Pure Gold Mining Inc. [PGM-TSXV] shares rallied Wednesday after the company released an updated mineral resource estimate for its Red Lake, Ontario gold mine.
The company said it has outlined an indicated resource of 1.65 million ounces of gold, grading 7.4 g/t within 6.9 million tonnes. On top of that is an inferred resource of 0.37 million ounces of grade 6.3 g/t within 1.8 million tonnes.
With an effective date of December 31, 2021, the company said the updated estimate replaces an earlier estimate dated February, 2019. The updated estimate will form the basis of a new pre-feasibility study and updated life of mine plan which is expected to be announced by the fourth quarter of 2022.
“The team is confident that the fourthcoming updated pre-feasibility study and life of mine plan will demonstrate the near-term potential of the PureGold Mine and lay the foundation for future growth,’’ said Pure Gold President and CEO Mark O’Dea.
He said the understanding of the Red Lake deposit has been an iterative process over the past several years and has been informed by a vast geological dataset which includes over 1,700 new diamond drill holes and 40,000 new underground chip sample and test hole results and is supported by 18 months of continuous mining operations and underground development.
Pure Gold shares advanced on the news, rising 5.3% or $0.005 to 10 cents on volume of 530,230. The shares are currently trading in a 52-week range of $1.31 and $0.095.
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.
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 wa 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.
These shortages were caused by a combination of factors including development delays, insufficient scheduling flexibility, insufficient geologic information available for stopes prior to mining, equipment downtime, and strategic misalignments.