Big Picture – A Deep Dive Examination of Pure Gold Mining
Pure Gold Mining Snapshot
Madsen Gold Project - Overview
Pure Gold Mining is advancing a high grade mine with existing infrastructure and permits to operational readiness and resource growth from a 2017 Preliminary Economic Assessment that projects 910,000 ounces of gold produced over 14 years and a robust after-tax internal rate of return of 47%1.
A Definitive Feasibility Study for the Madsen Gold Deposit is in progress with metallurgical, plant, infrastructure, and development studies proceeding. Results are expected in the fourth quarter of 2018. Environmental baseline and permitting updates are also underway. A production decision is expected in late 2018.
In December, 2017, the Company announced a new and expanded mineral resource estimate for the Madsen Gold Project incorporating two new satellite deposits the Russet South and Fork Deposits in close proximity to the Madsen mine and mill complex1. An aggressive exploration program subsequently resulted in the discovery of the Wedge satellite deposits in January 20182. Continued exploration drilling at Wedge, Fork, and Russet has been successful and is expected to provide potential expansion and project scalability opportunities at Madsen3. Exploration drilling is expected to continue through 2018. Drill results from the Wedge, Russet South and Fork Deposits will be incorporated into an updated resource estimate and economic study in Q4 2018.
Location: Located in Red Lake, Ontario, an established mining jurisdiction with more than 29 million ounces of high margin, high grade gold produced to date4.
High Grade: Madsen is one of the highest grade undeveloped Gold deposits in the world5. High grade gold mineralization is structurally controlled and hosted in altered basalt near ultramafic contacts.
Existing Infrastructure and Permits: The 47 square kilometre patented land position is host to two significant past producing mines, including the Madsen Mine which together produced approximately 2.5 million ounces of gold over a 36 year operating history. Substantial infrastructure is in place, including existing power and paved highway access, a 1,275 metre deep shaft and headframe, 27 levels of underground workings, a portal and ramp which is currently open and active for exploration and a mill and tailings facility with an existing Environmental Compliance Approval which allows for operation of a 1,089 tonne per day milling and processing facility1.
Current Mineral Resources Estimate1:
- Indicated mineral resource of 1,744,000 ozs gold in 6.24 million tonnes grading 8.7 g/t Gold (4 g/t cut-off);
- Inferred mineral resource of 296,000 ozs gold in 1.16 million tonnes grading 7.9 g/t Gold (4 g/t cut-off)
- In December 2017, the Company released a Preliminary Economic Assessment (PEA) for an underground mining operation as a long life, high margin mine, with low initial capital requirements and fast timeline to production.
- The PEA presented an after-tax net present value (at a 5% discount rate) of $258 million and an internal rate of return of 47% with a 2.8 year payback of initial capital with production of 910,000 ounces of gold during a mine life of 14 years. The pre-production construction period would be 12 months with an initial capital investment of $51 million1.
Satellite deposit growth through exploration provides potential scalability:
- Madsen’s satellite deposits are outcropping at surface, road accessible, close to existing milling infrastructure (1-3 kilometres), and remain open for expansion.
- In May 2018, the Company announced an additional 21,000 metres of exploration drilling with the goal of demonstrating expansion and project scalability opportunities at Madsen through satellite resource growth6.
- Drill results from the Wedge, Russet South and Fork Deposits will be incorporated into an updated resource estimate and initial economic study, on track for Q4 2018.
- The Company is fully funded to complete the definitive feasibility study, finalize remaining mining and processing permit updates, complete the extraction of a 7,200 tonne bulk sample, and undertake 21,000 metres of exploration drilling focused on increasing the scale of the project beyond that contemplated in the feasibility study6.
Phil Smerchanski, P.Geo, Vice President, Exploration of the Company, is a Qualified Person within the meaning of NI 43-101. Mr. Smerchanski has reviewed and verified that the technical information contained herein is accurate and approves of the written disclosure of the same.
Darin Labrenz P.Geo.
