Elephants are the world’s largest land animals. And though there aren’t many, they can still be found scattered across the planet. In the mining industry, super-large-sized deposits are often referred to as elephants. Like the animal, these deposits aren’t all that common. But also like the animal, they can still be found.

Elephant country is somewhere miners tend to gravitate towards in their hunt for meaningful discoveries, as elephants can usually be found in herds. And one of the world’s most prolific gold herds is found in British Columbia’s Golden Triangle.

The Golden Triangle, also known as the Stewart district, is located in northwestern BC. I’ve seen several different illustrations of this triangle drawn out on a map, but they’re all very similar with the long end stretching south to north from the town of Stewart to Dease Lake, roughly 300km.

I won’t go into a ton of geological detail, but the Golden Triangle resides in what is known as the Stikine terrane. It is generally believed that this terrane’s hydrothermal systems were seasoned longer than most. And the effect is a cornucopia of mineralized deposits including the volcanogenic massive sulfide, alkaline porphyry copper-gold, and transitional epithermal intrusion-related precious-metals types. This favorable geology has yielded several elephants.

The Golden Triangle has seen mineral exploration for over a century. And modern methods over the last half century or so have unearthed some of its greatest treasures. The best known as measured by yield is the famous Eskay Creek gold/silver deposit. This Barrick-run mine was once the world’s highest-grade gold mine (48 g/t) and fifth-largest silver mine by volume. Eskay Creek closed due to depletion in 2008, and over its life produced 3m+ ounces of gold and 160m+ ounces of silver.

While Eskay Creek was quite impressive, the Golden Triangle’s largest elephants are still in the ground. Towards the north are the massive Galore Creek and Schaft Creek projects. These projects, majority owned by Novagold and Teck Resources, hold two of the world’s largest undeveloped copper/gold deposits. Their combined resources of 22b+ pounds of copper and 21m+ ounces of gold, along with substantial byproducts of silver and other base metals, are astonishing.

Moving south closer to Stewart we find the KSM, Snowfield, and Brucejack projects. These polymetallic projects also hold a smorgasbord of metals, but with higher concentrations of gold. Seabridge Gold’s KSM project is the largest of the bunch, a 70m-ounce 23m-pound gold/copper behemoth. Snowfield and Brucejack are much smaller relatively speaking, containing around 30m ounces of gold resources each. But these elephants still rank within the top 5% globally in terms of size.

So as you can see, the Golden Triangle is host to one of the world’s most robust elephant herds. But while elephants are highly desirable assets for miners to have in their portfolios, they do have their drawbacks. And the most onerous is the massive amount of capital it requires to develop them.

In order to profitably mine large lower-grade polymetallic deposits, they typically need to operate on economies of scale (large-scale production). Once up and running proposed operations at such projects as KSM, Galore Creek, and Schaft Creek would indeed deliver high margins/profits, even at today’s metals prices. But getting them up and running is no easy task since large-scale mines come with large-scale price tags.

According to the latest feasibility studies, the pre-production capex required to develop each KSM, Galore Creek, and Schaft would well exceed $3b. It would be difficult to raise this kind of capital when the commodities markets are hot. And in today’s environment, when commodities are highly out of favor, I suspect it would be nearly impossible.

Really the only way an elephant will see production any time soon is if it is developed on a smaller scale, thus requiring less capital investment. But while this unfortunately isn’t an option for most elephants, there is a rare breed where it is. And Pretium Resources has found this breed in its excellent Brucejack project.

Brucejack is located about 20km south of Eskay Creek, in an area that saw its first hard-rock exploration about 50 years ago. Folks were excited early on, but the lower mineral grades didn’t offer much intrigue on the development front. This all changed though upon the discovery of the higher-grade West zone in 1980. And the operators at the time ended up putting about $40m into exploration, feasibility, and development work over the next decade or so.

Brucejack’s West zone had actually seen 5.0km of underground development and was fully permitted for a mine build. But falling gold prices in the 1990s pinched its economics, and ultimately forced the operators to abandon it. Interestingly Silver Standard ended up acquiring Brucejack and the nearby Snowfield project as silver plays. And its exploration work years later uncovered this elephant’s rare breed.

Former Silver Standard CEO and industry titan Robert Quartermain saw something special in the handful of holes that were drilled about 450 meters to the south of Brucejack’s West zone. And his newly-formed company Pretium Resources acquired the project (including Snowfield) in 2010 betting that this high-grade discovery would materialize into an Eskay Creek-type find.

Pretium’s aggressive follow-up drilling delivered one multi-kilogram intersect after another. And after several years and nearly 1,000 holes, Brucejack’s Valley of the Kings zone has grown to become one of the world’s premier high-grade gold deposits.

