VANCOUVER, British Columbia, March 31, 2021 (GLOBE NEWSWIRE) -- Pure Gold Mining Inc. (TSX-V:PGM, LSE:PUR) (“PureGold” or the “Company”), is pleased to report on progress of the ramp-up at its PureGold Mine and significant milestones achieved as of the end of the first quarter of 2021. Since late January, the milling facility at the PureGold Mine has been operating at greater than 75% of nameplate capacity, including multiple consecutive days at greater than 800 tpd and a peak daily throughput of 897 tpd. Gold recoveries have been exceptional and consistent throughout the ramp-up period, averaging 95%, in line with expectations. With the milling facility now fully ramped up, the Company’s focus will shift to aligning the mill throughput with the rate of ore production from underground as the mine continues to access higher grade ore and progress toward steady state production.

The Company is also pleased to announce it has entered into a binding letter agreement (the “Amendment”) with its principal lending partner, Sprott Private Resource Lending II (Collector), LP (“Sprott” or the “Lender”). Pursuant to the terms of the Amendment, the original credit agreement dated August 2019 (the “2019 Agreement”)1 will be amended to provide for an increase to the aggregate principal amount of debt of up to US$20 million, with US$12.5 million to be available to the Company upon closing and the remainder to be available upon satisfaction of certain conditions (detailed below). The Amendment will also provide for the deferral of cash interest payments until June 30, 2021. All other key terms and conditions of the Amendment are substantially the same as for the 2019 Agreement. In consideration for of the Amendment, the Company will pay to Sprott an amount equal to 4% of the additional debt made available to the Company, payable in shares. The Amendment remains subject to TSX-V approval.

“We are pleased by the progress of the ramp-up of the PureGold Mine to date, highlighted by the milling facilities achieving design capacity prior to quarter end. With the mill ramp-up effectively complete, we can now focus our attention solely on ramping up the mine and accessing high grade ore from multiple declines where we are making great progress,” stated Darin Labrenz, President & CEO of PureGold. “The additional US$12.5 million will ensure the PureGold Mine continues its ramp-up phase with maximum financial flexibility, whilst the remaining US$7.5 million can be accessed if needed to provide additional liquidity. The term and repayment schedule matches our expected grade and production growth over the coming years as we get into the heart of the orebody and continue to execute on our organic growth strategy.”

Narinder Nagra, Managing Partner of Sprott Private Resource Lending, commented, “As one of the largest investors dedicated to the natural resource sector, Sprott is excited to continue its partnership with PureGold. We look forward to continuing to work with the management team on the PureGold Mine, one of the premier gold assets in Canada.”

Mining Update
As of the end of the first quarter, the mine continues to ramp-up to steady state production. Realized head grades for the first quarter were lower than anticipated due to ramp-up related issues including unplanned dilution in the first longhole stopes blasted by the Company and the feeding of low grade stockpile material to the mill to facilitate uninterrupted mill ramp-up during commissioning. The mining issues are being addressed and corrected by the Company, are viewed as symptomatic of ramp-up, and are not expected to persist in the future. The head grades realized in the first quarter are not representative of management’s expectations for steady state production.

The reserve grade from the 2019 Feasibility Study2 is 9.0 g/t gold for the life-of-mine, with average annual grades ranging from 6.3 g/t gold to 13.7 g/t gold, and a projected grade for year one of operations of 7.0 g/t gold. Initial longhole stopes mined in the first quarter of 2021 near the ramp had expected grades between 5 and 6 g/t and incurred up to 50% external dilution upon mining due to overbreak in excess of what was planned. The next longhole stope mined was expected to drive higher grades for the month of March, but a significant volume of non-mineralized dyke was encountered, resulting in unanticipated internal dilution and reduced grade.

The Company has taken actions to reduce dilution and improve recovery which are expected to result in head grades improving in the second quarter and beyond. Blasting practices have been modified to reduce overbreak going forward. Additionally, a number of stopes will be converted from longhole mining to mechanized cut-and-fill mining method in order to maximize recovery and minimize dilution where local conditions warrant. Cut-and-fill is already the primary mining method for the PureGold Mine, with 75% of total ore tonnes over the 12-year mine life outlined in the 2019 Feasibility Study2 planned to be mined using either conventional or mechanized cut-and-fill methods. Lastly, non-mineralized dykes are known to exist in the current working area of the mine, have been accounted for in the current mineral resource, and are not expected to be a persistent problem going forward.

In addition to lower than anticipated head grades from initial production stopes, mine scheduling flexibility was limited during the first months of ramp-up due to the temporary single-ramp nature of the mine. With limited high grade stope inventory, low grade stockpiles were processed to supplement mill feed during the first quarter of 2021 to ensure the ramp-up of the mill continued uninterrupted.

