Broker Stifel GMP is upbeat on the prospects for Red Lake-focused Pure Gold Mining Inc following its recent announcement of management changes and an operational update.
"Going back to basics with an emphasis on mine planning, scheduling, accountability and making definition drilling a priority is now a focus and what we think Pure Gold needs," analysts said in a note.
Director and seasoned mining engineer Troy Fierro with over 35 years of operating experience in start-ups and early-stage operations replaced Darin Labrenz as president and CEO, while Chris Haubrich was appointed the new chief financial officer (CFO). These new appointments all follow the appointment of director Maryse Belanger in November as the mine's new general manager, noted Stifel.
On January 4, Pure Gold reported that issues surrounding accessing high-grade ore at its flagship mine had meant that changes to mine planning and scheduling were implemented in the fourth quarter to end-December and both ore production and head grade have been steadily increasing since.
READ: Pure Gold Mining reports changes to leadership team and provides 4Q update as it continues to unlock potential of Red Lake mine
"The initiatives implemented include reorganization of information and workflow structures including mine planning and scheduling, expanded definition drilling (targeting to delineate 6 months of production drilling to give clarity on production plans), implementation of a geologic confidence-based model, all of which in combination are expected to drive a sustainable increase in throughput and head grade," said Stifel analysts.
"Such initiatives are showing early signs of improvements with the last three weeks of December averaging 760 tpd @ 6.6 g/t," they highlighted.
Indeed yesterday, the firm noted that output overall in December had been a record, with the PureGold mine averaging 662 tonnes per day (tpd) of ore milled at a grade of 6.1 grams per ton (g/t) gold, with 96% recovery for 3,905 ounces of gold produced.
The broker also noted initiatives, which are expected to positively impact costs at the mine, including the elimination of senior management roles (reduced G&A), new crushing and hauling contract (reduce material handling costs by 25%), inexpensive upgrades to the gravity circuit to drive recovery up (1-2%), and sourcing and installation of camp all aimed at reducing G&A and opex costs.
"While we are maintaining our HOLD rating and trimming our target price to C$1.30 (from $1.40), we are increasingly optimistic about the company's future, but are watching for proof of execution over the coming months," said the analysts.
Contact the writer at giles@proactiveinvestors.com