Pure Gold Mining (TSXV: PGM) appears to have hit a wall in terms of turning around its operations as a result of the current financial market conditions. The firm this morning revealed that due to a lack of funding, the PureGold Mine is in the process of being placed into care and maintenance immediately.
As per the release this morning, Pure Gold’s cash position has dwindled down to just $2.0 million, while the company faces a working capital deficit of $13.0 million. The firm had been relying on funding from the exercise of warrants issued in May with an exercise price of $0.18 to provide enough funding to float operations through to the next financing, however with the equity trading at $0.12, the firm has faced the reality that no warrants are going to be exercised at these levels before they expire next month.
With these warrants having provided zero additional funds, and the company unable to source further outside financing, the company simply does not have the money required to complete its feasibility study or life of mine plan, while its strategic review has also been hampered by the funding issues.
As a result, the company has been forced to suspend operations at its mine, with the Pure Gold Mine being placed into care and maintenance immediately. The decision is said to have been required as a result of the failure of the mine to hit consistent positive cash flow, despite recent cost cutting measures and increased production.
The company is now reviewing potential sale and restructuring scenarios with its lender, Sprott Resource Lending. The company also indicated that if outside financing is not found in the near term, debt defaults are likely.
Pure Gold Mining last traded at $0.12 on the TSX Venture.
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