President, CEO & Director
Mr. Labrenz is a registered professional geologist with over 25 years of experience in the mineral exploration industry. Most recently, Mr. Labrenz was Vice President Business Development for Terrane Metals Corp., a BC based development company that was acquired by Thompson Creek Metals in 2010. Prior to Terrane, Mr. Labrenz was employed by the Placer Dome group, where he was responsible for the design and supervision of exploration programs, management of geological activities at both underground and open pit mining operations, as well as technical support and geological management of several feasibility studies and economic evaluations. Mr. Labrenz has significant experience in the Red Lake Camp, including former Chief Geologist at the Campbell Mine.
Sean Tetzlaff CPA, CA
Chief Financial Officer and Corporate Secretary
Sean Tetzlaff is an experienced financial professional with over 20 years of experience in the mining industry. Recently he served as Chief Financial Officer and Corporate Secretary of Blue Gold Mining, which merged with Riverstone Resources in 2012 to become True Gold Mining. He also served as CFO, VP Finance and Corporate Secretary of Fronteer Gold from 2005 to 2011. During this time, he had oversight of financial, legal, and contractual matters for all of Fronteer Gold operations and international subsidiaries. He was responsible for the successful execution of numerous equity investments, asset divestitures, and merger and acquisitions transactions including the sale of Fronteer to Newmont for $2.3 billion in 2011. Mr. Tetzlaff also served as CFO of Aurora Energy Resources from 2006 to 2008, helping the company grow from initial public offering through to the advancement of one of the world's largest undeveloped uranium deposits. Mr. Tetzlaff has a tax background, having worked with KPMG LLP from 2000 to 2004.
Phil Smerchanski M.Econ.Geol., P.Geo
Vice President, Exploration
Mr. Smerchanski is a registered professional geologist and has more than fifteen years of exploration experience with Falconbridge, Inco, and Anglo American, and as a senior consultant to mid-tier and major mining companies. Mr. Smerchanski has developed base and precious metals expertise through field experience on ore systems across North America, and the Southern Hemisphere. In Red Lake, he has recently consulted to Goldcorp as a technical advisor on their high grade generative exploration team, including targeting at the new HG Young discovery. He is committed to resource discovery and evaluation through the integration of multidisciplinary geoscience datasets and experts.
Ken Donner P.Eng, MBA, PMP
Vice President, Operations
Mr. Donner is a registered professional engineer with over 30 years of experience in the development, construction and operation of mines. He has worked across Canada, in far eastern Russia, Greenland, New Zealand and the United States. Much of Mr. Donner’s career has focused on high grade deposits leading to an extensive knowledge in the management and operation of such underground mines. Most recently, he was Construction Manager with AMEC on Newmont’s Leeville #3 Vent Shaft project, which was delivered on time and under budget. Previous experience includes Homestake’s Snip mine, Bema’s Julietta mine, De Beers’ Snap Lake mine and Oceana Gold’s Frasers mine. Mr. Donner holds a Masters Certificate in Project Management from University of Victoria, an MBA specializing in Technology/Engineering Management from Bellevue City University and a Geological Engineering degree from University of Windsor.
Christopher Lee MSc, PGeo
Mr. Lee is a registered professional geologist with over 25 years of experience in mineral exploration and resource evaluation. He specializes in structural analysis of ore deposits for application to grade control, resource estimation and generation of predictive exploration models. Mr. Lee spent seven years with SRK providing specialist structural geology guidance for projects located globally, across a variety of commodities and at all stages from exploration through to development and production. He has significant experience in the Red Lake district, including the Goldcorp Challenge where he placed as a semi-finalist. Most recently, Mr. Lee was Chief Geoscientist at True Gold Mining and Fronteer Gold where he was the Qualified Person responsible for resource modeling, estimation and growth of over 14 million ounces of gold in mining assets located in Burkina Faso, Turkey and Nevada.
