TIDMPUR
RNS Number : 1476W
Pure Gold Mining Inc.
16 August 2022
NEWS RELEASE 22-22
August 16 , 2022
PureGold Provides Operations Update and Reports Second Quarter
2022 Financial and Operating Results
VANCOUVER, B.C. - Pure Gold Mining Inc. (TSX-V:PGM, LSE:PUR)
("PureGold" or the "Company"), today provided an operational update
and outlook as well as financial results for the second quarter of
2022. PureGold owns and operates the PureGold Mine near Red Lake,
Ontario.
So far during the third quarter, both costs and revenues are
trending in the right direction on a sequential quarterly basis,
due to the groundwork laid in the first and second quarters. As a
result, the Company forecasts the Mine to deliver positive
site-level cash flow in the third quarter, achieving a previously
stated objective.
Moreover, a team of multidisciplinary consultants led by SRK
Consulting (Canada) Inc. ("SRK") remains on track to complete an
updated Life of Mine plan and a new Pre-Feasibility Study ("PFS")
in Q4 2022, based on the recently announced updated Mineral
Resource Estimate ("Updated MRE"). The Company is working
collaboratively with SRK to ensure a smooth integration beginning
in 2023 of the new Life of Mine plan into the Mine's existing
planning system.
Terry Smith, PureGold Chief Operating Officer, stated: "Over the
last six months we have advanced in four key areas to expedite our
future success. We have a solid resource model we can use for
long-term planning; a revamped short-term planning process to drive
execution; a lower operating cost base to generate cash flow; and
most importantly, an emerging culture of safety and
performance."
"Mid-way through the third quarter, we are combining these
elements into stronger gold production, most notably with a
year-to-date record gold pour just last week. We hope to break that
record again very soon, and that the SRK resource model will help
light the way to grow production in our upcoming Pre-Feasibility
Study."
The Company will host a conference call and webcast Tuesday
August 16(th) at 9:00am Pacific Time (12:00pm Eastern Time) to
discuss the Updated MRE and operational update and outlook. Details
are provided at the end of this news release.
Operations Update & Outlook
The Company is expecting a significant improvement in production
in the third quarter compared to either the first quarter or the
second quarter of the year as the benefits of investments made in
operational improvements begin to pay off. These improvements
include a relentless commitment to safety, cost rationalization,
improved integration of mine planning, geology and definition
drilling leading to more reliable forecasts, improved mining
execution. All of this is supported by the establishment of a
high-confidence drilled inventory well ahead of active production
areas.
The new SRK Resource model highlights the higher grade and less
structurally complex Austin and South Austin Zones as compared to
McVeigh. Both Austin and South Austin will contribute approximately
65% to overall Q3 production, as compared to approximately 30 %
since production began. We expect higher overall production levels
as Austin and South Austin contribute still more and McVeigh
contributes less.
Production Outlook
Ore throughput for the third quarter is forecast to average
between 775-875 tpd at 4.0-5.0 g/t gold. Both grade and ore
throughput are forecast to trend positively throughout the quarter.
The end of July and beginning of August have been and continue to
be, as of the date of this press release, particularly strong from
both throughput and grade perspectives, leading to the previously
noted record weekly gold pour last week.
Cost Update
Site-level operating plus sustaining capital costs are expected
to be in the range of $9.5 - $10.5 million per month for the third
quarter. Compared to the first quarter of 2021, this represents an
absolute reduction in costs of approximately 25% and a
cost-per-tonne reduction of approximately 50%. Our most significant
cost is labour, including accommodations and travel. We expect to
reduce this cost in 2023 following the installation of a workforce
camp, which is currently in progress on our mine property.
In addition to the savings noted above, further cost savings are
expected to be captured in the next 12 months. Key opportunity
areas include replacing rentals and contractors with more permanent
solutions, and completing key infrastructure upgrades including the
new camp, new electric compressors, and a new mine air heater. All
these projects are currently underway. The Company is targeting
additional savings equating to $1 million per month (approximately
10%) by the end of 2022. Further savings opportunities are expected
to be identified and incorporated into the Updated Life of Mine
plan.
Pre-Feasibility Study, Life of Mine Plan and Technical Report
Update
On August 10, 2022, PureGold announced an Updated MRE for the
PureGold Mine which included 1.65 million ounces of gold at 7.4 g/t
contained in 6.9 million tonnes in the Indicated category and 0.37
million ounces of gold at 6.3 g/t contained in 1.8 million tonnes
in the Inferred category at a cutoff grade of 3.38 g/t.
Notably, the Updated MRE has already been constrained by the
Reasonable Prospects for Eventual Economic Extraction test using
Minable Stope Optimizer shapes. Due in part to this, the Company
expects that its forthcoming PFS will show a higher conversion
ratio of Indicated Resource to Probable Reserves compared with the
Company's previous Life of Mine plans.
