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Pure Gold Mining says discussions on Madsen mine financing well advanced

The mining group also unveiled a preliminary economic assessment (PEA) for the Fork, Russet South, and Wedge deposits at the property
gold vein in rock
Pure Gold released a feasibility study on its Madsen project last year

Pure Gold Mining Inc (CVE:PGM) (OTCMKTS:LRTNF) said discussions on financing its Madsen gold project in Ontario are well advanced, as it posted results for the year to end December 2018.

Discussions on debt financing for the construction and development of Madsen are well advanced with multiple potential financiers, the group said.

Last year saw the release of a feasibility study for the project, which outlined a high-grade underground mining operation with a production rate of 800 tonnes per day (tpd) at modest initial capital cost and strong financial performance based upon a US$1,275 per troy ounce gold.

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The study showed a high grade underground mining operation with engineered stopes containing 1 million ounces of gold in probable mineral reserves. The mine is set to benefit from  significant mining, milling and tailings infrastructure already in place.

Last month, the mining group also unveiled a preliminary economic assessment (PEA) for the Fork, Russet South, and Wedge deposits at the property, which showed the potential to either add mine life or improve annual production throughput at Madsen with further advancement of these deposits.

Mining these would add around $51 million to the Madsen project's after-tax net present value, and yield an after-tax IRR (internal rate of return) of 39%, it said in a statement.

It would add 3.7 years to the life of the mine with a total output of 210,000 ounces of gold, with an initial capital requirement of $57 million, including a 14% contingency.

The life of mine all in sustaining cash cost (AISC) was estimated at US$712 per ounce of payable gold.

Looking ahead

Pure Gold said that in the coming months, it will focus on a number of issues, including working with First Nations to promote a cooperative and mutually respectful relationship on then development plan, advancing project financing and continuing environmental studies and documentation to support the update and filing of existing permits and filing for additional permits.

It also aims to start detailed engineering and design activities, and continue exploration at the project.

The firm has changed its fiscal year end to December 31 from March 31, so Friday's financials relate to nine months to the end of 2018, while the comparative period is 12 months to March 31 last year.

In the period, the group spent $19.4 million on exploration and evaluation ($26.3M in 2018), while the net loss, in keeping with a company at this stage of development, was $21.9 million (loss of $26.1 million in 2018).

Shares in Toronto eased 1.69% to $0.58.

--Angela Harmants contributed to this report
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