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

Pure Gold (TSXV: PGM; LSE: PUR) is raising $25 million in two separate financings with which to ramp up production at its PureGold mine in Red Lake, Ontario. 

The company will offer a private placement of 17 million shares at a price of 53¢ per share for gross proceeds of about $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 $5 million.

Pure Gold is also making a concurrent private placement of 30.2 million shares to its largest shareholder, AngloGold Ashanti (NYSE: AU), which will raise a further $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 February 15.

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

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.) The probable reserves total 3.5 million grading 9 grams gold per tonne (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 grams gold per tonne 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.