Pure Gold hopes to understand Red Lake geology with new mineral resource estimate
Pure Gold Mining is reporting nearly 20% less gold in the ground at its namesake Red Lake mine than was originally reported more than three years ago.
The Vancouver-based company released an updated mineral resource estimate showing 2,019,200 million ounces of gold in the indicated and inferred category, down significantly from the 2,530,000 ounces posted in February 2019.
Today’s new figures show 1.65 million ounces of gold at 7.4 grams per tonne (g/t) in 6.9 million tonnes in the stated grade, and 0.37 million ounces of gold at 6.3 g/t in 1.8 million tonnes on the inferred side.
Pure Gold recently raised funds to help with a recovery plan for the struggling Red Lake underground operation.
The company ran into trouble last year when the mine began failing to meet its gold production targets a few months after commencing commercial production in August 2020.
The problems have been attributed to delays in underground development, planning problems and “insufficient” information on the immediate geology for the workings to go into production, among other issues. The company recorded a loss of $34.9 million for the year.
Senior managers were replaced at the start of the new year, pink slips were distributed among its workforce and the company imposed a drastic cost-cutting plan. A new team has been put in place to turn around the underperforming mine and get back to basics by producing a new resource base.
The situation is eerily reminiscent of the 2015 debacle at Rubicon Resources’ Phoenix gold project and the delicate geology of the Red Lake camp. This operation is now under the control of Evolution Mining.
Last month, Pure Gold launched a strategic review process which could involve a possible sale or merger of the business. The company did not provide any update on this process in its August 10 press release.
The new resource estimate figures will be incorporated into a new pre-feasibility study and a new mine life is expected to be released later this year.
“SRK’s extensive independent review and update shows that the PureGold mine remains supported by a multi-million ounce, high-grade gold resource,” said the company’s Chairman and Chief Executive Officer, Mark O’ Dea, in a statement.
“The updated MRE (mineral resource estimate) is based on a combination of deep geological understanding, close drilling and first-hand observations of stope-scale forms and continuity. The team is confident that the updated pre-feasibility study and upcoming life of mine plan will demonstrate the near-term potential of the PureGold mine and lay the foundation for future growth.