Pure Gold Mining is reporting almost 20 per less gold in the ground at its namesake Red Lake mine than what was originally reported more than three years ago.
The Vancouver company released an updated mineral resource estimate showing 2,019,200 million ounces of gold in the indicated and inferred categories, a significant drop from the 2,530,000 ounces posted in February 2019.
Today’s new numbers show 1.65 million ounces of gold at 7.4 grams per tonne (g/t) within 6.9 million tonnes in the indicated category, and 0.37 million ounces of gold at 6.3 g/t within 1.8 million tonnes on the inferred side.
Pure Gold recently raised financing to help with a turnaround plans at the struggling Red Lake underground operation.
The company ran into trouble last year when the mine began falling short of reaching its gold production targets within months of starting commercial production in August of 2020.
The problems were attributed to delays in underground development, scheduling issues and “insufficient” information on the immediate geology for the stopes to be brought into production, among other issues. The company posted a $34.9-million loss for the fiscal year.
Senior managers were replaced early in the new year, pinkslips were handed out among its workforce, and the company imposed a drastic cost-cutting plan. A new team was installed to turnaround the underperforming mine and go back to the basics in producing a new resource base.
The situation is eerily reminiscent of the 2015 debacle that was Rubicon Resources' Phoenix Gold Project and the tricky geology that’s in the Red Lake camp. That operation is now under control of Evolution Mining.
Last month, Pure Gold launched a strategic review process that could involve a potential sale or merger of the company. The company did not provide any updates on that process in its Aug. 10 news release.
The new resource estimate numbers will be incorporated into a new pre-feasibility study and new life-of-mine expected to be released later this year.
“The thorough independent review and update led by SRK shows that the PureGold Mine remains underpinned by a multi-million-ounce high grade gold resource,” said company president-CEO Mark O’Dea in a statement.
“The updated MRE (Minerals Resource Estimate) is based on a combination of deep geological understanding, closely spaced drilling, and first-hand observations of stope scale shapes and continuity. The team is confident that the forthcoming updated pre-feasibility study and life of mine plan will demonstrate the near-term potential of the PureGold Mine and lay the foundation for future growth.”