Pure Gold Mining Inc, the Red Lake-based gold producer, revealed that it has agreed a further credit facility with lending partner Sprott of up to US$6 million, which provides it with the "liquidity and time needed to maintain the positive momentum of its operational turnaround" as well as a new interim CEO.
Sprott has also agreed to waive any existing defaults under the credit agreement, stream purchase agreement, and production payment agreement for a period ending no later than May 15 this year.
As part of the new deal, PureGold will immediately pursue an equity financing for net proceeds of at least US$5 million to be received by the above date.
Chris Haubrich, PureGold's finance chief, said the Sprott deal would also allow "optimization initiatives currently underway" at the firm's flagship mine in Ontario, while the company continues "working toward updating our Life of Mine plan and evaluating a wide range of strategic and potential financing alternatives".
READ: Pure Gold Mining says its Red Lake gold mine generated $32M in revenue since the start of commercial production in August 2021
The company said following management changes, which began in the last quarter of 2021, PureGold's new operational leadership team has accelerated an operational turnaround plan for the PureGold mine as follows.
- Fast-track the operation to a state of positive site-level cash flow by Q3, 2022
- Ramp up throughput to nameplate capacity - 800 tonnes per day (tpd) by H2, 2022 and continue to grow thereafter
- Define a life of mine plan and deliver an updated NI 43-101 technical report for the project in Q4, 2022
Separately, PureGold said its director Mark O'Dea has been made interim president and CEO effective immediately as Troy Fierro has stepped down due to health issues. Fierro will remain as a director, the miner reported.
Since February this year, the company has reduced its workforce by around 20% to 275 employees from 340 and a new six-month mine plan, now started, for the period April to September 2022 has been completed.
This will see the PureGold mine produce ore at an average rate of 615 tpd and average grade of 5.4 grams per ton (g/t) gold, yielding between 2,500 and 4,100 ounces of gold per month trending upward over the period.
The company noted that it remains on track to release an updated resource, reserve and life-of-mine plan summarized in an updated NI 43-101 technical report by Q4 2022.
Based on current cost and revenue projections, PureGold said it expects to need additional capital, on top of the additional debt facility and equity raise, to transition to a state of positive site-level cash flow (expected in Q3 2022) and to complete the updated Life of Mine plan and NI 43-101 Technical Report, expected in Q4 2022.
It said it was evaluating "a range" of strategic and potential financing alternatives to source this capital.
Vancouver-headquartered PureGold owns and operates the PureGold mine in Red Lake, Ontario, which entered commercial production in 2021 after the successful construction of an 800 tpd underground mine and processing facilities.
Contact the author at giles@proactiveinvestors.com