Pure Gold Mining is Canada’s newest gold producer

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  • Commercially producing gold at its PureGold mine in Red Lake, Ontario
  • Probable mineral reserves of 1 million ounces of gold
  • Strong set of strategic investors including AngloGold Ashanti and Eric Sprott

What Pure Gold Mining does:


Pure Gold Mining Inc (CVE:PGM) (LON:PUR) (OTCMKTS:LRTNF) is advancing the PureGold mine in Red Lake Ontario – one of the highest grade gold mines in the world – and first gold has now been poured.


The project sits in the 7 kilometer (km) Madsen Red Lake gold system and there is huge exploration upside here.


The area already has significant infrastructure in place. The Red Lake mining camp in northwestern Ontario has produced nearly 30 million ounces of gold over the past 85 years, making it one of the largest and highest-grade gold-producing districts in Canada.


The PureGold mine is poised to be the fourth highest-grade gold mine in Canada at 9 grams per ton (g/t) and the 16th highest grade gold mine globally, making it higher grade than 95% of gold mines anywhere in the world. The company is developing the mine with scalable, phased approach, and the first phase is set to produce 1 million ounces.


This first one million announces will generate over C$2.3 billion in revenue over the next decade, says the company, and over C$1.2 billion in pre-tax free cash flow. .


PureGold has defined a 2.1 million ounce indicated resource (7.2Mt at 8.9 g/t gold) and a 0.5 million ounce inferred resource (1.9Mt at 7.7 g/t gold) at the PureGold mine.


In 2019, a feasibility study for Phase 1 pegged the pre-tax net present value (NPV) at C$353 million, with a pre-tax IRR (internal rate of return) of 43%, based on a gold price of US$1,275. That NPV moves to US$390 million and IRR at 51% based on a gold price of US$1,500 per ounce.


The first phase project is fully funded and in August 2019, the firm announced a US$90 million project finance package. The aim of the second phase is to extract high-grade ounces of gold already drilled off in the immediate area of the Phase One mine.


Pure Gold is supported by some key strategic investors experienced in building multi-billion dollar gold mining companies. Its largest shareholder is mining titan AngloGold Ashanti, while its second and third-largest shareholders are Eric Sprott and Van Eck Associates Corporation.


Chief executive Darin Labrenz is a Red Lake camp veteran who now leads a multifaceted team of experienced geologists, mine builders, and mine operators, supported by a board with proven capital markets expertise and rich history of building and operating mines.


The firm, last year, put out a corporate video which vividly highlighted the excitement surrounding its PureGold Mine in Ontario. See below:




How is it doing:


Pure Gold can now say, with conviction, that they are a gold-producing company.


Over the summer the company hit a major milestone, beginning commercial production at its PureGold Mine in Red Lake.


Following a successful commissioning period, the mine, milling facilities, and other critical systems are now all operating in line with or rapidly approaching design capacity of 800 tonnes of ore per day on a sustainable basis.


Earlier in the summer, Pure Gold reported on a ‘milestone’ second quarter, which saw an uplift in gold production and increased ramp-up rates at its flagship development mine.


At the mine, 6,261 ounces of gold were produced in the three months to end June 2021, up by 46% from the 4,291 ounces generated in the first quarter of the year, while throughput was 509 tonnes per day (tpd) for the quarter and 577 tpd in June alone.


The first phase is set to produce 1 million ounces, according to Pure Gold, which alone will generate over C$2.3 billion in revenue over the next decade and over C$1.2 billion in pre-tax free cash flow.


On the financing front, in May the company closed its previously-announced offering of flow-through shares at an issue price of $1.52 each for gross proceeds of $17,250,024 which includes the full exercise of the underwriters’ over-allotment option.


In April 2021, Pure Gold announced high-grade results from underground drilling at the mine, which shows the potential to improve on the near-term mine plan.


Drill results included 56.6 grams per tonne (g/t) gold over 1 metre (m) from one hole, and 8.7 g/t gold over 7.9m in another. Another hole intersected 30.5 g/t gold over 0.6m. The assays come from work completed in the first quarter this year close to new mine development and next to planned stoping areas.


These results are now being integrated into near-term mine planning, while development completed to date from the main ramp will allow production from some of these areas in 2021.


Inflection points:


  • Ramp up of gold production at PureGold mine to 800 tpd
  • Strengthening gold price
  • Brownfield exploration across Red Lake property area

What the broker says:


In an August 3 note, Stifel GMP lauded the start of commercial production at Pure Gold’s mine.


“Pure Gold Mining has commenced production at an exceptional time for a new producer, with high gold prices and forecast low AISC expected to generate strong cash flow, capable of funding its exploration program aimed at supporting a larger and longer-life operation, as well as maintaining a strong balance sheet,” analysts wrote.


“We expect 2021 to be an active year for Pure Gold Mining.”


Stifel GMP analysts maintained their ‘Hold’ rating and C$1.31 per share price target on Pure Gold Mining stock.


What the boss says:


In a statement announcing the production milestone in August, Darin Labrenz, president & CEO of PureGold, commented: “Commercial production is a significant milestone and marks the beginning of a very exciting growth phase for the company.”


He continued: “By combining stable gold production with the high-grade exploration potential that makes the PureGold Mine so unique, we are making significant progress toward our goal of unlocking the full potential of the PureGold Mine and becoming Canada’s next iconic gold producer.”




Contact Angela at [email protected]


Follow her on Twitter @AHarmantas

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