VANCOUVER, B.C. – Pure Gold Mining Inc. (PGM – TSX-V) (“Pure Gold” or the “Company”) is pleased to announce financial results and operating highlights for the three and six months ended September 30, 2017, as well as an update on activities at the Company’s 100% owned Madsen Gold Project (“Madsen”). All financial figures are in Canadian dollars, unless otherwise stated.
Operating Highlights through and subsequent to September 30, 2017:
The second quarter of fiscal 2018 and to date saw the Company complete a number of key milestones. Highlights for the quarter and subsequent period to date are as follows:
•On November 1, 2017, Pure Gold closed a bought deal private placement for aggregate gross proceeds of C$19.2 million upon the issuance of an aggregate of 31,613,292 common shares of the Company. The offering consisted of three tranches. The first tranche consisted of 8,690,000 common shares of the Company that qualify as "flow-through shares" for the purposes of the Income Tax Act (Canada) ("Super FT Shares") and were issued at a price of C$0.725 per Super FT Share. The second tranche consisted of 8,061,125 common shares of the Company that qualify as "flow-through shares" for the purposes of the Income Tax Act (Canada) ("FT Shares") and were issued at a price of C$0.64 per FT Share. The third tranche consisted of 14,862,167 common shares of the Company ("Common Shares") and were issued at a price of C$0.52 per Common Share. In consideration for their services, the Underwriters received a cash commission equal to 6.0% of the gross proceeds of the offering.
•On September 14, 2017, the Company announced a Preliminary Economic Assessment (“PEA”) for the Madsen Gold Project (“Madsen”). The PEA, based on an updated resource estimate (see news release dated August 2, 2017), shows a robust 14-year underground mining operation with highly attractive economics at base case metal prices. Highlights for the PEA include[1]:[2]
o Pre-tax NPV5% and IRR of $365 million and 54% respectively with a 2.7 year payback of initial capital;
o After-tax NPV5% and IRR of $258 million and 47% respectively with a 2.8 year payback of initial capital;
o Mine life of 14 years with a 12 month pre-production period;
o Life of mine (“LOM”) diluted head grade of 10.3 g/t gold;
o Average annual gold production in years three through nine of approximately 75,500 ounces, with peak annual production of approximately 85,000 ounces of gold;
o LOM direct operating cash cost¹ is estimated at US$595 per ounce of gold recovered;
o LOM operating cash cost¹ plus sustaining cost is estimated at US$714 per ounce of gold recovered;
o Pre-production capital cost estimated at $50.9 million which includes a 15% contingency;
o LOM sustaining capital costs estimated at $134.7 million which includes a 5% contingency.
•On August 2, 2017, Pure Gold announced a new mineral resource estimate for Madsen consisting of indicated mineral resources totaling 1,648,000 ounces (5,785,000 tonnes at an average grade of 8.9 g/t gold) and, inferred mineral resources totaling 178,000 ounces (587,000 tonnes at an average grade of 9.4 g/t gold), all at a 4.0 g/t cut-off . Indicated resource tonnes increased 27%, grade 17% and total ounces 48%, from the previous resource estimate completed in 2009.[3]
•Pure Gold continued to have success with its exploration drilling at Madsen and substantially completed its 70,000 metre drill program that was announced on January 11, 2017, during the quarter. Significant drill results received in the quarter include[4]:
o 34.6 g/t gold over 4.3 metres, including 67.0 g/t gold over 2.0 metres in hole PG17-456, the deepest drill result by Pure Gold to date at a vertical depth of 1,373 metres, approximately 240 metres below any previous mining on the South Austin deposit;
o 12.7 g/t gold over 2.0 metres in hole PGU-0016 in the McVeigh deposit;
o 14.4 g/t gold over 4.1 metres including 28.3 g/t gold over 2.0 metres in hole PGU-0020 in the McVeigh deposit;
o 48.4 g/t gold over 6.0 metres in drill hole PGU-0012 in the McVeigh deposit;
o 12.5 g/t gold over 8.2 metres in drill hole PGU-004 in the McVeigh deposit;
o 32.5 g/t gold over 2.0 metres in drill hole PG17-454 in the Austin deposit.
Continued with underground infrastructure work at the Madsen ramp. Constructed, installed and commissioned key surface and underground services including water and air lines, underground electrical lines, mine air heater and ventilation, and power lines connecting grid power to the portal;
o Completed geotechnical review of underground;
o Commenced re-conditioning of ramp;
o Completed a System Impact Assessment with the provincial power provider to confirm future power availability for an operating mine; and
o Continued exploration drilling from both surface and underground focused on resource growth.
Selected Financial Data
The following selected financial data is derived from our unaudited condensed interim consolidated financial statements and related notes thereto for the periods indicated, as prepared in accordance with International Financial Reporting Standards. Details of these results are described in the unaudited condensed interim consolidated financial statements and Management’s Discussion and Analysis for the three and six months ended September 30, 2017. These documents can be found on the Company’s website (www.puregoldmining.ca) or on SEDAR at www.sedar.com. All dollar figures are expressed in Canadian $. The information in the tables below is expressed in $000s except per share data.
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