Tag Archives: Pure Gold Mining

Pure Gold pours first gold in Red Lake, Ontario

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Pure Gold Mining says it has poured first gold at its PureGold Mine, in Red Lake, Ontario.

The first pour occurred on December 29, following the introduction of ore to the mill on December 15, 2020.

Darin Labrenz, President and CEO of PureGold, said: “Today, the PureGold Mine has come to life. With our first gold pour, we have transitioned to producer, and delivered on our promise to build Canada’s newest gold mine in the heart of Red Lake, Ontario, on budget and on schedule.

“To build a mine at any time requires a complete team effort comprised of dedicated, driven, and focused individuals. To do so under the unique challenges of 2020 speaks to the quality and dedication of the entire team. With this first gold bar, we are now focused on ramping up the operation to steady-state production as we continue to build a long-life growth company in Red Lake.”

With the commencement of production at the PureGold Mine, activities at site are now concentrated on optimising the operation, with commercial production anticipated by the end of the March quarter, at which time the company will be providing guidance.

A February 2019 feasibility study on the PureGold Mine outlined a probable mineral reserve of 3.5 Mt at 9 g/t, containing 1 Moz of gold. This saw the company project a 12-year operation, producing an average of 80,000 oz/y at an all-in sustaining cost of $787/oz.

PureGold will also continue to pursue its aggressive growth strategy in 2021, it said, with ongoing exploration drilling from both surface and underground, an update of mineral resources to include drilling completed over the last two years, and incorporation of significant improvements in mine design and mine plan.

MacLean ANFO loader goes underground at Pure Gold’s Madsen project

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The ramp up to first production at Pure Gold Mining’s Madsen gold project in Red Lake, Ontario, continues, with the company having recently taken delivery of an ANFO loader from MacLean Engineering.

The ANFO loader, which has just headed underground for the first time at the project, is one of several new pieces of kit the company has added to its fleet as it heads towards its goal of pouring first gold at Madsen by the end of the year.

In a June 21 update, Pure Gold said procurement of major equipment was now 94% complete; a total of 1,285 m of underground mine development had been completed, with an advance rate 60% better than the mine plan; initial access development to longhole stopes had commenced; and an alimak had been installed in the existing shaft to support dewatering and shaft rehabilitation.

In the update, the company said new mine equipment delivered to date included four underground LHDs, two jumbo drills, two haul trucks, two scissor lifts, multiple utility vehicles and the ANFO loader.

One of these haul trucks is a DUX DT-26N articulated truck, while at least one Epiroc jumbo drill has been commissioned at Madsen.

Based on the 2019 feasibility study, Madsen is expected to produce an average of 80,000 oz/y at an all-in sustaining cost of $787/oz over a 12-year mine life. The operation will feature a combination of diesel and battery-powered load and haul equipment, with first gold production planned for the December quarter.

DUX dump truck makes its way to Pure Gold Mining’s Madsen project

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New underground mining equipment has been arriving at Pure Gold Mining’s Madsen gold project in Red Lake, Ontario, with the company recently taking delivery of a DUX DT-26N articulated truck.

Despite the impact of the COVID-19 pandemic, Pure Gold has continued to progress the construction of Madsen, with Pure Gold President and CEO, Darin Labrenz, saying at the end of March that underground development had commenced safely and ahead of schedule.

In the same update, the company said detailed engineering was on track to support the completion of the project as scheduled for late 2020.

“To date the company has placed equipment purchase orders representing approximately 74% of the long lead items by value, including electrical equipment packages, key gold room equipment, gravity and intensive leach systems as well as the new ball mill to provide for planned processing rates of 800 t/d,” Pure Gold said.

One of the more recent pieces of equipment to arrive in Red Lake is a 26 t capacity articulated dump truck from DUX Machinery (pictured). This underground four-wheel drive truck is well suited for hauling ore, waste and backfill on level and steep grades, according to DUX. It also has the highest power to weight ratio in its class the company said, adding that it permits efficient chute, side and end loading in narrow drifts with low headings.

From mid-December to late March, some 740 m of development had been completed at Madsen, with Pure Gold saying early initiation of ramp development through the company’s test mining program and, to date, a 50% improvement on development productivity from underground, had provided an opportunity to access key stopes ahead of schedule, optimise the mine plan, and provide a larger ore stockpile in advance of mill start-up.

Based on the 2019 feasibility study, Madsen is expected to produce an average of 80,000 oz/y at an all-in sustaining cost of $787/oz over a 12-year mine life. The operation will feature a combination of diesel and battery-powered load and haul equipment.

Gold price rise revealing exploration deficit, Wood Mackenzie says

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Even though the resurgent gold price has garnered a renewed sense of optimism in the gold industry, a lack of exploration spend from miners means it is facing a potential period of secular decline over the long-term, according to Wood Mackenzie’s gold team.

Exploration budgets were slashed following the fall in the gold price from the highs that were reached in 2011/2012 and they have since failed to recover, according to Wood Mackenzie.

“The slight rebound in exploration spend we have seen over the past couple of years has largely been focused on brownfield projects and near-mine development,” the analysts said. “This has not been sufficient to replenish mined ounces and, as such, peak gold supply is now a very real possibility.”

Over the past couple of months, with gold breaking through $1,500/oz, it seems that exploration activity may be turning a bit of a corner.

