TIDMPUR
RNS Number : 7717Z
Pure Gold Mining Inc.
22 May 2019
NEWS RELEASE 19-12 May 22, 2019
PURE GOLD REPORTS FIRST QUARTER FINANCIAL RESULTS
VANCOUVER, B.C. - Pure Gold Mining Inc. (TSX-V: PGM, LSE: PUR)
("Pure Gold" or the "Company") is pleased to announce that its
unaudited condensed interim consolidated financial statements
("Financial Statements") for the first quarter ended March 31, 2019
and the accompanying Management's Discussion and Analysis are
available for download on the Company's website at
www.puregoldmining.ca at under the Company's SEDAR profile at
www.sedar.com.
Financial and Operating Highlights through and subsequent to
March 31, 2019:
During the three months ended March 31, 2019 and to date, the
Company completed and advanced a number of key milestones,
significantly de-risking its 100%-owned Madsen Gold Mine ("Madsen")
which culminated in the release of a new mineral resource estimate,
a feasibility study for the Madsen deposit and a preliminary
economic assessment ("PEA") for the Fork, Russet South and Wedge
Deposits in February 2019. A summary of the highlights for the
three months ended March 31, 2019 and subsequent period to date are
as follows:
-- On February 11, 2019, Pure Gold released the results of an
independent feasibility study for the Madsen deposit([1]) . The
feasibility study outlines a high-grade, underground mining
operation with a production rate of 800 tonne per day ("tpd") at
modest initial capital cost and strong financial performance based
upon a US$1,275/troy ounce ("oz") gold. Base case parameters in the
feasibility study assume a gold price of US$1,275/oz and an
exchange rate (Canadian $ to US $) of 0.75. Highlights of the
feasibility study include:
o Probable Mineral Reserves of 3.5 million tonnes at 9.0 grams
per tonne ("g/t") gold containing 1.0 million ozs gold(1) ;
o Modest initial capital requirement of $95 million including a
9% contingency;
o Mine life of 12.3 years with a 13-month pre-production period
from a formal production decision;
o Peak annual production of approximately 125,000 ozs with
average annual gold production in years 3 through 7 of
approximately 102,000 ozs;
o Life of Mine ("LOM") direct operating cash cost([2]) estimated
at US$607 per oz of payable gold;
o LOM all in sustaining cash cost ("AISC")([3]) estimated at
US$787 per oz of payable gold;
o Pre-tax Net Present Value ("NPV") at 5% and Internal Rate of
Return ("IRR") of $353 million and 43% respectively with a 3.0-year
payback of initial capital; and
o After-tax NPV at 5% and IRR of $247 million and 36%
respectively with a 3.3-year payback of initial capital.
The feasibility study supports a high-grade underground mining
operation with engineered stopes containing 1.0 million ozs of gold
in probable mineral reserves. The project benefits from significant
mining, milling and tailings infrastructure already in place,
resulting in a project with modest capital intensity. Mining will
be conducted from new ramp development utilizing a combination of
cut and fill and longhole methods. A new hoist house and double
drum production hoist will use the existing shaft infrastructure to
lift ore and waste from the mine, commencing in year four of
operations.
The proposed Madsen implementation schedule is over a period of
13 months, with underground mine development commencing
approximately 9 months before the first gold pour. The project
requires initial capital of $95 million (including contingency) to
support the construction of an underground mine and associated
infrastructure, including the expansion of existing milling
capacity to 800 tonnes of ore per day.
-- On February 27, 2019 the Company announced results of a PEA
for the Fork, Russet South, and Wedge deposits that demonstrates
the potential to add approximately $51 million to the Madsen
after-tax net present value at an IRR 39%.
The PEA provides a blueprint of how Pure Gold might extend mine
life or with further resource definition and permitting work,
possibly increase the annual production profile at Madsen. The PEA
represents the first conceptual expansion scenario for the future
phased growth of the Madsen Mine.
