Pure Gold raising $25 million for Red Lake mine

TORONTO – Pure Gold Mining Inc. [PGM-TSXV] said Thursday it is raising $25 million to fund development at its Red Lake, Ont., mine, a move that could result in AngloGold Ashanti Ltd. [AU-NYSE] increasing its stake in Pure Gold to 19.9% from 14.9%.

The first $9 million will come from a bought deal offering of 16.9 million common shares at 53 cents per share. The underwriting syndicate has been granted an option to purchase an additional 9.4 million shares, potentially adding another $5 million to the bought deal proceeds.

The company said it has also agreed to a concurrent non-brokered private placement of 30.2 million common shares at the offering price with Pure Gold’s largest shareholder, AngloGold Ashanti, a move that is expected to add $15.9 million to the financing proceeds.

AngloGold Ashanti currently holds 65.6 million common shares of Pure Gold, or 14.9% non-diluted. It also holds warrants that, if exercised, could increase its stake to 15.25%.

Following closure of all the announced transactions, AngloGold Ashanti will hold 95.9 million Pure Gold common shares, plus 1.65 million warrants, representing a 19.9% interest on a partially-diluted basis.

The funding news comes after Pure Gold recently announced management changes, including the appointment of Troy Fierro, a company director and mining engineer, as President CEO.

He replaces Darin Labrenz, who is stepping down from the board.

Pure Gold recently became a gold producer when it delivered on a promise to build Canada’s newest gold mine in the heart of Red Lake, Ontario. The first gold was poured on December 29, 2020.

That marked the return to life of the former Madsen mine, which is situated in the Red Lake area, an established mining district with more than 29 million ounces of high-grade gold production to date. Interest in the region is being fueled by high grade gold discoveries at Great Bear Resources Ltd.’s [GBR-TSXV] 100%-owned Dixie Lake project.

Madsen produced 2.5 million ounces between 1938 and 1976. The project benefits from existing infrastructure, including a mill and tailings facility, paved highway access, and access to power, water and experienced labour.

The company has a fully-built mine site with an 800-tonne-per-day mill. However, it has faced significant challenges in recent months. They include maintaining access to enough high-grade stopes needed to provide high-grade ore to the mill.

For the month of December, 2021, the Pure Gold mine averaged 662 tonnes per day of ore milled at a grade of 6.1 g/t gold with 96% recovery for 3,905 ounces of gold produced. Production in the fourth quarter of 2021 amounted to 7,657 ounces, compared to 9,260 ounces in the third quarter of 2021, and 6,287 ounces in the 2021 second quarter.

On Thursday, Pure Gold shares eased 7.1% or $0.045 to 58.5 cents on volume of 1.38 million. The shares are currently trading in a 52-week range of   and trade in a 52-week range of  $2.34 and 61 cents.

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Author: Editor