Operations Suspended at Red Lake Mine
VANCOUVER – MINING – Pure Gold Mining Inc. (TSX-V:PGM, LSE:PUR) (“PureGold” or the “Company”), announces a financial update regarding its cash balance, working capital and discussions with its lender. The Company also provides an operations update regarding its PureGold Mine in Ontario.
The Company’s current cash balance is approximately $2 million and net working capital deficit is approximately $13 million1. PureGold has previously noted that it expected at least some additional funding in 2022 to come from the exercise of warrants (the “Warrants”) issued in conjunction with its May 2022 financing. The Warrants are currently priced to be exercised at $0.18 per share and, given current market conditions, the Company no longer expects to receive any proceeds from warrant exercises prior to their expiry on November 25-27, 2022. To date, none of the Warrants have been exercised, and the Company has, so far, been unable to obtain alternative outside financing in order to continue operations, complete its ongoing Pre-Feasibility Study (“PFS”) and Life-of-Mine plan, and continue its ongoing strategic review process.
The Company is suspending operations and placing the PureGold Mine on care and maintenance immediately. This step follows an evaluation of several potential alternative scenarios and has become necessary because the mine has not yet achieved consistent positive site-level cash flow, notwithstanding recent reductions in operating costs and sequential quarter over quarter increases in production. The suspension of operations has resulted in the Company withdrawing its guidance for Q4 2022.
If additional outside financing is not obtained in the short term, PureGold will not be able to meet its obligations as they become due, resulting in a default under its debt obligations. The Company continues to work collaboratively with its lender, a fund managed by Sprott Resource Lending Corp. (“Sprott”), to evaluate several near-term funding and strategic alternatives. This process will include evaluation of all available options, including possible sale or restructuring scenarios, in order to preserve asset value for the benefit of all stakeholders.
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
