PureGold Mining Inc. [PGM-TSXV; PUR-London; LRTNF-OTC] is in the final stages of preparing for first gold pour at its 100%-owned PureGold Mine located in the heart of Red Lake, Northwest Ontario, Canada. And with this, PureGold will open the only new gold mine in Canada to start producing in 2020.
Two sweet spots in the evolution of a new producer
There are two sweet spots in the evolution of a new gold producer, from discovery to production. The first of course, is discovery itself. Since 2015 PureGold has defined a robust orebody within a +7-kilometre-long, high grade gold system. Two historic mines operated on PureGold’s property, and these mines along with the famed Red Lake Mine Complex account for over 90% of the prolific camp’s 30 million ounces of production to date.
Armed with fresh ideas and new geological models, the PureGold team made multiple discoveries at surface and at depth; fresh ore in fresh rock.
In just five years, PureGold has defined Indicated Mineral Resources totalling 7,196,000 tonnes grading 8.9 g/t gold, for 2,063,000 ounces and Inferred Resources of 1,880,000 tonnes at 7.7 g/t gold, for 467,000 ounces. This includes Probable Mineral Reserves of 3,512,000 tonnes grading 9.0 g/t gold, for 1,013,000 ounces. All of this defined by an incredible 1.3 million metres of drilling.
And they have three new near surface gold discoveries -the Wedge, Russet South, and Fork Zones, each wide open along strike and at depth. To date, drilling in each of these areas has returned phenomenal results, with Wedge drilling intersecting 7.2 metres of 37.7 g/t gold and 5.4 metres of 156.1 g/t gold, Fork drilling returning 2.7 metres of 54.1 g/t gold and 1.3 metres of 50.5 g/t gold and drilling at Russet South yielding 2.1 metres of 76.6 g/t gold and 4.8 metres of 32.3 g/t gold. Importantly, the Company has moved each of these zones quickly from discovery to delineation of a reportable mineral resource, providing an opportunity to define a scalable PureGold mine.
PureGold’s system is deep rooted and gold deposits like this often continue for kilometers at depth. At the PureGold mine, a single high-grade drill intercept anchors the deposit at over two kilometres underground, almost a kilometre below the existing mineral reserves, highlighting the long-term potential for this mine to expand far beyond the initial mine plan. The neighbouring Red Lake Mine Complex, for example, is currently being mined at over twice the depth (2.5 km) of PureGold’s established reserves.
“These types of deposits, such as you find in the Red Lake camp, have deep roots,” said PureGold Director and co-Founder Mark O’Dea. “To date, our deepest reserves and resources are about a kilometre in depth. However, we have a two-kilometre deep drill hole that returned 14.3 g/t gold over two metres. We believe, considering the depth of Evolution’s Red Lake Mine Complex at 2.5 kilometres deep, we could expect to continue to define our orebody a lot deeper than the current levels of our reserves and resources. This is a big mineral system that is open to depth and along strike for at least seven kilometres.Â We have barely scratched the surface.”
O’Dea also noted that the PureGold reserves includes very high-grade gold zones, such as the 8 Zone, that are also open to depth and along strike, with average grades of two to three times current reserves providing the opportunity for explosive transformative growth.
This tremendous growth potential has attracted major investors, including Eric Sprott with a $30 million investment, Anglogold Ashanti and Newmont.
The Company has assembled an outstanding team of proven mine operators with a combined experience spanning 68 mines globally, including the historic Red Lake Mine Complex, which has produced 25 million ounces to date. Their Board and executive management team have deep Red Lake experience, including CEO, Darin Labrenz, who was the head geologist in the mid 1990’s for mining giant Placer Dome at The Campbell Mine, part of the Red Lake Mine Complex.
On schedule to pour first gold before Christmas, PureGold is fully funded through to production, including an aggressive +30,000 metre ongoing exploration and expansion drilling program which is currently underway.
The Phase One mine plan will produce one million ounces of high-grade gold. The high-grade nature of the deposit leads to a low unit cost, with an all-in sustaining cost (AISC) of $787/oz. Of course, this is taking place when gold is at all-time record highs, meaning the Phase One mine will deliver significant free cash flow, with margins of over US$1,013/oz or over C$1,350/oz at the time of writing.
PureGold plans to continue their aggressive discovery program, funded by strong free cash flow generated by the Phase One Mine as part of a phased growth strategy. They plan to ramp up mining operations and generate strong positive cash flow, on one hand, while also creating growth through expanding gold resources, on the other, aiming to build a multi-generational mining operation.
Hiring at site is progressing according to plan and, when their mill starts, the company expects to have approximately 25,000 tonnes of ore stockpiled and ready to process.
Which brings us to the second sweet spot in the evolution of a new gold producer; sitting on the cusp of production, which is precisely where PureGold is today. The PureGold Mine is just weeks from first gold pour and poised for the re-rate which typically accompanies the jump from developer to emerging producer.
The PureGold Mine will be the fourth highest grade gold mine in Canada and the sixteenth highest in the world, placing it in the top 5% globally. And yet the team behind PureGold, with Red Lake’s next gold producer, the PureGold Mine, is already thinking beyond the Phase One mine, recognizing an extraordinary opportunity for growth and expansion.