Pure Gold Indicates Need For Short Term Financing To Avoid Debt Default, Provides H1 Guidance
Pure Gold Mining (TSXV: PGM) this morning provided its outlook for 2022. The guidance for the year was included within a long-winded release which also provided several operational updates, as well as management commentary on the firms performance over the last year.
Cutting to the chase, the company expects to mine roughly 600-700 tonnes per day in the first half of the year, at an average head grade of 4.0 to 5.0 g/t gold. With an expected recovery rate of 95%, the firm as a result expects to produce between 15,000 and 20,000 ounces of gold in the first six months of the year.
Hard guidance was not yet provided for the second half of the year, however the company indicated that both ore production and grade are expected to improve in the second half of the year due to initiatives underway focused on improving the operation. Guidance for H2 of the year is expected to be released by June.
The firm however did provide soft guidance for the year, indicating that it is targeting a 50% improvement in average daily ore production, a 30% increase in average head grade, and a 20% reduction in monthly operating costs when compared to 2021.
The company also indicated that dilution is likely on its way. With current cash of $9.0 million on the books as of today, the company indicated it will be in need of additional financing within the next 30 days, both to service its debt as well as to fund operations. The company specifically indicated that if it cannot find further funding, it will fail to meet obligations and as a result default on its debt.
Total external financing of an estimated $50 million is expected to be needed over the next six months. With this funding, the company expects it can reach sustainable positive free cash flow to support its operations. If this funding is found, the company expects positive free cash flow to begin by the end of the year. Financing options are reportedly in the process of being evaluated.
Pure Gold Mining last traded at $0.70 on the TSX Venture.
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