Pure Gold files for creditor protection
Pure Gold Mining Inc. [PGM-TSXV] has filed for protection under the Companies Creditors Arrangement Act. It said the CCAA proceedings are intended to facilitate a restructuring of the company’s balance sheet, the injection of additional capital, a sale of the company or its assets.
“Among other things, the initial order authorizes the company to borrow under an interim credit facility from its lending partner Scott Private Resource Lending 11 LP, in order to meet the company’s cash needs for the continuation of its business activities and preservation of its property.
KSV Restructuring Inc. has been appointed as monitor and management of Pure Gold is expected to remain responsible for the day-to-day operations under the general oversight of the monitor.
Meanwhile, as of November 2, 2022, the company’s stock market listing will transfer to the NEX, the company’s tier classification will change from Tier 2 to NEX, and the filing and service office will change from Vancouver to the NEX. The trading symbol will change to PGM.H from PGM.
On October 31, 2022, the shares closed at $0.015, down from the 52-week high of $1.08.
The CCAA filing comes after the company suspended operations and immediately put its Red Lake, Ont., gold mine on care and maintenance.
The company had warned that if additional outside financing is not obtained in the short term, it would not be able to meet its obligations as they become due, resulting in a default under its debt obligations.
The company said it is suspending operations in Red Lake following an evaluation of several potential alternative scenarios that were necessary because the mine had not yet achieved consistent positive site-level cash flow, notwithstanding recent reductions in operating costs and sequential quarter over quarter increases in production.
The company recently became a gold producer when it delivered on a promise to build Canada’s newest gold mine in the heart of Red Lake. 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.
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.
However, Pure Gold recently announced a series of executive management changes aimed at dealing with operational challenges at the mine site.
Among the key challenges was maintaining access to enough high-confidence, high-grade stopes to provide high-grade ore to the mill. “Shortages of high-grade ore at various times have led to blending of low-grade development material and stockpiles which has reduced the overall feed grade to the mill,” Fierro said recently.