Stope accessibility and scheduling flexibility are also expected to improve significantly in the second quarter as investments made in both the East Ramp and Main Ramp begin to bear fruit. Development rates on the East Ramp have exceeded expectations throughout the first quarter, advancing at a rate of 7.1 metres per day in March. The Company recently reached the targeted mineralization in the East Ramp and currently anticipates gaining access to stopes via the East Ramp in April, which is expected to significantly increase the number of working faces underground and alleviate pressure on the Main Ramp to provide mill feed exclusively. As at the end of the first quarter, the Main Ramp has been developed to a depth of approximately 335 metres below surface. The Company will continue to place a high priority on developing the Main Ramp to enhance mine flexibility and to accelerate access to the high grade 8 Zone.

At the end of the first quarter, the Company has 12 active ore headings and is currently developing stopes within the heart of the reserve where greater definition drilling supports higher grades consistent with the life of mine plan. Underground sampling of ore from development headings is showing an improvement in grade that is consistent with expectations. As adjustments to mining practices begin to positively impact operations and stope inventory improves throughout the second quarter, mine production and head grade are expected to improve and continue trending positively for the balance of the year.

Processing Update
The milling facility effectively completed its ramp-up in March, achieving and exceeding the design capacity of 800 tonnes per day for multiple consecutive days and operating reliably during that time. Minor ramp-up issues first related to water balance and undersized pumps in January and more recently related to miscalibrated power draw controls on the mill in early March have been identified and solutions implemented. Mill throughput peaked at 897 tonnes per day on March 19 and is now operating in alignment with the rate of ore production from the mine as the mine continues to ramp-up. Interstage screens for the CIP tanks and a trommel screen for the SAG discharge are scheduled to be installed in May which will further enhance operational stability and will position the milling facility for potential expansions beyond 800 tpd in the future. Gold recoveries have been tracking in line with expectations with both the gravity and CIP circuits performing well. Gold pours have continued on a regular basis during the entire commissioning period.

Gold Production to Date
In Q4 2020 the Company processed 3,535 tonnes of ore at a grade of 7.8 g/t gold to produce 860 ounces at a 96.6% recovery rate. From January 1st to March 29th 2021, the Company processed 47,182 tonnes of ore at a grade of 2.8 g/t gold to produce 4,011 ounces at a 95.0% recovery rate. As noted previously, overbreak and unmineralized dyke issues resulted in unanticipated dilution in Q1 and actions have been taken to significantly reduce these issues which are expected to result in head grades improving in the second quarter and beyond.

Commercial Production
The Company will continue to assess both ore throughput and gold production as determinants in declaring commercial production for the PureGold Mine throughout the second quarter. Inaugural production and cost guidance for the balance of 2021 will follow shortly thereafter.

Amended Credit Agreement
Upon closing of the Amendment, US$12.5 million will be available immediately to the Company. An additional amount up to US$7.5 million (for total additional debt of up to US$20 million) will be available to the Company for a period of three months from closing of the Amendment subject to the following conditions:

  • The Lender will make available an additional US$0.50 of aggregate principal amount, up to a maximum of US$7.5 million, for every US$1.00 raised by the Company through the combination of equity offerings, the exercise of existing share purchase warrants, and/or the exercise of existing stock options. For greater clarity, if the Company raised US$5 million in equity, warrant and option proceeds, an additional US$2.5 million aggregate principal amount would be made available.
  • The Company is in compliance with all covenants, all representations and warranties remain true in all respects, and no default or event of default exists

Additional key terms of the Amendment include:

  • Interest rate, principal repayment schedule, 2% arrangement fee payable pro-rata on each drawdown, and fixed per ounce production-linked payment to remain unchanged from the 2019 Agreement
  • No changes to the Callable Gold Stream
  • Interest may be capitalized up to and including June 30, 2021; thereafter, interest may only be capitalized at the discretion of the Lender
  • Relaxed minimum cash balance and working capital covenants for the balance of 2021
  • Capital leases to be included within the definition of Permitted Indebtedness

2020 Full Year Financial Statements
The Company has filed its audited consolidated financial statements for the year ended December 31, 2020 and related management discussion and analysis. For further information please see the Company’s website at www.puregoldmining.ca or the Company’s SEDAR profile at www.sedar.com

Qualified Persons and 43-101 Disclosure
Ken Donner, P. Eng., Vice President, Operations 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 growth company, located in the very heart of Red Lake, Canada. Our objective is pure and simple. To develop a highly-profitable long life gold mining company, becoming Canada’s next iconic gold producer. Our plan is very disciplined, very methodical and financially sound. To expand organically, and develop PureGold’s multi-million ounce high grade gold asset incrementally, step-by-step, using a phased mining development plan to deliver maximum return.

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. See Pure Gold press release dated August 7, 2019 for further information.
  2. 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 www.puregoldmining.ca or under the Company’s Sedar profile at www.sedar.com

ON BEHALF OF THE BOARD
"Darin Labrenz"
Darin Labrenz, President & CEO

Investor inquiries:
Adrian O’Brien, Director, Marketing and 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 Red Lake Mine complex, timing of expected production, timing and size of exploration activities, potential for advancing the amount and timing for higher grade ore, 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", "continue", "planned", "expect", "project", "predict", "potential", "targeting", "intends", "believe", "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", "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 the interpretation of results at the Pure Gold Red Lake Mine complex; 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 31, 2021 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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