Pure Gold Mining Inc (TSX-V:PGM, LSE:PUR, OTC:LRTNF) said it has arranged a non-brokered private placement of 200 million units of the company at a price of 15 cents per unit for aggregate gross proceeds of $30 million.
The company said it may elect to upsize the offering to up to a maximum of 266,666,666 units for aggregate gross proceeds of up to $40 million based on demand.
In a statement, Terry Smith, chief operating officer of Pure Gold, said: "This financing will give the company the opportunity to get back on track to becoming a great new mining business in Canada. We have all the ingredients we need to turn around the operation, including a strong geological understanding of the asset, a newly established lower cost base and a talented team that can deliver. We are excited to get to [third quarter], when we'll be operating a stable, cash-flowing operation, with a new technical report coming soon thereafter outlining the bright future that the Pure Gold mine has."
Proceeds from the equity financing will be used to complete the company's near-term objectives of ramping up the Pure Gold mine to 800 tonnes per day by the third quarter of 2022, reducing operating and sustaining capital costs in the second quarter of 2022 by at least 30% compared with the first quarter of 2022, achieving sustainable positive site-level cash flow by third quarter 2022, completing critical trade-off studies in support of the updated mineral resource, mineral reserve and life of mine plan expected to be released by fourth quarter 2022, and for general corporate purposes.
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The company said each unit in the private placement will consist of one common share and one common share purchase warrant. Each warrant will be transferable and entitle the holder to acquire one common share of Pure Gold for six months from the closing date of the offering at a price of 18 cents subject to certain adjustments.
The company has agreed to pay a cash finder's fee of 6% of the aggregate proceeds raised from subscriptions arranged by certain finders.
The company noted that its largest shareholder, AngloGold Ashanti Ltd has the right to maintain its pro-rata ownership interest in the company of up to 19.9% on a partially diluted basis. The company expects that AngloGold Ashanti will exercise its right in full, but there is no certainty of this outcome.
It also noted that certain directors, officers and insiders of the company are expected to purchase or acquire direction and control over an aggregate of between 10 million and 13,333,333 units under the offering.
The offering is expected to close on or about May 13, 2022, and is subject to certain conditions, including receipt of all applicable regulatory approvals including the approval of the TSX Venture Exchange. There is no certainty that the offering will close.
The securities to be issued under the offering will be issued on a private placement basis and will have a hold period of four months and one day from the applicable closing date in accordance with applicable securities laws.
Operational update
Pure Gold said that since its last press release, dated April 22, 2022, additional assay results from the approximately 60,000-metre definition drilling completed since November 2021, have been received.
New mining areas have been identified in upper McVeigh (above one level) and in upper Austin, just beneath McVeigh. Both areas are readily reachable with primary development access already in place.
These areas are currently being integrated into an updated six-month plan, with the expectation of enhancing the grade and overall tonnes available. Continuing definition drilling success will translate into inventory growth affirming the company's confidence in its production forecasts for both ore tonnes and grade throughout the rest of 2022, Pure Gold said.
The company added that it is well on its way to achieving the stated goal of a 30% reduction in operating and sustaining capital costs in the second quarter of 2022 compared with the first quarter of 2022. Based on preliminary results, operating and sustaining capital costs for April were down by approximately $3.8 million or approximately 27% compared with the average monthly costs in the first quarter of 2022, with further reductions expected in May. The majority of these reductions are expected to be sustainable going forward.
Tony Makuch joins as technical adviser
Pure Gold also announced that Tony Makuch has joined the company as a technical adviser to provide input on mining activities, development strategies, exploration efforts and organizational efficiencies.
The company noted that Makuch brings over 40 years of management, operations and technical experience in the mining industry. Most notably, he served as president and chief executive officer of Kirkland Lake Gold from 2016 until shortly after its $30 billion merger with Agnico Eagle Mines, which established it as the world's third-largest gold producer in February 2022.
Mark O'Dea, president and chief executive officer of Pure Gold commented: "On behalf of our executive management team, I would like to welcome Tony to Pure Gold. Tony's operational skills in high-grade underground mines, including in Red Lake, add significant bench strength to Pure Gold's growing operational team. His track record as a driving force behind some of the gold mining industry's most successful companies in the last decade speaks for itself. I look forward to working with Tony."
Makuch added: "I spent 10 years of my career in the Red Lake camp, and I hold a soft spot for both the people and the rocks that have made the district world-renowned. I see an opportunity to be involved in the creation of value through careful planning, executing and maintaining a commitment to operational excellence. I look forward to sharing my own experience to help the Pure Gold mine reach its potential."
Pure Gold is a gold mining company, located in the very heart of Red Lake, Ontario, Canada.
The company owns and operates the Pure Gold mine, which entered commercial production in 2021 after the successful construction of an 800-tonne-per-day underground mine and processing facilities. Gold reserves and resources are centred on a 47-square-kilometre property with significant discovery potential.
Contact the author at jon.hopkins@proactiveinvestors.com