported within the time periods
specified in the rules and forms of the Securities and Exchange
Commission (the “SEC”). The Registrant’s Chief
Executive Officer (“CEO”) and Chief Financial Officer
(“CFO”), after having evaluated the effectiveness of
the Registrant’s disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the
end of the period covered by this report, have concluded that, as
of such date, the Registrant’s disclosure controls and
procedures were effective to ensure that information required to be
disclosed by the Registrant in reports that the Registrant files or
submits under the Exchange Act is (i) recorded, processed,
summarized and reported, within the time periods specified in the
SEC’s rules and forms, and (ii) accumulated and
communicated to management, including its principal executive and
principal financial officers, or persons performing similar
functions, as appropriate to allow timely decisions regarding
required disclosure. However, as recommended by the SEC in its
adopting release for the rules governing the disclosure and control
procedures discussed above, the Registrant will continue to
periodically evaluate its disclosure controls and procedures and
will make modifications from time to time as deemed necessary to
ensure that information is recorded, processed, summarized and
reported within the time periods specified in the SEC’s rules
and forms.





The Registrant’s disclosure controls and procedures are
designed to provide reasonable assurance of achieving their
objectives, and, as indicated in the preceding paragraph, the CEO
and CFO believe that the Registrant’s disclosure controls and
procedures are effective at that reasonable assurance level,
although the CEO and CFO do not expect that the disclosure controls
and procedures or internal control over financial reporting will
prevent all errors and fraud. A control system, no matter how well
conceived or operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are
met.





Management’s Annual Report on Internal Control Over Financial
Reporting. The required
disclosure is included under the heading
“Management’s Report on Internal Control over Financial
Reporting” in the
Registrant’s Consolidated Financial Statements for the fiscal year ended December 31, 2016, filed
as part of this Annual Report on Form 40-F in Appendix
B.





Attestation Report of the Registered Public Accounting
Firm. The required disclosure
is included under the heading “Independent Auditor’s
Report” in the Registrant’s Consolidated
Financial Statements for the fiscal
year ended December 31, 2016, filed as part of this Annual Report
on Form 40-F in Appendix B.





Changes in Internal Control Over Financial
Reporting. During the fiscal
year ended December 31, 2016, there were no changes in the
Registrant’s internal control over financial reporting that
have materially affected, or are reasonably likely to materially
affect, the Registrant’s internal control over financial
reporting.








NOTICES PURSUANT TO REGULATION BTR





None.





1





IDENTIFICATION OF THE AUDIT COMMITTEE





The Registrant has a separately-designated standing audit committee
established in accordance with Section 3(a)(58)(A) of the Exchange
Act. The members of the audit committee are: Messrs. Ross Mitchell,
Peter Birkey and Shaoyang Shen.





AUDIT COMMITTEE FINANCIAL EXPERT





The board of directors of the Registrant has determined that each
of Messrs. Ross Mitchell, Peter Birkey and Shaoyang Shen, members
of the Registrant’s audit committee, qualify as audit
committee financial experts for purposes of paragraph (8) of
General Instruction B to Form 40-F. The board of directors has
further determined that each of Messrs. Ross Mitchell, Peter Birkey
and Shaoyang Shen is also independent, as that term is defined in
the Corporate Governance Listing Standards of the New York Stock
Exchange (the “NYSE”). The Commission has indicated
that the designation of each of Messrs. Ross Mitchell, Peter Birkey
and Shaoyang Shen as an audit committee financial expert does not
make any of them an “expert” for any purpose, impose
any duties, obligations or liabilities on them that are greater
than those imposed on members of the audit committee and the board
of directors who do not carry this designation or affect the
duties, obligations or liabilities of any other member of the audit
committee or the board of directors.





ADDITIONAL DISCLOSURE





Code of Ethics.





The
Registrant has adopted a “code of ethics” (as that term
is defined in Form 40-F), entitled the “Code of Business
Conduct and Ethics”, that applies to all of its directors,
officers, employees, and consultants including its principal
executive officer, principal financial officer, principal
accounting officer or controller, and persons performing similar
functions. In 2016, there were no waivers, including implicit
waivers, or amendments granted from any provision of the Code of
Business Conduct and Ethics.





The
Code of Business Conduct and Ethics is available for viewing on the
Registrant’s website at www.pretivm.com.





Corporate Governance Practices.





Our corporate governance practices are consistent with all
applicable current Canadian regulatory guidelines and standards. We
are classified as a foreign private issuer in connection with our
listing on the NYSE and are not required to comply with most of the
NYSE's corporate governance standards (the “NYSE
Rules”) and instead may comply with Canadian corporate
governance practices. However, our corporate governance practices
incorporate many best practices derived from the NYSE Rules and
there are no significant differences between our corporate
governance practices and the NYSE Rules.





Principal Accountant Fees and Services.





The required disclosure is included under the heading “Audit
Committee Information—External Auditor Service Fees” at
page 80 of the Registrant’s Annual Information Form for the
fiscal year ended December 31, 2016, filed as part of this Annual
Report on Form 40-F in Appendix A.





Pre-Approval Policies and Procedures.





The Audit Committee pre-approves all audit services to be provided
to us by our independent auditors. The Audit Committee’s
policy regarding the pre-approval of non-audit services to be
provided to us by our independent auditors is that all such
services shall be pre-approved by the Audit Committee. All
non-audit services performed by our auditors for the fiscal year
ended December 31, 2016 have been pre-approved by our Audit
Committee.





Off-Balance Sheet Arrangements.





The Registrant has no off-balance sheet arrangements as defined under
Form 40-F.





Tabular Disclosure of Contractual Obligations.





The required disclosure is included under the heading
“Contractual Obligations” in the registrant’s
Management’s Discussion and Analysis for the year ended
December 31, 2016, filed as part of this Annual Report on Form 40-F
in Appendix C.





Mine Safety Disclosure.





Not applicable.





2





UNDERTAKING





Registrant undertakes to make available, in person or by telephone,
representatives to respond to inquiries made by the Commission
staff, and to furnish promptly, when requested to do so by the
Commission staff, information relating to: the securities
registered pursuant to Form 40-F; the securities in relation to
which the obligation to file an annual report on Form 40-F arises;
or transactions in said securities.





CONSENT TO SERVICE OF PROCESS





Form
F-X signed by the Registrant and its agent for service of process
has been filed with the Commission together with Registrant’s
Registration Statement on Form 40-F (001-35393) in connection with its securities registered on
such form.





Any
changes to the name or address of the agent for service of process
of the Registrant shall be communicated promptly to the Commission
by an amendment to the Form F-X referencing the file number of the
Registrant.







































































3





SIGNATURES





Pursuant to the requirements of the Exchange Act, the Registrant
certifies that it meets all of the requirements for filing on Form
40-F and has duly caused this Annual Report to be signed on its
behalf by the undersigned, thereunto duly authorized.


Date: March 30, 2017
Pretium Resources Inc.By:
/s/
JOSEPH J. OVSENEKName:    Joseph
J. OvsenekTitle:      President, Chief Executive Officer &
Director



























































































4








EXHIBIT INDEX











Exhibit

Description99.1

Consent of
PricewaterhouseCoopers LLP, Independent Registered Public
Accountant99.2

Consent of
Tetra Tech99.3

Consent of
Snowden Mining Industry Consultants Inc.99.4

Consent of
AMC Mining Consultants (Canada) Ltd.99.5

Consent of
ERM Rescan99.6

Consent of
BGC Engineering Inc.99.7

Consent of
Alpine Solutions Avalanche Services99.8

Consent of
Valard Construction99.9

Consent of
Lyle Morgenthaler, B.A.Sc., P.Eng.99.10

Consent
of Russell Pennell, B.A.Sc., P.Eng.99.11

Consent
of Kenneth C. McNaughton, M.A.Sc., P.Eng.99.12

Consent
of Ivor W.O. Jones, M.Sc., FAusIMM, CPGeo99.13

Certification of Chief Executive Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of
200299.14

Certification of Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of
200299.15

Certification of Chief Executive Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of
200299.16

Certification of Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002























5



































APPENDIX A





PRETIUM RESOURCES INC. ANNUAL INFORMATION FORM FOR THE FISCAL
YEAR





ENDED DECEMBER 31, 2016




































































ANNUAL INFORMATION FORM





(“AIF”)





of





PRETIUM RESOURCES INC.


(the “Company” or “Pretivm”)


2300, 1055 Dunsmuir Street, PO Box 49334


Vancouver, British Columbia


V7X 1L4





Telephone:
604-558-1784


Facsimile:
604-558-4784


Website:
www.pretivm.com


E-mail:
invest@pretivm.com





For the Year Ended December 31, 2016





Dated: March 30, 2017















































TABLE OF CONTENTS





PRELIMINARY NOTES
1Effective
Date of Information
1Currency
1Note
Regarding Forward Looking Information and Forward Looking
Statements
1Scientific
and Technical Disclosure
4National
Instrument 43-101 Definitions
5CORPORATE STRUCTURE
9Name,
Address and Incorporation
9Intercorporate
Relationships
9Employees
9GENERAL DEVELOPMENT OF OUR BUSINESS
9The
Brucejack Project
9Environmental
Assessment and Review
112017
Significant Developments
132016
Significant Developments
162015
Significant Developments
192014
Significant Developments
23DESCRIPTION OF OUR BUSINESS
24The
Brucejack Project
24RISK FACTORS
48Risks
Related to Our Business
48Risks
Related to our Securities
69DIVIDENDS AND DISTRIBUTIONS
72DESCRIPTION OF CAPITAL STRUCTURE
72MARKET FOR SECURITIES
73Trading
Price and Volume
73Prior
Sales
73Restricted
Share Units (“RSUs”)
74DIRECTORS AND OFFICERS
75Name,
Occupation and Security Holding
75Shareholdings
of Directors and Senior Officers
78Cease
Trade Orders, Bankruptcies, Penalties or Sanctions
78Conflicts
of Interest
78Audit
Committee Information
79





i





LEGAL PROCEEDINGS AND REGULATORY ACTIONS
81INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL
TRANSACTIONS
82AUDITORS, TRANSFER AGENT AND REGISTRAR
82MATERIAL CONTRACTS
83INTEREST OF EXPERTS
83ADDITIONAL INFORMATION
84APPENDIX 1
1Audit
Committee Charter
1Annex
A
7
























































ii








PRELIMINARY NOTES





Effective Date of
Information





This
AIF is dated March 30, 2017, and unless otherwise indicated, the
information contained herein is current as of such date, other than
certain financial information which is current as of
December 31, 2016, being the date of the Company’s most
recently audited financial year end.





References to the
“Company”, “we” and “our” refer
to Pretium Resources Inc.





Currency





All
dollar amounts are expressed in Canadian dollars unless otherwise
indicated.





Note Regarding Forward Looking
Information and Forward Looking Statements





This AIF contains “forward-looking information” and
“forward looking statements” within the meaning of
applicable Canadian and United States securities legislation
(collectively herein referred to as “forward-looking
statements”), including the “safe harbour”
provisions of 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 (the
“Exchange Act”), and Section 27A of the U.S. Securities
Act of 1933, as amended (the “U.S. Securities Act”).
Forward-looking statements may include, but are not limited to,
information with respect to: the future price of silver and gold;
the development and construction of a mine at the Brucejack Project
(as defined below); our planned exploration and development
activities; the adequacy of our financial resources; the estimation
of mineral resources and reserves; realization of mineral resource
and reserve estimates; the timeline for commercial production and
commissioning at the Brucejack Project; costs and timing of future
exploration and development; results of future development,
exploration and drilling programs; production and processing
estimates, including the 2017 Project Economics Update; capital and
operating cost estimates, including the February 2017 Capital Cost
Forecast; statements relating to the economic viability of the
Brucejack Project, including mine life, total tonnes mined and
processed and mining operations, as well as the 2017 Project
Economics Update; approvals, consents and permits under
applicable legislation; our
relationship with community stakeholders; our executive
compensation approach and practice; litigation risks; currency
fluctuations; and environmental risks. Wherever possible, words
such as “plans”, “expects”,
“projects”, “assumes”,
“budgeted”, “strategy”,
“scheduled”, “estimates”,
“forecasts”, “anticipates”,
“believes”, “intends” “modeled”
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 statements.





1





Statements concerning mineral resource estimates may also be deemed
to constitute forward-looking statements 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 statements. Forward-looking statements are subject
to a variety of known and unknown risks, uncertainties and other
factors that could cause actual events or results to differ from
those expressed or implied by the forward-looking statements,
including, without limitation, risks related to:





●
 uncertainty
as to the outcome of legal proceedings including certain class
action proceedings in the U.S. and Canada;





●
 our
ability to repay indebtedness;





●
 the
effect of indebtedness on cash flow and business
operations;





●
 our
ability to satisfy commitments under the Stream and Offtake
agreements and the effect of restrictive covenants in such
agreements and in our Credit Agreement;





●
 assumptions
regarding expected operating costs and expenditures, production
schedules, economic returns and other projections, including the
February 2017 Capital Cost Forecast (as defined herein) and the
2017 Project Economics Update (as defined herein);





●
 our
production estimates, including the accuracy thereof;





●
 our
ability to raise enough capital to fully fund the capital costs
required to complete construction at the Brucejack
Project;





●
 dependency
on the Brucejack Project for our future operating
revenue;





●
 the
accuracy of our 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
mineral resource estimates, including accuracy thereof and our
ability to upgrade such mineral resource estimates to mineral
reserve estimates;





●
 uncertainties
relating to the interpretation of drill results and the geology,
grade and continuity of our mineral resources;





●
 the
fact that we have no mineral properties in production and no
history of production or revenue;





●
 the
exploration, development and operation of a mine or mine property,
including the potential for undisclosed liabilities on our mineral
projects;





●
 our
ability to obtain adequate financing for our planned exploration
and development activities and to complete further exploration
programs;





●
 our
ability to complete commissioning and achieve commercial production
at the Brucejack Project in the timeline we
anticipate;





●
 the
operation and economic viability of the development of the
Brucejack Project;





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





●
 commodity
price fluctuations, including gold price volatility;





●
 failure
of counterparties to perform their contractual
obligations;





2





●
 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;





●
 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
environmental laws and regulations;





●
 compliance
with emerging climate change regulation;





●
 uncertainties
relating to additional claims and legal proceedings;





●
 adequate
internal control over financial reporting;





●
 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;





●
 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 relevant legislation, accounting practices or increasing
insurance costs;





●
 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;





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





●
 the
trading price of our Common Shares (as defined below) is subject to
volatility due to market conditions;


3





●
 future
sales or issuances of our debt or equity securities;





●
 we
do not intend to pay dividends in the near future;





●
 our
being treated as a passive foreign investment company for U.S.
federal income tax purposes;





●
 certain
terms of the Notes (as defined below);and





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





This list is not exhaustive of the factors that may affect any of
our forward-looking statements. Although we have attempted to
identify important factors that could cause actual results to
differ materially from those contained in forward-looking
statements, there may be other factors that cause results not to be
as anticipated, estimated or intended. There can be no assurance
that such information will prove to be accurate, as actual results
and future events could differ materially from those anticipated in
such information.





Forward-looking statements involve statements about the future and
are inherently uncertain, and our actual achievements or other
future events or conditions may differ materially from those
reflected in the forward-looking statements due to a variety of
risks, uncertainties and other factors, including, without
limitation, those referred to in this AIF under the heading
“Risk Factors” and elsewhere in this AIF.





Our forward-looking statements are based on the beliefs,
expectations and opinions of management on the date the statements
are made. In connection with the forward-looking statements
contained in this AIF, we have made certain assumptions about our
business, including about ourplanned exploration, development and
production activities; the accuracy of our mineral resource
estimates; 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 Project; timing and
receipt of approvals, consents and permits under applicable
legislation; and the adequacy of our financial resources. We have
also assumed that no significant events will occur outside of our
normal course of business. Although we believe that the assumptions
inherent in the forward-looking statements are reasonable as of the
date of this AIF, forward-looking statements are not guarantees of
future performance and, accordingly, undue reliance should not be
put on such statements due to the inherent uncertainty therein. We
do not assume any obligation to
update forward-looking statements, 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
statements.





Scientific
and Technical Disclosure





4





Certain
scientific and technical information relating to the Brucejack
Project contained in this AIF is derived from, and in some
instances is an extract from, the report entitled
“Feasibility Study and Technical Report Update on the
Brucejack Project, Stewart, BC” with an effective date of
June 19, 2014 prepared for us by Tetra Tech and co-authored by
Snowden Mining Industry Consultants Inc. (“Snowden”), AMC Mining Consultants
(Canada) Ltd. (“AMC”, ERM Rescan, BGC Engineering
Inc. (“BGC”),
Alpine Solutions Avalanche Services (“Alpine Solutions”) and Valard
Construction (“Valard”)(the “Brucejack Report”) in accordance
with National Instrument 43-101 – Standards of Disclosure for Mineral
Projects (“NI
43-101”).





The
Brucejack Report is the only current NI 43-101 compliant technical
report with respect to the Brucejack Project and supersedes all
previous technical reports.





Each
co-author of the Brucejack Report listed in the section entitled
“Interest of Experts” is a “qualified
person” as defined in NI 43-101 and has reviewed, approved
and verified certain scientific and technical information in this
AIF that is derived from the Brucejack Report.





Scientific
and technical information in this AIF not contained in the
Brucejack Report has been reviewed, approved and verified by Mr.
Kenneth C. McNaughton, M.A.Sc., P.Eng., our Vice President
Exploration, Lyle Morgenthaler, B.A.Sc., P.Eng., our Chief Mine
Engineer, Russell Pennell, B.A.Sc., P.Eng., our Senior Mine
Planning Engineer and Ivor W.O. Jones, M.Sc., FAusIMM, CPgeo who is
independent of the Company, each of whom is a “qualified
person” as defined in NI 43-101.





Reference
should be made to the full text of the Brucejack Report, which has
been filed with certain Canadian securities regulatory authorities
pursuant to NI 43-101 and is available for review under the
Company’s profile on SEDAR at www.sedar.com. Alternatively,
copies of the Brucejack Report may be inspected during normal
business hours at the Company’s head office.





National
Instrument 43-101 Definitions





Canadian
reporting requirements for disclosure of mineral properties are
governed by NI 43-101. The definitions given in NI 43-101 are
adopted from those given by the Canadian Institute of Mining
Metallurgy and Petroleum.





Qualified Person
The
term “Qualified Person” refers to an individual who is
an engineer or geoscientist with at least five years of experience
in mineral exploration, mine development, production activities and
project assessment, or any combination thereof, including
experience relevant to the subject matter of the project or report
and is a member in good standing of a self-regulating
organization.





5





Mineral Resource
The
term “Mineral Resource” is a concentration or
occurrence of solid material of economic interest in or on the
Earth’s crust in such form, grade or quantity that there are
reasonable prospects for eventual economic extraction. The
location, quantity, grade or quality, continuity and other
geological characteristics of a Mineral Resource are known,
estimated or interpreted from specific geological evidence and
knowledge, including sampling. Mineral Resources are sub-divided,
in order of increasing geological confidence, into Inferred,
Indicated and Measured categories.Inferred Mineral Resource
The
term “inferred mineral resource” refers to that part of
a Mineral Resource for which quantity and grade or quality are
estimated on the basis of geological evidence and sampling.
Geological evidence is sufficient to imply but not verify
geological and grade or quality continuity.

An
Inferred Mineral Resource has a lower level of confidence than that
applying to an Indicated Mineral Resource and must not be converted
to a Mineral Reserve. It is reasonably expected that the majority
of Inferred Mineral Resources could be upgraded to Indicated
Minerals Resources with continued exploration.Indicated Mineral Resource
The
term “indicated mineral resource” refers to that part
of a Mineral Resource for which quantity, grade or quality,
densities, shape and physical characteristics are estimated with
sufficient confidence to allow the application of Modifying Factors
in sufficient detail to support miner planning and evaluation of
the economic viability of the deposit.

Geological
evidence is derived from adequately detailed and reliable
exploration, sampling and testing and is sufficient to assume
geological and grade or quality continuity between points of
observation.

An
Indicated Mineral Resource has a lower level of confidence than
that applying to a Measured Mineral Resource and may only be
converted to a Probable Mineral Reserve.





6





Measured Mineral Resource
The
term “measured mineral resource” refers to that part of
a Mineral Resource for which quantity, grade or quality, densities,
shape and physical characteristics are estimated with confidence
sufficient to allow the appropriate application of Modifying
Factors to support detailed mine planning and final evaluation of
the economic viability of the deposit.

Geological
evidence is derived from detailed and reliable exploration,
sampling and testing and is sufficient to confirm geological and
grade or quality continuity between points of
observation.Modifying Factors
Modifying
Factors are considerations used to convert Mineral Resources to
Mineral Reserves. These include, but are not restricted to, mining,
processing, metallurgical, infrastructure, economic, marketing,
legal, environmental, social and governmental factors.Mineral Reserve
A
Mineral Resource is the economically mineable part of a measured
and/or Indicated Mineral Resource. It includes diluting materials
and allowances for losses, which may occur when the material is
mined or extracted and is defined by studies at Pre-Feasibility or
Feasibility level as appropriate that include application of
Modifying Factors. Such studies demonstrate that, at the time of
reporting, extraction could be reasonably justified.

The
reference point at which Mineral Reserves are defined, usually the
point where the ore is delivered to the processing plant, must be
stated. It is important that, in all situations where the reference
point is different, such as for a saleable product, a clarifying
statement is included to ensure that the reader is fully informed
as to what is being reported.

The
public disclosure of a Mineral Reserve must be demonstrated by a
Pre-Feasibility Study or Feasibility Study.Probable Mineral Reserve
A
Probable Mineral Reserve is the economically mineable part of an
Indicated, and in some circumstances, a Measured Mineral Resource.
The confidence in the Modifying Factors applying to a Probable
Mineral Reserve is lower than that applying to a Proven Mineral
Reserve.Proven Mineral Reserve
A
Proven Mineral Reserve is the economically mineable part of a
Measured Mineral Resource. A Proven Mineral Reserve implies a high
degree of confidence in the Modifying Factors.





7





Cautionary Note to U.S. Investors





Technical
disclosure contained or incorporated by reference in this AIF 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
AIF 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 Securities and Exchange Commission
(“SEC”), and mineral reserve and resource information
contained or incorporated by reference in this AIF may not be
comparable to similar information disclosed by U.S. companies. In
particular, and without limiting the generality of the foregoing,
the term “resource” does not equate to the term
“reserves”.





Under
U.S. standards, 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 the SEC standards. Accordingly, mineral reserves
estimates included in this AIF may not qualify as
“reserves” under SEC standards. The SEC’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 U.S. standards in documents filed with
the SEC.





U.S.
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 an
“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 an “inferred
mineral resource” exists or is economically or legally
mineable. Disclosure of “contained ounces” in a
resource is permitted disclosure under Canadian regulations;
however, the SEC normally only permits issuers to report
mineralization that does not constitute “reserves” by
SEC standards as in-place tonnage and grade without reference to
unit measures. 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 the SEC. 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 U.S. standards.

















8








CORPORATE STRUCTURE





Name,
Address and Incorporation





The
Company was incorporated under the Business Corporations Act (British
Columbia) (the “BCBCA”) on October 22, 2010. Our
head and registered office is located at Suite 2300, 1055 Dunsmuir
Street, PO Box 49334, Vancouver, British Columbia, V7X
1L4.





Intercorporate
Relationships





We have
two wholly-owned subsidiaries, Pretium Exploration Inc.
(“Pretium Exploration”) and 0890696 B.C. Ltd.
(“089”), which hold our interests in the Brucejack
Project and the assets related thereto. Both subsidiaries were
incorporated under the BCBCA.





Employees





As at
the conclusion of the financial year ended December 31, 2016, the
Company, together with its subsidiaries, had approximately 360 full
time employees.





GENERAL
DEVELOPMENT OF OUR BUSINESS





We are
an exploration and development company that was formed for the
acquisition, exploration and development of precious metal resource
properties in the Americas.





Our
only material mineral project for the purposes of NI 43-101 is the
Brucejack Project, a development stage project located in
north-western British Columbia. We also have a 100% interest in the
Snowfield Project (the “Snowfield Project”), which
borders the Brucejack Project to the north.





We intend to focus our exploration and development efforts
on the Brucejack Project and, in particular, on the commissioning
of and commercial production at the Brucejack Mine. We will also
focus on advancing engineering studies on the higher grade
underground opportunities at the Brucejack Project and on expanding
and increasing the quality of our mineral resources.





The
Snowfield Project represents a longer term gold opportunity for our
shareholders. Although we do not have a development plan as yet for
the Snowfield Project, we plan to continue to explore the area and
have budgeted for additional environmental studies which will
benefit both the Brucejack and Snowfield Projects.








The Brucejack Project





We
acquired the Brucejack Project, along with the Snowfield Project
and other associated assets (together, the “Project
Assets”), pursuant to an acquisition agreement dated October
28, 2010, as amended, with Silver Standard Resources Inc.
(“Silver Standard”)(the “Acquisition
Agreement”), for an aggregate acquisition price of $450
million, consisting of a cash payment of $233,020,000 and the
issuance of a total of 36,163,333 common shares (the “Common
Shares”) in the capital of the Company (the
“Acquisition”). We financed the cash portion of the
Acquisition with part of the proceeds from our initial public
offering, which closed concurrently with the acquisition of the
Project Assets in December 2010.





9





On June
30, 2014, we filed the Brucejack Report, which is a NI 43-101
compliant feasibility study on the Brucejack Project. The Brucejack
Project’s Valley of the Kings Proven and Probable Mineral
Reserves as set out in the Brucejack Report are 6.9 million ounces
of gold (13.6 million tonnes grading 15.7 grams of gold per tonne)
and West Zone Proven and Probable Mineral Reserves are 600,000
ounces of gold (2.9 million tonnes grading 6.9 grams of gold per
tonne). The Mineral Reserve estimates by zone and Reserve category
are summarized below:





Valley of the Kings Mineral Reserve Estimate(1)(2) – June
2014





Category
Tonnes
(millions)
Gold
(g/t)
Silver
(g/t)
ContainedGold
(million
oz)
Silver
(million
oz)Proven
2.1
15.6
12
1.1
0.8Probable
11.5
15.7
10
5.8
3.9Total P&P
13.6
15.7
11
6.9
4.6


(1) Rounding of some figures may lead to minor discrepancies
in totals


(2) Based on C$180/t cutoff grade, US$1,100/oz Au price,
US$17/oz Ag price, C$/US$ exchange rate = 0.92





West Zone Mineral Reserve Estimate(3) – June
2014





Category
Tonnes
(millions)
Gold
(g/t)
Silver
(g/t)
ContainedGold
(million
oz)
Silver
(million
oz)Proven
1.4
7.2
383
0.3
17.4Probable
1.5
6.5
181
0.3
8.6Total P&P
2.9
6.9
279
0.6
26.0


(3)
See notes (1) and (2) to the table above..





The
Brucejack Report set out a base case (US$1,100/ounce gold,
US$17/ounce silver and exchange rate of 0.92 C$/US$) estimated
pre-tax Net Present Value (5% discount) of US$2.25 billion, with an
internal rate of return of 34.7%.





The
Brucejack Report contemplates average annual production during the
first eight years of 504,000 ounces of gold and during the 18 year
Life of Mine (“LOM”) 404,000 ounces of gold, an
estimated capital cost, including contingencies, of US$746.9
million and an average processing rate of 2,700 tonnes/day with
operating costs of C$163.05 per tonne milled.





Please
see “Description of Our Business” at page 24 for an
excerpt of the Brucejack Report.





10








Environmental Assessment and Review





Major
mining projects in British Columbia are subject to environmental
assessment and review prior to certification and issuance of
permits to authorize construction and operations. Environmental
assessment (provincial EA and federal EIS) is a means of addressing
the potential for adverse environmental, social, economic, health,
and heritage effects or the potential adverse effects on Aboriginal
interests or rights prior to project approval. Depending on the
scope of a project, assessment and permitting of major mines in
British Columbia proceeds through the BC Environmental Assessment
Office process (the “BC EAO”) pursuant to the BC
Environmental Assessment Act (BC EAA) to receive an EA Certificate
and through the Canadian Environmental Assessment Agency
(“CEAA”) pursuant to the Canadian Environmental
Assessment Act 2012 to receive a CEAA Decision
Statement.





At a
provincial level, proposed mining developments that exceed a
threshold criterion of 75,000 t/a (or 205 t/d) as specified in the
Reviewable Project Regulations are required under the BC EAA to
obtain an Environmental Assessment Certificate from the Ministry of
Environment and Ministry of Energy and Mines (“EA
Certificate”). Following issuance of an EA Certificate,
permitting proceeds through the Ministry of Energy and Mines to
obtain a Mines Act permit to construct / operate / close a mine and
Ministry of Environment to permit under the Environment Management
Act various waste discharge permits.





At a
federal level, proposed gold mine developments (other than placer
mines) that exceed a threshold criterion of 600 t/d as specified
under the Regulations Designating Physical Activities are required
to complete an Environmental Impact Study (the “EIS”)
pursuant to the CEA Act.





BC EA





We
submitted our Project Description for the Brucejack Project to the
British Columbia Environmental Assessment Office (“BC
EAO”) in December 2012 and in February 2013, the BC EAO
issued a Section 10 order in respect of the EA Certificate
requirement for the Brucejack Project. A Section 11 order was
issued in July 2013 outlining the scope, procedures and methods for
the environmental assessment process.





During
2013, meetings were held with the working group comprised of
representatives from provincial and federal government agencies,
First Nations and communities participating in the review process
(the “Working Group”). Public meetings were also held
in 5 communities in northwest British Columbia during the first
public comment period.





In May
2014, we received a copy of the approved Application Information
Requirements from the BCEAO and on June 20, 2014, we filed our EAC
application with the BC EAO. The EAC application was then evaluated
for completeness over a 30-day period by BC EAO with the
involvement of the Working Group. On August 13, 2014, our EA
Certificate application was accepted for filing by the BC EAO. In
September 2014, we held a second round of public meetings in 5
communities in northern British Columbia during the second public
comment period.





11





In
March 2015, we were issued our EA Certificate for the Brucejack
Project by the British Columbia Minister of the Environment and the
Minister of Energy and Mines. The Ministers issued the EA
Certificate with conditions that would give them the confidence to
conclude that the project will be constructed, operated and
decommissioned in a way that ensures no significant adverse effects
are likely to occur.





The BC
EA process concluded within the legislated timeframe and was led by
the BC EAO. The process provided for significant opportunities for
Aboriginal groups, government agencies and the public to provide
input on the potential for environmental, economic, social,
heritage and health effects from a proposed project.





The
B.C. Minister of Energy and Mines issued us our B.C. Mines Act
Permit on August 31, 2015, approving our mine plan and reclamation
program allowing commercial production at the Brucejack Project.
The Mines Act Permit allows for the construction of a 2,700 tonnes
per day doré and flotation plant, development of an
underground mine, and associated facilities and other
infrastructure.





CEAA EIS





In
respect of the federal Environmental Impact Assessment process, we
submitted the Project Description for the Brucejack Project to the
CEAA in January 2013.





In May
2013, CEAA issued the EIS Guidelines that outline the federal
permitting requirements for the Brucejack Project. We filed our EIS
concurrently with our EAC application in August 2014.





In July
2015, we received our Environmental Assessment Decision Statement
from the Federal Minister of the Environment which found that the
Brucejack Project was not likely to cause significant adverse
environmental effects. The Minister issued a Project Recommendation that includes a
determination regarding the potential effects of the Project under
the Nisga'a
Final Agreement, which is a modern treaty signed by the
governments of Canada, British Columbia and the Nisga'a Nation.





In
reaching the decision, the Minister considered the Project
Recommendation and the Canadian Environmental Assessment Agency's
(CEAA) Environmental Assessment
Report. The Report includes CEAA’s conclusions and
recommendations on the potential environmental effects of the
project, the proposed mitigation measures, the significance of any
remaining adverse environmental effects, and the follow-up
program.





The
pre-construction conditions set out by the BC EA Certificate and
the CEAA Decision Statement were addressed in advance of the start
of mine construction in September 2015.





Following
design engineering and the start of construction, the EA
Certificate has been amended to address project changes brought
about through modifications to site specific configurations and
site requirements. The Mines Act Permit has also been amended to
accommodate project changes and the various waste discharge permits
have been amended to also accommodate project changes.





12








2017 Significant Developments





2017 Engineering and Development of the Brucejack
Project





Construction
of the Brucejack Project has advanced ahead of schedule and
commissioning is planned for April 2017. Commissioning was
previously planned for mid-2017. Underground development is well
advanced with twelve stopes crosscut on two levels in preparation
for long-hole drilling. Cross cutting of another eleven stopes is
in progress. A long-hole drill has been mobilized, with long-hole
drilling of a test stope underway.





All
major mechanical and electrical components have been delivered to
site and installation and assembly is ongoing. The shell, heads,
gears motors and drives for the SAG and Ball mills have been
installed and the drives are scheduled to be energized in early
April 2017. Electrical and instrumentation along with mechanical
and piping installation within the mill building is ongoing. The
mine substation and central electrical room are ready for
energization.





The
330-person camp which includes mine dry facilities, offices,
recreation facilities, dining hall and kitchen has been
commissioned and is fully operational.





Construction
continues on the Valley of the Kings portal building. External
structural steel erection is complete and internal structural
steel, mechanical and electrical installation is progressing. The
portal will serve as the primary access point to convey the gold
ore from the underground crusher to the mill.





Construction
of the 57-kilometer long transmission line has been completed and
is expected to be energized in early April 2017. An additional six
2-megawatt diesel generators are fully commissioned and, combined
with our initial 5-megawatts of diesel power, can provide adequate
power to maintain full mill and underground production in the event
of any grid power interruption.





Underground
development remains on schedule and contract mining crews have
completed over 10,000 meters of underground development to date.
Access to eight production levels from the 1200 to 1410-meter
levels has been established. Long-hole drilling has been in
progress on a test stope on the 1320-meter level since
mid-February. Excavation of the major development infrastructure is
now complete. The third and final exhaust vent raise has broken
through to the surface. Underground work is focused on continued
ramp and level development. Construction of underground
infrastructure, including the crusher, conveyor, and transfer
towers continues.





February 2017 Capital Cost Forecast





On
February 3, 2017, we announced that the total project capital cost
forecast (the “February 2017 Capital Cost Forecast”) to
complete construction of the Brucejack Project, including
contingencies, is US$811.1 million, an increase of 16% from the
February 2016 capital cost estimate of US$696.8 million. The
February 2017 Capital Cost Forecast includes US$68.8 million of
working capital for the first three months of production, but does
not take into account any revenue generated during this period. Key
areas of capital cost increases from the February 2016 Capital Cost
Estimate include: the transmission line (US$37.9 million); costs to
accelerate commissioning (US$13.9 million); new scope items
(US$21.7 million); construction overages (US$34.1 million);and
Indirects/Owner’s costs (US$31.4 million).





13





The
February 2017 Capital Cost Forecast to complete construction of the
Brucejack Project, including contingencies, has been prepared on
the basis of: 97% committed of the February 2017 Forecast excluding
working capital (US$719.7 million of US$742.3 million), substantial
completion of engineering; award of all major contracts and
purchase orders; substantial completion of civil works;
approximately 95% completion of project wide concrete installation;
substantial completion of fabrication of structural steel;
approximately 60% completion of erection of site-wide structural
steel; approximately 75% completion of process tank installation;
approximately 15% completion of mechanical and piping installation
for the mill building and associated works; approximately 25%
completion of electrical and instrumentation installation for the
mill building and associated works, completion and energization of
the Stewart to Knipple substation transmission line works; and
approximately 90% completion of the Knipple substation to Brucejack
Mine transmission line.





The
following is a summary of the capital costs from the February 2017
Capital Cost Forecast in comparison with the February 2016 Capital
Cost Estimate:





Capital Costs Summary Comparison(1)





February 2017
Forecast(US$ million)
February 2016
Capital Cost Estimate (US$ million)Mine
underground
90.7
101.4Mine
site(2)
250.4
165.3Offsite
Infrastructure(3)
108.8
81.0Total Direct Costs
449.9
347.7Indirect
Costs
78.3
97.5Owner’s
Costs
209.0
160.3Contingency
5.1
35.3Total Capital Cost
742.3
640.8Working Capital
68.8
56.0Total Construction Cost
811.1
696.8


(1)US$0.75:C$1


(2)Includes mine site,
mine site process, mine site utilities, mine site facilities,
tailings facilities, mine site temporary facilities and surface
mobile equipment.


(3)Includes
transmission line.





Lyle Morgenthaler, B.A.Sc., P.Eng., Chief Mine Engineer, is the
Qualified Person responsible for Brucejack Project development and
has reviewed and is responsible for the technical and scientific
information in this section of the AIF.





2017 Project Economic Metrics





14





Based
on the February 2017 Capital Cost Forecast, the Project Economics
were updated (the “2017 Project
Economics Update”). Net Cash Flows and Net Present
Values decreased slightly and Internal Rates of Return and Payback
improved marginally in comparison to the Project Economics from
February 2016.





The
following table provides an updated summary of the Brucejack
economic results by metal price.





Summary of Brucejack Economic Results by Metal Price –
February 2017 Update(4,5)





Low Case
Base Case
High CaseGold Price
(US$/ounce)
$800
$1,100
$1,400Silver Price
(US$/ounce)
$10.00
$14.00
$18.00Net Cash Flow (US$)
$2.11
billion (pre-tax)
$1.47
billion (post-tax)
$4.22 billion
(pre-tax)
$2.82 billion
(post-tax)
$6.32 billion
(pre-tax)
$4.17 billion
(post-tax)Net Present Value(6)
(5.0% discount)
(US$)
$1.05
billion (pre-tax)
$0.69
billion (post-tax)
$2.34 billion
(pre-tax)
$1.53 billion
(post-tax)
$3.62 billion
(pre-tax)
$2.36 billion
(post-tax)Internal Rate of Return
19.9%
(pre-tax)
16.5%
(post-tax)
34.4%
(pre-tax)
28.5%
(post-tax)
47.5%(pre-tax)
39.1%
(post-tax)Payback(from start of production
period)
5.0
years (pre-tax)
5.2
years (post-tax)
3.3 years
(pre-tax)
3.5 years
(post-tax)
2.5 years
(pre-tax)
2.7 years
(post-tax)Exchange Rate
(US$:C$)
0.75
0.75
0.75


(4)Includes impact
from financing announced Sept 15, 2015.


(5)Financing impact
assumes repayment of debt facility at maturity, exercise of maximum
buyout options for offtake and stream facilities at December 31,
2018.


(6)NPV is discounted
to December 31, 2015.





Lyle Morgenthaler, B.A.Sc., P.Eng., Chief Mine Engineer, is the
Qualified Person responsible for Brucejack Project development and
has reviewed and is responsible for the technical and scientific
information in this section of the AIF.





The estimates contained in the February 2017 Capital Cost Forecast
and the 2017 Project Economics Update are forward-looking
statements and are subject to the risks and uncertainties outlined
under “Cautionary Note Regarding Forward-Looking
Statements” and “Risk Factors”.





Convertible Debenture Offering





In February, 2017, we completed an offering of US$100
million aggregate principal amount of 2.25% unsecured convertible
senior subordinated notes due 2022 (the “Notes”), which
includes the exercise of the full amount of the over-allotment
option of US$10 million aggregate principal amount of Notes. The
initial conversion rate for the Notes is 62.5000 Common Shares per
US$1,000 principal amount of Notes, equivalent to an initial
conversion price of US$16.00 per Common Share.





We
intend to use the net proceeds of the Notes offering for working
capital during start-up of the Brucejack Project and for general
corporate purposes.








15








2016 Significant Developments





2016 Mineral Resource Update





On July
21, 2016, we announced an updated Valley of the Kings Mineral
Resource estimate in accordance with National Instrument 43-101 for
the Brucejack Project (the “2016 Mineral Resource Estimate
Update”).





The
2015-2016 Valley of the Kings infill drill program was undertaken
to support production planning in the Valley of the Kings and
designed to convert Indicated Mineral Resources into Measured
Mineral Resources in the areas to be mined in the first three years
of the current mine plan (1320-meter level to 1200-meter level) by
increasing drill density to 7.5-meter to 10-meter centers. The
infill drill program was subsequently expanded to include
extensions of Domain 20 which are adjacent to areas planned to be
mined in the early years of the 2014 Feasibility Study Mine
Plan.





