Viceroy Research said it’s shorting Pretium Resources Inc., arguing the company has artificially inflated the value of its Canadian gold mine, which risks being taken over by creditors in coming months.
The New York-based short seller — which rose to prominence last year with research into financial irregularities at South African retail giant Steinhoff International Holdings NV — released a report Thursday saying Vancouver-based Pretium has distorted results from its Brucejack gold mine in the northwest province of British Columbia.
“Our mine valuation – coupled with Pretium’s overleveraged balance sheet – lead us to believe Pretium equity is effectively worthless,” Viceroy said in the report.
“We believe the most likely outcome is that debtholders will exercise their security and take control of the mine as the company becomes progressively, but quickly, unprofitable.” Pretium Chief Executive Officer Joe Ovsenek didn’t immediately respond to an email and voicemail requesting comment.
Short sellers benefit from a falling stock as it allows them to pay back shares they have borrowed at a cheaper price.