TIDMPUR
RNS Number : 1422S
Pure Gold Mining Inc.
12 July 2022
NEWS RELEASE 22-20
July 12 , 2022
PureGold Enhances Credit Facility, Closes US$6 Million
Additional Credit Facility and Launches Strategic Review
Process
-- Closing of previously announced US$6 million Additional Credit Facility from Sprott
-- New rescheduling of C$12 million of principal repayments to enhance liquidity
-- Operational Turnaround Plan underway, Updated Life of Mine Plan remains on track
-- Objective of strategic review process is to evaluate alternatives and maximize value
VANCOUVER, B.C. - Pure Gold Mining Inc. (TSX-V:PGM, LSE:PUR)
("PureGold" or the "Company"), today announced the finalization of
several agreements ("Agreements") with its lending partner, a fund
managed by Sprott Resource Lending Corp. ("Sprott"), including a
new debt repayment schedule to enhance the Company's liquidity and
provide financial flexibility.
PureGold also announced that its Operational Turnaround Plan is
progressing, its Updated Life of Mine plan remains on track, and
that the Company is launching a strategic review process with the
objective of maximizing shareholder value and the value of its
PureGold mine in Ontario. Meanwhile, in order to better forecast
the mine's near-term production, the Company is postponing until
August a 2022 guidance update that had previously been scheduled
for June 2022.
Mark O'Dea, President & CEO of PureGold, stated, "We have
initiated a strategic review process to explore potential
alternatives for maximizing shareholder value and generating the
financial strength to allow the PureGold Mine to achieve its
potential. We remain focused on achieving positive site-level cash
flow by Q3 2022, and delivering an updated NI 43-101 Technical
Report and Life of Mine plan by Q4 2022. If we can maximize the
value of the mine, we can also maximize value for our stakeholders,
including but not limited to our shareholders, employees, and the
local communities surrounding Red Lake."
Amendments to the Credit Agreement and Additional Credit
Facility
The Company together with Sprott have agreed to a second
amendment of the restated credit agreement dated April 2021
("Second ARCA"). Pursuant to the Second ARCA, and as previously
announced, Sprott has provided the Company with an additional
secured, first-priority, non-revolving credit facility ("Additional
Credit Facility") up to a maximum principal amount of US$6 million.
Drawdowns on the Additional Credit Facility are permitted for
payments owing to Sprott including interest, gold stream and
production payment agreement ("PPA") payments. The first such
drawdown is expected to be made in respect of amounts owing to
Sprott as of June 30, 2022. The Additional Credit Facility matures
on December 31, 2022 and accrues interest at a rate of 14% per
annum.
In addition, the Company has agreed with Sprott to defer the
first four scheduled principal repayments, each 2.5% of the total
principal amount, originally scheduled for the last day of
September 2022, December 2022, March 2023, and June 2023,
respectively, to the bullet payment in August 2026. The bullet
payment will increase from 35% of the total principal amount to 45%
as a result. This creates approximately C$12 million of additional
liquidity for PureGold within the next 15 months that would have
otherwise been allocated to debt repayments.
The Company has further agreed with Sprott on temporary
reductions to the minimum cash and minimum working capital ratio
covenants to US$5 million (approximately C$6.5 million at the
current exchange rate) and 0.75x, respectively, for the months
ending June 30 and July 31, 2022. As of June 30, 2022, the Company
had C$13 million in cash, C$21 million in available liquidity
including the full Additional Credit Facility, and a net working
capital ratio of approximately 0.85x. The Company cautions that it
might not be able to comply with its covenants in the future
without further amendments from Sprott.
Other amended terms pursuant to the Second ARCA and related
agreements include removal of requirement to pass the completion
test, removal of the post-completion test interest step-down, and
an increase in the PPA amount from US$12 per ounce to US$14 per
ounce. The consideration for these amendments is a payment of
US$0.5 million which will be added to the outstanding principal
amount with no upfront cash outlay.
Strategic Review Process
The strategic review process, which was initiated with the
assistance of advisors, might include a potential sale or merger of
the Company, sale of some or all of the PureGold Mine, or various
other potential long-term financing alternatives.
The Company has not made any decisions related to strategic
alternatives at this time, and there can be no assurance that the
evaluation of strategic alternatives will result in any transaction
or change in strategy. Any breach of the Agreements with Sprott
including an unsuccessful strategic review process could result in
an event of default under the Credit Agreement. The Company does
not intend to comment further unless and until the Board of
Directors of the Company has approved a specific course of action
or the Company has determined further disclosure is appropriate or
necessary.
