TIDMPUR
RNS Number : 2708U
Pure Gold Mining Inc.
01 April 2021
NEWS RELEASE 21- 04 April 1 , 2021
PUREGOLD MILLING FACILITY ACHIEVES DESIGN CAPACITY, ADDITIONAL
LIQUIDITY SECURED AS PUREGOLD MINE CONTINUES RAMPING UP
VANCOUVER, B.C. - Pure Gold Mining Inc. (TSX-V:PGM, LSE:PUR)
("PureGold" or the "Company"), is pleased to report on progress of
the ramp-up at its PureGold Mine and significant milestones
achieved as of the end of the first quarter of 2021. Since late
January, the milling facility at the PureGold Mine has been
operating at greater than 75% of nameplate capacity, including
multiple consecutive days at greater than 800 tpd and a peak daily
throughput of 897 tpd. Gold recoveries have been exceptional and
consistent throughout the ramp-up period, averaging 95%, in line
with expectations. With the milling facility now fully ramped up,
the Company's focus will shift to aligning the mill throughput with
the rate of ore production from underground as the mine continues
to access higher grade ore and progress toward steady state
production.
The Company is also pleased to announce it has entered into a
binding letter agreement (the "Amendment") with its principal
lending partner, Sprott Private Resource Lending II (Collector), LP
("Sprott" or the "Lender"). Pursuant to the terms of the Amendment,
the original credit agreement dated August 2019 (the "2019
Agreement")(1) will be amended to provide for an increase to the
aggregate principal amount of debt of up to US$20 million, with
US$12.5 million to be available to the Company upon closing and the
remainder to be available upon satisfaction of certain conditions
(detailed below). The Amendment will also provide for the deferral
of cash interest payments until June 30, 2021. All other key terms
and conditions of the Amendment are substantially the same as for
the 2019 Agreement. In consideration for of the Amendment, the
Company will pay to Sprott an amount equal to 4% of the additional
debt made available to the Company, payable in shares. The
Amendment remains subject to TSX-V approval.
"We are pleased by the progress of the ramp-up of the PureGold
Mine to date, highlighted by the milling facilities achieving
design capacity prior to quarter end. With the mill ramp-up
effectively complete, we can now focus our attention solely on
ramping up the mine and accessing high grade ore from multiple
declines where we are making great progress," stated Darin Labrenz,
President & CEO of PureGold. "The additional US$12.5 million
will ensure the PureGold Mine continues its ramp-up phase with
maximum financial flexibility, whilst the remaining US$7.5 million
can be accessed if needed to provide additional liquidity. The term
and repayment schedule matches our expected grade and production
growth over the coming years as we get into the heart of the
orebody and continue to execute on our organic growth
strategy."
Narinder Nagra, Managing Partner of Sprott Private Resource
Lending, commented, "As one of the largest investors dedicated to
the natural resource sector, Sprott is excited to continue its
partnership with PureGold. We look forward to continuing to work
with the management team on the PureGold Mine, one of the premier
gold assets in Canada."
Mining Update
As of the end of the first quarter, the mine continues to
ramp-up to steady state production. Realized head grades for the
first quarter were lower than anticipated due to ramp-up related
issues including unplanned dilution in the first longhole stopes
blasted by the Company and the feeding of low grade stockpile
material to the mill to facilitate uninterrupted mill ramp-up
during commissioning. The mining issues are being addressed and
corrected by the Company, are viewed as symptomatic of ramp-up, and
are not expected to persist in the future. The head grades realized
in the first quarter are not representative of management's
expectations for steady state production.
The reserve grade from the 2019 Feasibility Study(2) is 9.0 g/t
gold for the life-of-mine, with average annual grades ranging from
6.3 g/t gold to 13.7 g/t gold, and a projected grade for year one
of operations of 7.0 g/t gold. Initial longhole stopes mined in the
first quarter of 2021 near the ramp had expected grades between 5
and 6 g/t and incurred up to 50% external dilution upon mining due
to overbreak in excess of what was planned. The next longhole stope
mined was expected to drive higher grades for the month of March,
but a significant volume of non-mineralized dyke was encountered,
resulting in unanticipated internal dilution and reduced grade.
The Company has taken actions to reduce dilution and improve
recovery which are expected to result in head grades improving in
the second quarter and beyond. Blasting practices have been
modified to reduce overbreak going forward. Additionally, a number
of stopes will be converted from longhole mining to mechanized
cut-and-fill mining method in order to maximize recovery and
minimize dilution where local conditions warrant. Cut-and-fill is
already the primary mining method for the PureGold Mine, with 75%
of total ore tonnes over the 12-year mine life outlined in the 2019
Feasibility Study(2) planned to be mined using either conventional
or mechanized cut-and-fill methods. Lastly, non-mineralized dykes
are known to exist in the current working area of the mine, have
been accounted for in the current mineral resource, and are not
expected to be a persistent problem going forward.