Highlights of the PEA include(1) :
o Base case parameters assume a gold price of US$1,275/oz and an
exchange rate (C$ to US$) of 0.75;
o Mine life extension of 3.7 years with total production the
Fork, Russet South and Wedge deposits of 210,000 ozs of gold;
o LOM direct operating cash cost([4]) estimated at US$557 per oz
of payable gold;
o LOM AISC(4) estimated at US$712 per oz of payable gold;
o Pre-tax NPV(5%) and IRR of $79 million and 57% respectively
with a 1.6-year payback of initial capital;
o After-tax NPV(5%) and IRR of $51 million and 39% respectively
with a 2.0-year payback of initial capital; and
o Initial capital requirement of $57 million including a 14%
contingency.
The PEA is preliminary in nature and includes inferred mineral
resources that are too speculative geologically to have economic
considerations applied to them that would enable them to be
categorized as mineral reserves. There is no certainty that PEA
results will be realized. Mineral resources are not mineral
reserves and do not have demonstrated economic viability.
-- On March 29, 2019 the Company closed a bought-deal private
placement, pursuant to which the Company issued 7,723,975 common
shares of the Company on a flow-through basis (the "FT Shares") at
a price of $0.67 per FT Share for gross proceeds of $5,175,063 (the
"2019 Offering"). In connection with the 2019 Offering, the Company
paid the underwriters a cash commission equal to 6.0% of the gross
proceeds.
The gross proceeds from the issuance of the FT Shares will be
used for "Canadian exploration expenses" and will qualify as
"flow-through mining expenditures", as those terms are defined in
the Income Tax Act (Canada). The FT Shares issued under the 2019
Offering have a hold period of four months and one day from
closing, expiring on July 30, 2019.
-- The Company began trading on the London Stock Exchange under
the symbol PUR, effective May 21, 2019.
Outlook
Pure Gold is focused on advancing high quality assets that host
the key traits of economic mines: grade, scope, size potential and
access to infrastructure in mining-friendly jurisdictions. Our key
asset is Madsen which comprises in excess of 4,600 hectares of
primarily patented mineral claims in the prolific Red Lake gold
camp of Northwestern Ontario and hosts two significant former gold
producers including the Madsen Mine which had previous gold
production of 2.6 million ozs.
With the feasibility study now complete Pure Gold will continue
to advance Madsen towards development. In August 2018 the Company
announced that it had appointed Endeavour Financial as its
financial advisor to provide advisory services with respect to debt
financing for the construction and development of Madsen. This
process is well advanced and discussions are underway and advancing
with multiple potential financiers. Expressions of interest from
financiers are anticipated by the end of May 2019.
Over the coming months, the Company will be focused on:
-- Continuing work with First Nations to promote a cooperative
and mutually respectful relationship concerning Pure Gold's
development plan, and to finalize an agreement to govern this
relationship;
-- Advancing project finance initiatives;
-- Optimizing the project execution schedule, including detailed
engineering, procurement and permitting;
-- Continuing environmental studies and documentation to support
the update and filing of existing permits and filing for additional
permits that may be required; and
-- Commencing detailed engineering and design activities.
The feasibility study, focused exclusively on the Madsen
deposit, outlines a robust high-grade, low capital mining
operation. Exploration by the Company to date has demonstrated that
Madsen has outstanding potential for growth and opportunities for
scalability. Key opportunities to enhance the project over the
project life include:
-- Potential expansion of the Madsen resource, through
application of the Company's geologic model to target extensions to
the known resource, including:
-- Potential conversion of the inferred resources in the Madsen
deposit to measured and indicated, currently totaling 241,000 ozs
of gold (0.9 million tonnes at 8.4 g/t gold(1) );
-- High-grade 8 Zone expansion potential beyond the reserve
scheduled to commence mining in year four of operations;
-- Potential depth extensions of the Madsen deposit which
remains open as supported by drill hole PG17-456 which intersected
34.6 g/t gold over 4.3 metres at a depth of 1,373 metres below
surface, and AD-11-01 which returned 14.3 g/t gold over 2.0 metres
at a depth of approximately 2,100 metres below surface;
-- Continue exploration at Fork, Russet South and Wedge, and
across the plus 5 kilometre gold system at Madsen, where strong
potential exists for continued growth; and
-- Review and optimization of the mine plan with an opportunity
for additional mine flexibility, potential for increased milling
rates and annual gold production.