Grant of RSUs
The Board of Directors of the Company has approved the grant of
an aggregate of 400,000 Restricted Share Units ("RSUs") to an
executive pursuant to its RSU Plans. The RSUs are payable in common
shares of the Company on exercise, vest immediately and must be
redeemed within 30 days of July 12, 2025, or they expire.
Qualified Persons and 43-101 Disclosure
Terrence Smith, P.Eng., Chief Operating Officer for the Company,
is the designated Qualified Person for this news release within the
meaning of National Instrument 43-101 ("NI 43-101") and has
reviewed and verified that the technical information contained
herein is accurate and approves of the written disclosure of
same.
About Pure Gold Mining Inc.
PureGold is a Canadian gold mining company, located in the heart
of Red Lake, Ontario, Canada. The Company owns and operates the
PureGold Mine, which entered commercial production in 2021 after
the successful construction of an 800 tpd underground mine and
processing facilities. Gold reserves and resources are centered on
a forty-seven square kilometre property with significant discovery
potential.(1)
Additional information about the Company and its activities may
be found on the Company's website at www.puregoldmining.ca and
under the Company's profile at www.sedar.com
1. For further information, see the technical report titled
"Madsen Gold Project Technical Report Feasibility Study for the
Madsen Deposit, Red Lake, Ontario, Canada" with an effective date
of February 5, 2019, and dated July 5, 2019 (the "Feasibility
Study"), for further information please see puregoldmining.ca or
under the Company's Sedar profile at www.sedar.com
ON BEHALF OF THE BOARD
"Mark O'Dea"
Mark O'Dea, President & CEO
Investor inquiries:
Adrian O'Brien,
Director, IR & Communications
Tel: 604-809-6890
aobrien@puregoldmining.ca
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
All statements in this press release, other than statements of
historical fact, are "forward-looking information" with respect to
PureGold within the meaning of applicable securities laws,
including, but not limited to statements including statements with
respect to future compliance with the Credit Facility and the
Additional Credit Facility; expectation to be able to meet all
financial commitments and to fund operations with available cash
and liquidity on hand; the results of the Strategic Review Process;
potential for extending the mine life of the PureGold Mine; and
potential for additional resources and expansion of known deposits
and potential for making new discoveries and the focus of the
Company in the coming months . Forward-looking information is
often, but not always, identified by the use of words such as
"seek", "anticipate", "plan", "progress", "confirms", "continue",
"planned", "expect", "expectations", "expand", "enhanced",
"increasing", "optimize", "project", "predict", "potential",
"supports", "targeting", "intends", "believe", "improved",
"potential", and similar expressions, or describes a "goal", or
variation , of such words and phrases or state that certain
actions, events or results "may", "should", "confirms", "could",
"would", "might" or "will" be taken, occur or be achieved.
Forward-looking information is not a guarantee of future
performance and is based upon a number of estimates and assumptions
of management at the date the statements are made including, among
others, assumptions about future prices of gold and other metal
prices, currency exchange rates and interest rates, favourable
operating conditions, political stability, obtaining governmental
approvals and financing on time, obtaining renewals for existing
licences and permits and obtaining required licences and permits,
labour stability, stability in market conditions, availability of
equipment, accuracy of any mineral resources, successful resolution
of disputes and anticipated costs and expenditures. Many
assumptions are based on factors and events that are not within the
control of PureGold and there is no assurance they will prove to be
correct.
Such forward-looking information, involves known and unknown
risks, which may cause the actual results to be materially
different from any future results expressed or implied by such
forward-looking information, including, risks related to liquidity
and the Company's ability to continue as a going concern; mine
closure and rehabilitation; failure to achieve estimates or
material increases in costs; history of net losses and negative
operating cash flow, indebtedness; interpretation of results at the
PureGold Mine complex, including reserve and resource estimates may
prove to be incorrect ; changes in project parameters as plans
continue to be refined; current economic conditions; future prices
of commodities; possible variations in grade or recovery rates; the
costs and timing of the development of new deposits; failure of
equipment or processes to operate as anticipated; the failure of
contracted parties to perform; the timing and success of
exploration and development activities generally; delays in
permitting; possible claims against the Company; the timing of
future economic studies; labour disputes and other risks of the
mining industry; delays in obtaining governmental approvals,
financing or in the completion of exploration as well as those
factors discussed in the Annual Information Form of the Company
dated March 30, 2022 in the section entitled "Risk Factors", under
PureGold's SEDAR profile at www.sedar.com .
Although PureGold has attempted to identify important factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking information,
there may be other factors that cause actions, events or results
not to be as anticipated, estimated or intended. There can be no
assurance that such information will prove to be accurate as actual
results and future events could differ materially from those
anticipated in such statements. PureGold disclaims any intention or
obligation to update or revise any forward-looking information,
whether as a result of new information, future events or otherwise
unless required by law.
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END
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