The
program, which consisted of 63,740 meters in 367 drillholes, was
successful in increasing the Measured Mineral Resources in the
Valley of the Kings by 58% to 1.9 million ounces (3.5 million
tonnes grading 17.0 grams per tonne gold). Results from the program
confirmed the style and grade distribution of the gold
mineralization in the area being tested, and included the
intersection of high grade and visible gold.





The
program was also successful in adding Indicated Mineral Resources,
with Measured and Indicated Mineral Resources in the Valley of the
Kings now totalling 9.1 million ounces of gold (16.4 million tonnes
grading 17.2 grams per tonne gold), an increase from the December
2013 Valley of the Kings Mineral Resource estimate of Measured and
Indicated Mineral Resources which totalled 8.7 million ounces of
gold (15.3 million tonnes grading 17.6 grams per tonne gold). The
following table is a summary of the 2016 Mineral Resource Estimate
Update:





Valley of the Kings Mineral Resource estimate – July
2016(1),(4)





(Based
on a gold-silver cut-off grade of 5.0 grams/tonne(5))





Category
Tonnes
(millions)
Gold
(g/t)
Silver
(g/t)
Contained(3)Gold
(million
oz)
Silver
(million
oz)Measured
3.5
17.0
15.3
1.9
1.7Indicated
13.0
17.3
15.0
7.2
6.2M&I
16.4
17.2
15.0
9.1
7.9Inferred(2)
4.6
21.0
26.9
3.1
4.0


(1)
Mineral Resources which are not Mineral Reserves do not have
demonstrated economic viability. The estimate of Mineral Resources
may be materially affected by environmental, permitting, legal,
marketing, or other relevant issues. The Mineral Resources in this
news release were estimated using the Canadian Institute of Mining,
Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources
and Reserves, Definitions and Guidelines prepared by the CIM
Standing Committee on Reserve Definitions and adopted by CIM
Council.


(2) The
quantity and grade of reported Inferred resources in this
estimation are uncertain in nature and there has been insufficient
exploration to define these Inferred Resources as an Indicated or
Measured Mineral Resource and it is uncertain if further
exploration will result in upgrading them to an Indicated or
Measured Mineral Resource category.


(3) Contained metal figures and totals may differ due to
rounding of figures.


(4) The
Mineral Resource estimate stated in Table 1 is defined using 10 m
by 10 m by 10 m blocks in the Valley of the Kings.


(5) The
gold-silver cutoff value is defined as Au + Ag/53.





16





The
2016 Mineral Resource Estimate Update confirmed the geological
model for the Valley of the Kings and combined Measured and
Indicated Resources‎ have not materially
changed. The Valley of the Kings remains open to the east and west
along strike, and at depth.





We
prepared the 2016 Mineral Resource Estimate Update under the
guidance and supervision of Ivor W.O. Jones, M.Sc., FAusIMM, CPgeo
who is the independent Qualified Person (QP) responsible for the
Mineral Resource for the Brucejack Project. The Company employed
the same approach and methodology as was used for the December 2013
Valley of the Kings Mineral Resource estimate. For details see
Brucejack Project Mineral
Resources Update Technical Report effective date 19 December
2013.





2016 Mineral Reserve Estimate and Mine Plan Update





On
December 15, 2016 we announced a positive updated Valley of the
Kings Mineral Reserve estimate for its Brucejack Project
(“2016 Mineral Reserve Estimate Update”) which was
based on the 2016 Mineral Resource Estimate Update. The following
table is a summary of the 2016 Mineral Reserve Estimate
Update.





Valley of the Kings Mineral Reserve Estimate – December
2016(1-5)





Category
Tonnes
(millions)
Gold
(g/t)
Silver
(g/t)
ContainedGold
(million
oz)
Silver
(million
oz)Proven
3.3
14.5
12.9
1.6
1.4Probable
12.3
16.5
11.3
6.5
4.5Total
15.6
16.1
11.1
8.1
5.9


(1) The
Mineral Reserves and Resources in this news release were estimated
using the Canadian Institute of Mining, Metallurgy and Petroleum
(CIM), CIM Standards on Mineral Resources and Reserves, Definitions
and Guidelines prepared by the CIM Standing Committee on Reserve
Definitions and adopted by CIM Council.


(2) Contained metal figures and totals may differ due to rounding
of figures.


(3) A
94% tonnage recovery is used


(4)
Assumptions used include US$1,100 per ounce of gold US$17 per ounce
of silver and a $0.92 CAD/US exchange rate


(5) A
NSR cut-off of CAD$180/tonne was used to optimize the
stopes





Russell
Pennell, B.A.Sc., P.Eng., Senior Mining Engineer, Pretium Resources
Inc. is the Qualified Person responsible for the Reserve Estimate
and Mine Plan Update for the Brucejack Project.





Highlights
of the 2016 Mineral Reserve Estimate Update include Proven Mineral
Reserves in the Valley of the Kings increased to 1.6 million ounces
gold (3.3 million tonnes grading 14.5 grams per tonne gold) which
is sufficient for the first three years of mine life and Proven and
Probable Mineral Reserves in the Valley of the Kings increased to
8.1 million ounces gold (15.6 million tonnes grading 16.1 grams per
tonne gold).





Areas
of gain in the 2016 Mineral Reserve Estimate Update are attributed
to: (a) increasing drill density to 7.5-meter to 10-meter centers
which allowed for conversion of a significant amount of Probable
Reserve to the Proven Reserve category; (b) adjustments made to the
stope orientation and design parameters; and (c) the addition of
grade to the background mineralization for the estimate which had
previously been modeled at zero grade.





17





2016 Exploration Program





The
2016 grass-roots exploration program concluded in October and was
conducted to evaluate the broader regional exploration potential of
the Brucejack property outside the area of known mineralization.
The Bowser Regional Project area, approximately 20 kilometers
south-east of the Valley of the Kings deposit, comprises
approximately 800 square kilometers.





As the
2015 program included airborne magnetic, radiometric and EM surveys
over two-thirds of the project area, the 2016 program was designed
to cover the remaining areas with airborne magnetic and radiometric
surveys as well as a hyperspectral survey, regional ground MT
surveys, property scale mapping and prospecting over the entire
area. A limited drill program was also completed to enhance
geological interpretation.





Renewal of Base Shelf Prospectus





In May,
2016, we filed a short form base shelf prospectus with the
securities commissions in each of the provinces and territories of
Canada, except Quebec, and a corresponding shelf registration
statement on Form F-10 with the SEC under the U.S. Securities Act
of 1933, as amended, and Multijurisdictional Disclosure System
established between Canada and the United States.





The
base shelf prospectus will allow us to offer up to US$600,000,000
of Common Shares, debt securities, preferred shares, subscription
receipts, units, warrants and share purchase contracts from time to
time over the 25-month period after Canadian securities regulatory
authorities have issued a receipt for the final short form base
shelf prospectus.





2016 Capital Cost Forecast and
Project Economics Update





In February, 2016, we provided an updated cost estimate for the
Brucejack Project (the “February 2016 Capital Cost
Update”). The February 2016 Capital Cost Update was
based on the achievement of the 60% engineering milestone
and was carried out to update the June 2014 Feasibility Study cost
estimate (the “Feasibility Study Estimate”) for the
Brucejack Project.





Under
the February 2016 Capital Cost Update,
the estimated total project capital cost to complete design,
construction, installation and commissioning, including
contingencies, was US$640.8 million. Working capital for the
three-month period of post-plant commissioning and initial gold
production was estimated at US$56.0 million and covers the cost of
operations, but did not take into account any revenue generated
during this period. The working capital estimate also covers the
costs for prepayments related to electrical power and permitting,
including US$9 million in government fees and bonds.





The
February 2016 Capital Cost Update and Project Economics Update have
since been superseded by the February 2017 Forecast and 2017
Project Economics Update.





Shelf Prospectus Offering





18





We
completed a marketed offering of 26,210,000 of our Common Shares at
US$4.58 per Common Share, for gross proceeds of US$120 million (the
“Shelf Prospectus Offering”) in March 2016. The
offering was done under a supplement to our short form base shelf
prospectus dated July 14, 2014. The underwriters also exercised
their over-allotment option and purchased an additional 2,174,000
Common Shares at US$4.58 per Common Shares, for additional proceeds
of US$9,956,920 for total gross proceeds of
US$129,998,720.





Pursuant
to a subscription agreement dated December 8, 2014 between Jin
Huang Mining Company (formerly Xinxing Global Limited) (“Jin
Huang”) and the Company, Jin Huang is entitled to maintain
its proportionate ownership interest in the Company by
participating pro rata in issuances of the Company's Common Shares.
Jin Huang exercised its participation rights and subscribed for
2,786,849 of our Common Shares at a price of US$4.58 per Common
Share in a non-brokered private placement.





Pursuant
to a subscription agreement dated September 21, 2015, Orion Mine
Finance Group (“Orion”) is entitled to maintain its
proportionate ownership interest in the Company by participating
pro rata in issuances of our Common Shares. Orion exercised its
participation rights and subscribed for 752,906 of our Common
Shares at a price of US$4.58 per Common Share in a non-brokered
private placement.





Additional
aggregate gross proceeds of approximately US$16,212,078 was raised
from the pro-rata private placement.





The net
proceeds of the marketed offering and the pro-rata offering were
used to fund development of the Brucejack Project.





2015
Significant Developments





2015 Exploration Activities





A
grass-roots exploration program was undertaken in 2015 which was
comprised of prospecting, airborne EM, magnetic and radiometric
surveys, and a surface drill program.





The
2015 surface exploration drill program consisted of approximately
20,000 meters of drilling, which targeted porphyry/epithermal-style
mineralization to the east of the Brucejack Project.





The
2015 regional exploration program was successful in expanding the
size of the hydrothermal system that includes the Valley of the
Kings and confirming the potential for additional mineralized zones
to the east. With the discovery of the Flow Dome Zone, the program
was successful in extending the strike length of the Valley of the
Kings gold mineralization 1,000 meters to the east of the current
Valley of the Kings Measured and Indicated Mineral Resource.
Results from the 2015 program were used to prioritize targets for
follow-up regional exploration programs.





19








2015 Engineering and Development of the Brucejack
Project





Underground
development was ongoing in 2015, with an initial focus on
underground exploration development. Upon receipt of final mine
development permits, the focus switched to the development of mine
infrastructure.





An
infill drill program at the Brucejack Project’s Valley of the
Kings commenced in 2015 to target stope areas in years 1 through 3
of the current mine plan (1320-meter level to 1200-meter level).
The planned drill program was expanded to include extensions of
Domain 20 which are adjacent to areas being mined in the early
years of the 2014 Feasibility Study Mine Plan. An area of roughly
200 vertical meters over a strike length of 250 meters was drilled
at 7.5 to 10-meter centers. The primary purpose of the drilling was
grade control, with the additional benefit of infill drilling
inferred and non-stope indicated resources in the same area.
Results from the program continued to confirm the style and grade
distribution of the gold mineralization in the area being tested,
which includes the intersection of high grade and visible
gold.





Construction
at the Brucejack Project commenced on September 5, 2015
with expected commissioning at
that time being in the third quarter of 2017. Activities were
focused on bulk earth works, including the pads for the permanent
camp and mill building, in preparation for facilities construction
in the spring of 2016. Additional construction activities at site
included the excavation of diversion ditches and contact water pond
and the widening of the haul road to accommodate construction
traffic. Transmission line right-of-way clearing commenced and the
contract for the transmission line towers was issued.





Construction Financing Package with Orion Mine Finance Group and
Blackstone Tactical Opportunities





In September, 2015, we completed a US$540,000,000 construction
financing package (the “Orion and Blackstone
Financing”) with the Orion Mine Finance Group
(“Orion”) and Blackstone Tactical Opportunities
(“BTO”) (collectively “Orion and
Blackstone”). The Orion and Blackstone Financing was
comprised of a credit facility for US$350,000,000 (the
“Credit Facility”), a US$150,000,000 prepayment under a
callable gold and silver stream agreement (the “Stream
Agreement”) and a private placement of Common Shares for
US$40,000,000 (the “Private Placement”).





Upon closing, we received US$340,000,000 comprised of: (i)
US$150,000,000 as an initial advance under the Credit Facility;
(ii) US$150,000,000 as a deposit under the Stream Agreement (the
“Deposit”); and (iii) US$40,000,000, being the
aggregate subscription price under the Private
Placement.





The Credit Facility consisted of a credit agreement among the
Company, as borrower, Pretium Exploration and 089, as guarantors,
Orion and BTO, as lenders and Orion, as administrative agent, dated
September 15, 2015 (the “Credit Agreement”) and an
offtake agreement among Pretium Exploration, the Company, 089,
Orion Co-Investments II (Stream) Limited (“Orion
Stream”) and BTO, dated September 15, 2015 (the
“Offtake Agreement”).





20





The Credit Agreement is a senior secured loan facility of
US$350,000,000 of which US$150,000,000 was advanced at closing,
leaving US$200,000,000 available to be drawn in up to US$50,000,000
tranches (with each tranche subject to a minimum amount of
US$5,000,000) beginning six months from the closing date of the
Credit Agreement over a period
of 18 months with each draw subject to an arrangement fee of 3%.
The facility was fully drawn on February 15, 2017. The Credit
Agreement has a fixed interest rate of 7.5%. Principal and accrued
interest compounded quarterly is due at maturity on December 31,
2018. We have an option to extend maturity to December 31, 2019 on
payment of 2.5% of the principal amount
outstanding.





The Offtake Agreement applies to sales from the first 7,067,000
ounces of refined gold (less any delivered ounces pursuant to the
Stream Agreement). Orion Stream and BTO will pay for refined gold
based on a market referenced gold price in U.S. dollars per ounce
during a defined pricing period before and after the date of each
sale. The offtake obligation applies to 100% of refined gold
produced at the Brucejack Project less the percentage of refined
gold to be delivered pursuant to the Stream Agreement. Moreover,
Pretium Exploration has the option to reduce the offtake obligation
by one of the following options:





i.
 Effective
on December 31, 2018, Pretium Exploration can elect to reduce the
offtake obligation to either i) 50% by paying US$11 per ounce
multiplied by 0.5, on the remaining undelivered gold ounces, or ii)
25% by paying US$11 per ounce multiplied by 0.75, on the remaining
undelivered gold ounces; or





ii.
 Effective
on December 31, 2019 Pretium Exploration can elect to reduce the
offtake obligation to either i) 50% by paying US$13 per ounce
multiplied by 0.5, on the remaining undelivered gold ounces, or ii)
25% by paying US$13 per ounce multiplied by 0.75, on the remaining
undelivered gold ounces.





Pursuant to the Stream Agreement among Orion Stream and BTO as
purchasers, the Company and Pretium Exploration, as seller, Orion
Stream, as purchaser’s agent, Orion, as collateral agent,
dated September 15, 2015, the Deposit was advanced at closing as
prepayment in consideration of a callable stream that applies to 8%
of the 7,067,000 ounces of refined gold and 26,297,000 ounces of
refined silver produced at the Brucejack Project (the
“Refined Precious Metals”). The Refined Precious Metals
subject to the Stream Agreement will be reduced by the aggregate
ounces of Refined Precious Metals sold and delivered prior to the
applicable delivery start date.





Pretium Exploration may elect to repurchase all or a portion of the
Refined Precious Metals stream by one of the following
options:





i.
 On
December 31, 2018, Pretium Exploration can elect to repurchase the
entire 8% stream by paying US$237,000,000 or can elect to reduce
the stream to 3% of Refined Precious Metals by paying
US$150,000,000, in which case the stream deliveries would commence
January 1, 2019; or





ii.
 On
December 31, 2019, Pretium Exploration can elect to repurchase the
entire 8% stream by paying US$272,000,000 or can elect to reduce
the stream to 4% of Refined Precious Metals by paying
US$150,000,000, in which case the stream deliveries would commence
January 1, 2020.





21





If Pretium Exploration does not exercise the right to reduce or
repurchase the Refined Precious Metals stream by December 31, 2019,
US$20,000,000 will be payable to Orion Stream and BTO and an 8%
stream will apply to the Refined Precious Metals beginning January
1, 2020, with payment of US$400 per ounce of gold and US$4.00 per
ounce of silver. If the market price of gold is greater than US$400
per ounce, the excess will decrease the Deposit until it has been
reduced to nil.





Subject to certain exceptions, the Stream Agreement contains
restrictions on the transfer of production and transfers of
property and assets. The Stream Agreement also contains a general
prohibition regarding changes of control of Pretium or any of its
subsidiaries. However, the Stream Agreement does not prohibit a
transfer or change of control of Pretium or any of its subsidiaries
if a change of control or transfer of substantially all assets of
Pretium, Pretium Exploration or any other Pretium Entity (as
defined in the Stream Agreement, which is available on SEDAR)
occurs or is agreed to (a “Triggering Event”) prior to
the earlier of (i) January 1, 2020; and (ii) the date the Deposit
is reduced to nil, and Pretium Exploration exercises its right at
such time to purchase the stream obligation (the “Purchase
Right”) in exchange for consideration equal to the greater of
(a) 13.6% of consideration received as a result of such Triggering
Event which is attributable to the project, and (b) an amount equal
to the product of $150,000,000 and (1.15)D/365, where
“D” is the number of days from the date of the
Agreement to the date of completion of such Triggering Event (the
greater of such amounts, the “Triggering Event
Amount”). If a Triggering Event occurs and Pretium
Exploration has not exercised the Purchase Right, the Purchasers
shall have the right at such time to require Pretium Exploration to
purchase the Stream Agreement in exchange for consideration equal
to the Triggering Event Amount. Once the Deposit is reduced to nil,
there will be no consequences of a change of control of
Pretium.





Under the Private Placement each of Orion and BTO subscribed for
3,848,004 of our Common Shares at US$5.1975 per Common Share for
aggregate proceeds at closing of US$40,000,000. Orion and BTO are
also entitled to maintain their proportionate ownership of our
Common Shares by participating pro rata in issuances of our Common
Shares (subject to certain exceptions) until the maturity date of
the Credit Agreement.





Production Decision





In 2015, following receipt of all of the major regulatory permits
required to begin development work at the Brucejack Project, and
the completion of the Construction Financing with Orion and
Blackstone, our Board of Directors approved a Production Decision
for the Brucejack Project.









































22





2014
Significant Developments





2014 Exploration Activities





The
2014 exploration program at the Brucejack Project was focused on
continuing resource definition in the Valley of the Kings with both
surface and underground exploration.





The
2014 surface drill program consisted of infill drilling,
exploration drilling at depth and condemnation drilling. The infill
drill program, comprising 5,818 meters in three holes including 14
wedge holes, was successful in confirming the grade and continuity
of Indicated and Inferred gold mineralization in an area defined by
the 2013 Mineral Resource estimate block model.





The
exploration drilling at depth, which consisted of four deep drill
holes comprising 3,507 meters, was successful in confirming the
continuity of gold mineralization in the Valley of the Kings below
the area defined by the 2013 Mineral Resource estimate.
Condemnation drilling for mine site infrastructure consisted of 25
drill holes comprising 2,679 meters.





Underground
exploration in the Valley of the Kings continued with mapping and
sampling coinciding with the advance of ramping and vent raise
excavation.





2014 Engineering and Development of the Brucejack
Project





In
June, 2014, we filed the Brucejack Report which superseded the NI
43-101 compliant “Feasibility Study and Technical Report on
the Brucejack Project” dated
June 11, 2013, prepared by Tetra Tech.





Basic
and detailed engineering activities continued in 2014:





●
 AMEC was awarded
the EPCM contract and commenced work on engineering and
procurement;





●
 Flow sheets and
process design criteria were finalized as well as process and
instrumentation diagrams;





●
 Plant and site
layout refinements were underway, as well as the procurement of
surface facilities and underground infrastructure;





●
 Teams in the
technical areas required to advance the Project through development
were staffed; and





●
 Contracts including
bulk earthworks, transmission line and long lead items were
awarded.





23








DESCRIPTION OF OUR BUSINESS





The Brucejack Project is our only material project and we
intend to focus our exploration and development efforts on
the Brucejack Project and, in particular, on advancing engineering
studies on the higher grade underground opportunities at the
Brucejack Project and on expanding and increasing the quality of
our mineral resources.





On June
30, 2014, we filed the Brucejack Report, which is a NI 43-101
compliant feasibility study on the Brucejack Project and an excerpt
from the Brucejack Report is reproduced below.





Unless
stated otherwise, the scientific and technical information in this
AIF is solely derived from, and in some instances is an extract
from, the Brucejack Report. Reference should be made to the full
text of the Brucejack Report, which is available electronically on
the SEDAR website at www.sedar.com under our SEDAR profile, as the
Brucejack Report contains additional assumptions, qualifications,
references, reliances and procedures which are not fully described
herein.





The
“Resource Estimate” in the Brucejack Report has been
prepared in compliance with NI 43-101 and Form 43-101F1 which
require that all estimates be prepared in accordance with the
“CIM Definition Standards on Mineral Resources and Mineral
Reserves as prepared by the CIM Standing Committee on Reserve
Definitions” and in effect as of the effective date of the
Brucejack Report.





The
quantity and grade of reported inferred resources in this
estimation are uncertain in nature and there has been insufficient
exploration to define these inferred resources as an indicated or
measured mineral resource and it is uncertain if further
exploration will result in upgrading them to an indicated or
measured mineral resource category. Mineral resources which are not
mineral reserves do not have demonstrated economic viability. The
estimate of mineral resources may be materially affected by
environmental, permitting, legal, title, taxation, socio-political,
marketing, or other relevant issues.





The Brucejack
Project





Project
Description and Location





The
Brucejack Project (also known as the “Property” in the Brucejack Report)
consists of four mining leases and six mineral claims totalling
3,304 hectares. The mining leases require annual payments to remain
in good standing and the mineral claims are in good standing until
January 31, 2027.





The
Brucejack Project is centred at approximately latitude
56°28’20”N by longitude
130°11’31”W, approximately 950 kilometres
northwest of Vancouver, 65 kilometres north-northwest of Stewart,
and 21 kilometres south-southeast of the Eskay Creek
Mine.





We
acquired our 100% outright interest in the Brucejack Project in
December 2010, pursuant to the Acquisition Agreement with Silver
Standard. The Brucejack Project is subject to a 1.2% net smelter
returns royalty in favour of Franco-Nevada Corporation
(“Franco-Nevada”) on production in
excess of 503,386 ounces of gold and 17,907,080 ounces of
silver.





24





Property
Location Map








Accessibility, Climate, Local Resources, Infrastructure and
Physiography





Accessibility





The
Brucejack Project is located in the Boundary Range of the Coast
Mountain Physiographic Belt along the western margin of the
Intermontane Tectonic Belt. The terrain is generally steep with
local reliefs of 1000 metres from valleys occupied by receding
glaciers, to ridges at elevations of 1200 metres above sea-level.
Elevations within the Brucejack Project area range from 1366 metres
along Brucejack Lake to 1650 metres at the Bridge Zone. However,
within several areas, the relief is relatively low to
moderate.





25





We have
completed construction of our approximately 74 kilometre
exploration access road that links the Brucejack Camp to Highway 37
via the Knipple Glacier, Bowser Camp and Wildfire Camp. Personnel,
equipment, fuel and camp provisions are driven to a staging area on
the Knipple Glacier before being taken over the glacier to the
Brucejack Camp. The area is easily accessible by helicopter from
the town of Stewart, or seasonally from the settlement of Bell II.
The flight time from Stewart is approximately 30 minutes and
slightly less from Bell II.





Climate





The
climate is typical of north-western British Columbia with cool, wet
summers, and relatively moderate but wet winters. Annual
temperatures range from +20°C to -20°C. Precipitation is
high with heavy snowfall accumulations ranging from 10 metres to 15
metres at higher elevations and 2 metres to 3 metres along the
lower river valleys. Snow packs cover the higher elevations from
October to May. The optimum field season is from late June to
mid-October.





Local Resources and Infrastructure





There
are no local resources other than abundant water for any drilling
work.





The
nearest infrastructure is the town of Stewart, approximately 65
kilometres to the south, which has limited supplies and personnel.
The towns of Terrace and Smithers are also located in the same
general region as the Brucejack Project. Both are directly
accessible by daily air service from Vancouver.





The
nearest railway is the Canadian National Railway Yellowhead route,
which is located approximately 220 kilometres to the southeast.
This line runs east-west and terminates at the deep water port of
Prince Rupert on the west coast of British Columbia. The most
northerly ice-free shipping port in North America, in Stewart, is
accessible to store and ship concentrates.





A high
voltage, 138-kV transmission line currently services Stewart, BC
and has sufficient capacity to provide power to the Brucejack
Project. BC Hydro has started engineering work on a system upgrade
to provide for the interconnection of the transmission line that
will service the Brucejack Project with the 138kv transmission line
servicing the town of Stewart.





History and Exploration





The
exploration history of the area dates back to the 1880s when placer
gold was located at Sulphurets and Mitchell Creeks. Placer mining
was intermittently undertaken throughout the early 1900s and
remained the main focus of prospecting until the
mid-1930s.





In
1935, prospectors discovered copper-molybdenum mineralization on
the Sulphurets property in the vicinity of the Main Copper zone,
approximately six kilometres northwest of Brucejack Lake; however,
these claims were not staked until 1960. From 1935 to 1959, the
area was relatively inactive with respect to prospecting; however,
it was intermittently evaluated by a number of different parties
and several small copper and gold-silver occurrences were
discovered in the Sulphurets-Mitchell Creek area. In 1960, Granduc
and Alaskan prospectors staked the main claim group covering the
known copper and gold-silver occurrences, which collectively became
known as the Sulphurets property, starting the era of modern
exploration. Various operators explored the area, and an
underground program was completed on the West Zone between 1986 and
1991 by the Newcana Joint Venture among Granduc, Newhawk and Lacana
Mining Corporation.





26





In
1999, Silver Standard acquired Newhawk and with it, Newhawk's 60%
interest and control of the Brucejack Project. In 2001, Silver
Standard acquired Black Hawk’s 40% direct interest in the
Brucejack Project, resulting in 100% interest in the Brucejack
Project.





Silver
Standard began initial work on the Brucejack Project in 2009 with
drilling, rock-chip and channel sampling and re-sampling of
historical drill core. The 2009 program tested five zones with 37
drillholes totalling 18,000 metres. A total of 12 drillholes were
targeted at what would become the Valley of the Kings Zone (the
“Valley of the Kings”).





In
2010, Silver Standard’s drill program was designed to
continue definition of the bulk tonnage mineralization as well as
to determine the nature and continuity of the high-grade
mineralization observed at Valley of the Kings. Approximately one
third of the 2010 drilling targeted the Valley of the Kings and
included gold intersections of up to 5,840 g/t gold. The bulk
tonnage drilling achieved its intended goal through the definition
of more than 20 Moz at Brucejack (8 Moz in Measured and
Indicated and 12.5 Moz gold in Inferred, at a 0.3 g/t
AuEq cut-off; Ghaffari et al. 2011). The relatively dense drilling
from the bulk tonnage drilling program, with drill spacings of
100 metres by 100 metres to 50 metres by
50 metres, formed the basis upon which the bulk tonnage
resource model was built. Numerous high-grade intersections were
defined as part of this drilling, allowing for the initial
delineation of high-grade mineralization trends. In 2010, Silver
Standard proceeded with the sale of the Snowfield and Brucejack
projects to us.





Our
2011 diamond drill program was focused specifically on
defining high grade resources. In 2011, 178 drillholes were
completed totalling 72,805 metres in drillholes SU-110 to
SU-288. This included 97 drillholes (41,219 metres) that
targeted the Valley of the Kings, 16 drillholes
(7,471 metres) that targeted the West Zone, and
21 drillholes (7,220 metres) that targeted the
surrounding areas. The remaining drilling was focused on expansion
of Shore Zone, testing for structurally controlled high grade
mineralization in Galena Hill (now part of the Valley of the Kings)
and Bridge Zones, as well as testing new target areas. The West
Zone ramp was partially dewatered in late 2011 and early 2012. A
geotechnical mapping program and updated survey was completed on
the dewatered portion of the mine.





Our
2012 diamond drill program focused on defining the high grade
resource for the Valley of the Kings, specifically targeting
geological and structural features believed to be associated with
high grade gold mineralization.  Diamond drilling also focused
on expanding the known extents of the Valley of the Kings Zone,
both west of the Brucejack Fault and along trend to the east of the
main mineralized zone.   A total of 301 drillholes
were completed, totalling 105,500 metres of drilling during
the 2012 drilling program.





An
underground exploration program commenced in 2012 which was
designed to, amongst other things, access the Valley of the Kings
deposit underground, excavate a 10,000 tonne underground bulk
sample and demonstrate continuity of the high-grade gold
mineralization. The initial phase of the underground program
involved widening a portion of the historical West Zone underground
workings to five metres by five metres so that the historical West
Zone portal and underground workings can be used for access to the
Valley of the Kings with production sized mining equipment. In late
December 2012, the widening of the historical West Zone underground
workings was completed and excavation commenced of the access ramp
from the West Zone workings to the Valley of the
Kings.





27





Our
2013 surface diamond drill program focused on further defining
the high grade resource for the Valley of the Kings as well as the
geological and structural features believed to be associated with
gold mineralization. A total of 24 surface diamond drillholes
(5,200 metres) of the 37 surface drillholes
(5,770 metres; drillholes SU-590 to SU-626) completed
during the 2013 drilling program were focussed on the Valley
of the Kings.





In
2013, we also excavated a bulk sample from within the Valley
of the Kings to further evaluate the geological interpretation and
Mineral Resource estimate. The location of the proposed bulk sample
was selected to be representative of the grade and character of the
overall mineralization of the Valley of the Kings.





Underground
development reached the bulk sample area in May 2013 and
underground drilling to support the bulk sample program began in
mid-May. A total of 409 drillholes (38,840 metres) were
completed with 200 of these drillholes (16,640 metres)
testing the bulk sample area. The remainder (209 drillholes
totalling 22,200 metres) were testing targets outside of the
bulk sample area.





The
design of the bulk sample was limited by provincial legislation to
a maximum allowable bulk sample size of 10,000 tonnes. The
bulk sample was collected as a series of nominal 100 tonne
rounds in underground development. We elected to process the bulk
sample both through a sample tower on site and at a custom mill
(Contact Mill) in Montana, USA. The results of assaying of the
samples from the sample tower provided, in Snowden’s opinion,
an unacceptable degree of variation in the results.





In
2014, exploration focused on resource definition in the Valley of
the Kings with both surface and underground
exploration.





The
2014 surface drill program consisted of infill drilling,
exploration drilling at depth and condemnation drilling. The infill
drill program, comprising 5,818 metres in three holes including 14
wedge holes, was successful in confirming the grade and continuity
of Indicated and Inferred gold mineralization in an area defined by
the 2013 Mineral Resource estimate block model.





The
exploration drilling at depth, which consisted of four deep drill
holes comprising 3,507 metres, was successful in confirming the
continuity of gold mineralization in the Valley of the Kings below
the area defined by the 2013 Mineral Resource estimate.
Condemnation drilling for mine site infrastructure consisted of 25
drill holes comprising 2,679 metres.





Underground
exploration in the Valley of the Kings has continued to date with
mapping and sampling coinciding with the advance of ramping and
vent raise excavation.























28





Geological
Setting





The
Brucejack Property is located on the eastern limb of the broad
McTagg anticlinorium, the northern closure of the Stewart-Iskut
culmination. As a result, rocks on the Brucejack Property are
tilted, as well as folded, and generally display a progressive
younging towards the east. Volcanic arc-related rocks of the
Triassic Stuhini Group form the core of the anticlinorium, and are
successively replaced outwards by volcanic arc-related rocks of the
Lower Jurassic Hazleton Group and clastic basin-fill sedimentary
rocks of the Middle to Upper Jurassic Bowser Lake
Group.





Geology
on the Brucejack Property can generally be characterized as a
northerly-trending, broadly arcuate, concave-westward
structural-stratigraphic belt of variably altered rocks. This belt
is bisected on the western side of the Brucejack Property by a
prominent topographic lineament, the Brucejack Fault. This belt is
characterised by a broad band of variably but generally intensely
quartz-sericite-pyrite altered rocks of up to several hundred
metres or more across, and approximately five kilometres in strike
extent. The quartz-sericite-pyrite alteration typically contains
between two and 20% pyrite, and, depending on the alteration
intensity, can preclude protolith recognition. Most of the defined
mineral resources on the Brucejack Property are located within the
intensely altered zone.





Mineralization





Gold
(± silver) mineralization is hosted in predominantly
sub-vertical vein, vein stockwork, and subordinate vein breccia
systems of variable intensity, throughout the alteration band. The
stockwork systems display both parallel and discordant
relationships to stratigraphy. The stockwork systems are relatively
continuous along strike (several tens of metres to several hundreds
of metres).





Several
mineralization zones have been explored to varying degrees,
including (from south to north): Bridge Zone, Valley of the Kings
Zone, West Zone, Gossan Hill, Shore Zone, and SG Zone (Ireland et
al. 2013). There are numerous relatively unexplored mineralization
showings within the alteration band across the Brucejack Property
that are between the main mineralization zones, highlighting the
exceptional exploration potential of the Brucejack
Property.





High
grade gold mineralization in the Valley of the Kings, the current
focus of the Project, occurs in a series of west-northwest (and
subordinate west-southwest) trending sub-vertical corridors of
structurally reoriented vein stockworks and vein breccias.
Stockwork mineralization displays both discordant and concordant
relationships to the volcanic pile stratigraphy. Gold is typically
present as gold-rich electrum within deformed quartz-carbonate
(±adularia?) vein stockworks, veins, and subordinate vein
breccias, with grades ranging up to 41,582 g/t gold and
27,725 g/t silver over 0.5 m.





Recent
underground exploration carried out as a part of the bulk sample
program confirmed the location of corridors of stockwork-style
mineralization and the lithological contacts in this part of the
deposit (within the Valley of the Kings). In addition the work
resulted in the recognition of sub-vertical north-northeasterly
trending deformed, curviplanar, and sheared quartz-carbonate veins
containing abundant visible electrum. These structures are
interpreted as structurally-controlled fluid conduits that were
active during development of the porphyry system and associated
volcanic pile in the early Jurassic, and which were reactivated
during Cretaceous deformation.





29





The
Valley of the Kings deposit is currently defined over
1,200 metres in east-west extent, 600 metres in
north-south extent, and 650 metres in depth. The West Zone
appears to form the northern limb of an anticline that links up
with the Valley of the Kings in the south, and the southern limb of
a syncline that extends further to the north. This zone, which is
currently defined over 590 metres along its northwest strike,
560 metres across strike, and down to 650 metres in
depth, is open to the northwest, southeast, and at depth to the
northeast.





Mineralized Zones





The
current resources as presented in this AIF are comprised of two
different zones on the Brucejack Project, being the Valley of the
Kings Zone and the West Zone.





Valley of the Kings Zone





Exploration
drilling by Silver Standard (2009, 2010) and the Company (2011 to
present), as well as surface mapping, has been successful in
outlining a series of corridors of high grade mineralization
associated with deformed quartz stockworks and intense
quartz-sericite-pyrite alteration in an east-west trending and
east-southeast plunging tight syncline developed in almost the full
sequence of lower Hazelton Group rocks.





The
Valley of the Kings mineralized zone trends approximately
west-northwest to east-southeast. Its orientation mirrors that of
Electrum Ridge, a pronounced topographic feature near the southern
margin of the zone, and drilling to date has extended its strike to
over 800 metres. The zone is up to 150 metres wide and was
originally thought to be bound to the west by the Brucejack Fault.
Recent drilling in the current 2012 drill program, together with
the presence of significant intervals of gold mineralization, in
the Waterloo Zone, indicates that the Valley of the Kings continues
west across the fault, thereby making the zone open to the west, as
well as to the east and at depth.





High-grade
gold and silver mineralization within the Valley of the Kings
occurs as electrum, which is generally hosted in deformed
quartz-carbonate and quartz-adularia veins and vein stockworks.
While quartz veining and stockworks are common throughout the zone,
the majority of gold intersections are confined to corridors within
a zone 75 metres to 100 metres wide on the southern limb of the
syncline. The orientation of these corridors is subparallel to the
fold axis. Gold to silver ratios within the Valley of the Kings are
typically 2:1 or higher. Variations in this ratio, which could be a
function of thermal gradients developed at the time of
mineralization, are suggested by a visible increase in the
proportion of silvery electrum (at the expense of more
gold-coloured electrum) with a concomitant increase in the
proportion of vein-hosted adularia towards the eastern parts of the
zone. Additional precious metals-bearing minerals found in the
Valley of the Kings, typically in trace quantities, include silver
sulphides, acanthite, pyrargyrite and tetrahedrite, and associated
with base metal-bearing sulphides include sphalerite and
galena.





30





Low
grade bulk tonnage mineralization, associated with disseminated
anhedral pyrite, forms a halo within the altered rocks, surrounding
the high grade mineralization corridors.





West Zone





The
West Zone gold-silver deposit is hosted by a northwesterly trending
band of intensely altered Lower Jurassic latitic to trachyandesitic
volcanic and subordinate sedimentary rocks, as much as 400 metres
to 500 metres thick, which passes between two more competent bodies
of hornblende plagioclase hornblende phyric flows. The stratified
rocks dip moderately to steeply to the northeast and are intensely
altered, particularly in the immediate area of the precious metals
mineralization. The West Zone appears to form the northern limb of
an anticline that links up with the Valley of the Kings to the
south, and the southern limb of a syncline that extends further to
the north.





The
West Zone deposit itself comprises at least 10 quartz veins and
mineralized quartz stockwork ore shoots, the longest of which has a
strike length of approximately 250 metres and a maximum thickness
of about around 6 metres. Most mineralized shoots have vertical
extents that are greater than their strike lengths. Veins and
stockworks in this zone display clear evidence of post-mineral
ductile and brittle deformation. The West Zone is open along strike
to the southeast, and at depth to the northeast.





In
terms of hydrothermal alteration, the West Zone is marked by a
central silicified zone that passes outwards to a zone of sericite
± quartz ± carbonate and then an outer zone of chlorite
± sericite ± carbonate. The combined thickness of the
alteration zones across the central part of the deposit is between
100 metres and 150 metres.





Gold in
the West Zone occurs principally as electrum in quartz veins and is
associated with, in decreasing order of abundance, pyrite,
sphalerite, chalcopyrite, and galena. Besides being found with gold
in electrum, silver occurs in tetrahedrite, pyrargyrite, polybasite
and, rarely, stephanite and acanthite. Gangue mineralogy of the
veins is dominated by quartz, with accessory adularia, albite,
sericite, and minor carbonate and barite. The increased abundance
of silver in the West Zone may suggest that this zone was formed
down temperature gradient from the Valley of the
Kings.





Drilling





The
input data for the West Zone Mineral Resource estimate consisted of
756 drillholes (63,208 metres) including
439 underground drillholes (24,688 metres),
269 historical surface drillholes (21,321  metres) and
48 surface drillholes (17,199 metres) completed since
2009.





The
input data for the Valley of the Kings Mineral Resource estimate
comprised 932 drillholes totalling 218,238 metres. The
drilling consisted of:





●
 9 historic
drillholes (579 metres);


●
 490 surface
drillholes drilled between 2009 and 2012
(173,619 metres);


●
 24 surface
drillholes drilled in 2013 (5,200 metres); and


●
 409 underground
drillholes drilled in 2013 (38,840 metres).





31





Drillhole
paths were surveyed at a nominal 50 metre interval using a Reflex
EZ single shot instrument. There was no apparent drilling or
recovery factor that would materially impact the accuracy and
reliability of the drilling results.





The
drill collars were surveyed by McElhanney Surveying from Terrace,
BC. McElhanney Surveying used a total station instrument and
permanent ground control stations for reference and have completed
all the surveying on the project since 2009. All underground drill
collars were surveyed by Procon.





Historical
drill core sizes for surface drillholes were NQ (47.6 millimetre
diameter) and BQ (36.5 millimetre diameter). Core size for
drillholes collared from an underground exploration ramp at West
Zone was AQ (27 millimetre diameter).





Core
sizes for our surface collared drillholes are PQ (85 millimetre
diameter), HQ (63.5 millimetre diameter) and NQ (47.6 millimetre
diameter). Approximately 50% to 60% of the Company’s core is
HQ size. All drillcore collected from the underground drilling in
2013 was HQ size.








