Pure Gold Mining (TSXV: PGM) is officially undergoing a strategic review, which will potentially see the sale of the company, or its flagship asset. The review follows capitalization struggles being seen by the company, and the largest industry as a whole.
The review is being conducted with “the objective of maximizing shareholder value and the value of its PureGold mine in Ontario.” Yet at the same time, despite the review and the search for strategic alternatives, the company is also postponing a 2022 guidance update that was previously scheduled to be released last month.
The decision to pursue such a review was announced by the firm this morning, while the company concurrently announced that it has secured an additional $6.0 million credit facility from Sprott Resource Lending Corp. The facility is to be used solely for payments owed to Sprott, which includes interest, a gold stream, and production payment agreement payments.
The company currently has an outstanding US$85.0 million in principal credit facility, in addition to having received US$4.0 million under a production payment agreement as well as a US$25.0 million advance under a gold stream arrangement.
The latest facility has a maturity date of December 31, 2022, and bears interest at 14% per annum.
“We have initiated a strategic review process to explore potential alternatives for maximizing shareholder value and generating the financial strength to allow the PureGold Mine to achieve its potential. We remain focused on achieving positive site-level cash flow by Q3 2022, and delivering an updated NI 43-101 Technical Report and Life of Mine plan by Q4 2022,” commented CEO Mark O’Dea.
The review follows significant financial problems being exhibited by the company. Production at the mine has been declining, with head grades falling to 4.27 g/t in the most recent quarter, while ore processing is also on the decline. Cost of sales meanwhile dwarfed revenue, with production costing $41.8 million for the quarter, versus revenue of $18.4 million. Cash meanwhile dwindled to the point the firm was forced to raise $30.0 million at just $0.15 per unit.
Pure Gold Mining last traded at $0.155 on the TSX Venture.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