Per the latest resource estimate, this golden elephant contains nearly 14m ounces of the yellow metal. More impressive than the Valley of the Kings’ girth though is the quality of its ore. Core to this resource is 6.9m ounces of proven and probable reserves that grade an astounding 15.7 g/t.

Pretium was able to recognize the Valley of the Kings’ mining potential very early on. Its transitional epithermal gold occurrence (which is hosted in stockwork veining) had simple incomplex metallurgy. And this as well as the geological model was confirmed in a recently completed 10k metric-ton bulk-sampling program that pulled out 5,865 ounces of gold (thus equating to 18+ g/t!).

The data from this bulk-sampling program along with assays from additional underground drilling fed the Valley of the Kings’ latest and greatest feasibility study, which was announced in June. And it revealed a mining plan with huge economic potential, even at lower gold prices.

Mining would occur via conventional underground methods, with the ore processed at an onsite mill at a rate of 2.7k metric tons per day. With anticipated mill feed grades of 14 g/t and an average gold recovery of nearly 97% (via gravity and flotation), VOK would produce 504k ounces per year over the first 8 years and an average of 404k ounces per year over the life of the mine (18 years).

And VOK’s economics make mine development exceptionally compelling. The super-high grades among many factors allow Pretium to build this large-scale gold mine for only $747m. And with all-in sustaining cash costs estimated at only $448/ounce, VOK would be producing its gold in the lower-cost quartile of industry average.

At $1100 gold this mine comes with an after-tax internal rate of return of 29% and a sub-3-year capital-payback period. With figures like these, I suspect Pretium won’t have a problem procuring construction financing. And it is now pushing forward with the ever-important permitting process, the final step to be completed before closing on financing and mobilizing for construction.

Ultimately with VOK’s straightforward process flow, small footprint, and minimal environmental impact as well as Pretium’s good standing with the regulators and locals, there isn’t expected to be any problems procuring the necessary permits. PVG anticipates the receipt of final permits in H1 2015. And following a production decision and financing, it hopes to be building this mine by mid-year.

If all goes according to plan the Valley of the Kings will pour its first gold in 2017, easily beating out the rest of the Golden Triangle elephants to producerdom. This is one of the most highly-anticipated development projects not only in Canada, but in the world. And if Pretium executes as it hopes, investors are likely in store for a highly-profitable ride.

The best way for investors to play Pretium’s bright future is via its stock. And like nearly all precious-metals stocks, PVG has had a rough ride amidst gold’s post-apex consolidation and ongoing cyclical bear market as you can see in the chart below. But this beaten-down state offers what may prove one of the best PVG buying opportunities ever seen.

Pretium’s stay in the stock markets has mostly been fraught with peril.  And this peril was a symptom of gold’s bear-market behavior following its Q3 2011 all-time nominal high.  Despite the last few years being its most successful as it grew its elephant, PVG couldn’t break away from gold’s oppressive downtrend.

A junior mining company without cash flow is obviously more susceptible to downward pressure than its producing counterparts, so PVG leveraged gold to the downside.  But on the rare occasions over the last few years when gold did show signs of life, it usually provided investors with great positive leverage.

Since its 2011 high gold has had four meaningful uplegs.  And in three of them PVG performed like a champion.  In the Q1 2012, Q3 2013, and Q1 2014 uplegs PVG positively leveraged gold’s 16.6% average gain by 3.3x, with a 55.1% average gain of its own.  It didn’t perform so well in gold’s Q3 2012 upleg.  But since this was endemic of nearly the entire mining-stock sector, we’ll chalk it up as an anomaly.

Pretium really is poised to pop as soon as gold pulls out of its funk.  It showed incredible strength to soar 200%+ off its 2013 low in this weak market.  And I suspect we’ll see positive leverage much better than we’ve seen in recent years once investors return.  They’ll find a mining company vastly different than what it looked like the last time gold had a bull run.  And they’ll want to get a piece of what has grown to become one of the world’s finest undeveloped gold deposits.

Given their risk/reward paradigms, Pretium Resources and the top gold juniors are in line to outperform the entire PM sector once gold gets rolling.  And now is a great time to make the ultimate contrarian bet while they are still universally loathed.  Yes the pool of quality juniors has diminished amidst the recent carnage, but there are still plenty of good ones out there.

The bottom line is pretium is the Latin word for “value”.  And this is precisely what Pretium Resources will give shareholders as it advances its Golden Triangle elephant.  PVG has determined that Brucejack’s high-grade core can be developed at a reasonable cost.  And the latest mining plan outlines an operation with huge potential for profits even at lower gold prices.

Pretium is currently awaiting permitting before it can pull the trigger on its mine build.  And amidst pre-development work it will continue to explore a Valley of the Kings deposit that remains open to the east and west along strike and at depth.  PVG’s near-term prospects are sure to capture investors’ attention once gold turns around.  And it ought to be one of the top performers as capital chases the sector elites.