Sampling, Analysis, Data Verification and Security





Split
PQ samples weigh approximately 10 kilograms. HQ samples are around
6 kilograms, and NQ are 3 kilograms to 4 kilograms. These weights
assume a nominal 1.5 metre sample length. In general, the average
sample size submitted to the analytical laboratory, ALS Chemex
(“ALS”) was 6.5
kilograms.





Samples
at ALS were crushed to 70% passing 2 millimetres, (-10 mesh).
Samples were riffle split and 500 g were pulverized to 85%
passing 75 lm (-200
mesh). The remaining coarse reject material was returned to
us for storage in our Stewart warehouse.





Gold
was determined using fire assay on a 30 g aliquot with an atomic
absorption finish. In addition, a 33 element package was completed
using a four acid digest and ICP-AES analysis, which included the
silver. Density determinations were done by ALS using the
pycnometer method on pulps from the drilling program.





Snowden
analysed the quality assurance and quality control
(“QAQC”) for the
Brucejack Project. The Brucejack drillhole and QAQC database is
managed by GeoSpark Consulting Inc. (“GeoSpark”), who also manage the
routine analysis of the QAQC results for the Company. GeoSpark
supplied Snowden with a QAQC database, in Microsoft Access format,
containing the QAQC results for all drilling up to 5 December
2013.





The
QAQC protocols included the use of field duplicates, standards and
blanks. The quality control samples were included at a nominal rate
of one field duplicate, one standard and one blank for every 20
samples. Check assays, in the form of pulp duplicates, were also
completed by a different laboratory and compared with the primary
laboratory.





32





Procedures
undertaken by the Company have been under the supervision and
security of our staff, as far as drill core sampling prior to
dispatch. Laboratory sample reduction and analytical procedures
have been conducted by independent accredited companies with
acceptable practices. We ensure quality control is monitored
through the insertion of blanks, certified reference materials and
duplicates.





Mineral Processing and Metallurgical Testing





Several
metallurgical test programs were carried out to investigate the
metallurgical performance of the mineralization. The main test work
was completed from 2009 to early 2014. The samples tested were
generated from various drilling programs, including the samples
tested by the bulk sample processing programs. The metallurgical
test programs conducted on the Brucejack mineralization included
head sample characteristics, gravity concentration, gold/silver
bulk flotation, cyanidation, table concentrate melting and the
determination of various process related parameters. The early test
work focused on developing the flowsheet for gravity concentration,
bulk flotation, and flotation concentrate cyanidation. The test
work also studied the metallurgical responses of the samples to the
gravity concentration flowsheet for gravity concentration followed
by whole ore leaching. The later test work concentrated on the
gravity-flotation concentration flowsheet.





In
general, the Valley of the Kings Zone and West Zone mineralization
is moderately hard. The mineral samples tested responded well to
the conventional combined gravity and flotation flowsheet. The gold
in the mineralization was amenable to centrifugal gravity
concentration. On average, 40 to 50% of the gold in the samples
were recovered by the gravity concentration. The flotation tests
results indicated that bulk flotation can effectively recover the
gold remained in the gravity concentration tailings using potassium
amyl xanthate as a collector at the natural pH. Two stages of
cleaner flotation would significantly upgrade rougher flotation
concentrate. The gold in the mineralization showed better
metallurgical performance, compared to silver. On average,
approximately 96 to 97% of the gold and 91 to 92% of the silver
were recovered to the gravity concentrate and bulk flotation
concentrate at the grind size of 80% passing approximately 70 to
80 μm. There was a significant variation in metallurgical
performances among the samples tested. This may be a result of the
nugget gold effect. The industrial runs on the 10,000-t bulk sample
for the 2013 bulk sample processing program and the 1,200-t
high-grade Cleo mineralization conducted in 2014 showed that the
gravity/flotation process flowsheet as designed for the Brucejack
mineralization suited the treatment of the bulk sample. The results
also showed that the gravity/flotation flowsheet adapted well for
the varying mineralization and the wide range feed grades that were
experienced during processing of the bulk sample.





Cyanide
leach tests were also conducted to investigate the gold and silver
extractions from various samples, including head samples, flotation
concentrates, flotation tailings and gravity concentrates. In
general, most of the sample responded reasonably well to direct
cyanidation, excluding a few of samples containing higher contents
of graphite (carbon), arsenic, or electrum. Cyanide leach process
was not recommended for the feasibility study.





The
test results suggest that the gold and silver recovery flowsheet
for the mineralization should include gravity concentration, bulk
rougher and scavenger flotation, rougher and scavenger concentrate
regrinding, followed by cleaner flotation.








33





Mineral Processing





The
process flowsheet developed for the Brucejack Property
mineralization is a combination of conventional bulk sulphide
flotation and gravity concentration to recover gold and silver. The
processing plant will produce a gold-silver bearing flotation
concentrate and gold-silver doré that will be produced by
melting the gravity concentrate produced from the gravity
concentration circuits. Based on the LOM average, the recovery
process is estimated to produce approximately 5,600 kg of gold
and 1,900 kg of silver as doré per year and 44,000 t
of gold-silver bearing flotation concentrate per year from the mill
feed, grading 14.1 g/t gold and 57.7 g/t silver. The
estimated gold recoveries to the doré and flotation
concentrate are 43.3% and 53.4%, respectively, totalling 96.7%. The
estimated silver recoveries reporting to the doré and
flotation concentrate are 3.5% and 86.5%, respectively, totalling
90.0%. The LOM average gold and silver contents of the flotation
concentrate are anticipated to be approximately 157 g/t gold
and 1,000 g/t silver. The flotation concentrate will be
shipped off site to a smelter for further treatment to recover the
gold and silver.





The
process plant will consist of:





●
 one stage of
crushing (located underground);


●
 a surge bin with a
live capacity of 2,500 t on surface;


●
 a semi-autogeneous
grinding (SAG) mill and ball mill primary grinding circuit
integrated with gravity concentration;


●
 rougher flotation
and rougher/scavenger flotation followed by rougher flotation
concentrate regrinding; and


●
 cleaner flotation
processes.





A
gravity concentration circuit will also be incorporated in the bulk
concentrate regrinding circuit. The final flotation concentrate
will be dewatered, bagged, and trucked to the transload facility in
Terrace, British Columbia. It is expected that the flotation
concentrate will be loaded in bulk form into rail cars for shipping
to a smelter located in eastern Canada. The gravity concentrate
will be refined in the gold room on site to produce gold-silver
doré.





A
portion of the flotation tailings will be used to make paste for
backfilling the excavated stopes in the underground mine, and the
balance will be stored in Brucejack Lake. The water from the
thickener overflows will be recycled as process make-up water.
Treated water from the water treatment plant will be used for mill
cooling, gland seal service, reagent preparation, and make-up
water.





34





Simplified
Process Flowsheet














Mining Method





The
underground mine design is largely unchanged from the previous
feasibility study, supporting the extraction of 2,700 t/d of
ore via transverse long hole open stoping (“LHOS”) and
longitudinal LHOS. Paste backfill and modern trackless mobile
equipment will be used. Mine access will be by a main decline from
a surface portal close to the concentrator. A second decline will
be dedicated to conveying crushed ore directly to the concentrator
via two conveyors with a combined length of 800 m. There will
be a two-year pre-production development period, with steady-state
production being reached by the end of Year 2 of an 18-year LOM.
The development and production sequence prioritizes high-grade
areas while ramping up overall mine tonnage to the steady state,
averaging approximately 980,000 t/a through to Year
16.





Geotechnical
designs and recommendations are based on the results of site
investigations, and geotechnical assessments that include rock mass
characterization, structural geology interpretations, excavation
and pillar stability analyses, and ground support
design.





The
groundwater flow system was conceptualized to provide inflow
estimates to mine workings. These estimates referenced results of
site investigations and hydrogeologic testing and were used to size
dewatering equipment and as input to the process water
balance.





35





Underground
manpower will consist of technical staff, mining crews, mechanics,
electricians, and other support personnel. Pre-production manpower
will be supplied by a contractor, except personnel required for
maintenance and technical support. Total manpower required for full
production is 351, with up to 176 personnel on site at any given
time.





The
ventilation system is designed to meet British Columbia
regulations. Permanent surface fans will be located at the portals
of the twin, intake declines. All intake air entering the mine will
be heated above freezing point.





Paste
fill distribution design is based on a dual pumping system. A
positive displacement pump in the paste fill plant will provide
paste to all of the West Zone and the lower zones of the Valley of
the Kings. The paste plant pump will also feed a booster pump
located near the main access point to the Valley of the Kings area
located on 1,320 Level.





Ore
will be trucked from working areas to an underground crusher and
then transferred to surface via two, 1.07 metres wide
conveyors. Waste rock will be disposed in the underground mine
whenever possible, with the balance trucked to surface for disposal
in Brucejack Lake.





The
mine will be dewatered using a dirty water system of sumps and
pumps. Submersible and centrifugal pumps will be used for
development and permanent mine operations. Solids captured in the
main collection sump will be pumped to the mill for residual gold
recovery. For underground worker safety, both permanent and
portable refuge stations are planned. The emergency warning system
will include phones, cap lamp warning system, and stench
gas.





The
total project initial mining capital during the pre-production
period, including a 10% contingency, is estimated at
$240 million. Sustaining mining capital of $280 million
has been estimated for the production period. The total underground
operating cost over the LOM is estimated to be $1,512 million,
at an average LOM cost of $91.34/t.





Mineral Resource and Mineral Reserve Estimates





The
West Zone resource estimate remains unchanged from the Mineral
Resource estimate announced April 3, 2012, and filed on SEDAR April
30, 2012 (see Table 2 below).





In
December 2013, Snowden completed a Mineral Resource estimate for
the Valley of the Kings Zone of the Brucejack Project.





This
December 2013 estimate was an update of the previous November 2012
Mineral Resource estimate and included over 40,000 metres of
additional drilling, including 24 surface drillholes (5,200 metres)
and 409 underground drillholes (38,840 metres) drilled in support
of the underground bulk sample. In addition to the drilling, a
10,000 tonne bulk sample was processed through a mill and detailed
test work has been carried out to both validate the previous
Mineral Resources and refine the estimation process for the updated
Mineral Resource.





The
result of the test work is an improved confidence in both the
geological model and the grade estimate, with the definition of
Measured Resources as part of the December 2013 Mineral
Resource.





36





Bulk Sample Test Work





In
2013, Pretivm excavated a bulk sample from within the Valley of the
Kings to further evaluate the geological interpretation and provide
a comparison with the results from the Mineral Resource estimate.
The location of the proposed bulk sample was selected to be
representative of the grade and character of the typical
mineralization in the Valley of the Kings.





The
design of the bulk sample was limited by provincial legislation to
a maximum allowable bulk sample size of 10,000 t. The bulk
sample was collected as a series of nominal 100-t rounds in
underground development. Pretivm elected to process the bulk sample
both through a sample tower on site and at a custom mill (Contact
Mill) in Montana, U.S.A. In Snowden’s opinion, the results of
assaying of the samples from the sample tower provided an
unacceptable degree of variation in the results due to the coarse
gold nature of the mineralization and this information was not used
further.





Prior
to the December 2013 Mineral Resource estimate, the mill results
from the underground bulk sample processing were used to
investigate the local accuracy of the November 2012 Mineral
Resource estimate within the Valley of the Kings, and to determine
whether the estimation methodology could be improved for the
December 2013 Mineral Resource estimate.





A
series of statistical tests were run to determine whether any bias
exists between the surface diamond drilling, underground diamond
drilling, underground channel samples, and chip samples. No
significant difference/bias, based on the statistical analysis, was
evident between the different sample types.





However,
additional test work in the estimation did display some bias caused
by directional drilling in the area of the bulk sample. The
underground drilling had been aligned in a north-south orientation
which is consistent with the orientation of some high-grade
mineralization identified in the bulk sample, resulting in under
sampling of this mineralization. Removal of the underground
drillholes resulted in an increase in the grade of the local
estimate.





While
there is no bias evident between the channel samples and the
drilling, the location of numerous channel samples in the centre of
some of the higher-grade mineralization does result in a local
overestimation around the bulk sample crosscuts. Consequently, the
decision was made not to use the channel samples for the final
mineral resource estimate.





The
final metal and tonnes from the mill accounting were compared to
those predicted by the November 2012 Mineral Resource estimate for
each drive to assess the effectiveness of the resource modelling
process. This test work has in part relied on comparisons between
the test estimates and results from the bulk sample processing.
However, readers of this AIF and the Brucejack Report should be
warned that there is a significant difference in the sample support
for the resource estimate (each block in the resource estimate
represents 2,700 t whereas the bulk sample packages are around
100 t), and the grade is not homogenous throughout any block.
In other words, the grade can vary from a high-grade side of the
block to a low-grade side of the block, whereas the block grade
represents an average of the whole block. If the bulk sample
happens to take a high-grade part of the block, then the comparison
will look like the resource estimate under-estimated the grade, and
conversely if the bulk sample takes a low-grade part of the block,
then the comparison will look like the resource estimate
over-estimated the grade in the block. Whilst it is not entirely
valid to compare the results of the bulk sample with the resource
estimate (given the different sample support) locally, it does
provide the best opportunity to fine-tune the estimate to some hard
data. The reader should be warned that the results are only used to
give some local perspective to the grade estimates.





37





The
results indicated that the November 2012 Mineral Resource
underestimated the total metal content in the bulk sample by about
10%. In more detail, the November 2012 Mineral Resource estimated
high-grade into lower-grade areas, and low-grade into the
high-grade areas, a result of extrapolating the high-grade values
around the high-grade core. This extrapolation of high-grade values
was based on the nature of the mineralization and the interpreted
continuity of the high grades.





Based
on the bulk sample comparisons, Snowden concluded that the November
2012 Mineral Resource was a good representation of the contained
metal within the Valley of the Kings deposit and satisfactory for
mining studies based around bulk underground mining, but that it
was not locally accurate at the 10 metre block scale. As a
result further test work was undertaken to adjust the estimation
method for the December 2013 Mineral Resource, to produce an
estimate that is more responsive to the local scale grade
variations.





Mineral Resource Estimate





The
mineralization in the Valley of the Kings exists as steeply dipping
semi-concordant (to stratigraphy) and discordant pod-like zones
hosted in stockwork vein systems within the volcanic and
volcaniclastic sequence. High grade mineralization zones appear to
be spatially associated, at least in part, with intensely
silicified zones resulting from local silica flooding and
over-pressure caprock formation. High grade mineralization occurs
both in the main east-west trending vein stockwork system, as well
as in the rarer north-south trending part of the system. Snowden
notes that the Company has taken these various observations into
consideration in its interpretation of the mineralization domains
for the Valley of the Kings.





A
threshold grade of 0.3 g/t Au was found to generally identify
the limits to the broad zones of mineralization as represented in
the drill cores at West Zone and the Valley of the Kings. In the
Valley of the Kings, a 1 g/t Au to 3 g/t Au threshold
grade was used together with the Company’s interpretation of
the lithological domains, to interpret high grade corridors within
the broader mineralized zones, and define a series of mineralized
domains for estimation.





All
data was composited to the dominant sample length of 1.5 meter
prior to analysis and estimation. Statistical analysis of the gold
and silver data was carried out by lithological domain (at the
Valley of the Kings) and mineralized domain. Review of the
statistics indicated that the grade distributions for the
mineralization within the different lithologies are very similar
and as a result these were combined for analysis. This is in
agreement with field observations which indicate that the stockwork
mineralization is superimposed on the stratigraphic sequence. The
summary statistics of composite samples from all domains exhibit a
strong positive skewness with high coefficient of variation and
some extreme grades.





38





Because
of the extreme positive skew in the histograms of the gold and
silver grades within the high grade domains, Snowden elected to use
a non-linear approach to estimation, employing the use of indicator
and truncated distribution kriging. In this approach, the
proportion of high grade in a block was modelled, as was the grade
of the high grade portion, and the grade of the low grade
portion.





The
high grade population, which contains a significant number of
samples with extreme grades, required indicator kriging methods for
grade estimation. The low grade population was estimated using
ordinary kriging on the truncated (low grade; <5 g/t Au and
<50 g/t Ag) part of the grade distribution.





Density
was estimated using simple kriging of specific gravity measurements
determined on sample pulps by ALS Chemex.





Grade
estimates and models were validated by: undertaking global grade
comparisons with the input drillhole composites; visual validation
of block model cross sections; grade trend plots; and comparing the
results of the model to the bulk sample cross cuts.





The
resource classification definitions (Measured, Indicated, Inferred)
used for this estimate are those published by the Canadian
Institute of Mining, Metallurgy and Petroleum in their document
“CIM Definition Standards”.





In
order to identify those blocks in the block model that could
reasonably be considered as a Mineral Resource, the block model was
filtered by a cut-off grade of 5 g/t AuEq. The gold-equivalent
calculation used is: AuEq = Au + (Ag/53). These blocks were then
used as a guide to develop a set of wireframes defining coherent
zones of mineralization which were classified as Measured,
Indicated or Inferred and reported (Table 1 and Table
2).





Classification
was applied based on geological confidence, data quality and grade
variability. Areas classified as Measured Resources at West Zone
are within the well-informed portion where the resource is informed
by 5 meter by 5 meter or 5 meter by 10 meter
spaced drilling. Measured Resources within Valley of the Kings are
informed by 5 meter by 10 meter to 10 meter by
10 meter underground fan drilling and restricted to the
vicinity of the underground bulk sample.





Areas
classified as Indicated Resources are informed by drilling on a
20 meter by 20 meter to 20 meter by 40 meter
grid within West Zone and Valley of the Kings. In addition, some
blocks at the edge of the areas with 20 meter by 20 meter
to 20 meter by 40 meter drilling, were downgraded to
Inferred where the high grades appear to have too much influence.
The remainder of the Mineral Resource is classified as Inferred
Resources where there is some drilling information (and within
around 100 metres of drilling) and the blocks occur within the
mineralized interpretation.





Areas
where there is no informing data and/or the lower grade material is
outside of the mineralized interpretation are not classified as a
part of the Mineral Resource.





39





Resource Reporting





The
Mineral Resources are reported above a cut-off grade of 5 g/t
gold equivalent (AuEq) which reflects the potential economics of a
high grade underground mining scenario. The AuEq value for each
block is consistent with the November 2012 Mineral Resource.
In that evaluation, the AuEq value was calculated according to the
formula (AuEq = Au + Ag/53) based upon prices of US$1,590/oz and
US$30/oz for gold and silver respectively. Recoveries for gold and
silver are assumed to be similar.





High
grade Mineral Resources for the Valley of the Kings and the West
Zone are summarized in Table 1 and Table 2 respectively
(below).





Table 1


Valley of the Kings Mineral Resource estimate


based on a cut-off grade of 5 g/t AuEq – December
2013(1)(4)(5)





Category
Tonnes(millions)
Gold(g/t)
Silver(g/t)
Contained(3)Gold(Moz)
Silver(Moz)Measured
2.0
19.3
14.4
1.2
0.9Indicated
13.4
17.4
14.3
7.5
6.1M +
I
15.3
17.6
14.3
8.7
7.0Inferred(2)
5.9
25.6
20.6
4.9
3.9





(1)
 Mineral Resources
which are not Mineral Reserves do not have demonstrated economic
viability. The estimate of Mineral Resources may be materially
affected by environmental, permitting, legal, marketing, or other
relevant issues. The Mineral Resources in this AIF were estimated
using the Canadian Institute of Mining, Metallurgy and Petroleum
(CIM), CIM Standards on Mineral Resources and Reserves, Definitions
and Guidelines prepared by the CIM Standing Committee on Reserve
Definitions and adopted by CIM Council.


(2)
 The quantity and
grade of reported Inferred resources in this estimation are
uncertain in nature and there has been insufficient exploration to
define these Inferred Resources as an Indicated or Measured Mineral
Resource and it is uncertain if further exploration will result in
upgrading them to an Indicated or Measured Mineral Resource
category.


(3)
 Contained metal and
tonnes figures in totals may differ due to rounding.


(4)
 The Mineral
Resource estimate stated in Table 1 and Table 2 is defined using
5 metre by 5 by 5 metre blocks in the well drilled
portion of West Zone (5 metre by 10 metre drilling or
better) and 10 metre by 10 metre by 10 metre blocks
in the remainder of West Zone and in Valley of the
Kings.


(5)
 The gold equivalent
value is defined as AuEq = Au + Ag/53.








40





Table 2


West Zone Mineral Resource estimate


based on a cut-off grade of 5 g/t AuEq – April 2012
(1)(4)(5)





Category
Tonnes(millions)
Gold(g/t)
Silver(g/t)
Contained(3)Gold(Moz)
Silver(Moz)Measured
2.4
5.85
347
0.5
26.8Indicated
2.5
5.86
190
0.5
15.1M+I
4.9
5.85
267
0.9
41.9Inferred(2)
4.0
6.44
82
0.8
10.6





(1), (2), (3), (4) and (5) - See footnotes to
Table 1.





Mineral Reserve Estimates





The
mine design and Mineral Reserve estimate have been completed to a
level appropriate for feasibility studies. The Mineral Reserve
estimate stated herein is consistent with CIM Standards on Mineral
Resources and Mineral Reserves. As such, the Mineral Reserves are
based on Measured and Indicated Resources and do not include any
Inferred Resources.





The
Mineral Reserves were developed from the resource model
“bjbm_1313_v11_cut”, which was provided to AMC by
Snowden, on behalf of Pretivm, in February 2014.





A net
smelter return (NSR) cut-off grade of $180/t of ore was used to
define the Mineral Reserves (as used in previous studies). The NSR
for each block in the resource model was calculated as the payable
revenue for gold and silver, less refining, concentrate treatment,
transportation, and insurance costs. The metal price assumptions
are US$1,100/oz gold and US$17/oz silver. Costs assume a C$ to US$
exchange rate of 0.92.





The NSR
contributions for both flotation concentrate and doré were
calculated individually, combined, and assigned to each block in
the resource model.





Dilution and Recovery Estimates





In the
evaluation of Mineral Reserves, modifying factors were applied to
the tonnages and grade of all mining shapes (both stoping and
development) to account for the dilution and ore losses that are
experienced at all mining operations.





Ore
dilution includes overbreak into the design hanging wall and design
footwall, and also into adjacent backfilled stopes. Diluting
materials are assumed to carry no metal values in the estimation of
Mineral Reserve grades.





The
largest component of dilution at Brucejack will be paste backfill
due to its inherently weaker strength compared to the hanging wall
and footwall rock masses for any given dimensions of
exposure.





41





Ore
losses (recovery factors) are related to the practicalities of
extracting ore under varying conditions, including difficult mining
geometry, problematic rock conditions, losses in fill, and blasting
issues.





The
dilution factors were calculated from standard overbreak
assumptions that are based on AMCs experience and benchmarking of
similar long-hole open stope operations.





●
 Longhole stopes
(primary, secondary, tertiary) carry 1.0 metre of dilution
from paste or country rock overbreak into the design hanging wall
and design footwall, and 0.3 metre of backfill dilution from
the floor.


●
 Secondary or
tertiary stopes carry an additional 1.0 metres of backfill
dilution on each wall that exposes a primary stope.


●
 Sill pillar stopes
are treated as secondary stopes, given the additional backfill
dilution that can be expected from the roof.


●
 Ore cross-cuts
carry 0.5 metre of dilution from rock overbreak into the
design hanging wall and design footwall.


●
 Production slashing
of secondary stopes carries 0.5 metres of backfill dilution on
each wall that exposes a primary stope.





Mineral Reserves





Mineral
Reserves tabulated by zone and by reserve category are presented
below.





The
mining blocks divide the Mineral Reserves into logical parcels
consistent with the mining sequence, and form the basis of the LOM
development and production schedule.





Brucejack Mineral Reserves* by Zone and by
Reserve Category (June 19, 2014)





Zone
OreTonnes(Mt)
Grade
MetalAu(g/t)
Ag(g/t)
Au(Moz)
Ag(Moz)Valley
of the Kings Zone
Proven
2.1
15.6
12
1.1
0.8Probable
11.5
15.7
10
5.8
3.9Total
13.6
15.7
11
6.9
4.6West
Zone
Proven
1.4
7.2
383
0.3
17.4Probable
1.5
6.5
181
0.3
8.6Total
2.9
6.9
279
0.6
26.0Total
Mine
Proven
3.5
12.2
161
1..4
18.2Probable
13.0
14.7
30
6.1
12.5Total
16.5
14.1
58
7.5
30.7


Note: *Rounding
of some figures may lead to minor discrepancies in totals. Based on
C$180/t cut-off grade, US$1,100/oz gold price, US$17/oz silver
price, C$/US$ exchange rate = 0.92.





42








Brucejack Mineral Reserves* by Mining Block
(June 19, 2014)





Mining Block
OreTonnes(Mt)
NSR($/t)
Grade
Contained MetalAu(g/t)
Ag(g/t)
Au(Moz)
Ag(Moz)Valley
of the Kings Upper
4.3
578
16.9
12
2.3
1.6Valley
of the Kings Middle
5.7
503
14.9
10
2.7
1.9Valley
of the Kings Lower
3.7
530
15.5
9
1.8
1.1Valley
of the Kings
13.6
534
15.7
11
6.9
4.6WZ
Upper
0.6
304
4.2
407
0.1
8.0WZ
Lower
2.3
350
7.6
245
0.6
18.1WZ
2.9
340
6.9
279
0.6
26.0Mining Block Total
16.5
500
14.1
58
7.5
30.7


Note: *Rounding
of some figures may lead to minor discrepancies in totals. Based on
C$180/t cut-off grade, US$1,110/oz gold price, US$17/oz silver
price, C$/US$ exchange rate = 0.92.





Project Infrastructure





The
Brucejack Project will require the development of a number of
infrastructure items. The locations of project facilities and other
infrastructure items were selected to take advantage of local
topography, accommodate environmental considerations, and ensure
efficient and convenient operation of the mine haul
fleet.





Project
infrastructure will include:





●
 a 79 km access
road at Highway 37 and travelling westward to Brucejack Lake with
the last 12 km of access road to the mine site traversing the
main arm of the Knipple Glacier;


●
 internal site roads
and pad areas;


●
 grading and
drainage;


●
 avalanche hazard
assessment;


●
 mill building and
process plant;


●
 mine site operation
camp;


●
 transmission line
and substation;


●
 ancillary
facilities;


●
 water supply and
distribution;


●
 water treatment
plant;


●
 waste
disposal;


●
 tailings delivery
system;


●
 Brucejack Lake
outlet control;


●
 communications;


●
 power supply and
distribution;


●
 fuel supply and
distribution; and


●
 off-site
infrastructure including the Bowser Airstrip and Camp and the
Knipple Transfer Station facilities.





43





Avalanche Hazard Assessment





An
avalanche hazard assessment has been completed for the Brucejack
Project. Mine site facilities and access routes are exposed to
approximately 14 avalanche paths or areas, and the preliminary
transmission line alignment crosses several avalanche paths.
Avalanche magnitude and frequency varies depending on location.
Potential consequences of avalanches reaching the Brucejack mine
facilities, transmission line, worksites, and roads include damage
to infrastructure, worker injury (or fatality), and project delays.
Potential consequences of static snow loads on transmission towers
include damage to towers and foundations, and potential loss of
electrical service to the mine. Without mitigation to the effects
of avalanches and static snow loading, there is a high likelihood
of some of the above consequences affecting operations on an annual
basis.





Avalanche
mitigation for the Brucejack Project includes location planning, in
order to avoid placement of facilities in avalanche hazard areas.
For areas where personnel and infrastructure may be exposed, an
avalanche management program will be implemented for mine
operations during avalanche season (October through June). The
program will utilize an Avalanche Technician team to determine
periods of elevated avalanche hazard and provide recommendations
for closures of hazard areas. The options for reducing control
include explosive control, or waiting for natural settlement. Areas
that are expected to have increased frequency of hazard and
consequences will be evaluated for the installation of the remote
avalanche control system (“RACS”) in order to allow for
avalanche explosive control during reduced visibility (darkness and
during storms). An allowance has been made in the capital and
operating cost estimates for six RACSs.





Transmission Line





For the
Brucejack transmission line, we retained Valard to review potential
routes and develop an initial design for the transmission line to
the Brucejack Project site, based on Valard’s current
experience in the area. To this end, Valard reviewed potential
routes and determined the preferred route to be an extension from
an existing transmission line from a hydro generation facility to
the south (near Stewart, British Columbia) to the Brucejack Project
site. Based on the terrain and the expected construction
conditions, single steel monopole towers are recommended for the
design.





Site
review indicates that the hazards in the area can be avoided
through diligent siting of the tower structures and any structures
exposed to hazards are expected to be designed to accommodate
impact pressures. Worker risks are expected to be controlled by way
of an active snow avalanche risk program.





Tailings Delivery System





Approximately
one half of the tailings produced by mine operations will be stored
underground as paste backfill and approximately one half will be
placed on the bottom of Brucejack Lake. Tailings will be pumped
from the tailings thickener at the process plant by slurry pipeline
to the lake in a manner which will minimize suspended solids
concentrations at the lake outlet. Fine particulate solids may also
be suspended in the lake surface layer if fine waste rock is placed
in the lake. Investigations on minimizing or eliminating this
source of suspended solids in the lake outflow are
underway.





44





Environmental





We are
committed to operating the mine in a sustainable manner and
according to our guiding principles. Every reasonable effort will
be made to minimize long-term environmental impacts and to ensure
that the Brucejack Project provides lasting benefits to local
communities while generating substantial economic and social
advantages for shareholders, employees, and the broader community.
We respect the traditional knowledge of the Aboriginal peoples who
have historically occupied or used the Brucejack Project
area.





The
Brucejack Project area ecosystem is relatively undisturbed by human
activities. Our objective is to retain the current ecosystem
integrity as much as possible during the construction and operation
of the Brucejack Project. Upon closure and reclamation of the
Brucejack Project, the intent will be to return the disturbed areas
to a level of productivity equal to or better than that which
existed prior to project development, and for the end configuration
to be consistent with pre-existing ecosystems to the extent
possible.





2014 Capital Cost Estimate





The
Brucejack Report estimated total initial capital cost for the
design, construction, installation, and commissioning of the
Brucejack Project as US$746.9 million (the “2014 Capital
Cost Estimate”). A summary breakdown of the initial capital
cost, including direct costs, indirect costs, owner’s costs,
and contingency is provided below.





Summary of 2014 Capital Cost Estimate





Major
Area
Area Description
Capital Cost
(US$ million)Direct Costs11
Mine
Site
21.521
Mine
Underground
179.531
Mine
Site Process
53.832
Mine
Site Utilities
30.533
Mine
Site Facilities
53.534
Mine
Site Tailings
3.535
Mine
Site Temporary Facilities
33.436
Mine
Site (Surface) Mobile Equipment
14.684
Off
Site Infrastructure
89.1Subtotal Direct Costs
479.491
Indirect
Costs
127.598
Owner’s
Costs
71.099
Contingency
69.0Total Initial Capital Cost
746.9


Note:Numbers may
not add due to rounding.





45





The
purpose of the 2014 Capital Cost Estimate was to provide
feasibility-level input to the Brucejack Project financial model.
The 2014 Capital Cost Estimate is a Class 3 feasibility cost
estimate prepared in accordance with the standards of the
Association for the Advancement of Cost Engineering International
(the “AACE”).
The estimated degree of project definition meets or exceeds 30%.
The accuracy of this estimate is deemed to be -15%/+20%. There was
no deviation from the AACE’s recommended practices in the
preparation of this estimate.





The
2014 Capital Cost Estimate was prepared with a base date of Q2 2014
and did not include any escalation beyond this date. The quotations
used for were obtained in Q2 2014, with a validity period of 90
days.





The
2014 Capital Cost Estimate used U.S. dollars as the base currency.
Foreign exchange rates were applied as required. Duties and taxes
and taxes are not included in the estimate. This estimate is
divided into four general sections (direct costs, indirect costs,
owners’ costs and contingency) and was developed based
largely on first principles from a design, planning, and cost
basis.





Operating Costs





In the
Brucejack Report, the total LOM average operating cost for the
Brucejack Project was estimated at $163.05/t ore milled which
includes for:





●
 mining;


●
 process;


●
 general and
administration (G&A);


●
 surface
services;


●
 backfill, including
paste preparation; and


●
 water
treatment.





The
operating costs exclude sustaining capital costs, off-site costs
(such as shipping and smelting costs), taxes, or other government
imposed costs, unless otherwise noted.





A total
of 593 personnel were projected to be required for the Brucejack
Project. The unit cost estimates are based on the LOM ore
production and a mine life of 18 years. The currency exchange rate
used for the estimate was 1.00:0.92 (C$/US$). The operating cost
for the Brucejack Project has been estimated in Canadian dollars
within an accuracy range of ±15%.





Economic Analysis





In the
Brucejack Report, Tetra Tech prepared an economic evaluation of the
Brucejack Project based on a pre-tax financial model. For the
18-year LOM and 16.55 Mt of mine plan tonnage, the following
pre-tax financial parameters were calculated:





●
 34.7% internal rate
of return (“IRR”);


●
 2.7-year payback on
the US$746.9 million initial capital; and


●
 US$2,251 million
net present value (NPV) at a 5% discount rate.





46





A
post-tax economic evaluation of the Brucejack Project was prepared
with the inclusion of applicable taxes. The following post-tax
financial parameters were calculated:





●
 28.5%
IRR;


●
 2.8-year payback on
the US$746.9 million initial capital; and


●
 US$1,445 million
NPV at a 5% discount rate.





The
base case metal prices and exchange rate used for the Brucejack
Technical Report are as follows:





●
 gold –
US$1,100/oz


●
 silver –
US$17.00/oz


●
 exchange rate
– 0.92:1.00 (US$:C$).





Project Execution Plan





The
Brucejack Project will take approximately 33 months to complete
from the start of basic engineering, through construction, to
introduction of first material into the mill. A further two months
is planned for commissioning and production ramp-up. The Brucejack
Project execution schedule was developed to a Level 2 detail of all
activities required to complete the Brucejack Project.





The
Brucejack Project will transition from the study phase to basic
engineering during the third quarter of 2014 and will move forward
in the following phases:





●
 Stage l –
early works including mine development, the EAC application,
permitting, access road upgrades, preliminary power transmission
line right-of-way, basic engineering, and the procurement of
long-lead equipment.





●
 Stage ll –
full project execution (following permit approval), including
detailed engineering, procurement, construction team mobilization,
construction, and commissioning.























47








RISK FACTORS





Investing in our securities is speculative and involves a high
degree of risk due to the nature of our business and the present
stage of our development. The following risk factors, as well as
risks currently unknown to us, could materially adversely affect
our future business, operations and financial condition and could
cause them to differ materially from the estimates described in
forward-looking information relating us, or our business, property
or financial results, each of which could cause purchasers of our
securities to lose part or all of their investment. You should
carefully consider the following risk factors along with other risk
factors included elsewhere in the AIF.





Risks
Related to Our Business





We are subject to lawsuits that could divert our resources and
result in the payment of significant damages and other
remedies.





We are
engaged as a defendant in several class action lawsuits filed by
certain of our shareholders. Litigation resulting from these
claims could be costly and time-consuming and could divert the
attention of management and key personnel from our business
operations. We cannot assure that we will succeed in defending any
of these claims and those judgments will not be entered against us
with respect to the litigation resulting from such claims. If we
are unsuccessful in our defense of these claims or unable to settle
the claims in manner satisfactory to us, we may be faced with
significant monetary damages or injunctive relief against us that
could have a material adverse effect on our business and financial
condition.





Due to
the nature of our business, we may be subject to a variety of
regulatory investigations, claims, lawsuits and other proceedings
in the ordinary course of our business. The results of these legal
proceedings cannot be predicted with certainty due to the
uncertainy inherent in litigation, including the effects of
discovery of new evidence of advancement of new legal theories, the
difficulty of predicting decisions of judges and juries and the
possibility that decisions may be reversed on appeal. There can be
no assurances that these matters will not have a material adverse
effect on our business.





As of
the date hereof, we are aware of legal proceedings in Ontario and
in New York, as more particularly described in the section entitled
“Legal Proceedings” on page 81 of this AIF and in our
Management’s Discussion & Analysis of our financial
condition and results of operations for the year ended December 31,
2016.





Our indebtedness may adversely affect our cash flow and our ability
to operate our business.





We have a substantial amount of indebtedness as a result of
entering into the Credit Agreement. As a result of this
indebtedness, we are required to use a portion of our cash flow to
service principal and interest on our debt. In addition, in order
to fund our debt service obligations and to pay amounts due on the
Notes, we will require significant amounts of cash. Our
indebtedness could have adverse consequences on our business,
including: limiting our ability to obtain additional financing for
working capital, capital expenditures, exploration and development,
debt service requirements, acquisitions and general corporate or
other purposes; restricting our flexibility and discretion to
operate our business; having to dedicate a portion of our cash
flows from future mining operations, if any, to the payment of
interest on its indebtedness and not having such cash flows
available for other purposes; exposing us to increased interest
expense on borrowings at variable rates; limiting our ability to
adjust to changing market conditions; placing us at a competitive
disadvantage compared to competitors that have less debt or greater
financial resources; making us vulnerable in a downturn in general
economic conditions; and preventing our ability to make
expenditures that are important to our growth and
strategies.





48





Our ability to meet our debt service requirements will depend on
our ability to generate cash from mining activities. Unless we
acquire or develop operating properties, cash to meet these
obligations will be sourced from cash on hand or the issuance of
additional equity or debt securities. There can be no assurance
that we will generate cash flow in amounts sufficient to pay
outstanding indebtedness or to fund any other liquidity needs. If
the cash generated from mining activities is insufficient to meet
the obligations to pay interest and principal under the Credit
Agreement, the lenders may exercise their rights under the security
arrangements of the Credit Agreement, which could result in a loss
or substantial reduction in the value of our principal assets. If
our cash flow and capital resources are insufficient to fund our
debt obligations, we may be forced to reduce or delay capital
expenditures, sell assets, seek to obtain additional equity capital
or restructure our debt.





Our future performance will be affected by a range of economic,
competitive, governmental, operating and other business factors,
many of which cannot be controlled, such as general economic and
financial conditions in the industry or the economy at large. A
significant reduction in operating cash flows resulting from
changes in economic conditions, increased competition or other
events could increase the need for additional or alternative
sources of liquidity and could have a material adverse effect on
the business, financial condition or results of operations, as well
as our ability to service our debt and other obligations. If we are
unable to service our indebtedness or fulfil our other obligations
under the Credit Agreement, we will be forced to adopt an
alternative strategy that may be less attractive to us and include
actions such as reducing or delaying capital expenditures, selling
assets, restructuring or refinancing indebtedness or seeking equity
capital. In addition, any failure to make scheduled payments of
interest and principal on outstanding indebtedness is likely to
result in a reduction of credit rating, which could harm our
ability to incur additional indebtedness on acceptable
terms.





We may be unable to satisfy our commitments under the Stream
Agreement and Offtake Agreement and failure to do so may have a
material and adverse effect on the Company.





Our ability to make deliveries under the Stream Agreement and
Offtake Agreement is dependent on our ability to successfully
complete construction and place the Brucejack Project into
production, as well as the Company’s financial condition and
operating performance, which are subject to prevailing economic and
competitive conditions and to certain financial, business,
legislative, regulatory and other factors beyond our
control.





If our cash flows and capital resources are insufficient to
complete construction and place the Brucejack Project into
production, we could face substantial liquidity problems and could
be forced to reduce or delay investment and capital expenditures or
to dispose of material assets or operations, or seek additional
debt or equity capital. We may not be able to effect any such
alternative measures on commercially reasonable terms or at all
and, even if successful, those alternatives may not allow us to
meet our delivery obligations under the Stream Agreement and
Offtake Agreement. If we do not meet our delivery obligations
within the term of the Stream Agreement the uncredited balance of
the Deposit under the Stream Agreement shall be due and owing.
Failure to otherwise fulfill our commitments under these agreements
could result in adverse impacts on our business. See “General
Development of Our Business”.





49





If metal prices improve over time, the Offtake Agreement and Stream
Agreement may reduce our ability to sell our resources later at
higher market prices due to our obligations under these
agreements.





The Stream Agreement, Offtake Agreement and Credit Agreement
contain restrictive covenants that will limit our ability to
operate our business.