With the addition of the PEA for the Fork, Russet South, and
Wedge deposits, Pure Gold has demonstrated the potential to either
add mine life or improve annual production throughput at Madsen
with further advancement of these deposits. Subject to availability
of funds, the Company plans to continue exploring these zones to
define further mineralization and upgrade the resource
classification with the goal of determining the feasibility of
adding production from these zones to the Madsen mine production
profile, as early as practical, in the mine life.
Non-GAAP Measures and Other Financial Measures
Alternative performance measures are furnished to provide
additional information. These non-GAAP performance measures are
included in this news release because these statistics are key
performance measures that management uses to monitor performance,
to assess how the Company is performing, to plan and to assess the
overall effectiveness and efficiency of mining operations. These
performance measures do not have a standard meaning within
International Financial Reporting Standards ("IFRS") and,
therefore, amounts presented may not be comparable to similar data
presented by other mining companies. These performance measures
should not be considered in isolation as a substitute for measures
of performance in accordance with IFRS.
Selected Financial Data
The following selected financial data is derived from our
Financial Statements and related notes thereto for the periods
indicated, as prepared in accordance with International Financial
Reporting Standards. Details of these results are described in the
unaudited condensed interim consolidated financial statements and
Management's Discussion and Analysis for the three months ended
March 31, 2019. These documents can be found on the Company's
website (www.puregoldmining.ca) or on SEDAR at www.sedar.com. All
dollar figures are expressed in Canadian $.
For the three For the three
months ended months ended
March 31, March 31,
2019 2018
-------------------------------------- -------------- --------------
Total Revenue - -
Exploration and evaluation
expenditures $1,646,481 $7,619,266
Net loss for the period attributable
to shareholders $2,834,833 $7,196,939
Total comprehensive loss for
the period $2,834,833 $7,196,939
Basic and Diluted Loss per
Share $0.01 $0.03
-------------- --------------
March 31,
2019 December 31, 2018
----------------------------------------------------------- ------------- ------------------
Cash and short-term investments $7,187,562 $4,277,624
Working capital (current assets less current liabilities) $5,616,537 $3,817,475
Total assets $24,339,863 $20,871,965
Current liabilities $2,008,581 $1,019,408
Non-current liabilities $3,090,537 $2,438,919
Shareholders' equity $19,240,745 $17,413,638
------------- ------------------
This press release should be read in conjunction with Pure
Gold's Condensed Interim Consolidated Financial Statements and
Management's Discussion and Analysis for the three months ended
March 31, 2019. In addition, for further information please see
Pure Gold's Annual Information Form for the fiscal period ended
December 31, 2018. These documents can be found on the Company's
website (www.puregoldmining.ca) or under the Company's profile on
SEDAR at www.sedar.com. Shareholders may receive a printed copy of
the audited consolidated financial statements, free of charge, upon
request.
Qualified Persons and 43-101 Disclosure
Phil Smerchanski, P. Geo., Vice President, Exploration for the
Company, is the designated Qualified Person for this news release
within the meaning of National Instrument 43-101 ("NI 43-101") and
has reviewed and verified that the technical information contained
herein is accurate and approves of the written disclosure of
same.
About Pure Gold Mining Inc.
Pure Gold is a Canadian focused gold developer. It has recently
released the feasibility study for its flagship project, the Madsen
Red Lake Gold deposit, which outlines a 12 year LOM, current
probable reserves of one million ounces at 9 g/t Au in 3.5 million
tonnes, 800 tonne per day underground mining operation with
comparatively low initial capital cost of C$95m and strong
financial performance with after-tax NPV 5% of C$247m and internal
rate of return of 36%. In addition, specific exploration targets
and satellite resources not considered in the feasibility study
suggest an opportunity for near-term growth to potentially further
enhance the economics of the project with after-tax NPV 5% of C$51m
and internal rate of return of 39%.
Additional information about the Company and its activities may
be found on the Company's website at www.puregoldmining.ca and
under the Company's profile at www.sedar.com.
