viewPure Gold Mining, Inc.

Pure Gold Mining set on building Canada's next iconic gold mine


Red Lake in Ontario has produced nearly 30 million ounces of gold over the past 85 years

Pure Gold Mining, Inc. -

Quick facts: Pure Gold Mining, Inc.

Price: 2.22 CAD

Market: TSX-V
Market Cap: $867.87 m
  • Probable mineral reserves of 1 million ounces of gold
  • Strong set of strategic investors
  • On track to start producing before Christmas

What Pure Gold Mining does:

Pure Gold Mining Inc (CVE:PGM) (LON:PUR) (OTCMKTS:LRTNF) is advancing Canada’s highest-grade gold development stage deposit, the Madsen Red Lake mine in Ontario, to first production, which is on track to start for the fourth quarter this year.

Investors should also note that, concurrent to construction, the company has big growth plans and has a fully funded exploration drilling and resource delineation program, centered on the 7 kilometer (km) Madsen Red Lake gold system.

The area already has significant infrastructure in place at Madsen. The Red Lake, this 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.

Madsen is the highest-grade, at 9 grams per tonne (g/t), underground development project in Canada and ranks 11th out of 132 projects globally. It is set to be developed in two phases, the first of which will generate 1 million ounces.

Last year, 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 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.

The first phase project is fully funded and in August 2019, the firm announced a US$90 million project finance package.

The firm is supported by some key strategic investors experienced in building multi-billion dollar gold mining companies. Pure Gold's largest shareholder is mining titan AngloGold Ashanti with 14%. The second and third largest shareholders are Eric Sprott and Van Eck Associates Corporation, holding 10% and 5.7% respectively.

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 a rich history of building and operating mines

How is it doing:

Pure Gold Mining has put in place measures amid the current global coronavirus pandemic but is operating, continuing construction, and on track for first gold before Christmas 2020.

On May 11, it noted that the current high gold price augurs well for the financials of its mine. In its 2019 feasibility study, gold was put at US$1,275 an ounce, which, when factoring in the exchange rate, represents C$1,700 an ounce

But with the yellow metal now at nearer C$2,400 per ounce, the mine would generate an additional C$679 million in revenue over the base case of the feasibility, the company revealed.

The group also said in May that it aimed to begin drilling in a bid to convert resources to reserves and increasing resources from new high-grade discoveries at surface and at depth. Initial work will focus on the growth of mineral reserves in areas earmarked for 2020 and 2021 production.

Detailed engineering at the process plant is now 95% complete, while 60 new employees, have been hired, most of whom are Red Lake residents, Pure Gold said.

Substantial progress has been made on refurbishing the semi-autogenous grinding (SAG) mill, it said, while pre-production underground ramp development as part of the test mining program was initiated ahead of the feasibility schedule and continues to progress apace.

Inflection points

  • Completion of construction
  • First gold
  • Positive exploration results

What the boss says:

Pure Gold CEO Darin Labrenz spoke to Proactive in May and suggested there was no better time to be building a gold miner. He noted that even before the pandemic, there was increased economic uncertainty around the world, adding to the metal's safe-haven status.

"We've seen real interest rates declining towards zero, government debt is rising. Right now, with the amount of debt governments across the world are taking on, it really does seem to be a very positive and constructive environment for gold," he said.

"When you look at our project today, it's poised to generate about US$1.2 billion in pre-tax cash flow and again that's just for the first phase of our growth plans for this project. It's pretty phenomenal what we're looking at right now from a market perspective."

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Pure Gold releases more impressive drill results from their underground work...

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