The restrictive covenants contained in the Stream Agreement,
Offtake Agreement and Credit Agreement could have adverse
consequences on our business, including: limiting our ability to
obtain additional financing for working capital, capital
expenditures, exploration and development, debt service
requirements, acquisitions and general corporate or other purposes;
restricting our flexibility and discretion to operate our business;
limiting our ability to adjust to changingmarket conditions; making
us vulnerable in a downturn in general economic conditions; and
making us unable to make expenditures that are important to our
growth and strategies. The restrictive covenants contained in the
Stream Agreement, Offtake Agreementand Credit Agreement will limit
our operating flexibility and could prevent us from taking
advantage of business opportunities. Our failure to comply with
these covenants may result in an event of default. If such event of
default is not cured or waived, we may suffer adverse effects on
our operations, business or financial condition, including being
required to return non-offset portions of the Deposit. In such a
case, there can be no assurance that our assets would be sufficient
to repay any non-offset portions of the Deposit in
full.





Actual capital costs, operating costs and expenditures, production
schedules and economic returns may differ significantly from those
we have anticipated.





Our expected capital costs, operating costs and expenditures,
production schedules, economic returns and other projections for
the Brucejack Report which are contained in the Brucejack Technical
Report, the February 2017 Capital Cost Forecast and 2017 Project
Economics Update are based on assumed or estimated future metals
prices, cut-off grades, operating costs, capital costs and
expenditures and other factors that each may prove to be
inaccurate. Therefore, the Brucejack Technical Report, the February
2017 Capital Cost Forecast and 2017 Project Economics Update may
prove to be unreliable if the assumptions or estimates do not
reflect actual facts and events. For example, significant declines
in market prices for base and precious metals or extended periods
of inflation would have an adverse effect on the economic
projections set forth in the Brucejack Technical Report, the
February 2017 Capital Cost Forecast and 2017 Project Economics
Update.





Any material reductions in estimates of mineralization or increases
in capital costs and expenditures, or in our ability to maintain a
projected budget or renew a particular mining permit, could also
have a material adverse effect on projected production schedules
and economic returns, as well as on our overall results of
operations or financial condition. There is also a risk that rising
costs for labour and material could have an adverse impact on
forecasted construction costs and that shortages of labour and
material could have a negative impact on any mine development
schedule. An increase in any of these costs, or a lack of
availability of commodities and goods, may have an adverse impact
on our financial condition and results of operations.





50





We may be required to seek additional debt or equity capital in
order to fund the development of the Brucejack Project and we may
not be able to access capital on commercially reasonable terms or
at all and, even if successful, we may not be able to raise enough
capital to allow us to fully fund the capital costs required to
complete construction at the Brucejack Project.





There is uncertainty relating to production estimates.





We have prepared estimates of future production and future
production costs for the Brucejack Project. No assurance can be
given that production estimates will be achieved. These production
estimates are based on, among other things: the accuracy of reserve
estimates; the accuracy of assumptions; metallurgical
characteristics; and the accuracy of estimated rates and costs of
mining and processing. Actual production may vary from estimates
for a variety of reasons, including, among other things: actual ore
mined varying from estimates of grade, tonnage, dilution,
metallurgical and other characteristics; short-term operating
factors relating to the ore reserves, such as the need for
sequential development of ore bodies and the processing of new or
different ore grades; risk and hazards associated with mining;
natural phenomena, such as inclement weather conditions,
underground floods, earthquakes, pit wall failures and cave-ins;
and unexpected labour shortages or strikes. Failure to achieve
production estimates could have an adverse impact on our future
cash flows, earnings, results of operations and financial
condition.





We have no history of commercial production and no revenue from
operations. We cannot provide assurance that we will generate any
operating revenues at our mineral properties in the
future.





We have not commenced commercial production on any of our mineral
resource properties. As such, we are subject to many risks common
to such enterprises, including under-capitalization, cash
shortages, limitations with respect to personnel, financial and
other resources and lack of revenues. There can be no assurance
that significant losses will not occur in the near future or that
we will be profitable in the future. Our operating expenses and
capital expenditures may increase in the future as consultants,
personnel and equipment costs associated with advancing exploration, development
and commercial production of our properties increase. We expect to
continue to incur losses unless and until such time, if ever, we
enter into commercial production and generate sufficient revenues
to fund our continuing operations. The development of the Brucejack
Project will require the commitment of substantial resources. There
can be no assurance that we will generate any revenues. If we are
unable to generate significant revenues at the Brucejack Project,
we will not be able to earn profits or continue operations. We
cannot provide investors with any assurance that we will ever
develop a mine at the Brucejack Project.





51





We have no mineral properties in production and the development of
our properties will be subject to all of the risks associated with
establishing new mining operations.





Development of our mineral properties will require the construction
and operation of mines, processing plants and related
infrastructure. As a result, we are and will continue to be subject
to all of the risks associated with establishing new mining
operations, including:





●
 the
timing and cost, which can be considerable, of the construction of
mining and processing facilities;





●
 the
availability and cost of skilled labour, mining equipment and
principal supplies needed for operations;





●
 the
availability and cost of appropriate smelting and refining
arrangements;





●
 the
need to obtain and maintain necessary environmental and other
governmental approvals and permits;





●
 the
availability of funds to finance construction and development
activities;





●
 potential
opposition from non-governmental organizations, First Nations,
environmental groups, local groups or other stakeholders which may
delay or prevent development activities; and





●
 potential
increases in construction and operating costs due to changes in the
cost of labour, fuel, power, materials and supplies.





The costs, timing and complexities of developing our projects may
be greater than anticipated because the majority of such property
interests are not located in developed areas, and, as a result, our
property interests may not be served by appropriate road access,
water and power supply and other support infrastructure. Cost
estimates may increase as more detailed engineering work is
completed on a project. It is common in new mining operations to
experience unexpected costs, problems and delays during
construction, development and mine start-up. Accordingly, we cannot
provide assurance that our activities will result in profitable
mining operations at our mineral properties.





We may not have sufficient funds to develop our mineral properties
or to complete further exploration programs.





We
currently generate no operating revenue, and must primarily finance
exploration activity and the development of mineral properties by
other means. In the future, our ability to continue exploration,
and development and production activities, if any, will depend on
our ability to obtain additional external financing. Any unexpected
costs, problems or delays could severely impact our ability to
continue exploration and development activities. Our access to
financing is always uncertain.





52





The sources of external financing that we may use for these
purposes include project or bank financing, or public or private
offerings of equity and debt or any combination thereof such as the
Orion and Blackstone Financing. In addition, we may enter into one or more strategic
alliances or joint ventures, decide to sell certain property
interests, or utilize one or a combination of all of these
alternatives. The financing alternative, or alternatives, we choose
may not be available on acceptable terms, or at all. If additional
financing is not available, we may have to postpone the further
exploration or development of, or sell, one or more of our
principal properties. Furthermore, even if we raise sufficient
additional capital, there can be no assurance that we will achieve
profitability or positive cash flow. In addition, any future equity
offering will further dilute your equity interest in us and any
future debt financing will require us to dedicate a portion of our
cash flow to payments on indebtedness and will limit our
flexibility in planning for or reacting to changes in our
business.





We are dependent on the Brucejack Project for our future operating
revenue.





Our
only material property for the purposes of NI 43-101 is the
Brucejack Project, which has a limited life based on mineral
resource estimates. Mineral resources are not mineral reserves and
do not have demonstrated economic viability. In order to be able to
develop a mine and commence production, we will be required to
replace and expand our mineral resources and obtain mineral
reserves.





In the
absence of additional mineral projects, we will be solely dependent
upon the Brucejack Project for our revenue and profits, if any. In
addition, development costs are difficult to predict and may render
the development of the Brucejack Project financially unfeasible. It
is uncertain whether the Brucejack Project will ever, or on the
timeline we anticipate, achieve commercial production. Should the
development of the Brucejack Project turn out to be not possible or
practicable, for political, engineering, technical, economic, legal
or other reasons, our business and financial position will be
significantly and adversely affected.





Mineral resource and reserve calculations are only
estimates.





Any
figures presented for mineral resources in this AIF or documents
incorporate by reference herein, any figures for mineral resources
which may be presented in the future or any figures for mineral
reserves that may be presented by us in the future are and will
only be estimates. There is a degree of uncertainty attributable to
the calculation of mineral reserves and mineral resources. Until
mineral reserve estimates or mineral resource estimates are
actually mined and processed, the quantity of metal and grades must
be considered as estimates only and no assurances can be given that
the indicated levels of metals will be produced. In making
determinations about whether to advance any of our projects to
development, we must rely upon estimated calculations as to the
mineral resources and grades of mineralization on our
properties.





The
estimating of mineral reserves and mineral resources is a
subjective process that relies on the judgment of the persons
preparing the estimates. The process relies on the quantity and
quality of available data and is based on knowledge, mining
experience, analysis of drilling results and industry practices.
Valid estimates made at a given time may significantly change when
new information becomes available. By their nature, mineral
resource estimates are imprecise and depend, to a certain extent,
upon analysis of drilling results and statistical inferences that
may ultimately prove to be inaccurate.





53





Estimated
mineral reserves or mineral resources may have to be recalculated
based on changes in mineral prices, further exploration or
development activity or actual production experience. This could
materially and adversely affect estimates of the volume or grade of
mineralization, estimated recovery rates or other important factors
that influence mineral reserve or resource estimates. The extent to
which resources may ultimately be reclassified as proven or
probable mineral reserves is dependent upon the demonstration of
their profitable recovery. Any material changes in mineral resource
estimates and grades of mineralization will affect the economic
viability of placing a property into production and a
property’s return on capital. We cannot provide assurance
that mineralization can be mined or processed
profitably.





Our
mineral resource estimates have been determined and valued based on
assumed future metal prices, cut-off grades, operating costs and
other assumptions that may prove to be inaccurate. Extended
declines in market prices for gold and silver may render portions
of our mineralization uneconomic and result in reduced reported
mineral resources, which in turn could have a material adverse
effect on our results of operations or financial condition. We
cannot provide assurance that mineral recovery rates achieved in
small scale tests will be duplicated in large scale tests under
on-site conditions or in production scale. In addition, if our
projects produce concentrate for which there is no market,
specifically, with respect to concentrate containing rhenium, this
may have an impact on the economic model for the Brucejack Project.
A reduction in any resources that may be estimated by us in the
future could have an adverse impact on our future cash flows,
earnings, results of operations and financial
condition.





No
assurances can be given that any mineral resource estimates for the
Brucejack Project will ultimately be reclassified as proven or
probable mineral reserves. The failure to establish proven and
probable mineral reserves could restrict our ability to
successfully implement our strategies for long-term growth and may
impact future cash flows, earnings, results of operation and
financial condition.





Uncertainty exists related to mineral resources.





There
is a risk that inferred mineral resources referred to in this AIF
cannot be converted into measured or indicated mineral resources as
there may be limited ability to assess geological continuity. In
addition, there is no assurance that any mineral resources will, as
a result of continued exploration, be determined to have sufficient
geological continuity so as to be upgraded to constitute proven and
probable mineral reserves.





Changes in the market price of gold and other metals, which in the
past have fluctuated widely, may materially and adversely affect
our revenues and the value of our mineral properties.





Our
profitability and long-term viability will depend, in large part,
on the market price of gold and silver. The market prices for these
metals are volatile and are affected by numerous factors beyond our
control, including:





54





●  global or regional
consumption patterns;





●  the supply of, and demand
for, these metals;





●  speculative
activities;





●  the availability and costs
of metal substitutes;





●  expectations for inflation;
and





●  political and economic
conditions, including interest rates and currency
values.





We
cannot predict the effect of these factors on metal prices. A
decrease in the market price of gold and other metals could affect
our ability to finance the exploration and development of any of
our mineral properties. The market price of gold and other metals
may not remain at current levels.





Future
production, if any, from our mining properties is dependent on
mineral prices that are adequate to make these properties economic.
A sustained period of declining gold and other metal prices would
adversely affect our financial performance, financial position,
results of operations and trading value of our
securities.





We have a history of negative operating cash flow and a significant
accumulated deficit. We may continue to incur losses and to
experience negative operating cash flow for the foreseeable
future.





We have
incurred net losses in each fiscal year since our inception. For
the year ended December 31, 2016, we had a net loss of $80.4
millionand at December
31, 2016, we had an accumulated deficit of $156.7 million. We
expect to incur losses unless and until such time as our mineral
projects generate sufficient revenues to fund continuing
operations. We have incurred construction related expenses in
recent periods and we plan to incur further expenses as cash flows
allow. The planned increases in construction related expenses may
result in larger losses in future periods.





The
exploration and development of our mineral properties will require
the commitment of substantial financial resources that may not be
available. The amount and timing of expenditures will depend on a
number of factors, including the progress of ongoing exploration
and development, the results of consultants’ analyses and
recommendations, the rate at which operating losses are incurred,
the execution of any joint venture agreements with strategic
partners and the acquisition of additional property interests, some
of which are beyond our control. Our business strategies may not be
successful and we may not be profitable in any future period. Our
operating results have varied in the past and they may continue to
fluctuate in the future. In addition, our operating results may not
follow any past trends.





We had
negative operating cash flow for the financial years ended December
31, 2016 and December 31, 2015. We anticipate that we will continue
to have negative cash flow until such time, if at all, that
profitable commercial production is achieved. We cannot provide
assurance that we will ever achieve profitability. To the extent
that we have negative cash flow in future periods, we may need to
allocate a portion of our cash reserves to fund such negative cash
flow. We may also be required to raise additional funds through the
issuance of equity or debt securities. There can be no assurance
that additional capital or other types of financing will be
available when needed or that these financings will be on terms
favourable to us.





55





If our counterparties to the Credit Agreement, Stream Agreement and
Offtake Agreement default on their contractual obligations the
Company may be materially and adversely affected.





If a counterparty does not meet its contractual obligations under
the Credit Agreement, Stream Agreement or Offtake Agreement, or if
they become insolvent, our future operating results may be
materially adversely impacted. A portion of the loan facility made
available to us under the Credit Agreement may be drawn in tranches
over an 18 month period. Pursuant to the Stream Agreement and
Offtake Agreement, we have agreed to sell refined gold and refined
silver to Orion Stream and BTO (see “General Development of
Our Business”). If Orion, Orion Stream or BTO do not meet
their respective obligations under the Credit Agreement, Stream
Agreement or Offtake Agreement, this could have a material and
adverse impact our operations and our financial
situation.





General economic conditions may adversely affect our growth,
profitability and ability to obtain financing.





Events
in global financial markets in the past several years have had a
profound impact on the global economy. Many industries, including
the gold mining industry, have been and continue to be impacted by
these market conditions. Some of the key impacts of the current
financial market turmoil include contraction in credit markets
resulting in a widening of credit risk, devaluations, high
volatility in global equity, commodity, foreign exchange and
precious metal markets and a lack of market confidence and
liquidity. A continued or worsened slowdown in the financial
markets or other economic conditions, including but not limited to,
consumer spending, employment rates, business conditions,
inflation, fuel and energy costs, consumer debt levels, lack of
available credit, the state of the financial markets, interest
rates and tax rates, may adversely affect our growth and
profitability. A number of issues related to economic conditions
could have a material adverse effect on our financial condition and
results of operations, specifically:





●  contraction in credit
markets could impact the cost and availability of financing and our
overall liquidity;





●  the volatility of gold and
other metal prices would impact our revenues, profits, losses and
cash flow;





●  continued recessionary
pressures could adversely impact demand for our
production;





●  volatile energy, commodity
and consumables prices and currency exchange rates could impact our
production costs; and





●  the devaluation and
volatility of global stock markets could impact the valuation of
our equity and other securities.





56





Mining is inherently risky and subject to conditions or events
beyond our control.





The
development and operation of a mine or mine property is inherently
dangerous and involves many risks that even a combination of
experience, knowledge and careful evaluation may not be able to
overcome, including:





●  unusual or unexpected
geological formations;





●  metallurgical and other
processing problems;





●  metal losses;





●  environmental
hazards;





●  power outages;





●  labour
disruptions;





●  industrial
accidents;





●  periodic interruptions due
to inclement or hazardous weather conditions;





●  flooding, explosions, fire,
rockbursts, cave-ins and landslides;





●  mechanical equipment and
facility performance problems;





●  avalanches; and





●  the availability of
materials and equipment.





These
risks could result in damage to, or destruction of, mineral
properties, production facilities or other properties, personal
injury or death, including to our employees, environmental damage,
delays in mining, increased production costs, asset write downs,
monetary losses and possible legal liability. We may not be able to
obtain insurance to cover these risks at economically feasible
premiums, or at all. Insurance against certain environmental risks,
including potential liability for pollution and other hazards as a
result of the disposal of waste products occurring from production,
is not generally available to companies within the mining industry.
We may suffer a material adverse impact on our business if we incur
losses related to any significant events that are not covered by
our insurance policies.





We cannot provide assurance that we currently hold or will
successfully acquire commercially mineable mineral
rights.





Exploration
for and development of gold properties involves significant
financial risks which even a combination of careful evaluation,
experience and knowledge may not eliminate. While the discovery of
an ore body may result in substantial rewards, few properties which
are explored are ultimately developed into producing mines. Major
expenses may be required to establish mineral reserves by drilling,
constructing mining and processing facilities at a site, developing
metallurgical processes and extracting gold from ore. We cannot
ensure that our current exploration and development programs will
result in profitable commercial mining operations.





57





The
economic feasibility of development projects is based upon many
factors, including the accuracy of mineral resource and mineral
reserve estimates; metallurgical recoveries; capital and operating
costs; government regulations relating to prices, taxes, royalties,
land tenure, land use, importing and exporting and environmental
management and protection; and gold prices, which are highly
volatile. Development projects are also subject to the successful
completion of feasibility studies, issuance of necessary
governmental permits and availability of adequate
financing.





Most
exploration projects do not result in the discovery of commercially
mineable ore deposits, and no assurance can be given that any
anticipated level of recovery of ore reserves, if any, will be
realized or that any identified mineral deposit will ever qualify
as a commercially mineable (or viable) ore body which can be
legally and economically exploited. Estimates of mineral reserves,
mineral resources, mineral deposits and production costs can also
be affected by such factors as environmental permitting regulations
and requirements, weather, environmental factors, unforeseen
technical difficulties, the metallurgy of the mineralization
forming the mineral deposit, unusual or unexpected geological
formations and work interruptions. If current exploration programs
do not result in the discovery of commercial ore, we may need to
write-off part or all of our investment in existing exploration
stage properties.





Material
changes in ore reserves, if any, grades, stripping ratios or
recovery rates may affect the economic viability of any project.
Our future growth and productivity will depend, in part, on our
ability to develop commercially mineable mineral rights at our
existing properties or identify and acquire other commercially
mineable mineral rights, and on the costs and results of continued
exploration and potential development programs. Mineral exploration
is highly speculative in nature and is frequently non-productive.
Substantial expenditures are required to:





●  establish ore reserves
through drilling and metallurgical and other testing
techniques;





●  determine metal content and
metallurgical recovery processes to extract metal from the ore;
and





●  construct, renovate or
expand mining and processing facilities.





In
addition, if we discover ore, it would take several years from the
initial phases of exploration until production is possible. During
this time, the economic feasibility of production may change. As a
result of these uncertainties, there can be no assurance that we
currently hold or will successfully acquire commercially mineable
(or viable) mineral rights.





Suitable infrastructure may not be available or damage to existing
infrastructure may occur.





58





Mining,
processing, development and exploration activities depend, to one
degree or another, on adequate infrastructure. Reliable roads,
bridges, power sources and water supply are important determinants
for capital and operating costs. The lack of availability on
acceptable terms or the delay in the availability of any one or
more of these items could prevent or delay exploitation or
development of our projects. If adequate infrastructure is not
available in a timely manner, we cannot assure you that the
exploitation or development of our projects will be commenced or
completed on a timely basis, or at all, or that the resulting
operations will achieve the anticipated production volume, or that
the construction costs and operating costs associated with the
exploitation and/or development of our projects will not be higher
than anticipated. In addition, unusual weather phenomena, sabotage,
government, First Nations or other interference in the maintenance
or provision of such infrastructurecould adversely affect our
operations and profitability. In addition, there are risks
associated with the construction of an underground mining project
relating to, among other things, supervision of the contractors,
cost estimating, delivery and operation of equipment, and disposal
of waste rock.





We are subject to significant governmental
regulations.





Our
exploration and development activities are subject to extensive
federal, provincial and local laws, regulations and policies
governing various matters, including:





●  environmental
protection;





●  the management and use of
toxic substances and explosives;





●  management of tailings and
other wastes;





●  the management of natural
resources and land;





●  the exploration and
development of mineral properties;





●  mine
construction;





●  mine production and
post-closure reclamation;





●  exports;





●  price controls;





●  taxation and mining
royalties;





●  labour standards and
occupational health and safety, including mine safety;
and





●  historic and cultural
preservation.





Failure
to comply with applicable laws and regulations may result in civil
or criminal fines or penalties or enforcement actions, including
orders issued by regulatory or judicial authorities enjoining or
curtailing operations or requiring corrective measures,
installation of additional equipment or remedial actions, any of
which could result in significant expenditures. We may also be
required to compensate private parties suffering loss or damage by
reason of a breach of such laws, regulations or permitting
requirements. It is also possible that future laws and regulations,
or more stringent enforcement of current laws and regulations by
governmental authorities, could cause us to incur additional
expense or capital expenditure restrictions or suspensions of our
activities and delays in the exploration and development of our
properties.





59





The
Canadian Extractive Sector Transparency Measures Act
(“ESTMA”), which became effective June 1, 2015,
requires public disclosure of payments to governments by mining
companies engaged in the commercial development of minerals who are
either publicly listed in Canada or with business or assets in
Canada. Mandatory annual reporting is required for extractive
companies with respect to payments made to foreign and domestic
governments at all levels, including entities established by two or
more governments, and including Aboriginal groups, although there
is a two year moratorium on disclosure of Canadian First Nations.
ESTMA requires reporting on the payments of any taxes, royalties,
fees, production entitlements, bonuses, dividends, infrastructure
improvement payments, and any other prescribed payment over
$100,000. Failure to report, false reporting or structuring
payments to avoid reporting may result in fines of up to $250,000
(which may be concurrent). If we find ourselves subject to an
enforcement action or in violation of ESTMA, this may result in
significant penalties, fines and/or sanctions imposed on us
resulting in a material adverse effect on our
reputation.





Our
efforts to comply with new rules and regulations have resulted in,
and are likely to continue to result in, increased general and
administrative expenses and a diversion of management time and
attention from revenue-generating activities to compliance
activities. If we fail to comply with such regulations, it could
have a negative effect on our business, results of operations and
share price and investors could lose all or part of their
investment. These rules and regulations continue to evolve in scope
and complexity and many new requirements have been created in
response to laws enacted by governments, making compliance more
difficult and uncertain.





We require various permits in order to conduct current and
anticipated future operations and a failure to renew applicable
permits or comply with the terms of any such permits that we have
obtained, could adversely affect our business.





Our
current and anticipated future operations require permits from
various governmental authorities. Obtaining or renewing
governmental permits is a complex and time-consuming process. The
duration and success of efforts to obtain and renew permits are
contingent upon many variables not within our control.





We have
obtained major permits required to complete construction and
commence production at the Brucejack Project however, we cannot
provide assurance that all rights and permits that we require for
our future operations, including any for construction of mining
facilities or conduct of mining, will be obtainable or renewable on
reasonable terms, or at all. Unexpected costs or delays with the
permitting process, failure to obtain required permits or the
expiry, revocation or failure to comply with the terms of any such
permits that we have obtained, would adversely affect our
business.





60





Our activities are subject to environmental laws and regulations
that may increase our costs and restrict our
operations.





All of
our exploration, development and production activities are subject
to regulation by governmental agencies under various environmental
laws. These laws address emissions into the air, discharges into
water, management of waste, management of hazardous substances,
protection of natural resources, antiquities and endangered species
and reclamation of lands disturbed by mining
operations.





Environmental
legislation is evolving and the general trend has been towards
stricter standards and enforcement, increased fines and penalties
for noncompliance, more stringent environmental assessments of
proposed projects and increasing responsibility for companies and
their officers, directors and employees. Compliance with
environmental laws and regulations may require significant capital
outlays on our behalf and may cause material changes or delays in
our intended activities. Future changes in these laws or
regulations could have a significant adverse impact on some portion
of our business, requiring us to re-evaluate those activities at
that time.





Our
anticipated operations will generate chemical and metals
depositions in the form of tailings. Our ability to obtain,
maintain and renew permits and approvals and to successfully
develop and operate mines may be adversely affected by real or
perceived impacts associated with our activities or of other mining
companies that affect the environment, human health and safety.
Recent regulations under the British Columbia Mines Act increase
potential penalties for prosecutions and allow for administrative
monetary penalties to be imposed without a court
process.





Environmental
hazards may exist on our properties that are unknown to us at the
present time and have been caused by previous owners or operators
or that may have occurred naturally. We may be liable for
remediating such damage.





Failure
to comply with applicable environmental laws, regulations and
permitting requirements may result in enforcement actions
thereunder, including orders issued by regulatory or judicial
authorities, causing operations to cease or be curtailed. Such
enforcement actions may include the imposition of corrective
measures requiring capital expenditure, installation of new
equipment or remedial action.





Compliance with emerging climate change regulations could result in
significant costs and the effects of climate change may present
physical risks to our operations.





Governments
at all levels may be moving towards enacting legislation to address
climate change concerns, such as requirements to reduce emission
levels and increase energy efficiency, and political and economic events may
significantly affect the scope and timing of climate change
measures that are ultimately put in place. Where legislation
has already been enacted, such regulations may become more
stringent, which may result in increased costs of compliance. There
is no assurance that compliance with such regulations will not have
an adverse effect on our results of operations and financial
condition. Furthermore, given the evolving nature of the debate
related to climate change and resulting requirements, it is not
possible to predict the impact on our results of operations and
financial condition.





61





Extreme
weather events (such as increased periods of snow and increased
frequency and intensity of storms) have the potential to disrupt
our exploration and development plans. Our emergency plans for
managing extreme weather conditions may not be sufficient and
extended disruptions could have adverse effects on our results of
operations and financial condition.





We may be subject to claims and
legal proceedings that could materially adversely impact our
financial position, financial performance and results of operations.





Due to
the nature of the Company’s business, we may be subject to a
variety of regulatory investigations, claims, lawsuits and other
proceedings in the ordinary course of the Company’s business.
The results of these legal proceedings cannot be predicted with
certainty due to the uncertainty inherent in litigation, including
the effects of discovery of new evidence or advancement of new
legal theories, the difficulty of predicting decisions of judges
and juries and the possibility that decisions may be reversed on
appeal. There can be no assurances that these matters will not have
a material adverse effect on our business.





We may fail to maintain adequate internal control over financial
reporting pursuant to the requirements of the Sarbanes-Oxley
Act.





During
our 2016, 2015 and 2014 fiscal years, we documented and tested our
internal control procedures in order to satisfy the requirements of
Section 404 of the Sarbanes-Oxley Act (“SOX”). SOX requires an annual
assessment by management of the effectiveness of our internal
control over financial reporting and, for fiscal years commencing
with our fiscal year ended December 31, 2012, an attestation report
by our independent auditors addressing the effectiveness of
internal control over financial reporting. We may fail to maintain
the adequacy of our internal control over financial reporting as
such standards are modified, supplemented or amended from time to
time, and we may not be able to conclude, on an ongoing basis, that
we have effective internal control over financial reporting in
accordance with Section 404 of SOX.





Our
failure to satisfy the requirements of Section 404 of SOX on an
ongoing, timely basis could result in the loss of investor
confidence in the reliability of our financial statements, which in
turn could harm our business and negatively impact the trading
price or the market value of our securities. In addition, any
failure to implement required new or improved controls, or
difficulties encountered in their implementation, could harm our
operating results or cause us to fail to meet our reporting
obligations. Future acquisitions of companies, if any, may provide
us with challenges in implementing the required processes,
procedures and controls in our acquired operations. No evaluation
can provide complete assurance that our internal control over
financial reporting will detect or uncover all failures of persons
within our Company to disclose material information otherwise
required to be reported.





The
effectiveness of our processes, procedures and controls could also
be limited by simple errors or faulty judgments. In addition, as we
continue to expand, the challenges involved in implementing
appropriate internal control over financial reporting will increase
and will require that we continue to monitor our internal control
over financial reporting. Although we intend to expend substantial
time and incur substantial costs, as necessary, to ensure ongoing
compliance, we cannot be certain that we will be successful in
complying with Section 404 of SOX.





62





We face potential opposition from non-governmental
organizations.





In
recent years, communities and non-governmental organizations
(“NGOs”) have become more vocal and active with respect
to mining activities at or near their communities. These
communities and NGOs have taken such actions as road closures, work
stoppages, and law suits for damages. These actions relate not only
to current activities but often in respect of decades old mining
activities by prior owners of mining properties. Such actions by
communities and NGOs may have a material adverse effect on our
results of operations or financial condition.





There is uncertainty related to unsettled First Nations rights and
title in British Columbia and this may create delays in project
approval or interruptions in project progress.





The
nature and extent of First Nations rights and title remains the
subject of active debate, claims and litigation in British
Columbia. First Nations in British Columbia have made claims of
aboriginal rights and title to substantial portions of land and
water in the province, including areas where the Company’s
operations are situated, creating uncertainty as to the status of
competing property rights. The Supreme Court of Canada has held
that aboriginal groups may have a spectrum of aboriginal rights in
lands that have been traditionally used or occupied by their
ancestors. Such aboriginal rights and title are not absolute and
may be infringed by government in furtherance of a legislative
objective, subject to meeting a justification test. The effect of
such claims on any particular area of land will not be determinable
until the exact nature of historical use, occupancy and rights to
such property have been clarified by a decision of the Courts or
definition in a treaty. First Nations in the province are seeking
settlements including compensation from governments with respect to
these claims, and the effect of these claims cannot be estimated at
this time. The federal and provincial governments have been seeking
to negotiate settlements with aboriginal groups throughout British
Columbia in order to resolve many of these claims. Any settlements
that may result from these negotiations may involve a combination
of cash, resources, grants of conditional rights to undertake
traditional pursuits (like hunting, gathering, trapping and
fishing) on public lands, and some rights of self-government. The
issues surrounding aboriginal title and rights are not likely to be
resolved in the near future.





In a
landmark decision in 2004, the Supreme Court of Canada determined
that there is a duty on government to consult with and, where
appropriate, accommodate First Nations where government decisions
may impact on claimed, but as yet unproven, aboriginal rights or
title. This decision also provided much needed clarification of the
duties of consultation and accommodation. This decision was
re-enforced in a 2010 decision of the Supreme Court of Canada, in
which the Court re-affirmed and re-stated the test for determining
when the duty to consult arises. The Court has made clear that
third parties are not responsible for consultation or accommodation
of aboriginal interests and that this responsibility lies with
government. However, government permits, including environmental
and mine permits, will not be granted by provincial and federal
agencies unless they are satisfied that the duty to consult and
accommodate has been fully met. In 2005, the Supreme Court of
Canada confirmed that this duty exists with respect to claimed
treaty rights.





63





Additional
uncertainty has arisen due to the recent decision of the Supreme
Court of Canada in Tsilhqot’in Nation v. British
Columbia (2014 SCC 44), which recognized the
Tsilhqot’in Nation as holding Aboriginal Title to
approximately 1,900 square kilometers of territory in the interior
of British Columbia.  This decision represents the first
successful claim for Aboriginal Title in Canada and may lead other
First Nations in British Columbia to pursue Aboriginal Title in
their traditional land-use areas.





A portion of the Brucejack Project lies within traditional First
Nation territory and in the Nass Area, as defined in the
Nisga’a
Final Agreement between the
Nisga’a First Nation and the federal and provincial
governments, which came into effect on May 11, 2000. However, there
may be overlapping claims by other First Nations. Given the
unsettled nature of land claims and treaty rights in British
Columbia, as well as the rights of the Nisga’a under
the Nisga’a Final
Agreement, there can be no
guarantee that there will not be delays in project approval,
unexpected interruptions in project progress, requirements for
First Nations consent, cancellation of permits and licences, or
additional costs to advance the Company’s
projects.





In
addition, the Government of Canada has expressed a renewed
commitment to implementing the United Nations Declaration of the
Rights of Indigenous People which requires governments to obtain
the free, prior, and informed consent of indigenous peoples who may
be affected by government action, such as the granting of mining
concessions or approval of mine permits.





In
order to facilitate mine permitting, construction and the
commencement of mining activities, the Company may deem it
necessary and prudent to try to obtain the cooperation and approval
of the local First Nations groups. Any cooperation and approval may
be predicated on our committing to take measures to limit the
adverse impacts on local First Nations groups and ensuring that
someof the economic benefits of the construction and mining
activity will be enjoyed by the local First Nations groups. There
can be no guarantee that any of our efforts to secure such
cooperation or approval would be successful or that the assertion
of FirstNations rights and title, or claims of insufficient
consultation or accommodation, will not create delays in project
approval or unexpected interruptions in project progress,
requirements for First Nations consent, cancellation of permits and
licences, or result in additional costs to advance our
projects.





Our properties may be subject to uncertain title.





We
cannot provide assurance that title to our properties will not be
challenged. We hold mineral claims which constitute our property
holdings. We may not have, or may not be able to obtain, all
necessary surface rights to develop a mineral property. Title
insurance is generally not available for mineral properties and our
ability to ensure that we have obtained a secure claim to
individual mining properties may be severely constrained. We have
not conducted surveys of all of the claims in which we hold direct
or indirect interests. A successful claim contesting our title to a
property could cause us to lose our rights to explore and, if
warranted, develop that property or undertake or continue
production thereon. This could also result in our not being
compensated for our prior expenditures relating to such
property.





64





Land reclamation requirements may be burdensome.





Land
reclamation requirements are generally imposed on mineral
exploration companies (as well as companies with mining operations)
in order to minimize long term effects of land disturbance.
Reclamation may include requirements to treat ground and surface
water to drinking water standards, controldispersion of potentially
deleterious effluent and reasonably re-establish pre-disturbance
land forms and vegetation. In order to carry out reclamation
obligations imposed on us in connection with exploration,
development and production activities, we must allocate financial
resources that might otherwise be spent on further exploration and
development programs. The actual costs of reclamation and mine
closure are uncertain and planned expenditures may differ from the
actual expenditures required. Therefore, the amount that we are
required to spend may be materially higher than our estimates. Any
additional amounts we are required to spend on reclamation and mine
closure may have a material adverse effect on our financial
performance, financial condition and results of
operations.





We may fail to identify attractive acquisition candidates or may
fail to successfully integrate acquired material
properties.





We may
actively pursue the acquisition of exploration, development and
production assets consistent with our acquisition and growth
strategy. The identification of attractive candidates and
integration of acquired properties, assets or entities involve
inherent risks, including but not limited to:





●  accurately assessing the
value, strengths, weaknesses, contingent and other liabilities and
potential profitability of acquisition candidates;





●  ability to achieve
identified and anticipated operating and financial
synergies;





●  unanticipated
costs;





●  diversion of management
attention from existing business;





●  potential loss of our key
employees or key employees of any business acquired;





●  unanticipated changes in
business, industry or general economic conditions that affect the
assumptions underlying the acquisition; and





●  decline in the value of
acquired properties, companies or securities.





Any one
or more of these factors or other risks could cause us not to
realize the anticipated benefits of an acquisition of properties or
companies, and could have a material adverse effect on our
financial condition. We may not be able to successfully overcome
these risks and other problems associated with acquisitions, and
this may adversely affect our business, financial condition or
results of operations.





65





In
connection with any future acquisitions, we may incur indebtedness
or issue equity securities, resulting in increased interest expense
or dilution of the percentage ownership of existing shareholders.
Acquisition costs, additional indebtedness or issuances of
securities in connection with such acquisitions, may adversely
affect the price of our Common Shares and negatively affect our
results of operations.





We may be adversely affected by future fluctuations in foreign
exchange rates.





Our
potential profitability is exposed to the financial risk related to
the fluctuation of foreign exchange rates. The minerals that could
be produced from our projects are priced in U.S. dollars but, since
our only projects are located in Canada, the majority of our
estimated expenditures are in Canadian dollars. A significant
change inthe currency exchange rates between the Canadian dollar
relative to the U.S. dollar will have an effect on the potential
profitability of our projects and therefore our ability to continue
to finance our operations. To the extent that the actual Canadian
dollar to U.S. dollar exchange rate is less than or more than the
rate estimated in any future development plans, the profitability
of our projects will be affected. Accordingly, our prospects may
suffer due to adverse currency fluctuations.





The mining industry is very competitive.





We
compete with other exploration and producing companies, many of
which are better capitalized, have greater financial resources,
operational experience and technical capabilities or are further
advanced in their development or are significantly larger and have
access to greater mineral reserves, for the acquisition of mineral
claims, leases and other mineral interests as well as for the
recruitment and retention of qualified employees and other
personnel. If we require and are unsuccessful in acquiring
additional mineral properties or qualified personnel, we will not
be able to grow at the rate we desire, or at all.





Our
competitors may be able to devote greater resources to the
expansion and efficiency of their operations or respond more
quickly to new laws and regulations or emerging technologies than
we can. We may not be able to compete successfully against current
and future competitors, and any failure to do so could have a
material adverse effect on our business, financial condition or
results of operations.





We may experience difficulty attracting and retaining qualified
management to grow our business.





We are
dependent on the services of key executives and other highly
skilled and experienced personnel to advance our corporate
objectives as well as the identification of new opportunities for
growth and funding. Robert A. Quartermain, Joseph J. Ovsenek,
Kenneth McNaughton, Tom Yip and Michelle Romero are currently our
key executives. It will be necessary for us to recruit additional
skilled and experienced management and personnel. Our inability to
do so, or the loss of Mr. Quartermain or Mr. Ovsenek or any of our
key executives, or our inability to attract and retain suitable
replacements for such executives or the additional highly skilled
employees required for our activities, would have a material
adverse effect on our business and financial
condition.





66





Some of our directors and officers have conflicts of interest as a
result of their involvement with other natural resource
companies.





Certain
of our directors and officers also serve as directors or officers,
or have significant shareholdings in, other companies involved in
natural resource exploration and development or mining-related
activities. To the extent that such other companies may participate
in ventures that we may also participate in, or in ventures that we
may seek to participate in, our directors and officers may have a
conflict of interest in negotiating and concluding terms respecting
the extent of such participation. In all cases where our directors
and officers have an interest in other companies, such other
companies may also compete with us for the acquisition of mineral
property investments. Such conflicts of our directors and officers
may result in a material and adverse effect on our profitability,
results of operation and financial condition. As a result of these
conflicts of interest, we may miss the opportunity to participate
in certain transactions, which may have a material adverse effect
on our financial position.





We may be unable to attract development partners.





We may
seek to develop some or all of our projects in partnership with one
or more third parties in a corporate or contractual joint venture,
or otherwise, or to dispose of some part or of its project to
another party, retaining a royalty interest therein. We may be
unable to find such partners or to negotiate satisfactory terms
therewith, in which case we will be obliged to either postpone
development of such project or proceed alone with the costs of
further development.





Failure to comply with the U.S. Foreign Corrupt Practices Act
(“FCPA”), as well as the anti-bribery laws of the
nations in which we conduct business (such as the UK’s
Bribery Act or the Corruption of Foreign Public Officials Act of
Canada (“CFPOA”)), could subject us to penalties and
other adverse consequences.





Our business is subject to the FCPA which generally prohibits
companies and company employees from engaging in bribery or other
prohibited payments to foreign officials for the purpose of
obtaining or retaining business. The FCPA also requires companies
to maintain accurate books and records and internal controls,
including at foreign-controlled subsidiaries. In addition, we are
subject to other anti-bribery laws of the nations in which we
conduct business that apply similar prohibitions as the FCPA (such
as the UK’s Bribery Act, the CFPOA and the OECD Anti-Bribery
Convention). Our employees or other agents may, without our
knowledge and despite our efforts, engage in prohibited conduct
under our policies and procedures and the FCPA or other
anti-bribery laws that we may be subject to for which we may be
held responsible. If our employees or other agents are found to
have engaged in such practices, we could suffer severe penalties
and other consequences that may have a material adverse effect on
our business, financial condition and results of
operations.





Enforcement of judgments or bringing actions outside the United
States against us and our directors, officers and the experts named
herein may be difficult.





67





We are
organized under the laws of, and headquartered in, British
Columbia, Canada, and a majority of our directors, officers and the
experts named in this AIF are not citizens or residents of the
United States. In addition, a substantial part of our assets are
located outside the United States. As a result, it may be difficult
or impossible for an investor to (i) enforce in courts outside the
United States judgments against us and our directors, officers and
the experts named in this AIF obtained in U.S. courts based upon
the civil liability provisions of U.S. federal securities laws or
(ii) bring in courts outside the United States an original action
against us and our directors, officers and the experts named in
this AIF to enforce liabilities based upon such U.S. securities
laws.





