Pure Gold Mining Inc. [PGM-TSXV; LRTNF-OTC] on Monday February 11 announced the results of a positive feasibility study for its 100%-owned Madsen-Red Lake project in northwestern Ontario.
The feasibility study sees Madsen-Red Lake as an 800 tonne-per-day, high-grade underground mining operation with a 12-year life span.
The study says it will support a peak annual production of approximately 125,000 ounces with average annual gold production in years three to seven of approximately 102,000 ounces.
Achieving that rate of production would require initial capital of $95 million [including and $8.1 million contingency] to support construction of the underground mine and associated infrastructure, including the expansion of the existing mill.
The total life-of-mine Capex is forecast at $327 million, including closure costs.
The feasibility study is based on probable mineral reserves of 3.5 million tonnes at 9.0 g/t, containing 1.0 million ounces of gold.
The life-of-mine all-in sustaining cost is estimated at US$787 per ounce of gold recovered.
Spot gold, by comparison was trading Monday at US$1,308.02 an ounce. The study assumes a gold price of US$1,275.00 an ounce.
“The Madsen-Red Lake orebody is an exceptional foundation on which to build a gold mining company. With access to existing infrastructure, a high grade reserve and exceptional growth potential, Madsen is one of the outstanding gold deposits in Canada,’’ said Pure Gold President and CEO Darin Labrenz.
“With the completion of the feasibility study being one of the last de-risking steps, we look forward to rapidly advancing Madsen-Red Lake to become Canada’s next gold mine,” Labrenz said.
News of the feasibility study comes after Pure Gold recently released the results of a test mining program at Madsen.
During the program, Pure Gold extracted 7,096 tonnes of mineralized material from three distinct stoping areas.
The company said results exceeded its expectations with regards to tonnage, grade and mining widths.
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.
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.
Monday’s announcement does not say when exactly the mine will be in production. However, it says the Madsen implementation schedule spans a period of 13 months, with underground mine development commencing approximately nine months before the first gold pour.
On Monday, Pure Gold shares eased 12.66% or $0.10 to 69 cents on volume of 1.64 million. The shares trade in a 52-week range of 50 cents and 81 cents.