Pure Gold raising another $13 million for Red Lake
Pure Gold Mining Inc. [PGM-TSXV; LRTNF-OTC] said Tuesday July 16 that concurrent with a $32.5 million bought deal financing announced on June 21, 2019, the company is raising another $13 million for exploration and development in the Red Lake, Ontario, camp where its flagship Madsen Gold Project is located.
The company said it plans to raise the additional funds by issuing another 23 million units at 55 cents per unit on a non-brokered basis. That amount includes 11.85 million units each to AngloGold Ashanti Ltd. [AU-NYSE; AGG-ASX; ANG-JSE], and an institutional investor, thereby increasing the amount raised to $45.5 million.
AngloGold is considered a related party to Pure Gold as it currently owns approximately 14.3% of the company on a non-diluted basis.
Each unit will consist of one common share and one-half of one share purchase warrant. Each warrant is good to buy one share for three years from the closing date of the offering for 85 cents.
It is expected that the transaction will close by July 18, 2019, the company said in a press release on Tuesday.
Pure Gold shares advanced on the news, rising 1.82% or $0.01 to 56 cents. The shares are currently trading in a 52-week range of 49 cents and 81 cents.
Tuesday’s announcement comes after Pure Gold recently took advantage of a buoyant gold price and renewed investor interest in the Red Lake camp by raising $32.5 million from a bought deal financing. The underwriting syndicate led by Sprott Capital Partners LP agreed to purchase 59.1 million Pure Gold units at 55 cents per unit.
Pure Gold is tapping the market for additional financing after recently announcing the results of a test mining program at its flagship Madsen Mine, where the company recently launched a 2019 exploration program that is expected to include 12,000 metres of diamond drilling.
The former Madsen Mine 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 boasts production of 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.
In February 2019, Pure Gold achieved a key milestone at the Madsen Project by announcing an updated mineral resource estimate. This resulted in an 18% increase in the indicated resource to 2,063,000 ounces gold at 8.9 g/t gold (in 7.2 million tonnes) and a 58% increase in the inferred resource of 467,000 ounces gold (in 1.9 million tonnes) at 7.7 g/t gold (in 0.59 million tonnes) at a cut-off grade of 4 g/t gold.
A Feasibility Study that was also released in February 2019 envisages a 12.2-year mine life based on 1.0 million ounces of probable gold reserves. The Feasibility Study also foresees peak annual production of 125,000 ounces, with average production in years three through seven reaching 102,000 ounces annually.
The initial capital requirement is estimated at $95 million.