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Pure Gold financing to accelerate ramp development

An upsized C$15 million bought deal financing will enable Pure Gold Mining to accelerate development of two ramps at its PureGold (Madsen) mine in the Red Lake district of Ontario, Canada and get into high grades faster, president and CEO Darin Labrenz has told Mining Journal.
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Pure Gold's PureGold operation in Ontario, Canada

The financing was part of a package of up to US$32 million in new funding for the company as seeks to address dilution issues during start-up at the mine. It also included a $20 million amended loan agreement with Sprott Private Resource Lending.

"The bought deal equity raise was flow through Canadian development financing which can only be used for ramp development," Labrenz said.

"We will use it to accelerate the development of the main ramp and east ramp to open up the deposit faster and move to the high-grade quicker. We will be able to recover some time lost because of that."

Pure Gold made its first pour in January from an operation it expects to produce 80,000oz/y. Labrenz said the mill had successfully ramped up and was processing 900 tonnes per day, some 100tpd more than its nameplate capacity. However, the mine was still ramping up as the company addressed issues related to blast overbreak and unmineralised dykes.

"We drove the development quite wide and we are working to shrink the stope openings to alleviate the impact. The first two stopes had 39% overbreak on one and 31% on the other and we have dropped this down to 12% on the most recent blast," said Labrenz.

Labrenz said the dyke dilution impacted one stope and the company was unlucky to encounter a dyke so early during the mine's life.

"Post-mineral dykes are well known in the deposit and they are generally quite small and discontinuous, but they are  difficult to model," he said.

"We built a probabilistic model in the resource to estimate them and diluted the grade of those blocks accordingly. We generally feel really good about that strategy as we have a lot of data for this model, but in a probabilistic model it happens.

"Unfortunately, we took this one early in the mine life."

Pure Gold expects to hit commercial production from the mine this quarter and to be back on plan with 12 active mining faces compared with four during the March quarter.

In the December 2020 quarter, the company processed 3,535 tonnes grading 7.8g/t for 860oz at a 96.6% recovery rate. In the March 2021 quarter, it processed 47,182t grading 2.8g/t to produce 4,011oz at a 95% recovery rate.

Shares in Pure Gold Mining are trading at C$1.44, valuing the company at $577 million.