A resource of 1 million ounces of gold in a prolific gold mining jurisdiction of Red Lake Ontario
Proven high-grade gold system with a clear path to production
Low capital intensity project with significant infrastructure in place
Who is Pure Gold Mining?
The mining company is aiming to put the project into production within the next 13 months – an achievable goal given the scale of the project and the amount of infrastructure already in place in Red Lake.
Known primarily as the company-builder of gold mining giant Goldcorp, the Red Lake region is one of the most prolific areas of precious metal production in the world with over 2.6 million ounces of gold produced.
CEO Darin Labrenz is a Red Lake camp veteran who now leads a multifaceted team of experienced geologists and mining operators. On the Pure Gold board are a number of directors with serious capital markets expertise to assist in navigating the financial realities of mine-building.
The Madsen mine produced 2.6 million ounces of high grade gold during its 36 years of historical operation.
A February 2019 feasibility study on the Madsen project outlined a long-life, high-margin mine with low initial capital requirements and a fast timeline to production.
Highlights of the study outline a 12-year, 800 ton per day underground operation, with probable mineral reserves of 3.5 million tons at 9 grams per ton containing 1 million ounces of gold.
Once a production decision is made, the timeline from construction to operation is expected to be around 13 months. According to the feasibility study, initial capital requirements to build the mine is C$95 million.
The study also outlined robust economics showing a 36% after tax internal rate of return and a net present value of C$247 million post-tax.
Given that the project is in the historic Red Lake area, the surrounding communities are generally very supportive of the mining industry, which clears the way for the permitting process.
Exploration work on deposits surrounding Madsen also highlight the project’s upside. A preliminary economic assessment on the Fork, Russet South and Wedge deposits revealed the potential to add another $51 million to the Madsen project.
According to the PEA, the deposits could add another 3.7 years to the mine life with total production of 210,000 ounces of gold.
What the CEO says
CEO Darin Labrenz thinks that the PEA is a blueprint for Pure Gold’s plan for phased growth and expansion.
“People are excited about our ability to deliver,” he said in an interview with Proactive. “This PEA allows us to start talking about a blueprint for the ability to impact the production profile. It lays out a path for us to continue to work on deposits to convert inferred resources to indicated and potentially looking at bringing them up earlier in the mine life, which can have tremendous value add for the project.”
Labrenz and his team are confident that Pure Gold’s shareholders are tuned into the quality of the project and value that it brings not only to the company itself, but the surrounding communities in Red Lake.
“There are many ways you can measure the quality of a project and what we like to look to is location, size and scale,” he said. “Our project is in Red Lake – an iconic mining district. We have 2.5 million oz of historic production that produced continuously for 36 years.
“In terms of longevity, the feasibility study shows an operating mine for 12 years, so if we add that (to the 36 years of past production) we get to 48 years of production. If that doesn’t demonstrate a strong return for investors and (positive) impact on society, I’m not sure what does.”
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