Second Quarter 2022 Operating and Financial Results
PureGold produced less gold in the second quarter of 2022 than
the second quarter of 2021 due in part to significant
cash-preservation measures that the Company introduced while
negotiating the financing agreements announced in May 2022. These
measures were successful, but their implementation led to
unavoidable business interruptions. The measures included:
-- O perating the mill for only 50% of the quarter ;
-- R educing the workforce ;
-- P ausing main ramp development ;
-- R ationalizing the mining fleet ; and
-- D emobilizing contractors and rental equipment.
Another factor affecting second quarter production was
significant turnover and workforce shortages in key areas like
longhole drilling, mobile mechanics, and technical staff.
Beyond these factors, the Company completed a complete overhaul
of the mine planning process . Prior to this overhaul, execution
diverged from planning , with grades significantly below plan .
PureGold was mining small and/or low-grade stopes, was
incorporating significant dilution into stope designs, and was
overly optimistic about planned rates and productivities.
The planning process now incorporates the latest infill drilling
results, deep geological review of potential mining fronts,
economic analysis beyond cut-off grade, access and blasting
considerations, and mine productivities based on ventilation,
equipment type, and location, among other things.
A summary of the highlights for the three and six months ended
June 30, 2022, and subsequent to date for the Company and its 100%
owned PureGold Mine ("PureGold Mine" or the "Mine") are as
follows:
Gold Production
-- Gold production for Q2 2022 was 3,509 ounces, and 8,244 ounces for H1 2022.
-- Gold sold for Q2 2022 was 3,500 ounces, and 11,375 ounces for H1 2022.
Processing
-- For Q2 2022, the PureGold Mine processed a total of 45,420
tonnes of ore, or an average of 500 tpd, at an average head grade
of 2.40 grams of gold per tonne of ore ("g/t Au") and achieved an
average recovery of 93.2%.
-- For H1 2022, the PureGold Mine processed a total of 96,312
tonnes of ore, or an average of 535 tpd, at an average head grade
of 2.66 grams of gold per tonne of ore ("g/t Au") and achieved an
average recovery of 94.2%.
-- In April 2022, we transitioned to a campaign milling
schedule, which saw the mill operating for two out of every four
weeks temporarily to save costs by aligning with near-term mine
production forecasts. The mill returned to a full-time schedule in
July 2022.
Mining
-- Mining totaled 40,551 tonnes of ore or an average of 445 tpd for Q2 2022.
-- For H1 2022, mining totaled 85,267 tonnes of ore or an average 471 tpd.
-- In support of a mining improvement plan, during Q2 2022 we
enhanced mobile equipment availability; transitioned to efficient
sill mining; mined a higher proportion and greater quantity of
high-grade, high-confidence stopes; upgraded basic mine services
including ventilation, electrical, compressed air, and water
management, and most importantly continued improving overall mine
planning integration.
-- We achieved an approximate 30% reduction in costs in Q2 2022
compared with Q1 2022, the result of workforce reductions,
rationalized equipment and optimized underground development
initiatives.
-- We continued to hold off on development of the Main Ramp
during Q2, 2022 after having temporarily paused it in Q1, 2022, in
order to reallocate resources to near-term production and
development areas. The Main Ramp is at a depth of approximately 525
metres below surface, which is several hundred metres below
near-term mining areas; as such, temporarily pausing ramp
development will not constrain ore mining or definition drilling in
the near-term.
Financial Results
-- Mine operating loss of $18.5 million and $41.9 million for
Q2, 2022 and H1, 2022, respectively.
-- Revenue, net of refining costs, was $8.5 million and $27.0 million for Q2, 2022 and H1, 2022, respectively.
-- Net loss and comprehensive loss totaled $20.8 million and
$42.2 million for Q2, 2022 and H1, 2022, respectively.
-- Basic and diluted loss per share for Q2, 2022 and H1, 2022 of $0.04 and $0.08, respectively.
