Pure Gold Mining Inc (TSX-V:PGM, LSE:PUR, OTC:LRTNF) is now on the right track according to Stifel GMP analysts, who have repeated their ‘Speculative Buy’ rating on the stock following an analyst tour on October 6 of the company’s gold mine in Red Lake, Ontario.
In a note to clients, the analysts also reiterated their C$0.25 target price. Pure Gold’s TSX-V shares are currently trading at about C$0.14.
The analysts noted that the company had faced several operational and financial challenges since its start-up at the end of 2020, but it was apparent that a significant turnaround was underway, driven by positive changes in its leadership over the past eight months.
READ: Pure Gold Mining achieves 3Q gold production guidance at Ontario PureGold Mine; reveals 4Q outlook
“Throughout the tour, we were impressed by the culture, attitudes, and leadership exhibited by everyone we met,” they wrote. “In particular, we believe the site general manager and COO, both of whom joined in February, have been at the forefront of the changes, improving accountability, driving efficiencies, reducing costs, and ultimately improving the culture and the desire to succeed.”
The analysts continued: “Except for liquidity, which remains tight, we believe lessons have been learned and Pure Gold is now on the right track.”
They added that they did not believe the orebody was impaired or the cause of past issues, rather insufficient capital during construction and start-up, insufficient definition drilling and mine planning, and not having the right people in place during this critical phase were the underlying issues.
“We expect 2022 to be a transition year for Pure Gold Mining as the mine ramps up, improves operating costs and proves its production and cash-generating potential,” they wrote. “The upcoming pre-feasibility study (PFS) we view as a critical document to help estimate the company's long-term potential and value.”
Pure Gold is a Canadian gold mining company that owns and operates the Pure Gold Mine located in Red Lake, Ontario.
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