In addition to lower than anticipated head grades from initial
production stopes, mine scheduling flexibility was limited during
the first months of ramp-up due to the temporary single-ramp nature
of the mine. With limited high grade stope inventory, low grade
stockpiles were processed to supplement mill feed during the first
quarter of 2021 to ensure the ramp-up of the mill continued
uninterrupted.
Stope accessibility and scheduling flexibility are also expected
to improve significantly in the second quarter as investments made
in both the East Ramp and Main Ramp begin to bear fruit.
Development rates on the East Ramp have exceeded expectations
throughout the first quarter, advancing at a rate of 7.1 metres per
day in March. The Company recently reached the targeted
mineralization in the East Ramp and currently anticipates gaining
access to stopes via the East Ramp in April, which is expected to
significantly increase the number of working faces underground and
alleviate pressure on the Main Ramp to provide mill feed
exclusively. As at the end of the first quarter, the Main Ramp has
been developed to a depth of approximately 335 metres below
surface. The Company will continue to place a high priority on
developing the Main Ramp to enhance mine flexibility and to
accelerate access to the high grade 8 Zone.
At the end of the first quarter, the Company has 12 active ore
headings and is currently developing stopes within the heart of the
reserve where greater definition drilling supports higher grades
consistent with the life of mine plan. Underground sampling of ore
from development headings is showing an improvement in grade that
is consistent with expectations. As adjustments to mining practices
begin to positively impact operations and stope inventory improves
throughout the second quarter, mine production and head grade are
expected to improve and continue trending positively for the
balance of the year.
Processing Update
The milling facility effectively completed its ramp-up in March,
achieving and exceeding the design capacity of 800 tonnes per day
for multiple consecutive days and operating reliably during that
time. Minor ramp-up issues first related to water balance and
undersized pumps in January and more recently related to
miscalibrated power draw controls on the mill in early March have
been identified and solutions implemented. Mill throughput peaked
at 897 tonnes per day on March 19 and is now operating in alignment
with the rate of ore production from the mine as the mine continues
to ramp-up. Interstage screens for the CIP tanks and a trommel
screen for the SAG discharge are scheduled to be installed in May
which will further enhance operational stability and will position
the milling facility for potential expansions beyond 800 tpd in the
future. Gold recoveries have been tracking in line with
expectations with both the gravity and CIP circuits performing
well. Gold pours have continued on a regular basis during the
entire commissioning period.
Gold Production to Date
In Q4 2020 the Company processed 3,535 tonnes of ore at a grade
of 7.8 g/t gold to produce 860 ounces at a 96.6% recovery rate.
From January 1(st) to March 29(th) 2021, the Company processed
47,182 tonnes of ore at a grade of 2.8 g/t gold to produce 4,011
ounces at a 95.0% recovery rate. As noted previously, overbreak and
unmineralized dyke issues resulted in unanticipated dilution in Q1
and actions have been taken to significantly reduce these issues
which are expected to result in head grades improving in the second
quarter and beyond.
Commercial Production
The Company will continue to assess both ore throughput and gold
production as determinants in declaring commercial production for
the PureGold Mine throughout the second quarter. Inaugural
production and cost guidance for the balance of 2021 will follow
shortly thereafter.
Amended Credit Agreement
Upon closing of the Amendment, US$12.5 million will be available
immediately to the Company. An additional amount up to US$7.5
million (for total additional debt of up to US$20 million) will be
available to the Company for a period of three months from closing
of the Amendment subject to the following conditions:
-- The Lender will make available an additional US$0.50 of
aggregate principal amount, up to a maximum of US$7.5 million, for
every US$1.00 raised by the Company through the combination of
equity offerings, the exercise of existing share purchase warrants,
and/or the exercise of existing stock options. For greater clarity,
if the Company raised US$5 million in equity, warrant and option
proceeds, an additional US$2.5 million aggregate principal amount
would be made available.