Legislative actions, potential new accounting pronouncements, and
higher insurance costs are likely to impact our future financial
position or results of operations.





Future
changes in financial accounting standards may cause adverse,
unexpected revenue fluctuations and affect our financial position
or results of operations. New pronouncements and varying
interpretations of pronouncements have occurred with greater
frequency and are expected to occur in the future. Compliance with
changing regulations of corporate governance and public disclosure
may result in additional expenses. All of these uncertainties are
leading generally toward increasing insurance costs, which may
adversely affect our business, results of operations and our
ability to purchase any such insurance, at acceptable rates or at
all, in the future.





Anti-takeover provisions could
discourage a third party from making a takeover offer
that could be beneficial to our
shareholders.





Some of
the provisions in our articles could delay or prevent a third party
from acquiring us or replacing members of our Board, even if the
acquisition or the replacements would be beneficial to our
shareholders. Such provisions include the following:





●
 shareholders cannot
amend our articles unless at least two-thirds of the shares
entitled to vote approve the amendment; and





●
 our Board can,
without shareholder approval, issue preferred shares having any
terms, conditions, rights and preferences that the Board
determines.





These
provisions could also reduce the price that certain investors might
be willing to pay for our securities and result in the market price
for our securities, including the market price for our Common
Shares, being lower than it would be without these
provisions.





A period of significant growth can place a strain on management
systems.





If we
experience a period of significant growth in the number of our
personnel this could place a strain upon our management systems and
resources. Our future will depend in part on the ability of our
officers and other key employees to implement and improve our
financial and management controls, reporting systems and procedures
on a timely basis and to expand, train and manage our employee
workforce. There can be no assurance that we will be able to
effectively manage such growth. Our failure to do so could have a
material adverse effect upon our business, prospects, results of
operation and financial condition.


68





Significant shareholders of the Company could influence our
business operations and sales of our Common Shares by such
significant shareholders could influence our Common Share
price.





As at
the date of this AIF, to the best of our knowledge, Silver Standard
holds approximately 9.38% of our outstanding Common Shares. Silver
Standard may have significant influence over the passage of any
resolution of our shareholders (such as would be required, to amend
our constating documents or take certain other corporate
action).





Pursuant
to a subscription agreement between Jin Huang and the Company dated
December 8, 2014, for so long as Jin Huang and their affiliates
hold at least 4.75% of our issued and outstanding Common Shares,
Jin Huang is entitled to nominate one individual to serve on our
Board and Jin Huang has the right to maintain its and its
affiliates proportionate ownership of our Common Shares by
participating pro rata in issuances of our Common Shares (subject
to certain exceptions). To the best of our knowledge, as of the
date of this AIF, Jin Huang and its affiliates holds approximately
5% of our issued and outstanding Common Shares.





Under
the terms of the September 15, 2015 subscription agreements between
the Company and each of Orion and BTO relating to the Orion and
Blackstone Financing, Orion and BTO are entitled to maintain their
proportionate ownership of our Common Shares by participating pro
rata in the issuances of our Common Shares (subject to certain
exceptions) until the maturity date of the Credit Agreement. To the
best of our knowledge, as of the date of this AIF, Orion holds
approximately 2.55% of our issued and outstanding Common
Shares.





Together,
these shareholders hold approximately 17% of our Common Shares. As
a result, these shareholders may have significant influence over
the passage of any resolution of our shareholders.





Risks
Related to our Securities





Future sales or issuances of debt or equity securities could
decrease the value of any existing Common Shares, dilute
investors’ voting power, reduce our earnings per share and
make future sales of our equity securities more
difficult.





We may sell or issue additional debt or equity securities in
offerings to finance our operations, exploration, development,
acquisitions or other projects. We cannot predict the size of
future issuances of debt or equity securities or the effect, if
any, that future sales and issuances of debt or equity securities
will have on the market price of the Common Shares.





Additional issuances of our securities may involve the issuance of
a significant number of our Common Shares at prices less than the
current market price for the Common Shares. Issuance of substantial
numbers of Common Shares, or the perception that such issuances
could occur, may adversely affect prevailing market prices of the
Common Shares. Any transaction involving the issuance of previously
authorized but unissued Common Shares, or securities convertible
into Common Shares, would result in dilution, possibly substantial,
to security holders. Sales of substantial amounts of our securities
by us or our existing shareholders, or the availability of such
securities for sale, could adversely affect the prevailing market
prices for our securities and dilute investors’ earnings per
share. Exercises of presently outstanding share options may also
result in dilution to security holders. A decline in the market
prices of our securities could impair our ability to raise
additional capital through the sale of securities should we desire
to do so.





69





Our Common Share price has
experienced volatility and may be subject to fluctuation
in the future based on market
conditions.





The
market prices for the securities of mining companies, including our
own, have historically been highly volatile. The market has from
time to time experienced significant price and volume fluctuations
that are unrelated to the operating performance of any particular
company. In addition, because of the nature of our business,
certain factors such as our announcements and the public’s
reaction, our operating performance and the performance of
competitors and other similar companies, fluctuations in the market
prices of our resources, government regulations, changes in
earnings estimates or recommendations by research analysts who
track our securities or securities of other companies in the
resource sector, general market conditions, announcements relating
to litigation, the arrival or departure of key personnel and the
factors listed under the heading “Cautionary Note Regarding
Forward-Looking Statements” can have an adverse impact on the
market price of our Common Shares.





Any
negative change in the public’s perception of our prospects
could cause the price of our securities, including the price of our
Common Shares, to decrease dramatically. Furthermore, any negative
change in the public’s perception of the prospects of mining
companies in general could depress the price of our securities,
including the price of our Common Shares, regardless of our
results. Following declines in the market price of a
company’s securities, securities class-action litigation is
often instituted. Litigation of this type, if instituted, could
result in substantial costs and a diversion of our
management’s attention and resources.





Future issuances of equity securities by us or sales by our
existing shareholders may cause the price of our securities to
fall.





The
market price of our equity securities could decline as a result of
issuances of securities by us or sales by our existing shareholders
in the market, or the perception that these sales could occur.
Sales of our Common Shares by shareholders might also make it more
difficult for us to sell equity securities at a time and price that
we deem appropriate. With an additional sale or issuance of equity
securities, investors will suffer dilution of their voting power
and may experience dilution in earnings per share.





We do not intend to pay dividends in the foreseeable
future.





We have
never declared nor paid any dividends on our Common Shares. We
intend, for the foreseeable future, to retain our future earnings,
if any, to finance our exploration and development activities. The
payment of future dividends, if any, will be reviewed periodically
by our Board and will depend upon, among other things, conditions
then existing including earnings, financial conditions, cash on
hand, financial requirements to fund our exploration activities,
development and growth, and other factors that our Board may
consider appropriate in the circumstance. See “Dividends and
Distributions”.








70





We may be treated as a “passive foreign investment
company” under the U.S. Internal Revenue Code, which could
result in adverse U.S. federal income tax consequences for U.S.
investors.





Generally,
unfavorable U.S. federal income tax rules apply to U.S. persons
owning stock of a PFIC. A foreign corporation will be considered a
PFIC for any taxable year in which (i) 75% or more of its gross
income is “passive income,” or (ii) 50% or more of the
average value of its assets is attributable to “passive
assets” (generally, assets that generate passive income). We
believe that we were a PFIC for U.S. federal income tax purposes
for prior years and may be a PFIC for the current year. The
determination of PFIC status for any year is fact specific, being
based on the types of income we earn and the types and value of our
assets from time to time, all of which are subject to change, as
well as, in part, the application of complex U.S. federal income
tax rules, which are subject to differing interpretations. If we
were classified as a PFIC for any taxable year during which a U.S.
holder holds our Common Shares, such U.S. holder may be subject to
increased tax liability (generally including an interest charge)
upon the sale or other disposition of such Common Shares or upon
the receipt of certain distributions treated as “excess
distributions,” regardless of whether such income was
actually distributed.





An event of default under our outstanding Notes may significantly
reduce our liquidity and adversely affect our
business.





Under
the Indenture (as defined below), we have made various covenants to
the trustees on behalf of the holders of such notes, including to
make payments of interest and principal when due and, upon
undergoing a fundamental change, to offer to purchase all of the
outstanding Notes, plus any accrued and unpaid interest, if any. If
there is an event of default under the Notes, the principal amount
of such Notes, plus accrued and unpaid interest, if any, may be
declared immediately due and payable. If such an event occurs, this
would place additional strain on our cash resources, which could
inhibit our ability to further our exploration and development
activities.





Our information systems are vulnerable to an increasing threat of
continually evolving cyber security risks.





Unauthorized
parties may attempt to gain access to our information systems or
the Company’s information through fraud or other means of
deceiving the Company’s counterparties, third-party service
providers or vendors. Our operations depend, in part, on how well
we and our suppliers, as well as counterparties, protect networks,
equipment, information technology (“‘IT’”)
systems and software against damage from a number of threats. The
Company’s operations also depend on the timely maintenance,
upgrade and replacement of networks, equipment, IT systems and
software, as well as pre-emptive expenses to mitigate the risks of
failures. Any of these and other events could result in information
system failures, delays and/or increases in capital
expenses.





71





The
failure of information systems or a component of information
systems could, depending on the nature of any such failure,
adversely impact the Company’s reputation and results of
operations. Although to date the Company has not experienced any
material losses relating to cyber attacks or other information
security breaches, there can be no assurance that we will not incur
such losses in the future. The Company’s risk and exposure to
these matters cannot be fully mitigated because of, among other
things, the evolving nature of these threats. As a result, cyber
security and the continued development and enhancement of controls,
processes and practices designed to protect systems, computers,
software, data and networks from attack, damage or unauthorized
access remain a priority. Any future significant compromise or
breach of the Company’s data security, whether external or
internal, or misuse of data, could result in additional significant
costs, lost sales, fines and lawsuits, and damage to the
Company’s reputation. In addition, as the regulatory
environment related to information security, data collection and
use, and privacy becomes increasingly rigorous, with new and
constantly changing requirements applicable to our business and
counterparties to the above noted agreements, compliance with those
requirements could also result in additional costs. As cyber
threats continue to evolve, the Company or its counterparties may
be required to expend additional resources to continue to modify or
enhance protective measures or to investigate and remediate any
security vulnerabilities.





DIVIDENDS AND DISTRIBUTIONS





We have
not, since the date of incorporation, declared or paid any
dividends on our Common Shares, and do not currently have a policy
with respect to the payment of dividends.





For the
foreseeable future, we anticipatethat we will retain future
earnings, if any, to finance our exploration and development
activities. The payment of future dividends, if any, will be
reviewed periodically by our Board and will depend upon, among
other things, conditions then existing including earnings,
financial conditions, cash on hand, financial requirements to fund
our exploration activities, development and growth, and other
factors that our Board may consider appropriate in the
circumstance.





DESCRIPTION OF CAPITAL STRUCTURE





Our
authorized share capital consists of an unlimited number of Common
Shares, without par value, and an unlimited number of Preferred
Shares, without par value, issuable in series.





As at
the date of this AIF, there were 180,792,927 Common Shares and no
Preferred Shares issued and outstanding.





All of
our Common Shares rank equally as to voting rights, participation
in a distribution of the assets of the Company on a liquidation,
dissolution or winding-up of the Company and entitlement to any
dividends declared by the Company. The holders of the Common Shares
are entitled to receive notice of, and to attend and vote at, all
meetings of shareholders (other than meetings at which only holders
of another class or series of shares are entitled to vote). Each
Common Share carries the right to one vote.





In the
event of the liquidation, dissolution or winding-up of the Company,
the holders of the Common Shares will be entitled to receive, on a
pro rata basis, all of the assets remaining after the payment by
the Company of all of its liabilities. The holders of Common Shares
are entitled to receive any dividends declared by the Company in
respect of the Common Shares, subject to the rights of holders of
other classes ranking in priority to the Common Shares with respect
to the payment of dividends, on a pro rata basis. Any alteration of
the rights attached to the Common Shares must be approved by at
least two-thirds of the Common Shares voted at a meeting of our
shareholders.





72





We may
issue our Preferred Shares from time to time in one or more series.
The terms of each series of Preferred Shares, including the number
of shares, the designation, rights, preferences, privileges,
priorities, restrictions, conditions and limitations, will be
determined at the time of creation of each such series by our
Board, without shareholder approval, provided that all Preferred
Shares will rank equally within their class as to dividends and
distributions in the event of our dissolution, liquidation or
winding-up.





MARKET
FOR SECURITIES





Trading
Price and Volume





Our
Common Shares trade on the TSX and the NYSE under the symbol
“PVG”. Our Common Shares commenced trading on the TSX
on December 21, 2010 and on the NYSE on January 12,
2012.





The
following table sets out the price ranges (high, low and close) and
trading volume of our Common Shares as quoted on the TSX for each
month of our most recently completed financial year:





Month
High (C$)
Low (C$)
Close (C$)
VolumeJanuary 2016
7.98
5.74
5.97
7,421,944February 2016
7.48
6.00
6.32
11,687,966March 2016
7.79
6.01
6.97
18,411,952April 2016
10.41
6.73
10.33
15,864,287May 2016
11.25
9.05
9.54
12,570,875June 2016
14.54
9.24
14.46
12,811,371July2016
16.18
13.60
15.51
13,649,080August 2016
15.94
12.12
12.65
11,644,479September 2016
15.59
12.40
13.47
14,194,567October 2016
13.62
10.92
13.11
8,380,961November 2016
14.39
10.55
11.73
9,563,447December 2016
12.82
9.17
11.12
9,416,970





The
closing price of our Common Shares on the TSX and the NYSE on March
29, 2017, the last trading day
before the date hereof, was C$14.76 and US$11.06 per Common Share,
respectively.





Prior
Sales





We did
not issue any securities in our most recent financial year that are
of a class that is not listed or quoted for trading on a
marketplace.





73





Stock Options





The following stock options were issued during the year ended
2016:





Date of Issuance
Number of Stock Options Issued
Exercise PriceMarch 2, 2016
710,000
$6.75May 12, 2016
100,000
$10.89August 10, 2016
40,000
$15.17November 3, 2016
20,000
$13.42December 15, 2016
731,627
$9.73





Restricted Share
Units (“RSUs”)





The following RSUs were awarded during the year ended December 31,
2016:





Date of Grant
Number of
RSUsGranted
RSU ValueDecember 16, 2016
352,902
$10.69





Each RSU awarded entitles the participant to receive a cash payment
or its equivalent in fully-paid Common Shares equal to the
arithmetic average of the closing price of a Common Share traded on
the TSX for the five (5) trading days on which a board lot was
traded immediately preceding such date.





Convertible Debenture





Subsequent
to the year ended December 31, 2016, we issued the Notes pursuant
to an indenture dated as of February 14, 2017 (the
“Indenture”).





The
initial conversion rate for the Notes is 62.5000 Common Shares per
US$1,000 principal amount of Notes, equivalent to an initial
conversion price of US$16.00 per Common Share.





We will
pay 2.25% interest per annum on the principal amount of the Notes
semi-annually in arrears on March 15 and September 15 of each year,
beginning on September 15, 2017. Interest will accrue on the Notes
from and including February 14, 2017 or from and including the last
date in respect of which interest has been paid or provided for, as
the case may be, to, but excluding, the next interest payment date
or maturity date, as the case may be. The Notes will mature on
March 15, 2022.





Subject
to earlier redemption or purchase, holders may convert their Notes
at any time until the close of business on the business day
immediately preceding March 15, 2022. A holder that surrenders
Notes for conversion in connection with a “make-whole
fundamental change” (as defined in the Indenture) or a notice
of redemption may in certain circumstances be entitled to an
increased conversion rate.








74





We may
not redeem the Notes before March 20, 2020, except in the event of
certain changes in Canadian tax law. At any time on or after March
20, 2020, we may redeem all or part of the Notes for cash, but only
if the last reported sale price of our Common Shares for 20 or more
trading days in a period of 30 consecutive trading days ending on
the trading day prior to the date we provide notice of redemption
exceeds 130% of the conversion price in effect on each such trading
day. The redemption price will equal to the sum of (1) 100% of the
principal amount of the Notes to be redeemed and (2) accrued and
unpaid interest, if any, to, but excluding, the redemption date. We
may also redeem the Notes upon the occurrence of certain changes to
the laws governing Canadian withholding taxes. In addition, we will
be required to offer to purchase for cash all of the
outstanding Notes upon a fundamental change, as described in this
offering memorandum, at a purchase price in cash equal to 100% of
the principal amount of the Notes to be purchased, plus accrued and
unpaid interest, if any, to, but excluding, the fundamental change
purchase date.





The
Notes are our unsecured senior subordinated obligations and are
subordinated in right of payment to the prior payment in full of
all of our existing and future senior indebtedness. The Notes will
also be effectively subordinated to all of our existing and future
secured indebtedness and all existing and future liabilities of our
subsidiaries, including trade payables.





DIRECTORS AND OFFICERS





Name,
Occupation and Security Holding





The
following table sets forth the name of each of our directors and
executive officers, their province or state and country of
residence, their position(s) with the Company, their principal
occupation during the preceding five years and the date they first
became a director of the Company and the number of Common
Shares held or controlled, directly or indirectly by such officer
or director as of the date of this AIF. Each director’s term
will expire immediately prior to the next annual meeting of
shareholders.





Name and Residence
Position(s) with the Company
Principal Occupation During Past Five Years
Director Since
Number of Common SharesRobert
A. Quartermain
British
Columbia,
Canada
Executive Chairman
and Director
Chairman of the
Company from October 2010 to present.

Chief
Executive Officer of the Company from October 2010 to December
2016.

President of the
Company from October 2010 to May 2015.
October 22,
2010
2,580,653
Common
Shares











75





Name and Residence
Position(s) with the Company
Principal Occupation During Past Five Years
Director Since
Number of Common Shares


Joseph
J. Ovsenek
British
Columbia,
Canada
Chief
Executive Officer, President and Director
Chief
Executive Officer of the Company from January 2017 to
present.

President of the
Company from May 2015 to present.

Executive Vice
President and Chief Development Officer of the Company from March
2014 to May 2015.

Vice
President, Chief Development Officer of the Company from January
2011 to March 2014.
December 21,
2010
125,575
Common
SharesChristopher Noel
Dunn(2)(3)
Massachusetts,
USA
Director
Managing Partner
of Ero Resource Partners LLC from February 2014 to
present.

Managing Director
of Liberty Mining & Metals, a subsidiary of Liberty Mutual
Investments from September 2011 to December 2013.
October 22,
2010
73,178
Common
SharesRoss
Mitchell(1)(3)
British
Columbia,
Canada
Director
Retired from July,
2007 to present.
October 22,
2010
143,841
Common
SharesGeorge
Paspalas(3)(4)
British
Columbia,
Canada
Lead
Director
President and
Chief Executive Officer of MAG Silver Corp. from October 2013 to
present.

President and
Chief Executive Officer of Aurizon Mines Ltd from August 2011 to
June 2013.
May
10, 2013
23,046
Common
SharesPeter
Birkey(1)(2)
Minnesota,
USA
Director
Consultant since
October 2013.

Executive Vice
President at Liberty Mutual Asset Management from June 2004 to
October 2013.
May
14, 2014
63,178
Common
Shares





76





Name and Residence
Position(s) with the Company
Principal Occupation During Past Five Years
Director Since
Number of Common Shares


Shaoyang
Shen(1)
British
Columbia,
Canada
Director
Managing Director
for Overseas Development of Zijin Mining Group from May 2014 to
present.

Chief
Operating Officer and Vice President of Silvercorp Metals Inc. from
2009 to April 2014.
January 16,
2015
32,000
Common
SharesNicole
Adshead-Bell(2)(4)
British
Columbia,
Canada
Director
President and
Director of Cupel Advisory Corp. since July 2015 and from January
2011 to January 2012.

Director of Mining
Research, Sun Valley Gold LLC, from January 2012 to June
2015.
October 1,
2015
11,192
Common
sharesKenneth
McNaughton
British
Columbia,
Canada
Vice
President, Chief Exploration Officer
Vice
President, Chief Exploration Officer of the Company from January
2011 to present.

President and Chief Executive Office of Camino Minerals Corp. from
January 2015 to present.
N/A
430,500
Common
SharesMichelle
Romero
British
Columbia,
Canada
Vice
President Corporate
Vice
President, Corporate for the Company from May 2015 to
present.

Vice
President, Corporate Relations for the Company from August 2013 to
May 2015.

Director,
Corporate Relations for the Company from February 2011 to August
2013.
N/A
47,300
Common
SharesTom
S.Q. Yip
British
Columbia,
Canada
Chief
Financial Officer
Chief
Financial Officer of the Company from January 2015 to
present.

Chief
Financial Officer of International Tower Hill Mines Ltd. from
September 2011 to December 2014.
N/A
55,000
Common
Shares


Notes:


(1)  Member
of the Audit Committee.


(2) Member of
the Corporate Governance Committee.


(3) Member of
the Compensation Committee.


(4) Member of
the Sustainability
and Technical Committee.








77





Shareholdings
of Directors and Senior Officers





As at the date of this AIF, our directors
and executive officers, as a group, beneficially own, control or
direct, directly or indirectly, 3,585,463 Common Shares representing
approximately 1.98% of the
issued and outstanding Common Shares and hold options to acquire an
additional 4,149,662 Common
Shares, representing approximately 4.13% of the Common Shares on a fully-diluted
basis.





Cease
Trade Orders, Bankruptcies, Penalties or Sanctions





None of
our directors or executive officers is, as at the date hereof, or
was within 10 years before the date hereof, a director, chief
executive officer or chief financial officer of any company
(including the Company) that (a) was subject to a cease trade
order, an order similar to a cease trade order or an order that
denied the relevant issuer access to any exemption under securities
legislation, that was in effect for a period or more than 30
consecutive days (a “Cease
Trade Order”) that was issued while the director or
executive officer was acting in the capacity as director, chief
executive officer or chief financial officer of such issuer, or (b)
was subject to a Cease Trade Order that was issued after the
director or executive officer ceased to be a director, chief
executive officer or chief financial officer and which resulted
from an event that occurred while that person was acting in the
capacity as director, chief executive officer or chief financial
officer.





None of
our directors or executive officers, nor, to our knowledge, any
shareholder holding a sufficient number of our securities to affect
materially the control of the Company (a) is, as at the date
hereof, or has been within the 10 years before the date hereof, a
director or executive officer of any company (including ours) that,
while that person was acting in that capacity, or within a year of
that person ceasing to act in that capacity, became bankrupt, made
a proposal under any legislation relating to bankruptcy or
insolvency or was subject to or instituted any proceedings,
arrangement or compromise with creditors or had a receiver,
receiver manager or trustee appointed to hold its assets, or (b)
has, within the 10 years before the date hereof, become bankrupt,
made a proposal under any legislation relating to bankruptcy or
insolvency, or become subject to or instituted any proceedings,
arrangement or compromise with creditors, or had a receiver,
receiver manager or trustee appointed to hold the assets of such
director, executive officer or shareholder.





None of
our directors or executive officers, nor, to our knowledge, any
shareholder holding a sufficient number of our securities to affect
materially the control of the Company, has been subject to (a) any
penalties or sanctions imposed by a court relatingto securities
legislation or by a securities regulatory authority or has entered
into a settlement agreement with a securities regulatory authority,
or (b) any other penalties or sanctions imposed by a court or
regulatory body that would likely be considered important to a
reasonable investor in making an investment decision.





Conflicts
of Interest





To the
best of our knowledge, there are no known existing or potential
conflicts of interest between the Company and any of our directors
or officers as a result of such individual’s outside business
interests at the date hereof. However, certain of our directors and
officers are, or may become, directors or officers of other
companies with businesses which may conflict with our business.
Accordingly, conflicts of interest may arise which could influence
these individuals in evaluating possible acquisitions or in
generally acting on behalf of the Company. Pursuant to the BCBCA,
directors are required to act honestly and in good faith with a
view to the best interests of the Company. As required under the
BCBCA and our Articles:





78





A
director or executive officer who holds any office or possesses any
property, right or interest that could result, directly or
indirectly, in the creation of a duty or interest that materially
conflicts with that individual’s duty or interest as a
director or executive officer of the Company, must promptly
disclose the nature and extent of that conflict.





A
director who holds a disclosable interest (as that term is used in
the BCBCA) in a contract or transaction into which the Company has
entered or proposes to enter may generally not vote on any
directors’ resolution to approve the contract or
transaction.





Generally,
as a matter of practice, directors or executive officers who have
disclosed a material interest in any transaction or agreement that
our Board is considering will not take part in any Board discussion
respecting that contract or transaction. If on occasion such
directors do participate in the discussions, they will abstain from
voting on any matters relating to matters in which they have
disclosed a material interest. In appropriate cases, we will
establish a special committee of independent directors to review a
matter in which directors, or management, may have a
conflict.





Audit
Committee Information





Under
National Instrument 52-110 (“NI 52-110”) companies are required
to provide disclosure with respect to their Audit Committee
including the text of the Audit Committee’s Charter, the
composition of the Audit Committee and the fees paid to our
external auditor. The text of our Audit Committee’s Charter
is attached as Appendix 1 to this AIF.





Our
current Audit Committee is comprised of Ross Mitchell (Chair),
Peter Birkey and Shaoyang Shen. All committee members are
independent and financially literate as such terms are defined in
NI 52-110.





The
education and experience of each Audit Committee member that is
relevant to the performance of his responsibilities as a member of
the Audit Committee are as follows:





Ross Mitchell is a Chartered Professional Accountant who has
over thirty years of experience holding senior finance positions in
both mining and mineral exploration companies. He was Vice
President, Finance of Westmin Resources Inc. from 1989 to 1995. In
1996, he became Vice President, Finance of Silver Standard and held
this position until his retirement in 2007. He earned a Bachelor of
Commerce degree from the University of British Columbia in 1971 and
a Chartered Accountant designation from the Institute of Chartered
Accountants of British Columbia in 1973.





79





Peter Birkey is an Investment Executive who has over twenty
years of experience investing in the financial markets and advising
both public and private companies. Mr. Birkey was an Executive Vice
President for Liberty Mutual Asset Management responsible for all
Strategy, Public Markets, Risk Management, Real Estate and Special
Situations until October 2013. Prior to this, he was a Senior Vice
President for AmerUs Capital Management (now Aviva USA) and a
Portfolio Manager for AEGON USA. Mr. Birkey earned a MBA in Finance
and Marketing with the highest honors from the University of
Chicago. He is also a Charted Financial Analyst and holds a
Bachelors degree in Economics and Business Administration from Coe
College.





Shaoyang Shen has extensive experience in managing public
companies. Mr. Shen was the Vice President and Chief Operations
Officer of Silvercorp Metals Inc. for six years prior to joining
Zijin Mining Group as their Managing Director of Overseas
Development in 2014. Mr. Shen earned a Bachelors of Economics from
Xiamen University of China, a MBA from the National University of
Singapore and a Master of Management and Professional Accounting
from the University of Toronto. Mr. Shen is a Certified Public
Accountant and a Certified Management Accountant.





Pre-approval Policy





The
Audit Committee meets with our CEO and CFO as well as our
independent auditors to review and inquire into matters affecting
financial reporting, the system of internal accounting and
financial controls and procedures and the audit procedures and
audit plans. The Audit Committee also recommends to the Board the
auditors to be appointed, subject to shareholder approval. In
addition, the Audit Committee reviews and recommends to the Board
for approval our interim and
annual financial statements and certain other documents required by
regulatory authorities.





The
chair of the Audit Committee is generally responsible for
overseeing the Audit Committee in its responsibilities as outlined
in the Audit Committee Charter. The chair’s duties and
responsibilities include presiding at each meeting of the Audit
Committee, referring specific matters to the Board in the case of a
deadlock on any matter or vote, receiving and responding to all
requests for information from the Company or the independent
auditors, leading the Audit Committee in discharging its tasks and
reporting to the Board on the activities of the Audit
Committee.





External Auditor Service Fees





The
aggregate fees billed by our external auditors in respect of the
last two financial years are as follows:





2015
2016Audit Fees(1)
$100,000
129,125Audit-Related Fees(2)
$95,600
113,250Tax Fees(3)
-
-All Other Fees
-
-


(1) Audits of
the Company’s consolidated financial statements, meetings
with the Audit Committee and management with respect to quarterly
filings, consulting and accounting standards and transactions,
issuance of consent in connection with Canadian and United States
securities filings.





80





(2) Audit-related
fees were paid for assurance and related services by the auditors
that were reasonably related to the performance of the audit or the
review of the Company’s financial statements that are not
included in Audit Fees.


(3) Tax
compliance, taxation advice and tax planning.





LEGAL
PROCEEDINGS AND REGULATORY ACTIONS





During
the last financial year, we were not subject to any penalties or
sanctions imposed by a regulatory body in respect of securities
legislation or regulatory requirements or any penalty or sanction
that would likely to be considered important to a reasonable
investor in making an investment decision. We have not entered into
any settlement agreement in respect of securities legislation or
regulatory requirements.





Class Action Lawsuits





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
price of our shares on the TSX and the NYSE had a significant drop
in value.





Canadian Class Actions





After
October 22, 2013, two proposed class actions were filed against the
Company and certain of our directors in the Ontario Superior Court
of Justice: the first on October 29, 2013 by David Wong (the
“Wong Action”) and the second on November 1, 2013 by
Roksana Tahzibi (the “Tahzibi Action”)(collectively,
the “Ontario Actions”).





The
plaintiffs in these actions allege that certain of the
Company’s disclosures contained material misrepresentations
or omissions regarding Brucejack, including statements with respect
to probable mineral reserves and future gold production at
Brucejack. The plaintiffs further allege that until October 22,
2013 the Company failed to disclose alleged reasons provided by
Strathcona Mineral Services Ltd. for its resignation as an
independent qualified person overseeing the bulk sample program.
According to the plaintiffs in the Ontario Actions, these
misrepresentations and omissions are actionable under
Ontario’s Securities Act, other provincial securities
legislation and the common law.





The
Tahzibi Action claimed $250 million in general damages. On August
25, 2016, the Tahzibi Action was discontinued.





The
Wong Action is the only remaining proposed class action against the
Company in Canada. The Wong Action claims $60 million in general
damages on behalf of a class of persons, wherever they reside, who
acquired the Company’s securities between July 23, 2013 and
October 21, 2013. Snowden Mining Industry Consultants Ltd. is no
longer a defendant in the Wong Action.





81





A
motion by the plaintiff in the Wong Action was brought seeking
leave from the Court to commence an action under the secondary
market provisions in Part XXIII.1 of the Ontario Securities Act.
The motion will be heard on May 29 and 30, 2017.





We
believe that the allegations made against the Company in the Wong
Action are meritless and will vigorously defend the matter,
although no assurance can be given with respect to the ultimate
outcome. We have not accrued any amounts for the Wong
Action.





United States of America Class Actions





Between
October 25, 2013 and November 18, 2013, five putative class action
complaints were filed in the United States against the Company and
certain of our officers and directors, alleging that we violated
the United States securities laws by misrepresenting or failing to
disclose material information concerning the Brucejack Mine. All
five actions were filed in the United States District Court for the
Southern District of New York.





In
January 2014, the Court ordered that these actions be consolidated
into a single action, styled In re Pretium Resources Inc.
Securities Litigation, Case No. 13-CV-7552. The Court has appointed
as lead plaintiffs in the consolidated action three individuals who
are suing on behalf of a putative class of shareholders who
purchased our Common Shares between June 11, 2013 and October 22,
2013.





In
March 2014, the plaintiffs filed a consolidated amended class
action complaint, which we moved to dismiss in May 2014. In July
2014, the plaintiffs filed a second consolidated amended class
action complaint (“Second Amended Complaint”). We moved
to dismiss the Second Amended Complaint on September 5, 2014. The
plaintiffs filed their Opposition to our Motion to Dismiss on
October 20, 2014 and we filed our reply brief on November 19,
2014.





As at
the date of this AIF, the Court has not yet issued a decision on
the motion.





We
believe that the allegations made against the Company and certain
of our officers and directors in this action are meritless and will
vigorously defend the matter, although no assurance can be given
with respect to the ultimate outcome of such
proceedings.





INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL
TRANSACTIONS





Other
than disclosed elsewhere in this AIF, no director, executive
officer or shareholder that beneficially owns, or controls or
directs, directly or indirectly, more than 10% of the issued Common
Shares, or any of their respective associates or affiliates of such
persons, has any material interest, direct or indirect, in any
transaction which has materially affected or is reasonably expected
to materially affect the Company within the three most recent
financial years preceding the date of this AIF.





AUDITORS, TRANSFER AGENT AND
REGISTRAR





Our
auditors are PricewaterhouseCoopers LLP and are located at Suite
1400, 250 Howe Street, Vancouver, British Columbia, Canada V6C
3S7.





82





Our
transfer agent and registrar for our Common Shares in Canada is
Computershare Investor Services Inc., at its principal offices in
Vancouver, British Columbia and Toronto, Ontario. Our transfer
agent and registrar for our Common Shares in the United States is
Computershare Trust Company, N.A, at its principal offices in
Golden, Colorado.





MATERIAL CONTRACTS





Except
for contracts entered into in the ordinary course of business, as
of date of this AIF, the only material contracts which we have
entered into are set out below.





1.
 Stream
Agreement;


2.
 Offtake Agreement;
and


3.
 Credit
Agreement.





Copies
of such agreements are available under our profile on SEDAR at
www.sedar.com
and the particulars are described in this AIF.





INTEREST OF EXPERTS





Each of the co-authors
of Brucejack Report is a “qualified person” for the
purposes of NI 43-101.  The scientific and technical
information relating to the Brucejack Project contained or
incorporated by reference in this AIF was certified
by:





Disclosure
Co-Authors
Certified by:Brucejack Report
Tetra Tech
Jianhui (John) Huang, Ph.D.,
P.Eng.Snowden Mining Industry
Consultants Inc.
Lynn Olssen,
MAusIMM(CP)AMC Mining Consultants
(Canada) Ltd.
Bert Smith,
P.Eng.ERM Rescan
Harold Rolf Schmitt, P.
Geo.BGC Engineering
Inc.
Derek Kinakin, M.Sc., P.Geo. (BC, AB), P.G.
(AK)Alpine Solutions Avalanche
Services
Brian Gould,
P.Eng.Valard
Construction
Keith Sones





The
“General Development of Our Business”, the
“Description of Our Business”, the “February 2017
Capital Cost Forecast” and the “2017 Project Economics
Update”, have been reviewed, approved and verified by Mr.
Kenneth C. McNaughton, M.A.Sc., P.Eng., our Vice President and
Chief Exploration Officer, Lyle Morgenthaler, B.A.Sc., P.Eng., our
Chief Mine Engineer,Russell Pennell, B.A.Sc., P.Eng., our Senior
Mine Planning Engineer, and Ivor W.O. Jones, M.Sc., FAusIMM, CPgeo
who is independent of the Company, each of whom is a
“qualified person” as defined in NI
43-101.





83





None of
the aforementioned companies, partnerships or persons, each of whom
are named in this AIF as having prepared reports, valuations,
statements or opinions or having been responsible for reporting
exploration results relating to our mineral properties and whose
profession or business gives authority to such reports, valuations,
statements or opinions or any director, officer, partner,
consultant or employee thereof, as applicable, received or will
receive a direct or indirect interest in any securities or other
property of ours or of any of our associates or affiliates or is
currently expected to be elected, appointed or employed as a
director, officer or employee of the Company or of any of our
associates or affiliates, other than Kenneth C. McNaughton,
M.A.Sc., P.Eng., who is our Vice President and Chief Exploration
Officer and holds 430,500 Common Shares, 598,878 options to
purchase Common Shares and 58,802 of our restricted share units;
and Lyle Morgenthaler, P.Eng., B.A.Sc., P.Eng., our Chief Mine
Engineer and holds 67,500 options to purchase Common Shares and
5,455 of our restricted share units. Russell Pennell, B.A.Sc.,
P.Eng., our Senior Mine Planning Engineer and Ivor W.O. Jones,
M.Sc., FAusIMM, CPgeo who is independent of the Company do not hold
any Common Shares, options to purchase our Common Shares or
restricted share units.





To the
best of our knowledge, as at the date hereof, such persons and the
directors, officers, partners, consultants and employees, as
applicable, of each of the aforementioned companies and partnership
beneficially own, directly or indirectly, in the aggregate, less
than one percent of our securities.





Our
auditors, PricewaterhouseCoopers LLP, report that they are
independent of the Company within the meaning of the Code of
Professional Conduct of the Chartered Professional Accountants of
British Columbia and PCAOB Rule 3520, Auditor Independence, as at
the date of their audit report.





ADDITIONAL INFORMATION





Additional
information relating to the Company is available on SEDAR at
www.sedar.com.





Additional
information with respect to directors’ and officers’
remuneration and indebtedness, principal holders of our securities
and securities authorized for issuance under equity compensation
plans is contained in the management information circular for our
most recent meeting of shareholders. Additional financial
information is provided in our audited financial statements and
MD&A for the year ended December 31, 2016, also filed on
SEDAR.





Copies
of these documents may be obtained by contacting us at Suite 2300,
1055 Dunsmuir Street, PO Box 49334, Vancouver, British Columbia V7X
1L4, telephone: (604) 558-1784, fax: (604) 558-4784.





















































84








APPENDIX 1





PRETIUM
RESOURCES INC.





Audit Committee
Charter





As
Adopted by the Board of Directors on March 10, 2016





I.  Purpose
of Audit Committee of Pretivm Resources Inc. (the
“Company”)





The
purpose of the Audit Committee (the “Committee”) is
to:





1.
 Assist the Board of
Directors of the Company (the “Board”) in fulfilling
its oversight responsibilities relating to:





(a)
 the quality and
integrity of the Company’s financial statements, financial
reporting process and systems of internal controls and disclosure
controls regarding risk management, finance, accounting, and legal
and regulatory compliance;





(b)
 the independence
and qualifications of the Company’s independent accountants
and review of the audit efforts of the Company’s independent
accountants; and





(c)
 the development and
implementation of policies and processes regarding financial
corporate governance matters.





2.
 Provide an open
avenue of communication between the independent accountants, the
Company’s financial and senior management and the
Board.





3.
 Prepare any reports
required to be prepared by the Committee pursuant to the rules of
any stock exchange on which the Company’s shares are listed
and pursuant to the rules of any securities commission or other
regulatory authority having jurisdiction, whether for inclusion in
the Company’s annual proxy statement or
otherwise.





The
Committee will primarily fulfill these responsibilities by carrying
out the activities enumerated in Section VII below of this
Charter.





While
the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct
audits, or to determine that the Company’s financial
statements are complete and accurate or are in accordance with
generally accepted accounting principles, accounting standards, or
applicable laws and regulations. This is the responsibility of
management of the Company and the Company’s independent
accountants, as well as any advisors employed by the Committee.
Because the primary function of the Committee is oversight, the
Committee shall be entitled to rely on the expertise, skills and
knowledge of management and the Company’s independent
accountants and the integrity and accuracy of information provided
to the Committee by such persons in carrying out its oversight
responsibilities. Nothing in this Charter is intended to change the
responsibilities of management and the independent
accountants.





II.  Composition





The
Committee shall be composed of at least three directors, each of
whom the Board has determined has no material relationship with the
Company which could, in the view of the Board, be reasonably
expected to interfere with the exercise of such director’s
independent judgement, and who otherwise satisfies the definition
of “independent” as set forth by National Instrument
52-110 – Audit Committees (“NI 52-110”) and any
other applicable securities laws, rules or requirements of any
stock exchange upon which the Company’s securities are listed
as in effect from time to time.





- A1
-





All
members of the Committee must be financially literate, meaning that
he or she has the ability to read and understand a set of financial
statements that present a breadth and level of complexity of
accounting issues that are generally comparable to the breadth and
complexity of the issues that can reasonably be expected to be
raised by the Company’s financial statements or must become.
A director who is not financially literate may be appointed to the
committee provided that such director becomes financially literate
within a reasonable period of time following such
appointment.





If any
member of the Committee ceases to be “independent”, as
defined by the applicable securities laws and exchange
requirements, including NI 52-110, for reasons outside that
member’s reasonable control, that person may remain an audit
committee member until the earlier of the next annual meeting of
the shareholders or the date that is six months from the occurrence
of the event that caused the member to no longer be
independent.





