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Pure Gold raises C$25m to ramp up Red Lake mine; AngloGold ups stake

Ultimately, Pure Gold would like to see output at its mine and mill grow to 150,000 oz. annually. Credit: Pure Gold Mining

Pure Gold (TSXV: PGM; LSE: PUR) is raising C$25 million in two separate financings with which to ramp up production at its PureGold mine in Red Lake, Ontario, and would increase its largest shareholder’s stake in the company to 19.9%.

The company will offer a private placement of 17 million shares at a price of C$0.53 per share for gross proceeds of about C$9 million. National Bank Financial will be the lead underwriter. The underwriters have been granted an overallotment of 9.4 million shares, which would raise a further C$5 million.

Pure Gold is also making a concurrent private placement of 30.2 million shares to its largest shareholder, AngloGold Ashanti, which will raise a further C$16 million. At the completion of the transaction, AngloGold will hold a 19.9% equity interest, up from 14.9%, in Pure Gold.

The closing of the transactions is contingent on the success of both financings. They are expected to close on Feb. 15, 2022.

The PureGold mine is one of the highest grade gold mines on the globe, with probable resources averaging 8.97 g/t gold. Commercial production was declared on Aug. 1, 2021. A series of mill upgrades were completed last year, bringing throughput up to 1,000 t/d from 800 t/d. However, the mine has struggled to consistently feed the mill at 800 t/d.

Resources at the mine are 7.2 million indicated tonnes grading 8.9 g/t gold (2.1 million contained oz.) and 1.9 million inferred tonnes at 7.7 g/t gold (467,000 contained oz.) The probable reserves total 3.5 million grading 9 g/t gold (1 million contained ounces).

Earlier this month, Pure Gold reported bonanza grades from surface and underground drilling completed in the fourth quarter last year. The best assay was 63.5 g/t gold over 1 metre from  hole PCP-02-3738-11. An updated resource estimate and 43-101 report is due in the first half of the year.

During the second half of the year, Pure Gold intends to publish its first sustainability report, drill test potential depth extensions, and outline a plan for growth based on satellite deposits, expansion and discovery. Ultimately, the company would like to see gold production increase to 150,000 oz. per year from the 80,000 oz. envisioned in the feasibility study.

(This article first appeared in the Canadian Mining Journal)