Pure Gold Mining (TSXV: PGM; LSE: PUR) has been named in a civil claim in the British Columbia Supreme Court for allegedly failing to disclose information relating to its operations at its underground mine in Red Lake, Ont.
The company said in a statement on Apr. 7 that it had learned of the civil claim and described the complaint as “unfounded and without merit.” Pure Gold says it intends to “vigorously defend the proceeding.”
“In the action, the plaintiff seeks certification as a class proceeding and with any other class members claims unspecified damages for losses incurred in their investments in the company,” the company said.
Pure Gold shares fell to their lowest in 2022 on Mar. 28 after it announced that it would need to raise funds within the next 30 days to fund its operations and service the interest on its debt. Pure Gold said it would need about $50 million of external financing in the next six months.
Loading ore at the PureGold mine. Credit: Pure Gold Mining.
It added that if the company does not receive the financial backing in the short term, it won’t be able to “meet its obligations as they become due resulting in a default under its debt obligations.”
Gold production at the mine in 2021 fell short of design capacity due to challenges in maintaining access to enough high-confidence, high-grade stopes to provide high-grade ore to the mill, the company said in an operations update on Mar. 28.
A persistent shortage of high-grade ore from underground resulted in less than full utilization of the mill and at various times led to blending of low-grade development material and stockpiles which also reduced the overall feed grade to the mill, it added.
Pure Gold, however, expects the situation to improve by the end of 2022 and hopes to see a 50% increase in average daily ore production, a 30% increase in average head grade and a 20% reduction in monthly operating costs compared to 2021.
It’s working towards releasing an updated statement of resources and reserves as well as an updated life-of-mine plan in the second half of the year.
For the first half of 2022, the company expects to mine and process ore at an average rate of between 600-700 tonnes per day at an average head grade of 4 to 5 grams gold per tonne and average gold recovery of 95% translating to expected gold production of between 15,000-20,000 oz. for the six-month period.
Resources at the mine are 7.2 million indicated tonnes grading 8.9 grams gold per tonne (2.1 million contained oz.) and 1.9 million inferred tonnes at 7.7 grams gold per tonne (467,000 contained oz.) Probable reserves total 3.5 million grading 9 grams gold per tonne (1 million contained ounces).
At presstime in Toronto, Pure Gold was trading at 24¢, down from about 40¢ on Mar. 28.
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