III.  Authority





The
Committee shall have the authority to (i) retain (at the
Company’s expense) its own legal counsel, accountants and
other advisors that the Committee believes, in its sole discretion,
are needed to carry out its duties and responsibilities; (ii)
conduct investigations that it believes, in its sole discretion,
are necessary to carry out its responsibilities; and (iii) take
whatever actions that it deems appropriate to foster an internal
culture that is committed to maintaining quality financial
reporting, sound business risk practices and ethical behaviour
within the Company. In addition, the Committee shall have the
authority to request any officer, director, employee or consultant
of the Company, the Company’s outside legal counsel and the
independent accountants to meet with the Committee and any of its
advisors and to respond to their inquiries. The Committee shall
have full access to the books, records and facilities of the
Company in carrying out its responsibilities. Finally, the Board
shall adopt resolutions which provide for appropriate funding, as
determined by the Committee, for (i) services provided by the
independent accountants in rendering or issuing an audit report,
(ii) services provided by any adviser employed by the Committee
which it believes, in its sole discretion, are needed to carry out
its duties and responsibilities, or (iii) ordinary administrative
expenses of the Committee that are necessary or appropriate in
carrying out its duties and responsibilities.





The
Committee shall be responsible for establishing procedures for (i)
the receipt, retention and treatment of complaints received by the
Company regarding accounting, internal accounting controls, or
auditing matters and (ii) the confidential, anonymous submissions
by employees of the Company regarding questionable accounting or
auditing matters.





The
Committee shall review the reports of the Chief Executive Officer
and Chief Financial Officer (in connection with their required
certifications for the Company’s filings with the Securities
and Exchange Commission) regarding any significant deficiencies or
material weaknesses in the design of operation of internal controls
and any fraud that involves management or other employees of the
Company who have a significant role in managing or implementing the
Company’s internal controls. During this review, the
Committee should evaluate whether the internal control structure,
as created and as implemented, provides reasonable assurances that
transactions are recorded as necessary to permit the
Company’s external auditors to reconcile the Company’s
financial statements in accordance with applicable securities
laws.





- A2
-





The
Committee, in its capacity as a committee of the Board, is directly
responsible for the appointment, compensation, retention and
oversight of the work of the independent accountants engaged
(including resolution of disagreements between the Company’s
management and the independent accountants regarding financial
reporting) for the purpose of preparing and issuing an audit report
or performing other audit, review or attest services for the
Company.





The
independent accountants shall submit to the Audit Committee
annually a formal written statement delineating all relationships
between the independent accountants and the Company and its
subsidiaries, addressing the non-audit services provided to the
Company or its subsidiaries and the matters set forth in or
required by the rules and regulations of all relevant regulatory
authorities.





The
independent accountants shall submit to the Audit Committee
annually a formal written statement of the fees billed for each of
the following categories of services rendered by the independent
accountants: (i) the audit of the Company’s annual financial
statements for the most recent fiscal year and any reviews of the
financial statements; (ii) information technology consulting
services for the most recent fiscal year, in the aggregate and by
each service (and separately identifying fees for such services
relating to financial information systems design and
implementation); and (iii) all other services rendered by the
independent accountants for the most recent fiscal years, in the
aggregate and by each service.





IV.  Appointing
Members





The
members of the Committee shall be appointed or re-appointed by the
Board on an annual basis. Each member of the Committee shall
continue to be a member thereof until such member’s successor
is appointed, unless such member shall resign or be removed by the
Board or such member shall cease to be a director of the Company.
Where a vacancy occurs at any time in the membership of the
Committee, it may be filled by the Board and shall be filled by the
Board if the membership of the Committee is less than three
directors as a result of the vacancy or the Committee no longer has
a member who is an “audit committee financial expert”
as a result of the vacancy.





V.  Chairperson





The
Board, or in the event of its failure to do so, the members of the
Committee, must appoint a Chairperson from the members of the
Committee. If the Chairperson of the Committee is not present at
any meeting of the Committee, an acting Chairperson for the meeting
shall be chosen by majority vote of the Committee from among the
members present. In the case of a deadlock on any matter or vote,
the Chairperson shall refer the matter to the Board. All requests
for information from the Company or the independent accountants
shall be made through the Chairperson.





VI.  Meetings





The
time and place of meetings of the Committee and the procedure at
such meetings shall be determined from time to time by the members
thereof provided that:





1.
 A quorum for
meetings shall be two members, present in person or by telephone or
other telecommunication device that permit all persons
participating in the meeting to speak and hear each
other;





2.
 The Committee shall
meet at least quarterly (or more frequently as circumstances
dictate); and





- A3 -





3.
 Notice of the time
and place of every meeting shall be given in writing or facsimile
communication to each member of the Committee and the external
auditors of the Company at least 48 hours prior to the time of such
meeting.





While
the Committee is expected to communicate regularly with management,
the Committee shall exercise a high degree of independence in
establishing its meeting agenda and in carrying out its
responsibilities. The Committee shall submit the minutes of all
meetings of the Committee to, or discuss the matters discussed at
each Committee meeting with, the Board.





VII.  Specific
Duties





In
meeting its responsibilities, the Committee is expected
to:





1.
 Select and
recommend to the Board the independent accountants for the Company,
considering independence and effectiveness, approve all audit and
non-audit services in advance of the provision of such services and
the fees and other compensation to be paid to the independent
accountants, and oversee the services rendered by the independent
accountants (including the resolution of disagreements between
management and the independent accountants regarding preparation of
financial statements) for the purpose of preparing or issuing an
audit report or related work, and the independent accountants shall
report directly to the Committee;





2.
 To pre-approve any
non-audit services to be provided to the Company by the external
auditor and the fees for those services;





3.
 Review the
performance of the independent accountants, including the lead
partner of the independent accountants, and, in its sole
discretion, approve any proposed discharge of the independent
accountants when circumstances warrant, and appoint any new
independent accountants;





4.
 Periodically review
and discuss with the independent accountants all significant
relationships the independent accountants have with the Company to
determine the independence of the independent accountants,
including a review of service fees for audit and non-audit
services;





5.
 Review and approve
the issuer’s hiring policies from time to time regarding
partners, employees and former partners and employees of the
present and former external auditor of the issuer;





6.
 Inquire of
management and the independent accountants and evaluate the
effectiveness of the Company’s process for assessing
significant risks or exposures and the steps management has taken
to monitor, control and minimize such risks to the Company. Obtain
annually, in writing, the letters of the independent accountants as
to the adequacy of such controls;





7.
 Consider, in
consultation with the independent accountants, the audit scope and
plan of the independent accountants;





8.
 Review with the
independent accountants the coordination of audit effort to assure
completeness of coverage, and the effective use of audit
resources;





- A4
-





9.
 Consider and review
with the independent accountants, out of the presence of
management:





(a)
 the adequacy of the
Company’s internal controls and disclosure controls including
the adequacy of computerized information systems and
security;





(b)
 the truthfulness
and accuracy of the Company’s financial statements;
and





(c)
 any related
significant findings and recommendations of the independent
accountants together with management’s responses
thereto;





10.
 Following
completion of the annual audit, review with management and the
independent accountants:





(a)
 the Company’s
annual financial statements and related footnotes;





(b)
 the independent
accountants’ audit of the financial statements and the report
thereon;





(c)
 any significant
changes required in the independent accountants’ audit plan;
and





(d)
 other matters
related to the conduct of the audit which are to be communicated to
the committee under generally accepted auditing
standards;





11.
 Following
completion of the annual audit, review separately with each of
management and the independent accountants any significant
difficulties encountered during the course of the audit, including
any restrictions on the scope of work or access to required
information;





12.
 Establish regular
and separate systems of reporting to the Committee by each of
management and the independent accountants regarding any
significant judgments made in management’s preparation of the
financial statements and the view of each as to appropriateness of
such judgments;





13.
 In consultation
with the independent accountants, review any significant
disagreement among management and the independent accountants in
connection with the preparation of the financial statements,
including management’s responses;





14.
 Consider and review
with management:





(a)
 significant
findings during the year and management’s responses thereto;
and





(b)
 any changes
required in the planned scope of their audit plan;





15.
 Review, prior to
publication, all filings with regulatory authorities and any other
publicly disclosed information containing the Company’s
financial statements, including Management’s Discussion &
Analysis, any certification, report, opinion or review rendered by
the independent accountants, any press releases announcing earnings
(especially the use of “pro forma” or
“adjusted” information not prepared in compliance with
generally accepted accounting principles) and all financial
information and earnings guidance intended to be provided to
analysts and the public or to rating agencies, and consider whether
the information contained in these documents is consistent with the
information contained in the financial statements;





- A5
-





16.
 Facilitate the
preparation and inclusion of any report from the Committee or other
disclosures as required by applicable laws and regulations in the
Company’s annual proxy statement or other filings of all
regulatory authorities having jurisdiction;





17.
 Review with
management the adequacy of the insurance and fidelity bond
coverages, reported contingent liabilities, and management’s
assessment of contingency planning. Review management’s plans
regarding any changes in accounting practices or policies and the
financial impact of such changes, any major areas in
management’s judgment that have a significant effect upon the
financial statements of the Company, and any litigation or claim,
including tax assessments, that could have a material effect upon
the financial position or operating results of the
Company;





18.
 Review with
management and the independent accountants each annual, quarterly
and other periodic report prior to its filing with the relevant
regulators or prior to the release of earnings;





19.
 Review policies and
procedures with respect to officers’ expense accounts and
perquisites, including their use of corporate assets, and consider
the results of any review of these areas by the independent
accountants;





20.
 Review, with the
Company’s counsel, any legal, tax or regulatory matter that
may have a material impact on the Company’s financial
statements, operations, related Company compliance policies, and
programs and reports received from regulators;





21.
 Evaluate and review
with management the Company’s guidelines and policies
governing the process of risk assessment and risk
management;





22.
 Meet with the
independent accountants and management in separate executive
sessions to discuss any matters that the Committee or these groups
believe should be discussed privately with the
Committee;





23.
 Report Committee
actions to the Board with such recommendations as the Committee may
deem appropriate;





24.
 Maintain, review
and update the procedures for (i) the receipt, retention and
treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters and
(ii) the confidential, anonymous submission by employees of the
Company of concerns regarding questionable accounting or auditing
matters, as set forth in Annex A attached to this
Charter;





25.
 Review, assess and
update this Charter on an annual basis and recommend any proposed
changes to the Board for approval, in accordance with the
requirements of the all applicable laws; and





26.
 Perform such other
functions consistent with this Charter, the Company’s
Articles and governing law, as the Committee deems necessary or
appropriate.











- A6
-





Annex
A





PROCEDURES FOR THE SUBMISSION OF


COMPLAINTS AND CONCERNS REGARDING


ACCOUNTING, INTERNAL ACCOUNTING CONTROLS OR


AUDITING MATTERS





1.
 Pretivm Resources
Inc. (the “Company”) has designated its Audit Committee
of its Board of Directors (the “Committee”) to be
responsible for administering these procedures for the receipt,
retention, and treatment of complaints received by the Company or
the Committee directly regarding accounting, internal accounting
controls, or auditing matters.





2.
 Any employee or
consultant of the Company may on a confidential and anonymous basis
submit concerns regarding questionable accounting controls or
auditing matters to the Committee by setting forth such concerns in
a letter addressed directly to the Committee with a legend on the
envelope such as “Confidential” or “To be opened
by Committee only”. If an employee or consultant would like
to discuss the matter directly with a member of the Committee, the
employee or consultant should include a return telephone number in
his or her submission to the Committee at which he or she can be
contacted. All submissions by letter to the Committee can be sent
to:





Pretivm
Resources Inc.


c/o
Audit Committee


Attn:
Chair





3.
 Any complaints
received by the Company that are submitted as set forth herein will
be forwarded directly to the Committee and will be treated as
confidential if so indicated.





4.
 At each meeting of
the Committee, or any special meetings called by the Chairperson of
the Committee, the members of the Committee will review and
consider any complaints or concerns submitted by employees as set
forth herein and take any action it deems necessary in order to
respond thereto.





5.
 All complaints and
concerns submitted as set forth herein will be retained by the
Committee for a period of seven (7) years.









































- A7
-
































APPENDIX B
 
 
 FINANCIAL STATEMENTS
OF
PRETIUM RESOURCES INC.,
INCLUDING MANAGEMENT’S REPORT TO SHAREHOLDERS AND THE
AUDITORS’ REPORTS







































































PRETIUM RESOURCES INC.




















CONSOLIDATED FINANCIAL STATEMENTS


YEAR ENDED DECEMBER 31, 2016


(Expressed in Canadian Dollars)























Suite
2300, Four Bentall Centre


1055
Dunsmuir Street, PO Box 49334


Vancouver,
BC V7X 1L4





Phone:
604-558-1784


Email: invest@pretivm.com








1





Management’s Responsibility for Financial
Reporting





The
accompanying consolidated financial statements of the Company have
been prepared by management in accordance with International
Financial Reporting Standards, and within the framework of the
summary of significant accounting policies in these consolidated
financial statements.





A
system of internal accounting control is maintained in order to
provide reasonable assurance that assets are safeguarded and that
transactions are properly recorded and executed in accordance with
management’s authorization. This system includes established
policies and procedures, the selection and training of qualified
personnel and an organization providing for appropriate delegation
of authority and segregation of responsibilities.





The
Audit Committee of the Board of Directors meets periodically with
management and the Company’s independent auditors to review
the scope and results of their annual audit and to review the
consolidated financial statements and related financial reporting
matters prior to submitting the consolidated financial statements
to the Board of Directors for approval.





The
consolidated financial statements have been audited by
PricewaterhouseCoopers LLP on behalf of the shareholders and their
report follows.





“Joseph J. Ovsenek”
“Tom S. Q. Yip”Joseph J. Ovsenek
Tom S. Q. YipChief
Executive Officer
Chief
Financial Officer





March
9, 2017















































2








Management’s Report on Internal Control over Financial
Reporting





Management
of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting under Rule
13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934. The
Securities Exchange Act of 1934 defines this as a process designed
by, or under the supervision of, the Company’s principal
executive and principal financial officers and effected by the
Company’s Board of Directors, management and other personnel,
to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles, and includes those policies and procedures
that:





●
 Pertain
to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of
the assets of the Company;





●
 Provide
reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and
expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company;
and





●
 Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company’s
assets that may have a material effect on the consolidated
financial statements.





Because
of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Projections of
any evaluation of effectiveness to future periods are subject to
risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or
procedures may deteriorate.





Management
assessed the effectiveness of the Company’s internal control
over financial reporting as of December 31, 2016. In making this
assessment, the Company’s management used the criteria set
forth by the Committee of Sponsoring Organizations of the Treadway
Commission in Internal Control – Integrated Framework
(2013).





Based
upon our assessment and those criteria, management concluded that
the Company’s internal control over financial reporting was
effective as of December 31, 2016.





PricewaterhouseCoopers
LLP, our independent auditors, has issued an audit report on
internal control over financial reporting for the Company as of
December 31, 2016, which is included herein.





“Joseph J. Ovsenek”
“Tom S. Q. Yip”Joseph J. Ovsenek
Tom S. Q. YipChief
Executive Officer
Chief
Financial Officer





March
9, 2017





























3














March
9, 2017





Independent Auditor’s Report





To the Shareholders of Pretium Resources Inc.





We
have completed integrated audits of Pretium Resources Inc.’s
(the “Company”) December 31, 2016 and December 31, 2015
consolidated financial statements and its internal control over
financial reporting as at December 31, 2016. Our opinions, based on
our audits are presented below.





Report on the consolidated financial statements


We
have audited the accompanying consolidated financial statements of
Company, which comprise the consolidated statements of financial
position as at December 31, 2016 and December 31, 2015 and the
consolidated statements of loss and comprehensive loss, cash flows
and changes in equity for the years then ended, and the related
notes, which comprise a summary of significant accounting policies
and other explanatory information.





Management’s responsibility for the consolidated financial
statements


Management
is responsible for the preparation and fair presentation of these
consolidated financial statements in accordance with International
Financial Reporting Standards as issued by the International
Accounting Standards Board and for such internal control as
management determines is necessary to enable the preparation of
consolidated financial statements that are free from material
misstatement, whether due to fraud or error.





Auditor’s responsibility


Our
responsibility is to express an opinion on these consolidated
financial statements based on our audits. We conducted our audits
in accordance with Canadian generally accepted auditing standards
and the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the
consolidated financial statements are free from material
misstatement. Canadian generally accepted auditing standards also
require that we comply with ethical requirements.





An
audit involves performing procedures to obtain audit evidence, on a
test basis, about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the
auditor’s judgment, including the assessment of the risks of
material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the
Company’s preparation and fair presentation of the
consolidated financial statements in order to design audit
procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting principles
and policies used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation
of the consolidated financial statements.

















4














We
believe that the audit evidence we have obtained in our audits is
sufficient and appropriate to provide a basis for our audit opinion
on the consolidated financial statements.





Opinion


In
our opinion, the consolidated financial statements present fairly,
in all material respects, the financial position of Pretium
Resources Inc. as at December 31, 2016 and December 31, 2015 and
its financial performance and its cash flows for the years then
ended in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards
Board.





Report on internal control over financial reporting


We
have also audited Pretium Resources Inc.’s internal control
over financial reporting as at December 31, 2016, based on criteria
established in Internal Control - Integrated Framework (2013),
issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO).





Management’s responsibility for internal control over
financial reporting


Management
is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of
internal control over financial reporting included in the
accompanying Management’s Report on Internal Controls over
Financial Reporting.





Auditor’s responsibility


Our
responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. We
conducted our audit of internal control over financial reporting in
accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was
maintained in all material respects.





An
audit of internal control over financial reporting includes
obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists,
testing and evaluating the design and operating effectiveness of
internal control, based on the assessed risk, and performing such
other procedures as we consider necessary in the
circumstances.





We
believe that our audit provides a reasonable basis for our audit
opinion on the Company’s internal control over financial
reporting.





Definition of internal control over financial
reporting


A
company’s 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 generally
accepted accounting principles. A company’s internal control
over financial reporting includes those policies and procedures
that: (i) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures
of the Company are being made only in accordance with
authorizations of management and directors of the Company; and
(iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the
Company’s assets that could have a material effect on the
financial statements.





5











Inherent limitations


Because
of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because
of changes in conditions or that the degree of compliance with the
policies or procedures may deteriorate.





Opinion


In
our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting
as at December 31, 2016, based on criteria established in Internal
Control - Integrated Framework (2013) issued by COSO.








signed
“PricewaterhouseCoopers LLP”


Chartered Professional
Accountants

































































6





PRETIUM RESOURCES INC.


CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION


(Expressed
in thousands of Canadian dollars)





December
31,
December
31,Note
2016
2015ASSETSCurrent assetsCash
and cash equivalents

$190,383
$387,925Receivables
and other
6
20,489
20,406210,872
408,331Non-current assetsMineral
properties, plant and equipment
7
1,705,843
1,021,415Other
assets
9
18,123
41,504Restricted
cash
10
12,590
8,495Total assets

$1,947,428
$1,479,745LIABILITIESCurrent liabilitiesAccounts
payable and accrued liabilities
8
$149,126
$48,004149,126
48,004Non-current liabilitiesLong-term
debt
9
672,908
428,829Decommissioning
and restoration provision
10
18,361
7,253Deferred
income tax
15
-
28,018840,395
512,104EQUITYShare
capital
11
1,212,260
986,579Contributed
surplus
11
51,491
57,369Deficit

(156,718)
(76,307)1,107,033
967,641Total liabilities and equity

$1,947,428
$1,479,745Commitments
16Contingencies
17Subsequent
events
18








On behalf of the
Board:





“Ross A. Mitchell”

“George N.
Paspalas”Ross
A. Mitchell

George
N. Paspalas(Chairman
of Audit Committee)

(Director)











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


7





PRETIUM RESOURCES INC.


CONSOLIDATED
STATEMENTS OF LOSS AND COMPREHENSIVE LOSS


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





For the
year endedDecember
31,
December
31,Note
2016
2015EXPENSESShare-based
compensation
11
$6,660
$6,181Salaries

5,520
4,599Investor
relations

2,038
1,430Office

1,407
1,625Professional
fees

1,065
666Listing
and filing fees

608
343Insurance

533
533Travel
and accommodation

480
404Amortization
7
138
88Gain
on sale of equipment

-
(47)Operating loss

(18,449)
(15,822)Foreign
exchange gain (loss)

2,482
(3,082)Interest
income

1,577
714Financing
and interest costs

(110)
(378)Accretion
of decommissioning and restoration provision
10
(268)
(85)(Loss)
gain on financial instruments at fair value
9
(91,633)
24,110(Loss) income before taxes

(106,401)
5,457Deferred
income tax recovery (expense)
15
25,990
(5,991)Net loss and comprehensive loss for the year

$(80,411)
$(534)Basic and diluted loss per common share

$(0.47)
$(0.00)Weighted average number of common shares outstanding

172,805,201
135,203,897


























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


8





PRETIUM RESOURCES INC.


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(Expressed
in thousands of Canadian dollars)





For the
year endedDecember
31,
December
31,Note
2016
2015CASH FLOWS FROM OPERATING ACTIVITIESNet
loss for the year

$(80,411)
$(534)Items
not affecting cash:Accretion
of decommissioning and restoration provision

268
85Amortization

138
88Deferred
income tax (recovery) expense
15
(25,990)
5,991Gain
on sale of equipment

-
(47)Loss
(gain) on financial instruments at fair value
9
91,633
(24,110)Share-based
compensation
11
6,660
6,181Unrealized
foreign exchange (gain) loss

(2,887)
3,119Changes
in non-cash working capital items:Receivables
and other

(73)
(1,816)Accounts
payable and accrued liabilities

(3,995)
115Net
cash used in operating activities

(14,657)
(10,928)CASH FLOWS FROM FINANCING ACTIVITIESCommon
shares issued
11
200,451
159,126Proceeds
from credit facility, net

129,951
192,291Proceeds
from exercise of stock options

21,902
24,171Proceeds
from stream financing

-
198,750Share
issue costs

(11,211)
(4,681)Net
cash generated by financing activities

341,093
569,657CASH FLOWS FROM INVESTING ACTIVITIESExpenditures
on mineral properties, plant and equipment
7
(518,032)
(203,224)Mineral
recoveries
7
-
210Proceeds
from sale of equipment

-
121Restricted
cash
10
(4,095)
(6,798)Net
cash used in investing activities

(522,127)
(209,691)Change in cash and cash equivalents for the year

(195,691)
349,038Cash and cash equivalents, beginning of the year

387,925
34,495Effect
of foreign exchange rate changes on cash and cash
equivalents

(1,851)
4,392Cash and cash equivalents, end of the year

$190,383
$387,925Supplemental
cash flow information
13








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


9





PRETIUM RESOURCES INC.


CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY


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





Note
Number
of common shares
Share
capital
Contributed
surplus
Deficit
TotalBalance
- December 31, 2014

116,828,081
$795,034
$59,970
$(75,773)
$779,231Shares
issued under private placement
11
23,430,324
152,126
-
-
152,126Shares
issued under flow-through agreement
11
800,000
5,968
-
-
5,968Share
issue costs
11
-
(4,681)
-
-
(4,681)Deferred
income tax on share issue costs

-
1,218
-
-
1,218Shares
issued upon exercise of options
11
4,010,000
36,914
(12,743)
-
24,171Value
assigned to options vested
11
-
-
10,142
-
10,142Loss
for the year

-
-
-
(534)
(534)Balance
- December 31, 2015

145,068,405
$986,579
$57,369
$(76,307)
$967,641Shares
issued under marketed offering
11
31,935,065
195,447
-
-
195,447Shares
issued under flow-through agreement
11
437,000
4,117
-
-
4,117Share
issue costs
11
-
(11,211)
-
-
(11,211)Deferred
income tax on share issue costs

-
2,915
-
-
2,915Shares
issued upon exercise of options
11
2,531,725
33,348
(11,446)
-
21,902Value
assigned to options vested
11
-
-
11,913
-
11,913Shares
issued upon settlement of restricted share units
11
141,057
1,065
(1,065)
-
-Settlement
and modification of restricted share units in cash
11
-
-
(5,280)
-
(5,280)Loss
for the year

-
-
-
(80,411)
(80,411)Balance
- December 31, 2016

180,113,252
$1,212,260
$51,491
$(156,718)
$1,107,033














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


10





PRETIUM RESOURCES
INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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








1.
 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 is in the business of acquiring, owning, evaluating and
developing gold/silver/copper mineral interests and owns the
Brucejack Mine and Snowfield Project located in Northwest British
Columbia, Canada. The Company is in the process of developing the
Brucejack Mine and exploring the Snowfield Project.





The
Company’s continuing operations and the underlying value and
recoverability of the amount shown for mineral properties, plant
and equipment is entirely dependent upon the existence of
economically recoverable mineral reserves and resources, the
ability of the Company to obtain the necessary financing to
complete exploration and development, the ability to obtain the
necessary permits to mine for exploration and evaluation assets,
and future profitable production or proceeds from the disposition
of the projects.





2.
 BASIS OF PREPARATION





These
consolidated financial statements have been prepared in accordance
with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting
Standards Board (“IASB”).





These
consolidated financial statements have been prepared on a
historical cost basis except for financial instruments classified
as fair value through profit or loss (“FVTPL”) which
are stated at their fair value.





These
consolidated financial statements were authorized for issue by the
Board of Directors on March 9, 2017.





3.
 SIGNIFICANT ACCOUNTING POLICIES





Basis of consolidation





These
consolidated financial statements include the financial statements
of the Company and the entities controlled by the Company, its
subsidiaries, listed in the following table:





Name of subsidiary
Place of incorporation
Proportion of ownership interest
Principal activityPretium
Exploration Inc.
British
Columbia, Canada
100%
Holds
interest in the Brucejack Mine and Snowfield Project0890696
BC Ltd.
British
Columbia, Canada
100%
Holds
real estate in Stewart, British Columbia





Control
is defined as the exposure, or rights, to variable returns from
involvement with an investee and the ability to affect those
returns through power over the investee. Power over an investee
exists when the Company has existing rights that give the Company
the ability to direct the activities that significantly affect the
investee’s returns. This control is generally evidenced
through owning more than 50% of the voting rights or currently
exercisable potential voting rights of a subsidiary’s share
capital. The financial statements of subsidiaries are included in
the consolidated financial statements from the date that control
commences until the date that control ceases.





11





PRETIUM RESOURCES
INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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








3.
 SIGNIFICANT ACCOUNTING
POLICIES (Cont’d)





Intercompany
balances and transactions, including any unrealized income and
expenses arising from intercompany transactions, are eliminated in
preparing the consolidated financial statements.





Foreign currency translation





Functional and presentation currency





Items
included in the financial statements of each consolidated entity
are measured using the currency of the primary economic environment
in which the entity operates (the “functional
currency”). The functional currency of the Company and its
subsidiaries is the Canadian dollar. These consolidated financial
statements are presented in Canadian dollars, which is the
Company’s presentation currency.





Transactions and balances





Foreign
currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the
transactions or valuations where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at period end exchange rates
of monetary assets and liabilities denominated in foreign
currencies are recognized in profit or loss for the
year.





Financial
instruments





Cash and cash
equivalents





Cash
and cash equivalents comprise cash holdings in business and savings
accounts held at major financial institutions with an original
maturity date of three months or less.





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





Receivables





Receivables
are classified as loans and receivables and accordingly are
recorded initially at fair value and subsequently measured at
amortized cost using the effective interest rate method, less any
impairment losses.





Derivatives





Derivative
instruments, including embedded derivatives, are recorded at fair
value through profit or loss and, accordingly, are recorded on the
statement of financial position at fair value. Unrealized gains and
losses on derivatives held for trading are recorded in profit or
loss for the year. 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.





Accounts payable and accrued liabilities and debt





Accounts
payable, accrued liabilities and debt are classified as other
financial liabilities 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.





12





PRETIUM RESOURCES
INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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








3.
 SIGNIFICANT ACCOUNTING
POLICIES (Cont’d)





Impairment of financial assets





Financial
assets are assessed for indicators of impairment at the end of each
reporting year. Financial assets are considered to be impaired when
there is objective evidence that, as a result of one or more events
that occurred after the initial recognition of the financial asset,
the estimated future cash flows of the investment have been
adversely impacted.





Plant and equipment





Plant
and equipment are carried at cost, less accumulated depreciation
and accumulated impairment losses. Cost comprises the fair value of
consideration given to acquire an asset and includes the direct
charges associated with bringing the asset to the location and
condition necessary for putting it into use along with the future
cost of dismantling and removing the asset. When parts of an item
of plant and equipment have different useful lives, they are
accounted for as separate items (major components) of plant and
equipment.





Plant
and equipment are amortized over the estimated useful life of the
assets using the straight line method to allocate their cost to
their residual values over their estimated lives, as
follows:





Camp
infrastructure and buildings
10
– 25 yearsMine
and exploration equipment
5
yearsOffice
equipment, computer hardware and software
3
– 5 years





Depreciation
of plant and equipment commences when the asset is substantially
complete and available for its intended use. The Company reviews
residual values, depreciation methods and useful lives annually.
Any changes in estimates that arise from the review are accounted
for prospectively.





Mineral property development costs





Mineral
properties consists of the Brucejack Mine carried at cost, less
accumulated depletion. Costs of project development including
gaining access to underground resources are capitalized to mineral
properties. Once the mineral property is in production, it will be
depleted using the units-of-production method. Depletion is
determined each period using gold equivalent ounces mined over the
asset’s estimated proven and probable reserves.





Construction in progress





Costs
recorded for assets under construction are capitalized as
construction in progress. On completion, the cost of construction
is transferred to the appropriate category of plant and equipment.
No depreciation is recorded until the assets are substantially
complete and available for their intended use.





Borrowing costs





Borrowing
costs that are directly attributable to the acquisition,
construction or production of an asset that takes a substantial
period of time to prepare for its intended use are capitalized as
part of the cost of the asset. Capitalization of borrowing costs
begin when there are borrowings and activities commence to prepare
an asset for its intended use. Capitalization of borrowing costs
ends when substantially all activity necessary to prepare a
qualifying asset for its intended use are complete. When proceeds
of project specific borrowings are invested on a temporary basis,
borrowing costs are capitalized net of any investment
income.





13





PRETIUM RESOURCES
INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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








3.
 SIGNIFICANT ACCOUNTING
POLICIES (Cont’d)





Exploration and evaluation expenditures





Exploration
and evaluation expenditures include the costs of acquiring licenses
and costs associated with exploration and evaluation activity.
Exploration and evaluation expenditures are capitalized. Mineral
property acquisition costs are capitalized. Exploration and
evaluation costs incurred before the Company has obtained the legal
rights to explore an area are expensed.





Once
the technical feasibility and commercial viability of the
extraction of mineral reserves or resources from a particular
mineral property has been determined, expenditures are reclassified
to mineral property development costs within mineral properties,
plant and equipment and are carried at cost until the properties to
which the expenditures relate are sold, abandoned or determined by
management to be impaired in value.





The
establishment of technical feasibility and commercial viability of
a mineral property is assessed based on a combination of factors,
including:





●
 The
extent to which mineral reserves or mineral resources as defined in
National Instrument 43101 (“NI 43-101”) have been
identified through a feasibility study or similar
document;





●
 The
results of optimization studies and further technical evaluation
carried out to mitigate project risks identified in the feasibility
study;





●
 The
status of environmental permits; and





●
 The
status of mining leases or permits.





Exploration
and evaluation assets are tested for impairment immediately prior
to reclassification to mineral property development
costs.





Mineral exploration tax credits





Mineral
exploration tax credits on eligible mineral exploration
expenditures incurred are treated as a reduction of capitalized
mineral properties. The credits are recorded when the amount is
reliably measurable and it is considered probable that the tax
credit will be recovered.





Mineral recoveries





The
incidental proceeds from the sale of gold recovered from activities
conducted during the exploration and evaluation stage are offset
against the carrying value of the associated mineral properties,
plant and equipment.





Impairment of non-financial assets





The
carrying amounts of assets included in mineral properties, plant
and equipment are reviewed for impairment whenever facts and
circumstances suggest that the carrying amounts may not be
recoverable. If there are indicators of impairment, the recoverable
amount of the asset is estimated in order to determine the extent
of any impairment. Where the asset does not generate cash flows
that are independent from other assets, the recoverable amount of
the cash generating unit to which the asset belongs is determined.
The recoverable amount of an asset or cash generating unit is
determined as the higher of its fair value less costs of disposal
and its value in use. An impairment loss exists if the
asset’s carrying amount exceeds the recoverable amount, and
is recorded as an expense immediately.





14





PRETIUM RESOURCES
INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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








3.
 SIGNIFICANT ACCOUNTING
POLICIES (Cont’d)





Value
in use is determined as the present value of the future cash flows
expected to be derived from continuing use of an asset or cash
generating unit in its present form. These estimated future cash
flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset or cash
generating unit for which estimates of future cash flows have not
been adjusted.





Fair
value is the price that would be received from selling an asset in
an orderly transaction between market participants at the
measurement date. Costs of disposal are incremental costs directly
attributable to the disposal of an asset. Estimated future cash
flows are calculated using estimated future prices, mineral
reserves and resources and operating and capital costs. All inputs
used are those that an independent market participant would
consider appropriate.





Tangible
assets that have been impaired in prior periods are tested for
possible reversal of impairment whenever events or changes in
circumstances indicate that the impairment has reversed. If the
impairment has reversed, the carrying amount of the asset is
increased to its recoverable amount, but not beyond the carrying
amount that would have been determined had no impairment loss been
recognized for the asset in the prior periods. A reversal of an
impairment loss is recognized into profit or loss
immediately.





Decommissioning and restoration provision





An
obligation to incur decommissioning and environmental costs arises
when environmental disturbance is caused by the exploration or
development of a mineral property. Such costs are estimated and
discounted to their net present value and capitalized to the
carrying amount of the related asset along with the recording of a
corresponding liability, as soon as the obligation to incur such
costs arises. Discount rates using a pre-tax rate that reflect
risks specific to the liability are used to calculate the net
present value. The liability is adjusted each year for the
unwinding of the discount rate, changes to the current market-based
discount rate, and for the amount or timing of the underlying cash
flows needed to settle the obligation.





Income taxes





Income
tax is recognized in profit or loss except to the extent that it
relates to items recognized directly in equity, in which case it is
recognized in equity.





Deferred
tax is provided for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. Temporary differences
are not provided for the initial recognition of assets or
liabilities that affect neither accounting nor taxable profit. The
amount of deferred tax provided is based on the expected manner of
realization or settlement of the carrying amount of assets and
liabilities, using tax rates at the end of the reporting year
applicable to the year of expected realization.





A
deferred tax asset is recognized only to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilized.





Share capital





Common
shares are classified as equity. Transaction costs directly
attributable to the issue of common shares and share options are
recognized as a deduction from equity, net of any tax
effects.








15





PRETIUM RESOURCES
INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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








3.
 SIGNIFICANT ACCOUNTING
POLICIES (Cont’d)





Flow-through
shares





The
issuance of flow-through common shares results in the tax
deductibility of the qualifying resource expenditures funded from
the proceeds of the sale of such shares being transferred to the
purchasers of the shares. On the issuance of such shares, the
Company bifurcates the flow-through shares into: a flow-through
share premium, equal to the estimated premium that investors pay
for the flow-through feature, which is recognized as a liability,
and share capital. As the related exploration expenditures are
incurred, the Company derecognizes the premium liability and
recognizes a related income tax recovery.





Share-based payment transactions





Options
granted under the Company’s equity settled share-based option
plan are measured at fair value at the date of grant and recognized
as an expense with a corresponding increase in contributed surplus
in equity. An individual is classified as an employee when the
individual is an employee for legal or tax purposes (direct
employee) or provides services similar to those performed by a
direct employee. Equity-settled share-based payment transactions
with non-employees are measured at the fair value of the goods or
services received. However, if the fair value cannot be estimated
reliably, the share-based payment transaction is measured at the
fair value of the equity instruments granted at the date the
non-employee receives the goods or the services.





Cash-settled
payment transactions such as Restricted Share Units
(“RSU’s”) are initially measured at fair value at
the date of grant and recognized as an expense with a corresponding
accrued liability with subsequent re-measurement of that liability
to fair value at each reporting date.





The
fair value at grant date of all share-based payments is recognized
as share-based compensation expense over the period for which
benefits of services are expected to be derived, with a
corresponding credit to contributed surplus or accrued liabilities
depending on whether the instruments are equity-settled or
cash-settled. The fair value of stock options granted is estimated
using the Black-Scholes option pricing model. The fair value of
RSU’s is estimated based on the quoted market price of the
Company’s common shares. When share-based payments are
granted in exchange for services directly related to specific
exploration or development projects, the expense is capitalized to
that asset.





Loss per share





The
Company presents basic and diluted loss per share data for its
common shares, calculated by dividing the loss attributable to
common shareholders of the Company by the weighted average number
of common shares outstanding during the year. Diluted loss per
share is determined by adjusting the loss attributable to common
shareholders and the weighted average number of common shares
outstanding for the effects of all dilutive potential common
shares.





4.
 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS





Key sources of judgment and estimation uncertainty





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 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:





16





PRETIUM RESOURCES
INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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








4.
 CRITICAL ACCOUNTING ESTIMATES
AND JUDGMENTS (Cont’d)





●
 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 December 31, 2016.





●
 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 on the
Company’s mineral properties, plant and equipment and has
concluded that no impairment indicators exist as of December 31,
2016.





●
 Fair value of
derivatives and other financial liabilities





The
fair value of financial instruments that are not traded in an
active market are determined using valuation techniques. Management
uses its judgment to select a method of valuation and make
estimates of specific model inputs that are based on conditions,
including market, existing at the end of each reporting period.
Refer to Note 9 and 14 for further details on the methods and
assumptions associated with the measurement of the construction
financing liabilities.





5.
 NEW ACCOUNTING STANDARDS AND RECENT PRONOUNCEMENTS





New standards, amendments and interpretations not yet
adopted





A
number of new standards and amendments to standards and
interpretations that have been issued but are not yet effective.
None of these are expected to have a significant effect on the
consolidated financial statements except the
following:





●
 IFRS
9, Financial
Instruments,
addresses the classification, measurement and recognition
of financial assets and financial liabilities. It
replaces the guidance in IAS 39, Financial Instruments:
Recognition and Measurement that relate to the classification and measurement
of financial instruments. IFRS 9 retains but simplifies the mixed
measurement model and establishes three primary measurement
categories for financial assets: amortized cost, fair value through
other comprehensive income and fair value through profit or loss.
The basis of classification depends on the entity’s business
model for managing its financial instruments and the contractual
cash flow characteristics of the instrument. For financial
liabilities, the standard retains most of the IAS 39 requirements.
The main change for liabilities is that, in cases where the fair
value option is taken for financial liabilities, the part of a fair
value change due to an entity’s own credit risk is recorded
in other comprehensive income (loss) rather than in net earnings.
IFRS 9 is effective for annual periods beginning on or after
January 1, 2018, with early adoption permitted. The Company is in
the early stages of assessing the impact of IFRS
9.











17





PRETIUM RESOURCES
INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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








5.
 NEW ACCOUNTING STANDARDS AND
RECENT PRONOUNCEMENTS (Cont’d)





●
 IFRS 15, Revenue from Contracts with
Customers deals with revenue
recognition and establishes principles for reporting useful
information to users of financial statements about the nature,
amount, timing and uncertainty of revenue and cash flows arising
from an entity’s contracts with customers. Revenue is
recognized when a customer obtains control of a good or service and
thus has the ability to direct the use and obtain the benefits from
the good or service. The standard replaces IAS 18,
Revenue
and IAS 11, Construction contracts
and related interpretations. The
standard is effective for annual periods beginning on or after
January 1, 2018, with early adoption permitted. Management intends
to adopt IFRS 15 effective January 1, 2017 and upon declaration of
commercial production, revenue generated from operations at the
Brucejack Mine will be accounted for under the new standard.
Management will assess the impact of IFRS 15 on all sales
agreements executed prior to commercial
production.





●
 IFRS 16, Leases addresses accounting for leases and lease
obligations. It replaces the existing leasing guidance in IAS
17, Leases. The objective of the new standard is to report all
leases on the statement of financial position and to define how
leases and lease liabilities are measured. IFRS 16 is effective
from January 1, 2019. The Company is in the process of evaluating
all lease agreements to determine the impact of IFRS
16.