-- The Company is in compliance with all covenants, all
representations and warranties remain true in all respects, and no
default or event of default exists
Additional key terms of the Amendment include:
-- Interest rate, principal repayment schedule, 2% arrangement
fee payable pro-rata on each drawdown, and fixed per ounce
production-linked payment to remain unchanged from the 2019
Agreement
-- No changes to the Callable Gold Stream
-- Interest may be capitalized up to and including June 30,
2021; thereafter, interest may only be capitalized at the
discretion of the Lender
-- Relaxed minimum cash balance and working capital covenants for the balance of 2021
-- Capital leases to be included within the definition of Permitted Indebtedness
2020 Full Year Financial Statements
The Company has filed its audited consolidated financial
statements for the year ended December 31, 2020 and related
management discussion and analysis. For further information please
see the Company's website at www.puregoldmining.ca or the Company's
SEDAR profile at www.sedar.com
Qualified Persons and 43-101 Disclosure
Ken Donner, P. Eng., Vice President, Operations for the Company,
is the designated Qualified Person for this news release within the
meaning of National Instrument 43-101 ("NI 43-101") and has
reviewed and verified that the technical information contained
herein is accurate and approves of the written disclosure of
same.
About Pure Gold Mining Inc.
PureGold is a growth company, located in the very heart of Red
Lake, Canada. Our objective is pure and simple. To develop a
highly-profitable long life gold mining company, becoming Canada's
next iconic gold producer. Our plan is very disciplined, very
methodical and financially sound. To expand organically, and
develop PureGold's multi-million ounce high grade gold asset
incrementally, step-by-step, using a phased mining development plan
to deliver maximum return.
Additional information about the Company and its activities may
be found on the Company's website at www.puregoldmining.ca and
under the Company's profile at www.sedar.com
1. See Pure Gold press release dated August 7, 2019 for further information.
2. For further information, see the technical report titled
"Madsen Gold Project Technical Report Feasibility Study for the
Madsen Deposit Red Lake, Ontario, Canada" with an effective date of
February 5, 2019, and dated July 5, 2019 (the "Feasibility Study"),
for further information please see www.puregoldmining.ca or under
the Company's Sedar profile at www.sedar.com
ON BEHALF OF THE BOARD
"Darin Labrenz"
Darin Labrenz, President & CEO
Investor inquiries:
Adrian O'Brien, Director, Marketing and Communications
Tel: 604-809-6890
aobrien@puregoldmining.ca
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
All statements in this press release, other than statements of
historical fact, are "forward-looking information" with respect to
PureGold within the meaning of applicable securities laws,
including, but not limited to statements with respect to those that
address proposed timing of development plans for the PureGold Red
Lake Mine complex, timing of expected production, timing and size
of exploration activities, potential for advancing the amount and
timing for higher grade ore, potential for additional resources and
expansion of known deposits and potential for making new
discoveries and the focus of the Company in the coming months .
Forward-looking information is often, but not always, identified by
the use of words such as "seek", "anticipate", "plan", "continue",
"planned", "expect", "project", "predict", "potential",
"targeting", "intends", "believe", "potential", and similar
expressions, or describes a "goal", or variation of such words and
phrases or state that certain actions, events or results "may",
"should", "could", "would", "might" or "will" be taken, occur or be
achieved. Forward-looking information is not a guarantee of future
performance and is based upon a number of estimates and assumptions
of management at the date the statements are made including, among
others, assumptions about future prices of gold and other metal
prices, currency exchange rates and interest rates, favourable
operating conditions, political stability, obtaining governmental
approvals and financing on time, obtaining renewals for existing
licences and permits and obtaining required licences and permits,
labour stability, stability in market conditions, availability of
equipment, accuracy of any mineral resources, successful resolution
of disputes and anticipated costs and expenditures. Many
assumptions are based on factors and events that are not within the
control of PureGold and there is no assurance they will prove to be
correct.
Such forward-looking information, involves known and unknown
risks, which may cause the actual results to be materially
different from any future results expressed or implied by such
forward-looking information, including, risks related to the
interpretation of results at the Pure Gold Red Lake Mine complex ;
changes in project parameters as plans continue to be refined;
current economic conditions; future prices of commodities; possible
variations in grade or recovery rates; the costs and timing of the
development of new deposits; failure of equipment or processes to
operate as anticipated; the failure of contracted parties to
perform; the timing and success of exploration and development
activities generally; delays in permitting; possible claims against
the Company; the timing of future economic studies; labour disputes
and other risks of the mining industry; delays in obtaining
governmental approvals, financing or in the completion of
exploration as well as those factors discussed in the Annual
Information Form of the Company dated March 31, 2021 in the section
entitled "Risk Factors", under PureGold's SEDAR profile at
www.sedar.com .
Although PureGold has attempted to identify important factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking information,
there may be other factors that cause actions, events or 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 statements. PureGold disclaims any intention or
obligation to update or revise any forward-looking information,
whether as a result of new information, future events or otherwise
unless required by law.
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