Mr. Currie most recently served as Director, Investment Banking at Canaccord Genuity Limited where he concentrated specifically on the junior mining sector. He retired from Canaccord in August 2012. Prior to his role in Investment Banking he was with Canaccord as a Senior Mining Analyst who focused, for over 22 years, on the junior mining sector. Mr. Currie has over three decades of industry experience directed specifically on junior exploration and development companies worldwide, and has extensive knowledge of the capital markets as it relates to the mineral exploration and mining industry.
Mark O'Dea Ph.D., P.Geo.
Dr. O’Dea is a mining industry entrepreneur. A seasoned geologist and deal maker, Dr. O’Dea has built and financed international mining companies from Canada to Africa, taking them from exploration and discovery to development and operations. His companies are built on a common foundation: high-quality, long-life projects with lasting economic opportunities, community benefits and environmental protection. Most recently, Dr. O’Dea co-founded and served as executive chairman of True Gold Mining. After building the Karma Heap Leach Gold Mine in Burkina Faso, West Africa, True Gold was sold to Endeavour Mining in 2016. As co-founder and CEO of Fronteer Gold, Dr. O’Dea grew the company from startup to its 2011 sale to Newmont Mining Corp., a deal that included the spin-out of Liberty Gold.
He also co-founded and served as Chairman of True North Nickel and CEO of Aurora Energy, sold to RNC Minerals and Paladin Energy in 2014 and 2011, respectively. Founder of Oxygen Capital Corp., Dr. O’Dea is currently chairman of Liberty Gold, director of Pure Gold Mining, Discovery Metals, and Sun Metals. His many honours include EY’s Entrepreneur of the YearTM for 2014 in the Pacific mining and metals category, the Globe and Mail’s Top 40 Under 40, and the Association for Mineral Exploration British Columbia’s Murray Pezim Award for perseverance and success in financing mineral exploration.
Mr. Pease has been involved with mineral exploration and mine development projects worldwide for the past 30 years. In 2006, Mr. Pease formed Terrane Metals Corp. with the intent to develop the Mt Milligan Gold-Copper project northwest of Prince George. Terrane advanced the project through exploration, development, and mine permitting. Construction commenced in the spring 2010, and ultimately Terrane Metals was acquired by Thompson Creek Mining in late 2010 for $700 million. He is also a former Director and Strategic Advisor to Richfield Ventures Corp., a junior gold mining company who discovered Blackwater gold project in British Columbia. Richfield was acquired in 2011 by New Gold Inc for $500 million. Prior to becoming President and CEO of Terrane, Mr. Pease was employed by the Placer Dome group for the majority of his professional career.
Mr. Fierro is a successful mining engineer with over 30 years of industry experience. He has previously held executive positions with Fronteer Gold Inc., Metallica Resources Inc., and Coeur d'Alene Mines, where he has overseen the development, construction or management of mines in Nevada, Mexico, Argentina, Chile, and Alaska. At Fronteer, Mr. Fierro acted as COO, and at Metallica, he was Vice President Operations where he played the lead role in the construction of the Cerro San Pedro Mine in Mexico. Mr. Fierro was also a director of Grayd Resources as well as Timberline Resources. Mr. Fierro graduated with a Bachelor of Science - Mine Engineering from South Dakota School of Mines where he serves on the Advisory Board.
Mr. Boggio was a Partner with PricewaterhouseCoopers LLP (and previously Coopers & Lybrand LLP) from 1988 until his retirement from PwC in May 2012. During that time, he was Leader of the B.C. Mining Group of PwC, a senior member of PwC's Global Mining Industry Practice and an audit practitioner for publicly listed Canadian, U.S. and U.K. mineral resource and energy clients. The scope of his clients' activities included exploration, development and production stage operations in the Americas, Africa, Europe and Asia. Mr. Boggio holds a B.A. and B.Comm. from the University of Windsor, Ontario, is a Fellow of the Institute of Chartered Accountants of British Columbia, and a member of the Institute of Corporate Directors.
Suite 1900 - 1055 West Hastings
Canada V6E 2E9
E-mail: [email protected]