There
are no other IFRS’s or International Financial Reporting
Interpretations Committee (“IFRIC”) interpretations
that are not yet effective that are expected to have a material
impact on the Company.





6.
 RECEIVABLES AND OTHER





December
31,
December
31,2016
2015Taxes
receivable
$11,576
$4,790BC
Mineral Exploration Tax Credit receivable
6,406
13,207Prepayments
and deposits
2,404
2,386Other
receivables
103
23$20,489
$20,406





























18





PRETIUM RESOURCES
INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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











7.
 MINERAL PROPERTIES, PLANT AND EQUIPMENT





Mineral
properties
Construction
in progress
Plant
and equipment
Exploration
and evaluation assets
TotalYear ended December 31, 2015CostBalance,
beginning of year
$-
$-
$13,436
$759,238
$772,674Additions
-
91,436
7,135
159,158
257,729Recoveries
(2,063)
-
-
-
(2,063)Disposals
-
-
(234)
-
(234)Transfer
from exploration andevaluation
assets
515,369
83,811
-
(599,180)
-Balance,
end of year
$513,306
$175,247
$20,337
$319,216
$1,028,106Accumulated depreciation and depletionBalance,
beginning of year
$-
$-
$4,602
$-
$4,602Depreciation
and depletion
-
-
2,249
-
2,249Disposals
-
-
(160)
-
(160)Balance,
end of year
$-
$-
$6,691
$-
$6,691Net book value - December 31, 2015
$513,306
$175,247
$13,646
$319,216
$1,021,415Year ended December 31, 2016CostBalance,
beginning of period
$513,306
$175,247
$20,337
$319,216
$1,028,106Additions
-
678,826
4,046
6,775
689,647Transfer
from construction inprogress
to plant and equipment
-
(3,900)
3,900
-
-Balance,
end of year
$513,306
$850,173
$28,283
$325,991
$1,717,753Accumulated depreciation and depletionBalance,
beginning of period
$-
$-
$6,691
$-
$6,691Depreciation
and depletion
-
-
5,219
-
5,219Balance,
end of year
$-
$-
$11,910
$-
$11,910Net book value - December 31, 2016
$513,306
$850,173
$16,373
$325,991
$1,705,843





Recoveries
in 2015 consist of BC Mineral Exploration Tax Credits receivable
from the Government of Canada
and incidental proceeds from the sale of gold recovered from the
bulk sample program.





Mineral properties





Mineral
properties consist solely of the 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 the 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 on
production in excess of 503,386 ounces of gold and 17,907,080
ounces of silver.





19





PRETIUM RESOURCES
INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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








7.
 MINERAL PROPERTIES, PLANT AND EQUIPMENT (Cont’d)





Plant and equipment





During
the year ended December 31, 2016, $138 (2015 - $88) of depreciation
was recognized in the statement of loss and $5,081 (2015 - $2,161)
was capitalized within construction in progress.





Exploration and evaluation assets





Exploration
and evaluation assets consists primarily of the Snowfield Project
as well as additional regional drilling and exploration
work.





8.
 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES





December
31,
December
31,2016
2015Trade
payables
$90,094
$27,436Accrued
liabilities
55,450
20,501Restricted
share unit liability
3,582
67$149,126
$48,004





9.
 LONG-TERM DEBT





On
September 21, 2015, the Company closed a construction financing
comprised of a credit facility for US$350,000, an offtake
agreement, a US$150,000 callable gold and silver stream agreement
and a private placement of common shares for US$40,000. Upon
closing, the Company received credit facility proceeds of
US$150,000, before an arrangement fee of US$4,500, gold and silver
stream proceeds of US$150,000 and common share proceeds of
US$40,000.





Transaction
costs associated with the credit facility and common shares have
been recorded as part of the associated financing. Transaction
costs attributable to the offtake and stream obligations have been
expensed as incurred.





Pursuant
to the construction financing agreements, the Company is subject to
a number of non-financial covenants, including restrictions on
future financings while amounts remain outstanding under the senior
secured term credit facility.














20





PRETIUM RESOURCES
INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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








9.
 LONG-TERM DEBT
(Cont’d)





As
at December 31, 2016, the Company’s long-term debt consisted
of the following:





Senior
secured term credit facility
Offtake
obligation
Stream
obligation
Total
long-term debtBalance,
December 31, 2014
$-
$-
$-
$-Issuance
on closing of construction financing
163,520
67,127
198,750
429,397Interest
expense including amortization of discount
6,270
-
-
6,270Gain
on financial instruments at fair value
-
(2,421)
(11,928)
(14,349)Foreign
exchange loss
7,511
-
-
7,511Balance,
December 31, 2015
$177,301
$64,706
$186,822
$428,829Additional
advances under the credit facility
114,150
-
-
114,150Interest
expense including amortization of discount
25,347
-
-
25,347Loss
on financial instruments at fair value
-
26,197
83,088
109,285Foreign
exchange gain
(4,703)
-
-
(4,703)Balance,
December 31, 2016
$312,095
$90,903
$269,910
$672,908





(a)
 Senior secured term credit facility





Pursuant
to the terms of the senior secured term credit facility, the
Company can borrow up to US$350,000, which bears interest at a
stated rate of 7.5%, compounded quarterly and payable upon
maturity. Each advance under the credit facility is subject to a 3%
arrangement fee at the time of draw. The credit facility is secured
by substantially all of the assets of the Company and its
subsidiaries.





On
September 21, 2015, the Company received the initial advance of
US$150,000. On December 15, 2016 the Company completed the second
advance under the credit facility for US$100,000. The undrawn
portion of the credit facility at December 31, 2016 was
US$100,000.





The
credit facility matures December 31, 2018 and is subject to an
extension for one year, at the Company’s option upon payment
of an extension fee of 2.5% of the principal amount, including
accumulated interest. The Company has the right to repay at par
plus accrued interest after the second anniversary of closing and
upon payment of 2.5% of principal prior to the second
anniversary.





The
Company has determined the prepayment and extension options in the
credit facility are embedded derivatives that are required to be
separated from the credit facility obligations and recorded at fair
value initially and at each statement of financial position date,
with changes in fair value recorded in profit or loss. These
embedded derivatives are recorded on the statement of financial
position as other assets. For the year ended December 31, 2016, the
change in fair value of these embedded derivatives was a fair value
loss of $7,617 (2015 - gain of $3,148).





In
conjunction with the credit facility, the Company entered into an
agreement to sell the gold produced at the Brucejack Mine (the
“Offtake obligation”). The Offtake obligation
(discussed below), compensates for a lower stated interest rate on
the credit facility and is presented as a reduction to the carrying
amount of the drawn portion of the credit facility and an asset
representing the initial fair value of the undrawn loan commitment.
As the balance of the credit facility is drawn, the loan commitment
will be reclassified as a reduction in the resulting loan and
amortized over the life of the associated liability on an effective
interest rate basis. Upon completion of the second advance for
US$100,000 under the credit facility, $15,764 of the loan
commitment was reclassified to long-term debt.





21





PRETIUM RESOURCES
INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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








9.
 LONG-TERM DEBT
(Cont’d)





As
a result of the impact of the Offtake obligation, the arrangement
fees and the prepayment and extension options, the effective
interest rate on the drawn portion of the credit facility is 14.4%.
For the year ended December 31, 2016, the Company capitalized
$25,347 (2015 – $6,270) of interest on the credit facility to
mineral properties, plant and equipment.





(b)
 Offtake
obligation





The
Company has entered into an agreement pursuant to which it will
sell 100% of refined gold (in excess of any delivered ounces
pursuant to the stream obligation) up to 7,067,000 ounces. The
final purchase price to be paid by the purchaser will be, at the
purchaser’s option, a market referenced gold price in US
dollars per ounce during a defined pricing period before and after
the date of each sale.





The
Company has the option to reduce the Offtake obligation by up to
75% by paying (a) US$11 per remaining ounce effective December 31,
2018 or (b) US$13 per ounce effective December 31, 2019 on the then
remaining undelivered gold ounces.





The
Company has determined the Offtake obligation represents a
derivative liability. Accordingly, the Offtake obligation, which is
primarily a function of the purchaser’s gold price option
feature, is re-measured at fair value at each statement of
financial position date, with changes in fair value being recorded
in profit or loss. From the year ended December 31, 2016, the
change in fair value of the Offtake obligation was a fair value
loss of $26,197 (2015 - gain of $2,421).





(c)
 Stream
obligation





The
Company has entered into a stream arrangement from which it
received a US$150,000 deposit on September 21, 2015. Pursuant to
the stream, the Company is obligated to deliver, subject to
prepayment options, 8% of up to 7,067,000 ounces of refined gold
and 8% of up to 26,297,000 ounces of refined silver commencing on
January 1, 2020 (less gold and silver sold to date) and a payment
of US$20,000. Upon delivery, the Company is entitled to (a) for
gold, the lesser of US$400 per ounce and the gold market price and
(b) for silver, the lesser of US$4 per ounce and the silver market
price. Any excess of market over the fixed prices above are
credited against the deposit. Any remaining uncredited balance of
the deposit is repayable, without interest, upon the earlier of the
date (i) the aggregate stated gold and silver quantities have been
delivered and (ii) 40 years.





The
Company has the option to repurchase the stream obligation for
US$237,000 on December 31, 2018 or US$272,000 on December 31, 2019.
Alternatively, the Company may reduce the stream obligation to (a)
3% on December 31, 2018 (and accelerate deliveries under the stream
to January 1, 2019) or (b) 4% on December 31, 2019 (in which case
deliveries will commence on January 1, 2020) on payment of
US$150,000.





In
the event of certain change of control events prior to January 1,
2020 (or the date the deposit is reduced to nil, if earlier), the
Company and the counterparty each have an option pursuant to which
the Company would repurchase the stream obligation in exchange
equal to the greater of (a) 13.6% of consideration received as a
result of the triggering event and (b) an amount that will result
in the counterparty receiving a 15% annualized return on the stream
obligation.





22





PRETIUM RESOURCES
INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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








9.
 LONG-TERM
DEBT (Cont’d)





The
Company has determined that the stream obligation is in substance a
debt instrument with embedded derivatives linked to gold and silver
commodity prices and interest rates. The Company has elected to
measure the stream obligation in its entirety at fair value through
profit or loss. The stream obligation will be re-measured at fair
value at each statement of financial position date, with changes in
the fair value being recorded in profit or loss. For the year ended
December 31, 2016, the stream obligation increased by $83,088 (2015
- decreased by $11,928). As the stream is in substance a debt
instrument, the effective interest on the debt host is capitalized
as a borrowing cost during the development of the Brucejack Mine.
For the year ended December 31, 2016, the Company capitalized
$25,269 (2015 - $6,613) of interest on the stream debt to mineral
properties, plant and equipment. The capitalized interest was
reclassified from the loss on financial instruments at fair value
recorded in the statement of loss. The effective interest rate on
the stream obligation is 9.5%.





10.
 DECOMMISSIONING AND RESTORATION PROVISION





(a)
 Reclamation
bonds





In
relation to the Brucejack Mine, the Company has $12,590 of
restricted cash (2015 - $8,495) which includes $9,662 (2015 -
$5,567) in the form of Guaranteed Investment Certificates and
Letters of Credit as security deposits with various government
agencies in relation to decommissioning and restoration
provisions.





(b)
 Decommissioning
and restoration provision





The
Company has a liability for remediation of current and past
disturbances associated with the exploration and development
activities at the Brucejack Mine. The decommissioning and
restoration provision is as follows:





December
31,
December
31,2016
2015Opening
balance
$7,253
$2,096Change
in discount rate
1,387
(696)Change
in amount and timing of cash flows
9,453
5,768Accretion
of decommissioning and restoration provision
268
85Ending
balance
$18,361
$7,253





In 2016, the provision increased due to continued
development and construction at the Brucejack Mine. The Company
used an inflation rate of 1.9% (2015 – 1.9%) and a discount rate of 2.0% (2015
–
2.4%) in calculating the estimated
obligation. The liability for retirement and remediation on an
undiscounted basis before inflation is $18,755 (2015 -
$8,062).





11.
 CAPITAL AND RESERVES





(a)
 Authorized share capital





At
December 31, 2016, 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.





23





PRETIUM RESOURCES
INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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








11.
 CAPITAL AND RESERVES
(Cont’d)





On
June 22, 2016, the Company completed a private placement of 437,000
flow-through common shares at a price of $11.45 per flow-through
share for gross proceeds of $5,004. The Company bifurcated the
gross proceeds between share capital of $4,117 and flow-through
share premium of $887. As a result of this private placement, the
Company entered into an additional subscription agreement with a
shareholder who wished to maintain their respective pro-rata
interest in the Company. Thus, on June 30, 2016, the Company issued
an additional 11,310 common shares at $11.45 per share for gross
proceeds of $130. The combined gross proceeds of these two
offerings was $5,134, before share issue costs of $88.





On
March 1, 2016, the Company completed a marketed offering of
28,384,000 common shares at a price of US$4.58 per common share for
aggregate gross proceeds of $174,288 (US$129,999) which includes
the exercise of the full amount of the over-allotment option of
2,174,000 common shares. As a result of this offering, the Company
entered into additional subscription agreements with shareholders
who wished to maintain their respective pro-rata interest in the
Company. Thus, on March 31, 2016, the Company issued an additional
3,539,755 common shares at US$4.58 per share for gross proceeds of
$21,029 (US$16,212). The combined gross proceeds of these two
offerings was $195,317 (US$146,211), before share issue costs of
$11,123.





On
September 21, 2015, as part of the construction financing, the
Company completed a private placement of 7,696,008 common shares at
US$5.1975 per share for gross proceeds of US$40,000 (before share
issue costs of US$686).





On
June 8, 2015, the Company completed a private placement of 800,000
flow-through common shares at a price of $8.75 per flow-through
share for gross proceeds of $7,000. The Company bifurcated the
gross proceeds between share capital of $5,968 (before share issue
costs of $127) and flow-through share premium of
$1,032.





On
January 15, 2015, the Company completed a private placement of
12,836,826 common shares at $6.30 per share for gross proceeds of
$80,872 resulting in the acquirer owing approximately 9.9% of the
Company’s issued and outstanding shares. As a result of this
agreement, the Company entered into additional subscription
agreements with holders who wished to maintain their respective pro
rata interest in the Company. Thus, on January 21, 2015, the
Company issued an additional 2,897,490 common shares at $6.30 per
share for gross proceeds of $18,254. The combined gross proceeds of
these two offerings was $99,126 (before share issue costs of
$3,470).





(b)
 Share Option Plan





The
Company has adopted an incentive stock option plan which provides
that the Board of Directors of the Company may from time to time,
in their discretion, and in accordance with Toronto Stock Exchange
requirements, grant to its directors, officers, employees and
consultants of the Company, non-transferable options to purchase
common shares, provided that the number of common shares reserved
for issue does not exceed 10% of the number of then outstanding
common shares. Such options can be exercisable for a maximum of
five years from the date of grant. The exercise price of each share
option is set by the Board of Directors at the time of grant but
cannot be less than the market price. Vesting of share options is
at the discretion of the Board of Directors at the time the options
are granted.





24





PRETIUM RESOURCES
INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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








11.
 CAPITAL AND
RESERVES (Cont’d)





The
following table summarizes the changes in stock options for the
year ended December 31:





2016
2015Number
of options
Weighted
average exercise price
Number
of options
Weighted
average exercise priceOutstanding,
January 1,
9,442,950
$9.23
10,810,950
$8.48Granted
1,438,007
8.54
2,851,000
7.84Exercised
(2,531,725)
8.98
(4,010,000)
6.03Expired
/ forfeited
(988,125)
10.31
(209,000)
12.53Outstanding,
December 31,
7,361,107
$9.04
9,442,950
$9.23





The
following table summarizes information about stock options
outstanding and exercisable at December 31, 2016:





Stock
options outstanding
Stock
options exercisableExercise
prices
Number of options outstanding
Weighted average years to expiry
Number of options exercisable
Weighted average exercise price$5.85
- $7.99
3,602,000
2.91
3,010,750
6.61$8.00
- $9.99
1,751,307
3.65
1,287,801
8.77$10.00
- $11.99
537,800
0.82
487,800
11.69$12.00
- $13.99
1,290,000
0.97
1,275,000
13.68$14.00
- $15.99
60,000
3.16
30,000
14.84$16.00
- $17.99
120,000
0.08
120,000
16.49Outstanding,
December 31, 2016
7,361,107
2.55
6,211,351
$9.14





The
total share option compensation expense for the year ended December
31, 2016 was $8,673 (2015 - $9,983) of which $3,200 (2015 - $5,719)
has been expensed in the statement of loss and $5,473 (2015 -
$4,264) has been capitalized to mineral properties, plant and
equipment.





The
following are the weighted average assumptions employed to estimate
the fair value of options granted for the year ended December 31,
2016 and year ended December 31, 2015 using the Black-Scholes
option pricing model:





For
the year endedDecember
31,2016
December
31,2015Risk-free
interest rate
0.71%
0.91%Expected
volatility
63.47%
65.40%Expected
life
5
years
5
yearsExpected
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.





25





PRETIUM RESOURCES
INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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








11.
 CAPITAL AND RESERVES
(Cont’d)





(c)
 Restricted Share Unit (“RSU”) Plans





The
Company adopted the RSU Plans to allow the Board of Directors to
grant its employees and consultants, non-transferable share units
based on the value of the Company’s share price at the date
of grant. The awards have a graded vesting schedule over a
three-year period.





2014 RSU Plan





Under
the 2014 RSU Plan, the awards are cash-settled immediately upon
vesting. The following table summarizes the changes in the 2014
RSU’s for the year ended December 31:





2016
2015Number
of RSU's
Weighted
average fair value
Number
of RSU's
Weighted
average fair valueOutstanding,
January 1,
215,698
$7.01
330,992
$6.84Settled
(91,153)
10.84
(109,271)
7.46Forfeited
(37,886)
8.43
(6,023)
8.24Outstanding,
December 31,
86,659
$10.65
215,698
$7.01





At December 31, 2016, a liability of $728 (2015 -
$67) was outstanding and included in accounts payable and accrued
liabilities. For the year ended December 31, 2016, $844 (2015 -
$358) has been recorded to share-based compensation expense and
$805 (2015 - $450) has been capitalized to mineral properties,
plant and equipment.





2015 RSU Plan





On
May 12, 2016, the 2015 RSU Plan was approved by shareholders of the
Company. Under the 2015 RSU Plan, awards can be either cash or
equity settled upon vesting at the discretion of the Board of
Directors. At the time of grant, as the Company did not have a
present obligation to settle in cash, the awards were treated as
equity-settled instruments and measured at fair value at the date
of grant and recorded in contributed surplus. The first vesting
period of the initial grant under the 2015 RSU Plan was settled in
cash on December 8, 2016 resulting in the repurchase of equity in
the amount of $2,399. With a history of settlement in cash
established, the Company will account for RSU’s granted under
the 2015 RSU plan as cash-settled awards prospectively from
December 8, 2016. As a result of the modification, $2,881 was
transferred from contributed surplus to the restricted share unit
liability.





The
associated compensation cost is recorded in share-based
compensation expense unless directly attributable to mineral
properties, plant and equipment.





26





PRETIUM RESOURCES
INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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








11.
 CAPITAL AND RESERVES
(Cont’d)





The
following table summarizes the changes in the 2015 RSU’s for
the year ended December 31:





2016
2015Number
of RSU's
Weighted
average fair value
Number
of RSU's
Weighted
average fair valueOutstanding,
January 1,
861,344
$7.01
-
$-Granted
352,902
10.69
861,344
7.55Settled
(336,896)
13.05
-
-Forfeited
(141,621)
9.09
-
-Outstanding,
December 31,
735,729
$10.65
861,344
$7.01





At December 31, 2016, a liability of $2,854 (2015
- nil) was outstanding and included in accounts payable and accrued
liabilities. For the year ended December 31, 2016, $2,616 (2015 -
$104) has been recorded to share-based compensation expense and
$598 (2015 - $55) has been capitalized to mineral properties, plant
and equipment.





12.
 RELATED
PARTIES





Transactions with key management





For
the year ended December 31, 2016, key management includes the
Company’s directors (executive and non-executive) and
executive officers including its Chairman and CEO (the
“CEO”), its President (the “President”),
its Chief Financial Officer (the “CFO”), its Chief
Exploration Officer and Vice President (the “CExO”) and
its Vice President, Corporate (the “VP Corporate”). It
also includes the Chief Operating Officer and Vice President (the
“COO”) until his departure on February 17,
2016.





Directors
and key management compensation:





For
the year endedDecember
31,
December
31,2016
2015Salaries,
benefits and management fees
$6,962
$4,979Share-based
compensation
6,096
7,072$13,058
$12,051





Employment
agreements





The
Company has entered into employment agreements with its CEO,
President, CFO, CExO and VP Corporate in which the individuals were
entitled to a base salary, extended benefits and were eligible for
an annual performance based bonus determined at the discretion of
the Board. The CEO, President, CFO, CExO and VP Corporate were also
entitled, on termination without cause, to twenty-four
months’ salary and twice the average annual performance bonus
earned in the three years immediately preceding
termination.





27





PRETIUM RESOURCES
INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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








13.
 SUPPLEMENTAL CASH FLOW INFORMATION





For the
year endedDecember
31,
December
31,2016
2015Net
change in non-cash working capital itemsincluded
in mineral properties, plant and equipment:Taxes
receivable
$(13)
$(6,036)Accounts
payable and accrued liabilities
98,214
33,806$98,201
$27,770





14.
 FINANCIAL RISK MANAGEMENT





Financial risk management





The
Company has exposure to a variety of financial risks: market risk
(including currency risk, interest rate risk and commodity price
risk), credit risk and liquidity risk from its use of financial
instruments.





This
note presents information about the Company's exposure to each of
these risks, the Company's objectives, policies and processes for
measuring and managing risk, and the Company's management of
capital.





The
Board of Directors has overall responsibility for the establishment
and oversight of the Company's risk management
framework.





(a)
 Market risk





(i)
 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 profit or loss.





The
Company is exposed to currency risk through cash and cash
equivalents, accounts payable and accrued liabilities and long-term
debt which are denominated in US dollars. The Company has not
hedged its exposure to currency fluctuations at this
time.





The
following table shows the impact on pre-tax profit of a 10% change
in the USD/CAD exchange rate on financial assets and liabilities
denominated in US dollars as of December 31, 2016, with all other
variables held constant:





Impact of currency
rate change on pre-tax profit10%
increase
10%
decreaseCash and cash
equivalents
$1,928
$(1,928)Other
assets
236
(236)Accounts payable
and accrued liabilities
(396)
396Senior secured term
credit facility
(31,209)
31,209Offtake
obligation
(9,090)
9,090Stream
obligation
(26,991)
26,991





28





PRETIUM RESOURCES
INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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








14.
 FINANCIAL RISK
MANAGEMENT (Cont’d)





(ii)
 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 also subject to interest rate risk with respect to the
fair value of long-term debt, in particular, the fair value of the
embedded derivatives under the senior secured term credit facility,
the offtake obligation and the stream obligation, which are
accounted for at fair value through profit or loss.





The
following table shows the impact on pre-tax profit of a 1% change
in interest rates on financial assets and liabilities as of
December 31, 2016, with all other variables held
constant:





Impact of interest
rate change on pre-tax profit1%
increase
1%
decreaseCash and cash
equivalents
$3,038
$(3,038)Other
assets
1,785
(1,071)Offtake
obligation
3,323
(2,982)Stream
obligation
6,387
(6,680)





(iii)
 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 Company has not hedged the
price of any commodity at this time.





The
financial instruments impacted by commodity prices are the offtake
obligation (a derivative liability) and the stream
obligation.





The
following table shows the impact on pre-tax profit from changes in
the fair values of financial instruments with a 10% change in gold
and silver commodity prices. The impact of a 10% movement in
commodity prices as of December 31, 2016, with all other variables
held constant, is as follows:





Impact of price
change on pre-tax profit10%
increase
10%
decreaseOfftake
obligation
$(3,794)
$4,654Stream
obligation
(4,085)
6,552
































29





PRETIUM RESOURCES
INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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








14.
 FINANCIAL RISK
MANAGEMENT (Cont’d)





(b)
 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 and restricted cash. The Company limits its exposure to
credit risk on financial assets through investing its cash and cash
equivalents with high-credit quality financial
institutions.





(c)
 Liquidity
risk





Liquidity
risk is the risk that the Company will not be able to meet its
financial obligations as they fall due. The Company’s
approach to managing liquidity is to ensure it will have sufficient
liquidity to meet liabilities when due. To the extent the Company
does not believe it has sufficient liquidity to meet obligations,
it will consider securing additional equity or debt
funding.





The
Company's cash and cash equivalents are currently invested in
business and savings accounts with high-credit quality financial
institutions which are available on demand by the Company for its
programs. The Company also holds government bonds to support future
environmental obligations.





The
Company’s financial obligations consist of accounts payable
and accrued liabilities and long- term
debt consisting of the credit facility, the offtake obligation and
the stream obligation.





The
maturity analysis of financial liabilities as at December 31, 2016
is as follows:





Less
than 1 year
1-3
years
3-5
years
More
than 5 years
TotalAccounts
payableand
accrued liabilities$
$149,126
$-
$-
$-
149,126Senior
secured term creditfacility
(US$308,644)
-
414,417
-
-
414,417Stream
obligation(US$20,000)
-
26,854
-
-
26,854





Amounts
related to the senior secured term credit facility are shown based
on contractual maturity of the host. The Company has a term
extension option (reflected in the embedded derivative) that could
extend repayment to 2019.





The
minimum amount owing in relation to the stream obligation is
$26,854 (US$20,000) assuming no early buyout options are exercised
as described in note 9(c).



































30





PRETIUM RESOURCES
INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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








14.
 FINANCIAL RISK
MANAGEMENT (Cont’d)





Capital management





The
Company’s objectives in the managing of the liquidity and
capital are to safeguard the Company’s ability to continue as
a going concern and provide financial capacity to meet its
strategic objectives. The capital structure of the Company consists
of debt instruments and equity attributable to common shareholders,
comprising of issued share capital, contributed surplus,
accumulated comprehensive income and accumulated
deficit.





The
Company manages the capital structure and makes adjustments to it
in light of changes in economic conditions and the risk
characteristics of the underlying assets. To maintain or adjust the
capital structure, the Company may attempt to issue new shares,
issue new debt, acquire or dispose of assets to facilitate the
management of its capital requirements. The Company prepares annual
expenditure budgets that are updated as necessary depending upon
various factors, including successful capital deployment and
general industry conditions. The annual and updated budgets are
approved by the Board of Directors. The Company has sufficient
funds to meet its current operating, exploration and development
obligations.





Fair value estimation





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
following table presents the Company’s financial assets and
liabilities that are measured at fair value on a recurring basis by
level within the fair value hierarchy. Each of these financial
instruments are classified as Level 3 as their valuation includes
significant unobservable inputs.





December
31,
December
31,2016
2015AssetsFinancial assets at fair value through profit or lossEmbedded
derivatives under the senior secured term credit
facility
$2,357
$9,974$2,357
$9,974LiabilitiesFinancial liabilities at fair value through profit or
lossOfftake
obligation
$90,903
$64,706Stream
obligation
269,910
186,822$360,813
$251,528





31





PRETIUM RESOURCES
INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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








14.
 FINANCIAL RISK
MANAGEMENT (Cont’d)





The
embedded derivative assets were valued using the Monte Carlo
simulation valuation models with principal inputs related to the
credit facility including the risk-free interest rate, the
Company’s and lender’s credit spread and foreign
exchange rates.





The
offtake and stream obligations were valued using Monte Carlo
simulation valuation models. The key inputs used by the Monte Carlo
simulation in valuing both the offtake and stream obligations
include: the gold forward curve based on Comex futures, long-term
gold volatility, call option exercise prices, risk-free rate of
return and spot USD/CAD foreign exchange rates.





In
addition, in valuing the stream obligation, management used the
following significant observable inputs: the silver forward curve
based on Comex futures and the long-term silver volatility and
gold/silver correlation.





The
valuation of the offtake and stream obligations also require
estimation of the Company’s nonperformance or credit risk and
the anticipated production schedule of gold and silver ounces
delivered over the life of mine.





15.
 TAXATION





(a)
 Deferred
income tax liability





The
tax effects of temporary differences between amounts recorded in
the Company’s accounts and the corresponding amounts as
computed for income tax purposes gives rise to deferred tax assets
(liabilities) as follows:





December
31,
December
31,2016
2015Tax
loss carry forwards
$35,330
$23,583Long
term debt
26,296
(6,327)Financing
costs
5,863
4,159Decommissioning
and restoration provision
4,774
1,886Other
514
(293)Mineral
interests
(72,777)
(51,026)Deferred
income tax liability
$-
$(28,018)





The
Company has tax losses in Canada of approximately $144,830 (2015 -
$90,705) expiring in various amounts from 2030 to 2036. The Company
also has investment tax credits totaling approximately $11,247
(2015 - $11,247).





(b)
 Income
tax (recovery) expense





The
Company’s tax (recovery) expense is comprised of the
following:





For the
year endedDecember
31,
December
31,2016
2015Current
tax expense
$-
$-Deferred
tax (recovery) expense
(25,990)
5,991Total
tax (recovery) expense
$(25,990)
$5,991











32





PRETIUM RESOURCES
INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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








15.
 TAXATION (Cont’d)





The
provision for income taxes differs from the amount calculated using
the Canadian federal and provincial statutory income tax rates of
26% as follows:





For the
year endedDecember
31,
December
31,2016
2015Expected
tax (recovery) expense
$(27,664)
$1,419Share-based
compensation and other items
1,260
3,784Flow-through
shares
1,301
1,820Flow-through
share premium
(887)
(1,032)Income
tax (recovery) expense
$(25,990)
$5,991





The
Company has deductible temporary differences for which no deferred
tax assets have been recognized of $13,711 (2015 - $7,891). A
deferred income tax asset has not been recognized in respect of the
differences, as it is not probable that sufficient future taxable
profit will be available to realize such assets.





16.
 COMMITMENTS





The
following table provides the Company’s gross contractual
obligations as of December 31, 2016:





Less
than 1 year
1-3
years
3-5
years
More
than 5 years
TotalOffice
lease
$705
$839
$-
$-
$1,544Decommissioning
andrestoration
provision
-
402
-
17,959
18,361Repayment
of credit facility(US$308,644)
-
414,417
-
-
414,417$705
$415,658
$-
$17,959
$434,322





Pursuant
to the stream agreement, the Company is obligated to deliver,
subject to prepayment options, 8% of up to 7,067,000 ounces of
refined gold and 8% of up to 26,297,000 ounces of refined silver
commencing on January 1, 2020 and a payment of
US$20,000.





Under
the offtake agreement, the Company is obligated to sell 100% of
refined gold (in excess of any delivered ounces pursuant to the
stream obligation) up to 7,067,000 ounces. The final purchase price
to be paid by the purchaser will be, at the purchaser’s
option, a market referenced gold price in US dollars per ounce
during a defined pricing period before and after the date of each
sale.





17.
 CONTINGENCIES





a)
 Canadian Class Actions





On
October 29, 2013, David Wong, a shareholder of the Company, filed a
proposed class action against the Company, Robert Quartermain (a
director, the President and the CEO of the Company) and Snowden
Mining Industry Consultants Ltd. (the “Wong
Action”).





33





PRETIUM RESOURCES
INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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








17.
 CONTINGENCIES
(Cont’d)





A
similar proposed class action was filed by Roksana Tahzibi, a
shareholder of the Company, on November 1, 2013 (the “Tahzibi
Action”).





The
Wong Action and Tahzibi Action were filed in the Ontario Superior
Court of Justice.





The
Tahzibi Action claimed $250 million in general damages. On August
25, 2016, the Tahzibi Action was discontinued.





The
Wong Action is the only remaining proposed class action against the
Company in Canada. The Wong Action claims $60 million in general
damages on behalf of a class of persons, wherever they reside, who
acquired the Company’s securities between July 23, 2013 and
October 21, 2013. Snowden Mining Industry Consultants Ltd. is no
longer a defendant in the Wong Action.





A
motion by the plaintiff in the Wong Action was brought seeking
leave from the Court to commence an action under the secondary
market provisions in Part XXIII.1 of the Ontario Securities Act.
The motion will be heard on May 29 and 30, 2017.





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 the Wong
Action.





b) United States Class Actions





Between
October 25, 2013 and November 18, 2013, five putative class action
complaints were filed in the United States against the Company and
certain of its officers and directors, alleging that defendants
violated the United States securities laws by misrepresenting or
failing to disclose material information concerning the Brucejack
Mine. All five actions were filed in the United States District
Court for the Southern District of New York.





In
January 2014, the Court ordered that these actions be consolidated
into a single action, styled In re Pretium Resources Inc.
Securities Litigation, Case No. 13-CV-7552 (PGG). The Court has
appointed as lead plaintiffs in the consolidated action three
individuals who are suing on behalf of a putative class of
shareholders who purchased or otherwise acquired the
Company’s common shares between June 11, 2013 and October 22,
2013.





In
March 2014, the plaintiffs filed a consolidated amended class
action complaint, which the Company moved to dismiss in May 2014.
In July 2014, the plaintiffs filed a second consolidated amended
class action complaint (“Second Amended Complaint”).
The Company moved to dismiss the Second Amended Complaint on
September 5, 2014. Plaintiffs filed their Opposition to the
Company’s Motion to Dismiss on October 20, 2014, and the
Company filed a reply brief on November 19, 2014. The Court has not
yet issued a decision on the motion.





The
Company believes that the allegations made against it in these
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 these class actions.





34





PRETIUM RESOURCES INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


For
the years ended December 31, 2016 and 2015


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








18.
 SUBSEQUENT EVENTS





On
February 14, 2017, the Company completed an offering of US$100,000
aggregate principal amount of unsecured convertible senior
subordinated notes due 2022 (the “Notes”), which
includes the exercise of the full amount of the over-allotment
option of US$10,000 aggregate principal amount of Notes. The Notes
will bear cash interest semi-annually at a rate of 2.25% per annum.
The initial conversion rate for the Notes is 62.5 common shares per
US$1 principal amount of Notes, equivalent to an initial conversion
price of US$16.00 per common share.





On
February 15, 2017, the Company received the final advance under the
senior secured term credit facility for US$100,000.














































































































35









































APPENDIX C








MANAGEMENT’S DISCUSSION AND ANALYSIS





















































PRETIUM RESOURCES INC.





MANAGEMENT’S DISCUSSION AND ANALYSIS


FOR THE YEAR ENDED DECEMBER 31, 2016





This
Management's Discussion and Analysis ("MD&A") should be read in
conjunction with the audited consolidated financial statements of
Pretium Resources Inc. ("Pretivm", the "Company", "we" or "us") for
the year ended December 31, 2016 as publicly filed on the System
for Electronic Document Analysis and Retrieval (SEDAR)
website.





All
dollar amounts are expressed in thousands of Canadian Dollars
unless otherwise specified.





We
have prepared the audited consolidated financial statements in
accordance with International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board
("IASB"). This MD&A is prepared as of March 9, 2017 and
includes certain statements that may be deemed "forward-looking
statements". We direct investors to the section "Risks and
Uncertainties" and "Statement on forward-looking information"
included within this MD&A.





Additional information relating to us, including
our Annual Information Form and Form 40-F, is available on the
SEDAR website atwww.sedar.com
and on the EDGAR section of the SEC
website atwww.sec.gov.





Our Business





Pretivm
was incorporated on October 22, 2010 under the laws of the Province
of British Columbia. We are an exploration and development company
that was formed for the acquisition, exploration and development of
precious metal resource properties in the Americas.





We
have a 100% interest in the Brucejack Mine and the Snowfield
Project, both of which are located in northwestern British
Columbia.





The
Brucejack Mine is our material mineral project. Our focus is on
advancing Brucejack to production as a high-grade gold underground
mine, with construction in progress and commercial production
anticipated in 2017.





The
mineral claims for the Snowfield Project are in good standing until
2027 and we continue to conduct baseline environmental studies for
potential future development.





4th
Quarter Highlights





●
 On
December 15, 2016, we announced an updated Mineral Reserve estimate
for Brucejack’s Valley of the Kings deposit, with an increase
in Proven and Probable Mineral Reserves to 8.1 million ounces gold
(15.6 million tonnes grading 16.1 grams per tonne gold). The Proven
Mineral Reserves in the Valley of the Kings increased to 1.6
million ounces gold (3.3 million tonnes grading 14.5 grams per
tonne gold) which is sufficient for the first three years of mine
life.


1





●
 On
December 15, 2016, we also announced Brucejack development
continued to progress on schedule, and that effective January 1,
2017 Robert Quartermain would assume the role of Executive Chair
and Joseph Ovsenek would assume the role of President and Chief
Executive Officer.





●
 Subsequent
to the end of the quarter, on February 3, 2017, we announced the
acceleration of mine commissioning with dry commissioning scheduled
to commence in March 2017 and wet commissioning scheduled to
commence in early April 2017. We also announced an updated forecast
of the capital cost to complete construction of the Brucejack Mine,
with capital cost including working capital estimated to be
US$811.1 million, an increase of 16% from the February 2016 capital
cost estimate.





●
 On
February 7, 2017, we announced the offering of US$90 million of
unsecured convertible senior subordinated notes, with an
over-allotment option of US$10 million. On February 8, 2017 we
announced the pricing of the offering, and on February 14, 2017, we
announced that the offering was completed for total gross proceeds
of US$100 million which included the exercise of the full amount of
the over-allotment option of US$10 million.





Operations





Brucejack Mine





The
Brucejack Mine is located approximately 950 kilometers northwest of
Vancouver, British Columbia and 65 kilometers north-northwest of
Stewart, British Columbia and is comprised of 4 mining leases and 6
mineral claims totaling 3,304 hectares in area. The Brucejack Mine
forms part of our contiguous claims package that comprises over
121,000 hectares.





Mine Construction Progress





Construction
of the Brucejack Mine has advanced ahead of schedule and dry
commissioning of the mill is now planned for March 2017 with wet
commissioning expected in early April 2017. Commissioning was
previously planned for mid-2017.





Over
144,000 tonnes of ore have been stockpiled on the surface and
underground in preparation for mill commissioning. Underground
development is well advanced with twelve stopes crosscut on two
levels in preparation for long-hole drilling. Cross cutting of
another eleven stopes is in progress. A long-hole drill has been
mobilized, with long-hole drilling of a test stope
underway.





All
major mechanical and electrical components have been delivered to
site and installation and assembly is ongoing. The shell, heads,
gears, motors and drives for the SAG and Ball mills have been
installed and the drives are scheduled to be energized in late
March. Electrical and instrumentation along with mechanical and
piping installation within the mill building is ongoing. The mine
substation and central electrical room are ready for
energization.





The
330-person camp which includes mine dry, offices, recreation
facilities, dining hall and kitchen has been commissioned and is
fully operational.


2





Construction
continues on the Valley of the Kings portal building. External
structural steel erection is complete and internal structural
steel, mechanical and electrical installation is progressing. The
portal will serve as the primary access point to convey the gold
ore from the underground crusher to the mill.





Construction
of the 57-kilometer long transmission line is nearing completion.
All of the towers are in place and the first 42 kilometers section
is energized to the Knipple substation. The final 15-kilometer
section of the transmission line is 97% complete and expected to be
energized in late Q1 2017. An additional six 2-megawatt diesel
generators are fully commissioned and, combined with our initial
5-megawatts of diesel power, can provide adequate power to maintain
full mill and underground production in the event of any grid power
interruption.





Underground
development remains on schedule and contract mining crews have
completed over 10,000 meters of underground development to date.
Access to eight production levels from the 1200 to 1410-meter
levels has been established. Long-hole drilling has been in
progress on a test stope on the 1320-meter levels since
mid-February. Excavation of the major development infrastructure is
now complete. The third and final exhaust vent raise has broken
through to the surface. Underground work is focused on continued
ramp and level development. Construction of underground
infrastructure, including the crusher, conveyor, and transfer tower
continues.





Brucejack Mine Capital Cost Forecast





On
February 3, 2017, we announced that the total project capital cost
forecast (the “February 2017 Forecast”) to complete
construction of the Brucejack Mine, including contingencies, was
US$811.1 million, an increase of 16% from the February 2016 capital
cost estimate of US$696.8 million. The February 2017 Forecast
includes US$68.8 million of working capital for the first three
months of production, but does not take into account any revenue
generated during this period.