ON BEHALF OF THE BOARD
"Darin Labrenz"
Darin Labrenz, President & CEO
Investor inquiries:
Adam Buchanan, Manager, Investor Relations
Tel: 604-646-8000
info@puregoldmining.ca
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
All statements in this press release, other than statements of
historical fact, are "forward-looking information" with respect to
Pure Gold within the meaning of applicable securities laws,
including, but not limited to statements with respect to those that
address potential quantity and/or grade of minerals, potential size
and expansion of a mineralized zone, proposed timing of exploration
and development plans, the growth potential of the Madsen Gold
Project and opportunities for scalability, planned mining methods,
mineral processing and sources of power, expected annual
production, potential profitability of the Madsen Gold Project at
lower metal prices, expected capital costs, anticipated permitting
requirements and timing thereof, expected development schedule,
expected timing of the completion of the Preliminary Economic
Assessment for the Russet South, Fork and Wedge deposits, potential
conversion of inferred resources to measured and indicated
resources, potential extension and expansion of mineral resources
and the focus of the Company in the coming months . Forward-looking
information is often, but not always, identified by the use of
words such as "seek", "anticipate", "plan", "continue", "planned",
"expect", "project", "predict", "potential", "targeting",
"intends", "believe", "potential", and similar expressions, or
describes a "goal", or variation of such words and phrases or state
that certain actions, events or results "may", "should", "could",
"would", "might" or "will" be taken, occur or be achieved.
Forward-looking information is not a guarantee of future
performance and is based upon a number of estimates and assumptions
of management at the date the statements are made including, among
others, assumptions about future prices of gold and other metal
prices, currency exchange rates and interest rates, favourable
operating conditions, political stability, obtaining governmental
approvals and financing on time, obtaining renewals for existing
licences and permits and obtaining required licences and permits,
labour stability, stability in market conditions, availability of
equipment, accuracy of any mineral resources, successful resolution
of disputes and anticipated costs and expenditures. Many
assumptions are based on factors and events that are not within the
control of Pure Gold and there is no assurance they will prove to
be correct.
Such forward-looking information, involves known and unknown
risks, which may cause the actual results to be materially
different from any future results expressed or implied by such
forward-looking information, including, risks related to the
interpretation of results at the Madsen Gold Project; changes in
project parameters as plans continue to be refined; current
economic conditions; future prices of commodities; possible
variations in grade or recovery rates; the costs and timing of the
development of new deposits; failure of equipment or processes to
operate as anticipated; the failure of contracted parties to
perform; the timing and success of exploration activities
generally; delays in permitting; possible claims against the
Company; the timing of future economic studies; labour disputes and
other risks of the mining industry; delays in obtaining
governmental approvals, financing or in the completion of
exploration as well as those factors discussed in the Annual
Information Form of the Company dated March 20, 2019 in the section
entitled "Risk Factors", under Pure Gold's SEDAR profile at
www.sedar.com.
Although Pure Gold has attempted to identify important factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking information,
there may be other factors that cause actions, events or results
not to be as anticipated, estimated or intended. There can be no
assurance that such information will prove to be accurate as actual
results and future events could differ materially from those
anticipated in such statements. Pure Gold disclaims any intention
or obligation to update or revise any forward-looking information,
whether as a result of new information, future events or otherwise
unless required by law.
[1] See the technical report titled "Madsen Gold Project
Technical Report Feasibility Study for the Madsen Deposit and
Preliminary Economic Assessment for the Fork, Russet South and
Wedge Deposits Red Lake, Ontario, Canada" for further information,
available at www.puregoldmining.ca or under the Company's Sedar
profile at www.sedar.com
[2] Cash cost includes mining cost, mine-level G&A, milling
and refining cost. This is a non-GAAP performance measure; please
see "Non-GAAP Measures and Other Financial Measures" below.
[3] All in sustaining cash cost adjusts cash cost for corporate
G&A and sustaining capital expenditures. This is a non-GAAP
performance measure; please see "Non-GAAP Measures and Other
Financial Measures" below.
[4] Cash costs includes mining cost, mine-level G&A, milling
and refining cost. This is a Non-GAAP measure; please see Non-GAAP
Measures and Other Financial Information" below.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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