-- Cash balance as of June 30, 2022 of $12.7 million
-- Current assets as of June 30, 2022 of $23.2 million
-- Current liabilities as of June 30, 2022 of $47.7 million
-- Total long term debt as of June 30, 2022 of $106.1 million
Operational and Financial Details
Q2 2022 Q2 2021 Change H1 2022 H1 2021 Change
------------------------ -------------- -------------- ------- -------------- --------------- -------
Operating data
-------------- -------------- ------- -------------- --------------- -------
Ore mined (tonnes) 40,551 36,828 10% 85,267 68,899 23%
-------------- -------------- ------- -------------- --------------- -------
Waste mined (tonnes) 34,094 131,887 -74% 123,400 235,116 -47%
-------------- -------------- ------- -------------- --------------- -------
Total mined (tonnes) 74,645 168,715 -55% 208,667 304,015 -31%
-------------- -------------- ------- -------------- --------------- -------
Ore milled (tonnes) 45,420 46,312 -2% 96,312 94,727 2%
-------------- -------------- ------- -------------- --------------- -------
Average head grade
(grams per tonne
gold) 2.40 4.20 -42% 2.66 3.57 -25%
-------------- -------------- ------- -------------- --------------- -------
Recovery (%) 93.2 95.7 -- 94.2 95.3 --
-------------- -------------- ------- -------------- --------------- -------
Gold produced (ounces) 3,509 5,997 -42% 8,244 10,075 -18%
-------------- -------------- ------- -------------- --------------- -------
Gold sold (ounces) 3,500 6,832 -49% 11,375 9,756 16%
-------------- -------------- ------- -------------- --------------- -------
Average US$ Price
realized $1,902 $1,796 6% $1,864 $1,789 6%
-------------- -------------- ------- -------------- --------------- -------
Average C$ Price
realized $2,438 $2,211 10% $2,376 $2,219 7%
-------------- -------------- ------- -------------- --------------- -------
Financial data
-------------- -------------- ------- -------------- --------------- -------
Revenue(1) $8,534,000 $15,109,000 -43% $27,027,000 $21,650,000 24%
-------------- -------------- ------- -------------- --------------- -------
Mine operating
loss(1) $(18,528,000) $(13,169,000) 40% $(41,924,000) $(28,755,000) 45%
-------------- -------------- ------- -------------- --------------- -------
Net loss(1) $(20,757,000) $(15,840,000) 31% $(42,225,000) $(32,627,000) 29%
-------------- -------------- ------- -------------- --------------- -------
As at June As at December
30, 2022 31, 2021
-------------- -------------- ------- -------------- --------------- -------
Long term debt 106,111,000 115,204,000 -8%
-------------- -------------- ------- -------------- --------------- -------
Current assets 23,233,000 21,297,000 8%
-------------- -------------- ------- -------------- --------------- -------
Current liabilities 47,753,000 43,277,000 10%
-------------- -------------- ------- -------------- --------------- -------
Additional information regarding the Company's financial results
and activities underway at the Company's PureGold Mine is available
in the Company's interim financial statements and management's
discussion and analysis for the three and six months ended June 30,
2022.
A Technical Report prepared in accordance with NI 43-101 for the
PureGold Mine will be filed on SEDAR ( www.sedar.com ) before
September 24, 2022. Readers are encouraged to read the Technical
Report in its entirety, including all qualifications, assumptions
and exclusions that relate to the Mineral Resource. The Technical
Report is intended to be read as a whole, and sections should not
be read or relied upon out of context. Please see PureGold's press
release dated August 10, 2022 for more information regarding the
updated Mineral Resource Estimate.
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.
EARNINGS RELEASE AND CONFERENCE CALL DETAILS
PureGold will host its first Quarterly Conference Call on
Tuesday August 16(th) , 2022 at 9:00am PST.
Conference Call Dial-in Details:
Title: Pure Gold Mining Inc. Q2 Operations Update and Q3 Outlook
Conference Call
PARTICIPANT TELEPHONE NUMBERS
Callers should dial in 5 -10 min prior to the scheduled start
time and simply ask to join our call.
Canada/USA TF: 1-800-319-4610
International Toll: +1-604-638-5340
The Conference Call will be accompanied by web-based
presentation slides, which will be available online via the link
provided below:
https://services.choruscall.ca/links/puregold2022q2.html
A replay of the audio call will be available via the telephone
numbers below and available until August 23(rd) , 2022.
CONFERENCE REPLAY
Canada/USA TF: 1-800-319-6413
International Toll: +1-604-638-9010
Replay Access Code: 9165
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. The PureGold Mine is centered on a
forty-seven square kilometre property with significant discovery
potential.
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
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 with respect to those that
address proposed timing of development plans for the PureGold Mine,
including the proposed updated NI 43-101 Technical Report and
timing and content of such Technical Report, including the life of
mine plan; expectations for the Mine to deliver positive site-level
cash flow in the third quarter; expectations regarding the
effectiveness of new initiatives to improve stope access and result
in increased throughput, improved grades and reduced costs in 2022;
achievement of minimum targets with respect to ore production,
average head grade and reduction in monthly operating costs by the
end of 2022 compared to 2021; potential for extending the mine life
of the PureGold Mine; the timing and results of the new
Pre-Feasibility Study and updated Life of Mine Plan; the potential
to convert resources to reserves; the transition of mining from the
McVeigh Zone to the South Austin and Austin Zones; 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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