Key
areas of capital cost increases from the February 2016 capital cost
estimate include: the transmission line (US$37.9 million); costs to
accelerate commissioning (US$13.9 million); new scope items
(US$21.7 million); construction overages (US$34.1 million); and
Indirect/Owner's costs (US$31.4 million).





The
updated capital cost forecast to complete construction of the
Brucejack Mine, including contingencies, has been prepared on the
basis of: 97% committed of the February 2017 Forecast excluding
working capital (US$719.7 million of US$742.3 million), substantial
completion of engineering; award of all major contracts and
purchase orders; substantial completion of civil works;
approximately 95% completion of project wide concrete installation;
substantial completion of fabrication of structural steel;
approximately 60% completion of erection of site-wide structural
steel; approximately 75% completion of process tank installation;
approximately 15% completion of mechanical and piping installation
for the mill building and associated works; approximately 25%
completion of electrical and instrumentation installation for the
mill building and associated works, completion and energization of
the Stewart to Knipple substation transmission line works; and
approximately 90% completion of the Knipple substation to Brucejack
Mine transmission line.





3





A
summary of capital costs from the February 2017 Forecast in
comparison with the February 2016 capital cost estimate is shown in
Table 1 below.





Table 1: Capital Costs Summary Comparison (1)





February 2017 Estimate
(US$ million)
February 2016 Estimate
(US$ million)Mine underground
90.7
101.4Mine site(2)
250.4
165.3Offsite Infrastructure(3)
108.8
81.0Total Direct Costs
449.9
347.7Indirect Costs
78.3
97.5Owner's Costs
209.0
160.3Contingency
5.1
35.3Total Capital Cost
742.3
640.8Working Capital
68.8
56.0Total Construction Cost
811.1
696.8


(1)
 US$0.75:C$1


(2)
 Includes
mine site, mine site process, mine site utilities, mine site
facilities, tailings facilities, mine site temporary facilities and
surface mobile equipment.


(3)
 Includes
transmission line





Updated Economic Metrics





An updated summary of Brucejack’s economic results by metal price is shown in Table
2 below. Based on the February 2017 Forecast, Net Cash Flows and
Net Present Values have decreased slightly and Internal Rates of
Return and Payback have improved marginally in comparison to the
project economics associated with the February 2016
estimate.





Table 2: Summary of Brucejack
Economic Results by Metal Price – February 2017 Update
(4,5)





Low
Case
Base Case
High CaseGold Price (US$/ounce)
$800
$1,100
$1,400Silver Price (US$/ounce)
$10.00
$14.00
$18.00Net Cash
Flow (US$)
$2.11 billion
(pre-tax)
$1.47 billion
(post-tax)
$4.22 billion (pre-tax)
$2.82 billion (post-tax)
$6.32 billion (pre-tax)
$4.17 billion (post-tax)Net
Present Value(6)
(5.0% discount)
(US$)
$1.05 billion (pre-tax)
$0.69 billion (post-tax)
$2.34 billion (pre-tax)
$1.53 billion (post-tax)
$3.62 billion (pre-tax)
$2.36 billion (post-tax)Internal Rate of Return
19.9% (pre-tax)
16.5% (post-tax)
34.4% (pre-tax)
28.5% (post-tax)
47.5%(pre-tax)
39.1% (post-tax)Payback(from
start of production period)
5.0 years (pre-tax)
5.2 years (post-tax)
3.3 years (pre-tax)
3.5 years (post-tax)
2.5 years (pre-tax)
2.7 years (post-tax)Exchange Rate (US$:C$)
0.75
0.75
0.75


(4)
 Includes
impact from financing announced September 15, 2015.


(5)
 Financing
impact assumes repayment of debt facility at maturity, exercise of
maximum buyout options for offtake and stream facilities at
December 31, 2018.


(6)
 NPV
is discounted to December 31, 2015.

















4





February 2017 Financing





On
February 14, 2017, we completed an offering of US$100 million
aggregate principal amount of 2.25% unsecured convertible senior
subordinated notes due 2022. The use of proceeds for the offering
is working capital during start-up of the Brucejack Mine and
general corporate purposes. For details of Brucejack construction
financing see “Liquidity and Capital Resources”
below.





Valley of the Kings Mineral Reserve Estimate Update





On
December 15, 2016, we announced an updated Mineral Reserve estimate
for Brucejack’s Valley of the Kings deposit, with Proven and
Probable Mineral Reserves in the Valley of the Kings increased to
8.1 million ounces gold (15.6 million tonnes grading 16.1 grams per
tonne). The Proven Mineral Reserves in the Valley of the Kings
increased to 1.6 million ounces gold (3.3 million tonnes grading
14.5 grams per tonne gold) which is sufficient for the first three
years of mine life.





Areas
of gain in the Mineral Reserves were attributed to the following
factors:





●
 Increasing
drill density to 7.5-meter to 10-meter centers allowed for
conversion of a significant amount of Probable Reserve to the
Proven Reserve category. Mining stopes within the existing Mineral
Reserve model along with expansion of the previous Indicated
Mineral Resource wire frame accounted for an increase of
approximately 620,000 ounces of gold.





●
 Several
new, adjacent stopes were added to the previous mine plan as a
result of the infill drilling reaching beyond the previously
defined ore. This expansion to the mine plan accounts for an
increase of approximately 300,000 ounces of gold.





●
 Adjustments
were made to the stope orientation and design parameters, along
with the addition of grade to the background mineralization for the
estimate which had previously been modeled at zero grade.
Estimating waste blocks within the stopes with the July 2016
Mineral Resource estimate grade accounts for an increase of
approximately 200,000 ounces of gold.





The updated Mineral Reserves estimate is based on
the July 2016 Mineral Resource estimate for the Valley of the
Kings. The July 2016 Mineral Resource estimate was updated based on
the 20152016 Valley of the Kings infill drill program which
consisted of 63,470 meters in 367 drill holes designed to target
stope areas to be mined in the first three years of the current
mine plan (1320-meter level to 1200-meter level).
(See news release
dated July 21, 2016.)









































5





Table
3 below is a summary of the updated Valley of the Kings Mineral
Reserve estimate.





Table 3: Valley of the Kings
Mineral Reserve estimate – December
2016(7-11)





Category
Tonnes
(millions)
Gold
(g/t)
Silver
(g/t)
ContainedGold
(million oz)
Silver
(million oz)Proven
3.3
14.5
12.9
1.6
1.4Probable
12.3
16.5
11.3
6.5
4.5Total
15.6
16.1
11.1
8.1
5.9


(7)
 The
Mineral Reserves and Resources were estimated using the Canadian
Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards
of Mineral Resources and Reserves, Definitions and Guidelines
prepared by the CIM Standing Committee on Reserve Definitions and
adopted by CIM Council.


(8)
 Contained
metal figures and totals may differ due to rounding of
figures


(9)
 A
94% tonnage recovery is used.


(10)
 Assumptions
used include US$1,100 per ounce of gold US$17 per ounce of silver
and a $0.92 CAD/US exchange rate.


(11)
 A
NSR cut-off of CAD$180/tonne was used to optimize the
stopes.





The National Instrument 43-101 compliant
Feasibility Study for the Brucejack Mine titled Feasibility Study and
Technical Report Update on the Brucejack Project, Stewart BC, dated
June 19, 2014 was filed on
SEDAR on June 30, 2014 (see news release dated June
19, 2014).





2016 Exploration Program





The
2016 grass-roots exploration program which concluded in October was
conducted to evaluate the broader regional exploration potential of
the Brucejack property outside the area of known mineralization.
The Bowser Regional Project area, approximately 20 kilometers
south-east of the Valley of the Kings deposit, comprises
approximately 800 square kilometers. The 2015 program included
airborne magnetic, radiometric and EM surveys over two-thirds of
the project area. The 2016 program covered the remaining areas with
airborne magnetic and radiometric surveys as well as a
hyperspectral survey, regional ground MT surveys, property scale
mapping and prospecting over the entire area. A limited drill
program was also completed to enhance geological
interpretation.





Snowfield Project





The Snowfield Project 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. Our previous efforts focused on completing an updated
mineral resource estimate for the project, examining alternatives
for advancing the project and negotiating cooperation agreements
with Seabridge Gold Inc. (“Seabridge”).








6





Joint Snowfield/ KSM Engineering Studies





We
have entered into a confidentiality and cooperation agreement with
Seabridge that, amongst other things, provided for the completion
of an engineering study examining the economics of combining our
Snowfield Project and Seabridge’s KSM Project as a single
operation. The internal engineering study was finalized during the
first quarter of 2012 and indicated that developing the KSM and
Snowfield deposits together could produce better economics than
developing KSM as a stand-alone project, although no property
acquisition costs or allocation of initial KSM capital were
considered.





We
have also entered into a mutual access agreement with Seabridge
that (a) gives Seabridge access to our Snowfield Project and us
access to Seabridge’s KSM Project for the stripping of
overburden and (b) provides us with road access to the Brucejack
and Snowfield Projects over Seabridge’s KSM Project
lands.





Snowfield represents a longer term gold
opportunity for our shareholders.





Additional
Claims





Our
contiguous claims, including the mining leases comprising the
Brucejack Mine total over 121,000 hectares, providing further
exploration potential to supplement the value we are creating at
Brucejack. A claim boundary map is available on our
website.





Results of Operations





Our
operations and business are not driven by seasonal trends, but
rather the achievement of project milestones such as the
achievement of various technical, environmental, socio-economic and
legal objectives, including obtaining the necessary permits,
completion of final feasibility studies, preparation of engineering
designs, as well as receipt of financings to fund these objectives.
As well, our results are impacted by the valuation of our financial
instruments which are a function of commodity prices, interest
rates and foreign exchange rates.





Selected Financial Information Basis of
Presentation





The
following financial data has been derived from our consolidated
annual financial statements which have been prepared in accordance
with IFRS, as issued by the IASB, except for quarterly financial
information which is derived from our unaudited interim financial
statements. Our significant accounting policies are outlined in
Note 3 to our audited consolidated financial statements for the
year ended December 31, 2016.












































7







Annual information





Selected
consolidated annual financial information for the years ended
December 31, 2016, 2015 and 2014 are as follows (in
$000’s):





2016
2015
2014Total
revenue
$-
$-
$-Loss per share -
basic and diluted
$(0.47)
$(0.00)
$(0.11)Loss and
comprehensive loss
$(80,411)
$(534)
$(12,445)Total
assets
$1,947,428
$1,479,745
$816,816Long-term
liabilities
$691,269
$464,100
$24,308Cash
dividends
$-
$-
$-Cash and cash
equivalents
$190,383
$387,925
$34,495Mineral properties,
plant and equipment
$1,705,843
$1,021,415
$768,072





Quarterly information







Selected
consolidated financial information is presented as follows (in
$000’s):





2016
2016
2016
2016
2015
2015
2015
2015Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1Total
revenue
$-
$-
$-
$-
$-

$-Earnings (loss) per
share -basic and
diluted
$(0.07)
$(0.11)
$(0.19)
$(0.10
$0.07
$(0.02)
$(0.02)
$(0.03)Income (loss)
andcomprehensiveincome
(loss)
$(11,423)
$(19,725)
$(34,345)
$(14,918
$8,757
$(3,335)
$(2,426)
$(3,530)Total
assets
$1,947,428
$1,769,001
$1,724,031
$1,663,570
$1,479,745
$1,433,292
$931,111
$915,153Long-term
liabilities
$691,269
$551,858
$521,347
$478,147
$464,100
$461,298
$24,336
$23,252Cash
dividends
$-
$-
$-
$-
$-
$-
$-
$-Cash and cash
equivalents
$190,383
$234,131
$371,620
$479,994
$387,925
$453,233
$68,871
$103,412Mineral properties,
plantand
equipment
$1,705,843
$1,470,081
$1,286,640
$1,118,368
$1,021,415
$919,522
$841,691
$793,349





Year ended December 31, 2016 compared to the year ended December
31, 2015





Net
loss and comprehensive loss for the year ended December 31, 2016
was $80,411 compared to $534 for the year ended December 31, 2015.
The increase in the loss was mainly attributed to the change in
fair value of the elements of the construction financing including
the offtake obligation and stream obligation which resulted in a
loss of $91,633. This was partially offset by an increased foreign
exchange gain and deferred income tax recovery which largely
resulted from the elements of the construction
financing.








8





Loss on financial instruments at fair value





The
September 2015 construction financing includes prepayment and term
extension options on the credit facility, the offtake obligation
and the stream obligation which are recorded on our statement of
financial position at fair value. During the year ended December
31, 2016, the changes in fair value of the offtake obligation and
stream obligation were a function of increases in the gold price,
increases in market expectations of future gold price, gold price
volatility and a decrease in interest rate. The change in fair
value of the offtake obligation resulted in a loss of $26,197 (2015
– gain of $2,421) and the change in fair value of the stream
obligation resulted in a loss of $83,088 (2015 – gain of
$11,928). The prepayment and extension options in the senior
secured term credit facility decreased in value due to a decrease
in interest rate, additional advances on the credit facility and
the passage of time resulting in a loss of $7,617 (2015 –
gain of $3,148).





As
the stream is in substance a debt instrument, the effective
interest on the debt host is capitalized as a borrowing cost during
the development of the Brucejack Mine. We capitalized $25,269 (2015
- $6,613) of interest on the stream obligation to mineral
properties, plant and equipment. The capitalized interest was
reclassified from the loss on financial instruments at fair value
recorded in the statement of loss.





Foreign exchange gain (loss)





The
foreign exchange gain for the year ended December 31, 2016 was
$2,482 compared to a foreign exchange loss of $3,082 for the year
ended December 31, 2015. This was mainly the result of the
subsequent translation of the US denominated senior secured term
credit facility into CAD resulting in a gain of $4,703 (2015
– loss of $7,511) offset by the translation of US denominated
cash and cash equivalents to CAD resulting in a loss of $1,851
(2015 – gain of $4,392).





Share-based compensation expense





We
hire individuals with the required skills to advance our business.
Stock options and Restricted Share Units
(“RSU’s”) may be granted to employees and
consultants as part of their overall compensation. Depending on the
nature of the awarded recipient’s role, we expense or
capitalize to mineral properties, plant and equipment the fair
value of these stock option issuances over the vesting
period.





During
the year ended December 31, 2016, share-based compensation expense
associated with stock options decreased to $3,200 as compared to
$5,719 during the comparable year. This was due mainly to the
decreased number of options granted in the year and the timing of
stock option grants.The 2014 RSU Plan resulted in $844 being
recorded to share-based compensation expense compared to $358
during the comparable year. This was due mainly to the increase in
share price of the Company in the year.





The
2015 RSU Plan resulted in $2,616 being recorded to share-based
compensation expense compared to $104 during the comparable year.
The first vesting period of the initial grant under the 2015 RSU
Plan was settled in cash. With a history of settlement in cash
established, the Company will account for RSU’s granted under
the 2015 RSU Plan as cash-settled awards resulting in
mark-to-market movements in future periods.

















9





Other expenses





Salaries
for the year ended December 31, 2016 were $5,520 as compared to
$4,599 for the comparable period. The increase in salaries was
attributable to an increase in head count, an increase in salary
paid and bonuses awarded to employees of the Company.





Investor
relations costs for the year ended December 31, 2016 were $2,038 as
compared to $1,430 incurred for the year ended December 31, 2015.
Investor relation costs increased due to marketing and
communication activities conducted within the investment community
and community relations with First Nations.





Professional
fees were $1,065 for the year ended December 31, 2016 compared to
$666 for the comparable year. Professional fees increased as a
result of legal fees incurred for completion of a new shelf
prospectus and timing of audit and tax related
expenditures.





Listing
and filing fees increased to $608 for the year ended December 31,
2016 compared to $343 in the comparable period. The increase
resulted from listing fees for the stock option and 2015 RSU plans
and higher annual fees with the stock exchanges.





We
earned interest income on our cash and cash equivalents balance for
the year ended December 31, 2016 of $1,577 compared to $714 for the
comparable year. This was directly attributable to higher cash
balances held by the Company throughout the year. Interest income
earned on proceeds from the construction financing was netted
against interest expense capitalized to mineral properties, plant
and equipment.





During
the year ended December 31, 2016, we recorded a deferred income tax
recovery of $25,990 compared to a deferred income tax expense of
$5,991 for the comparable year. The difference is related to the
unrealized loss on financial instruments at fair value including
the offtake obligation and stream obligation and the recognition of
2016 non-capital losses.





Quarter ended December 31, 2016 compared to the quarter ended
December 31, 2015





Net
loss and comprehensive loss for the quarter ended December 31, 2016
was $11,423 compared to income of $8,757 for the comparable quarter
ended December 31, 2015. The loss was mainly attributed to the
change in fair value of the elements of the construction financing
including the offtake obligation and stream obligation which
resulted in a loss of $4,144 (2015 - gain of $26,963). This was offset by an increase
in deferred income tax recovery which also largely resulted from
the elements of the construction financing.





(Loss) gain on financial instruments at fair value





During the three months ended December 31, 2016,
the changes in fair value of the offtake obligation and stream
obligation were a function of changes in the estimated production
schedule and foreign exchange offset by a decrease in the gold
price, decrease in market expectations of future gold price, gold
price volatility and an increase in interest rate which resulted in
a gain of $579 (2015 - gain of $2,715) and a loss of $11,005
(2015 - gain of $14,813)
respectively. The prepayment and extension options in the senior
secured term credit facility decreased in value due to a decrease
in interest rate and additional advances under the facility
resulting in a loss of $340 (2015 - gain of $3,405).





10





As
the stream is in substance a debt instrument, the effective
interest on the debt host is capitalized as a borrowing cost during
the development of the Brucejack Mine. We capitalized $6,622 (2015
- $6,030) of interest on the stream obligation to mineral
properties, plant and equipment. The capitalized interest was
reclassified from the loss on financial instruments at fair value
recorded in the statement of loss.





Foreign exchange loss





The foreign exchange loss of $3,284 compared to
$5,822 for the comparable period was the result of the subsequent
translation of the US denominated senior secured term credit
facility into CAD resulting in a loss of $4,693 (2015 -
5,731) offset by the translation of US
denominated cash and cash equivalents to CAD resulting in a gain of
$1,412 (2015 - loss of
$224).





Other expenses





Salaries
for the quarter ended December 31, 2016 were $3,125 as compared to
$2,407 for the comparable period. This was attributed to increased
head count and bonuses awarded to employees of the
Company.





Office
costs decreased to $344 for the quarter ended December 31, 2016
compared to $706 for the comparable period. The decrease was the
result of the lease buyout payment to move office locations in
2015.





During
the quarter ended December 31, 2016, we recorded a deferred income
tax recovery of $1,882 compared to deferred income tax expense of
$6,318 for the comparable period. The difference is related to the
unrealized gains on financial instruments at fair value including
the senior secured term credit facility, offtake obligation and
stream obligation offset by the realization of 2016 non-capital
losses.





Liquidity and Capital Resources





Our
cash and cash equivalents as at December 31, 2016 totaled $190,383
a decrease from $387,925 as at December 31, 2015. The decrease in
cash is largely attributable to the construction of the Brucejack
Mine offset by the marketed offering closed on March 1, 2016, the
private placement closed on March 31, 2016 and the second advance
under the senior secured term credit facility on December 15,
2016.





Our
working capital as at December 31, 2016 was $61,746 as compared to
$360,327 as at December 31, 2015. Working capital items other than
cash and cash equivalents consisted of receivables and other of
$20,489 and accounts payable and accrued liabilities of $149,126.
Receivables and other is comprised primarily of $11,576 of Goods
and Services Tax refunds, and $6,406 accrued for BC Mineral
Exploration Tax Credits receivable from the Province of
BC.





In
2015, we completed the US$540 million construction financing with
Orion and Blackstone. The financing was comprised of a credit
facility for US$350 million, a US$150 million prepayment under a
callable gold and silver stream agreement and a private placement
of our common shares for US$40 million. As at December 31, 2016,
there remained US$100 million undrawn on the credit facility. The
final advance of US$100 million under the credit facility was
completed on February 15, 2017.





11





On
March 1, 2016, we closed a marketed offering of 28,384,000 common
shares at a price of US$4.58 per common share for gross proceeds of
US$130 million. Subsequent to the close of the marketed offering,
third parties exercised their participation rights to maintain
proportionate ownership interest in the Company. This resulted in
additional gross proceeds of US$16.2 million.





On
February 14, 2017, we completed the offering of US$100 million
aggregate principal amount of 2.25% unsecured convertible senior
subordinated notes due 2022 which includes the exercise of the full
amount of the over-allotment option of US$10 million aggregate
principal amount of notes. The initial conversion rate for the
notes is 62.5 common shares per US$1,000 principal amount of notes,
equivalent to an initial conversion price of US$16.00 per common
share.





With
the US$540 million construction financing, available cash on hand
and the proceeds from the convertible senior subordinated notes,
the project capital costs and initial working capital for the
Brucejack Mine are expected to be fully funded.





During
June 2016, we closed a private placement of flow-through shares
with proceeds to be used to fund grass-roots exploration
approximately 15 kilometers east of the mine construction underway
at the Brucejack Mine. Subsequent to the closing of the private
placement, Orion exercised its participation rights to maintain its
respective proportionate ownership interest in the Company. The
total number of common shares issued was 448,310 for aggregate
gross proceeds of $5,134.





During
the year ended December 31, 2016, the exercise of share options
awards also provided us with additional liquidity.





Cash
used in investing activities for the year ended December 31, 2016
was $522,127 (2015 - $209,691). For the year ended December 31,
2016, the expenditure increase is due to the continuation of mine
construction and engineering and mine development. In the
comparable period, costs were incurred mainly in respect of
exploration and evaluation activities at Brucejack and Snowfield,
respectively and early stages of development and construction at
Brucejack.





We
are a development stage company and as such, we do not generate
revenues from operations. We rely on equity and/or debt funding for
our continuing financial liquidity. Our access to financing is
always uncertain. There can be no assurance of continued access to
significant equity and/or debt funding.





Short form base shelf prospectus financings – Use of
proceeds





On
March 1, 2016, we closed a marketed offering of 28,384,000 common
shares at a price of US$4.58 per common share for gross proceeds of
US$130 million. The actual use of proceeds, as at December 31, 2016
in comparison to the proposed use of proceeds included in the
Company’s prospectus supplement dated February 23, 2016 (the
“2016 Supplement”) to the Company’s short form
base shelf prospectus dated July 16, 2014 is outlined
below:





12


Proposed
use of proceeds (2)
Actual
use of proceeds
Difference(2)Principal
purpose
(US$)
(US$)
(US$)Development of
Brucejack Project
$44,000
$122,000
$(68,900)Working capital
during start-up
56,000
-
56,000General corporate
purposes (1)
12,900
-
12,900Total
$112,900
$122,000
$-





1)
 Funds included in general corporate purposes may be allocated to
corporate expenses, business development, potential future
acquisitions, and to other purposes.


2)
 The Company estimated the net proceeds from the offering to be
US$112,940, before the over-allotment option, at the time of the
2016 Supplement. The over-allotment option was exercised in full
and actual gross proceeds were US$129,999. Share issuance costs
were US$8,044 for actual net proceeds of US$121,955.


3)
 The differences noted in the table above are not expected to have a
material impact on the Company’s ability to achieve its
business objectives and milestones as set out in the 2016
Supplement.





Commitments, Contingencies and
Off-Balance Sheet ArrangementsClass
Action Lawsuits





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
price of our shares on the TSX and the NYSE had a significant drop
in value.





Canadian Class Actions





After
October 22, 2013, two proposed class actions were filed against
Pretivm and certain of its directors in the Ontario Superior Court
of Justice: the first on October 29, 2013 by David Wong (the
“Wong Action”) and the second on November 1, 2013 by
Roksana Tahzibi (the “Tahzibi Action”).





The
plaintiffs in these actions allege that certain of the
Company’s disclosures contained material misrepresentations
or omissions regarding Brucejack, including statements with respect
to probable mineral reserves and future gold production at
Brucejack. The plaintiffs further allege that until October 22,
2013 the Company failed to disclose alleged reasons provided by
Strathcona Mineral Services Ltd. for its resignation as an
independent qualified person overseeing the bulk sample program.
According to the plaintiffs in the Ontario Actions, these
misrepresentations and omissions are actionable under
Ontario’s Securities Act, other provincial securities
legislation and the common law.





The
Tahzibi Action claimed $250 million in general damages. On August
25, 2016, the Tahzibi Action was discontinued.





The
Wong Action is the only remaining proposed class action against the
Company in Canada. The Wong Action claims $60 million in general
damages on behalf of a class of persons, wherever they reside, who
acquired the Company’s securities between July 23, 2013 and
October 21, 2013. Snowden Mining Industry Consultants Ltd. is no
longer a defendant in the Wong Action.





13





A
motion by the plaintiff in the Wong Action was brought seeking
leave from the Court to commence an action under the secondary
market provisions in Part XXIII.1 of the Ontario Securities Act.
The motion will be heard on May 29 and 30, 2017.





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 the Wong
Action.





United States of America Class Actions





Between
October 25, 2013 and November 18, 2013, five putative class action
complaints were filed in the United States against us and certain
of our officers and directors, alleging that we violated the United
States securities laws by misrepresenting or failing to disclose
material information concerning the Brucejack Mine. All five
actions were filed in the United States District Court for the
Southern District of New York.





In
January 2014, the Court ordered that these actions be consolidated
into a single action, styled In re Pretium Resources Inc.
Securities Litigation, Case No. 13-CV-7552. The Court has appointed
as lead plaintiffs in the consolidated action three individuals who
are suing on behalf of a putative class of shareholders who
purchased our shares between June 11, 2013 and October 22,
2013.





In
March 2014, the plaintiffs filed a consolidated amended class
action complaint, which we moved to dismiss in May 2014. In July
2014, the plaintiffs filed a second consolidated amended class
action complaint (“Second Amended Complaint”). We moved
to dismiss the Second Amended Complaint on September 5, 2014. The
plaintiffs filed their Opposition to our Motion to Dismiss on
October 20, 2014 and we filed our reply brief on November 19, 2014.
The Court has not yet issued a decision on the motion.





We
believe the allegations made against us in these 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 these
class actions.





In
general, litigation claims can be expensive and time consuming to
bring or defend and could result in settlements or damages that
could significantly affect our financial position. We intend to
contest any such litigation claims to the extent of any available
defenses. However, it is not possible to predict the final outcome
of any current litigation or additional litigation to which we may
become party to in the future, and the impact of any such
litigation on our business, results of operations and financial
condition, could be material.





























14





Contractual Obligations





The
following table provides our gross contractual obligations as of
December 31, 2016 (in $000’s):





Less
than 1 year
1-3
years
3-5
years
More
than 5 years
TotalOperating activities:Office
lease
$705
$839
$-
$-
$1,544Decommissioning
andrestoration
provision
-
402
-
17,959
18,361Financing activities (1)(2):Repayment
of credit facility(US$308,644)
-
414,417
-
-
414,417$705
$415,658
$-
$17,959
$434,322





1)
 Pursuant
to the stream arrangement, we are obligated to deliver, subject to
prepayment options, 8% of up to 7,067,000 ounces of refined gold
and 8% of up to 26,297,000 ounces of refined silver commencing on
January 1, 2020 and a payment of US$20,000.





2)
 Under
the Offtake agreement, we are obligated to sell 100% of refined
gold (in excess of any delivered ounces pursuant to the stream
obligation) up to 7,067,000 ounces. The final purchase price to be
paid by the purchaser will be, at the purchaser’s option, a
market referenced gold price in US dollars per ounce during a
defined pricing period before and after the date of each
sale.





Related Party
Transactions (in
$000’s)





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





Effective
January 1, 2017, under his employment agreement, the Exec Chair
will serve as Executive Chairman for a period of three years
expiring December 31, 2019 (the “Executive Term”) after
which the Exec Chair’s employment will cease and he will
serve as Chairman of the Board until at least December 31, 2022,
subject to his continued election by the shareholders of the
Company. The Exec Chair currently receives a base salary of $500
per year, benefits, an annual performance bonus based on the annual
corporate objectives set by the Compensation Committee of the Board
of Directors and a long-term incentive award. In addition,
following the Executive Term, the Exec Chair will receive a
retirement allowance paid out over three years commencing January
1, 2020.





The
Exec Chair is also entitled, on termination without cause,
including following a change of control, to twenty-four
months’ salary, twice the target bonus and the retirement
allowance.





15





Effective
January 1, 2017, under the employment agreement, the CEO receives a
base salary of $645 per year, the CFO receives a base salary of
$425 per year, the CExO receives a base salary of $370 per year and
the VP Corporate receives a base salary of $300 per year. Each of
the CEO, CFO, CExO and VP Corporate are entitled to extended
benefits and are eligible for an annual performance based bonus
determined at the discretion of our Board and a long-term incentive
award.





The
CEO, CFO, CExO and VP Corporate 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.





On
February 17, 2016, we announced the departure of our Vice President
and Chief Operating Officer.





Critical Accounting Estimates and Judgments





Our
significant accounting policies are presented in Note 3 to the
consolidated financial statements for the year ended December 31,
2016. The preparation of these consolidated financial statements
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the
financial statements and reported amounts of expenses during the
reporting period. Actual outcomes could differ from these
estimates. The consolidated financial statements include estimates
which, by their nature, are uncertain. The impacts of such
estimates are pervasive throughout the consolidated financial
statements, and may require accounting adjustments based on future
occurrences. Revisions to accounting estimates are recognized in
the period in which an estimate is revised and future periods if
the revision affects both current and future periods.





Significant
judgments about the future and other sources of estimation
uncertainty at the financial position reporting date, including
those that could result in a material adjustment to the carrying
amounts of assets and liabilities, in the event that actual results
differ from assumptions made include, but are not limited to, the
following:





1) 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 December 31, 2016.














16





2)  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 on the
Company’s mineral properties, plant and equipment and has
concluded that no impairment indicators exist as of December 31,
2016.





3)  Fair
value of derivatives and other financial liabilities





The
fair value of financial instruments that are not traded in an
active market are determined using valuation techniques. Management
uses its judgment to select a method of valuation and make
estimates of specific model inputs that are based on certain
conditions, including market, existing at the end of each reporting
period.





Financial Instruments and Other Instruments Financial
assets





We
have the following financial assets: cash and cash equivalents,
receivables, embedded derivatives associated with the senior
secured term credit facility and restricted cash.





Cash
and cash equivalents and restricted cash are classified as loans
and receivables and are recorded at amortized cost. Interest income
is recognized by applying the effective interest rate. Receivables
are classified as loans and receivables and accordingly are
recorded initially at fair value and subsequently measured at
amortized cost using the effective interest rate method, less any
impairment losses.





Derivative
instruments, including embedded derivatives, are recorded at fair
value through profit or loss 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.





Financial liabilities





We
have the following financial liabilities: accounts payable and
accrued liabilities and debt instruments including the senior
secured term credit facility, offtake obligation and stream
obligation.





Accounts
payable and accrued liabilities and debt are classified as other
financial liabilities 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.





17







Derivative
instruments, including embedded derivatives, such as the offtake
obligation and stream obligation are recorded at fair value through
profit or loss 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.





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.





Our
Board of Directors approves and monitors the risk management
processes, inclusive of documented investment policies,
counterparty limits, and controlling and reporting structures. The
type of risk exposure and the way in which such exposure is managed
is provided as follows:





Market Risk





Currency
risk





We
are 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. We are exposed to currency
risk through cash and cash equivalents, accounts payable and
accrued liabilities and long-term debt which are denominated in US
dollars. The Company has not hedged its exposure to currency
fluctuations at this time.





Interest rate risk





We
are subject to interest rate risk with respect to our investments
in cash and cash equivalents and restricted cash. Our 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.





We
are also subject to interest rate risk with respect to the fair
value of long-term debt, in particular, the fair value of the
embedded derivatives under the senior secured term credit facility,
the offtake obligation and the stream obligation which are
accounted for at fair value through profit or loss.





Commodity price risk





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





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The
financial instruments impacted by commodity prices are the offtake
obligation (a derivative liability) and the stream
obligation.





Credit risk





Credit
risk is our risk of potential loss if the counterparty to a
financial instrument fails to meet its contractual obligations. Our
credit risk is primarily attributable to our liquid financial
assets including cash and cash equivalents and restricted cash. We
limit our exposure to credit risk on financial assets by investing
our cash and cash equivalents with financial institutions of high
credit quality.





The
carrying value of our cash and cash equivalents and restricted cash
represent our maximum exposure to credit risk.





Liquidity risk





Liquidity
risk is the risk that we will not be able to meet our financial
obligations as they fall due. 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 securing additional equity or debt funding.





Capital Management





Our
objectives in the managing of the liquidity and capital are to
safeguard our ability to continue as a going concern and provide
financial capacity to meet our strategic objectives. Our capital
structure consists of debt instruments and equity attributable to
common shareholders, comprised of issued share capital, contributed
surplus, accumulated comprehensive loss and accumulated
deficit.





We
manage our capital structure and make adjustments to it in light of
changes in economic conditions and the risk characteristics of the
underlying assets. To maintain or adjust the capital structure, we
may attempt to issue new shares, issue new debt, and acquire or
dispose of assets to facilitate the management of our capital
requirements. We prepare annual expenditure budgets that are
updated as necessary depending upon various factors, including
successful capital deployment and general industry conditions. The
annual and updated budgets are approved by the Board of Directors.
The Company has sufficient funds to meet its current operating,
exploration and development obligations.



































19





Outstanding Share Data





At
March 9, 2017, we had the following common shares and share
purchase options outstanding.





Number
of securities
Exercise
price ($)
Weighted
Average Remaining Life (years)Common
shares
180,705,427Share
purchase options
6,648,932
$5.85
- $15.17
2.62Fully
diluted
187,354,359





Risks and Uncertainties





Natural
resources exploration and development 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, 2016 and filed on SEDAR,
which are incorporated by reference in this MD&A.





Internal Control over Financial
Reporting and Disclosure Controls and Procedures
Internal Control
over Financial Reporting





Management
assessed the effectiveness of our internal control over financial
reporting (“ICFR”) as of December 31, 2016. 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
is responsible for establishing and maintaining adequate internal
controls over financial reporting. 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 assurance with respect to
financial statement preparation and presentation. Based upon the
results of that assessment, management concluded that our internal
controls over financial reporting as of December 31, 2016 were
effective.





There
has been no change in our internal control over financial reporting
during the year ended December 31, 2016 that has materially
affected, or is reasonably likely to affect our internal control
over financial reporting.





Disclosure Controls and Procedures





Management
assessed the effectiveness of our disclosure controls and
procedures as of December 31, 2016. Based upon the results of that
evaluation, management concluded that our disclosure controls and
procedures were effective to provide reasonable assurance that the
information disclosed by us in the reports that we file were
appropriately recorded, processed, summarized and reported to allow
timely decisions regarding required disclosure.





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Statement Regarding Forward-Looking Information





In
connection with the forward-looking statements contained in this
MD&A, we have made certain assumptions about our business,
including about our planned exploration and development activities;
the accuracy of our mineral resource estimates; 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 approvals, consents
and permits under applicable legislation; and the adequacy of our
financial resources. We have also assumed that no significant
events occur outside of our normal course of business. Although we
believe that the assumptions inherent in the forward-looking
statements are reasonable as of the date of this MD&A,
forward-looking statements are not guarantees of future performance
and, accordingly, undue reliance should not be put on such
statements due to the inherent uncertainty therein.





This
MD&A contains "forward-looking information" and "forward
looking statements" within the meaning of applicable Canadian and
United States securities legislation.





Forward-looking
information may include, but is not limited to, risks related to
information with respect to our planned exploration and development
activities, the adequacy of our financial resources, the estimation
of mineral resources and reserves, realization of mineral resource
and reserve estimates, timing of development of the Brucejack Mine,
costs and timing of future exploration, results of future
exploration and drilling, production and processing estimates,
capital and operating cost estimates, timelines and similar
statements relating to the economic viability of the Brucejack
Mine, timing and receipt of approvals, consents and permits under
applicable legislation, our executive compensation approach and
practice, and adequacy of financial resources. Wherever possible,
words such as “plans”, “expects”,
“projects”, “assumes”,
“budget”, “strategy”,
“scheduled”, “estimates”,
“forecasts”, “anticipates”,
“believes”, “intends” 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 statements
and information.





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 events or results to differ from
those expressed or implied by the forward-looking information,
including, without limitation, risks related to:





●
 uncertainty
as to the outcome of legal proceedings including certain class
action proceedings in the U.S. and Canada;





●
 our
ability to repay indebtedness;





●
 the
effect of indebtedness on cash flow and business
operations;


21





●
 our
ability to satisfy commitments under stream and offtake agreements
and the effect of restrictive covenants in such
agreements;





●
 our
ability to raise enough capital to fully fund the capital costs
required to complete construction at the Brucejack
Mine;





●
 assumptions regarding expected operating costs and
expenditures, production schedules, economic returns and other
projections, including the 2016 cost update and the project
economics update (refer to the "Brucejack Mine Capital Cost
Forecast" section of this
MD&A);





●
 our
production estimates, including the accuracy thereof;





●
 the
fact that we have no mineral properties in production and no
history of production or revenue;





●
 the
exploration, development and operation of a mine or mine property,
including the potential for undisclosed liabilities on our mineral
projects;





●
 our
ability to obtain adequate financing for our planned exploration
and development activities and to complete further exploration
programs;





●
 our
ability to achieve commercial production at the Brucejack Mine in
the timeline we anticipate;





●
 the
operation and economic viability of the development of the
Brucejack Mine;





●
 dependency
on the Brucejack Mine for our future operating
revenue;





●
 the
accuracy of our 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
mineral resource estimates, including accuracy thereof and our
ability to upgrade such mineral resource estimates and establish
mineral reserve estimates;





●
 uncertainties
relating to the interpretation of drill results and the geology,
grade and continuity of our mineral deposits;





●
 commodity
price fluctuations, including gold price volatility;





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





●
 failure
of counterparties to perform their contractual
obligations;





●
 market
events and 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;





●
 governmental
regulations, including environmental regulations;





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


22





●
 increased
costs and restrictions on operations due to compliance with
environmental laws and regulations;





●
 compliance
with emerging climate change regulation;





●
 uncertainties
relating to additional claims and legal proceedings;





●
 adequate
internal control over financial reporting;





●
 increased
costs of complying with the Dodd-Frank Wall Street Reform and
Consumer Protection Act (the “Dodd-Frank
Act”);





●
 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;





●
 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;





●
 potential
liabilities associated with our acquisition of material
properties;





●
 our
ability to comply with foreign corrupt practices regulations and
anti-bribery laws;





●
 changes
to relevant legislation, accounting practices or increasing
insurance costs;





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





●
 significant
growth could place a strain on our management systems;





●
 future
sales or issuance of our debt or equity securities;





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





●
 share
ownership by our significant shareholders;





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





●
 we
do not intend to pay dividends in the near future; and





●
 our
being treated as a passive foreign investment company for U.S.
federal income tax purposes.


23





This list is not exhaustive of the factors that
may affect any of our forward-looking statements. Although we have
attempted to identify important factors that could cause actual
results to differ materially from those contained in
forward-looking statements, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can
be no assurance that such information will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such information. Forward-looking statements involve
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 statements
due to a variety of risks, uncertainties and other factors,
including, without limitation, those referred to in our Annual
Information Form dated March 28, 2016 which is filed on SEDAR and
in the United States on Form 40-F through EDGAR at the SEC’s
website atwww.sec.gov.





Our
forward-looking statements are based on the beliefs, expectations
and opinions of management on the date the statements are made. In
connection with the forward-looking statements contained in this
MD&A, we have made certain assumptions about our business,
including about our planned exploration, development and production
activities; the accuracy of our mineral resource estimates; 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 approvals, consents
and permits under applicable legislation; and the adequacy of our
financial resources. We have also assumed that no significant
events will occur outside of our normal course of business.
Although we believe that the assumptions inherent in the
forward-looking statements are reasonable as of the date hereof,
forward-looking statements are not guarantees of future performance
and accordingly, undue reliance should not be put on such
statements due to the inherent uncertainty therein. We do not
assume any obligation to update forward-looking statements, whether
as a result of new information, future events or otherwise, other
than as required by applicable law. For the reasons set forth
above, investors should not place undue reliance on forward-looking
statements.

































































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