The analysts provided evidence:

  • In late June, Agnico Eagle Mines started an exploration drilling program at its Amaruq site in an effort to convert underground indicated resources;
  • On September 4, Polyus announced the completion of an exploration drill program at its Sukhoi Log project (pictured) that totalled 203,647 m and is planning 30,000 m of infill drilling in 2020; and
  • On September 10, Newcrest reported that its exploration program on the Havieron project, located 45 km east of Telfer in Australia, has four operating drill rigs, which have cut 6,166 m and a fifth drill will begin in September.

It will be some time, however, before this activity translates into reserves and ultimately into production.

Proposed exploration budgets for the largest producers in 2019 remain fairly conservative compared with the levels reached in 2012, according to the analysts. It would therefore seem unlikely that the trend in declining reserves will be abated this year.

Producers have been very vocal in reaffirming their strategy of cost control, portfolio management and capital discipline, particularly since the run up in the gold price, ensuring they do not get criticised for the same type of costly M&A and marginal project spend they carried out in the previous gold price highs.

“How steadfast miners will be to this strategy into 2020 and beyond, if prices continue to remain well supported, remains to be seen,” the analysts said.

Due to insufficient exploration spend, gold reserves have depleted significantly with the global average mine life falling from 16 years in 2012, to an estimated 11 years in 2018, they said. However, the largest producers are not facing quite such an acute situation, with their collective average mine life still over 16 years. “It is perhaps therefore not so surprising that they can afford a more calculated approach to replenishing reserves.”

To secure their longevity as pillars of the gold industry, Wood Mackenzie said it has seen heightened M&A activity and miners focusing on their core assets. While this may help to bolster balance sheets through improved operational performance and realised ‘synergies’, it seemingly does little to address the problem the industry is facing with regards to how to sustain current production levels.

“We have, as of late, noticed an uptick in some majors opting to increase their footholds in a select few juniors with promising exploration opportunities,” the analysts said.

Agnico Eagle, AngloGold Ashanti, Kinross and Newcrest are actively investing in, or entering into joint-ventures with junior gold companies to create long-term value.

Agnico Eagle announced a proposal on June 24, 2019 for an all-share acquisition of Alexandria Minerals Corporation at a $0.05 per share premium to the Chantrell Ventures Corp offer; however, O3 Mining acquired Alexandria on August 1, 2019.

AngloGold Ashanti upped its stake in Pure Gold Mining to 14.3% on July 16, 2019, which owns the Madsen gold project in Red Lake, Ontario.

Kinross purchased the near-surface, early-stage Chulbatkan project in Russia from N-Mining Limited for a total consideration of $283 million on July 31, 2019.

And, Newcrest entered into a 70-30 joint venture with Imperial Metals on August 16, 2019, where Newcrest will be the operators of the Red Chris mine, a potential ‘Tier One’ asset in British Columbia, Canada, the gold miner has said.

The analysts said: “We expect to see this trend of increased M&A activity to continue, particularly amongst the more mid-tier gold producers as they look to solidify their own positions in the industry. This will likely encompass mergers with peers to unlock shareholder value and the acquisition of assets that majors have determined to be non-core.

“This may help to progress some later stage projects into production that have been sitting on the shelf for a number of years, but we are not anticipating a knee jerk reaction to current prices. Smaller projects which have a short payback period, in a low sovereign risk jurisdiction, are an attractive proposition and we could see a number of these projects being fast tracked into production.”

And, going forward, to address the predicament of declining reserves, if prices remain elevated miners may be inclined to review their reserve and resource price assumptions, the analysts said.

Pure Gold moves onto engineering stage at Madsen Red Lake

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Having recently secured the finance to develop its Madsen Red Lake gold project in Ontario, Canada, Pure Gold Mining has started to secure contractors to build the mine.

The company has awarded the surface engineering and procurement (EP) contract to JDS Energy & Mining in partnership with Hatch and Knight Piesold, while Dumas Mine Contracting has secured the underground mine design engineering contract.

Just last month, Pure Gold Mining secured a $90 million project financing package with Sprott Resource Lending Corp that, on top of money already raised, more than covers the C$95 million ($72 million) in upfront capital required to build the mine. This will be put towards redeveloping the old mine workings, adding additional development levels and investing in a new fleet – much of which could be battery-electric.

With the engagement of its engineering partners, the company says it has commenced construction at Madsen, which is due to produce an average of 80,000 oz/y of gold at an all-in sustaining cost of $787/oz.

“Detailed design work on surface infrastructure, as well as underground electrical distribution, mine ventilation, mine service design and stope optimisation has been initiated, as well as equipment sourcing and the procurement of long lead time items,” the company said.

Pure Gold Mining President and CEO, Darin Labrenz, said: “Madsen began as an exploration concept in late 2014, and has evolved into a multi-million ounce gold deposit that is now under construction as Canada`s highest grade gold development project. Along the way, the team has hit every milestone we set: from first resource estimate, to early conceptual studies, through a comprehensive feasibility study, an agreement with our First Nation partners, and now a fully funded financing package.

“Today, as we commence construction, our project is perfectly timed to benefit from a rising gold market, and looks set to generate well over C$800 million in cumulative pre-tax cash flow with gold currently near C$2,000/oz.”

Pure Gold Mining has also appointed Dimitry Demianyuk as Project Manager, Madsen Red Lake Mine. Demianyuk will work with the VP Operations, Ken Donner, providing engineering management and project management focused on the optimisation of project scope, budget, quality and schedule, Pure Gold said.

Demianyuk is an engineering professional with 15 years of industry experience in mine development at all project stages, having worked for established EPCM firms earlier in his career and then transitioning to specialise in project management and engineering management as part of owner’s teams at Rio Tinto, Frontera Mining, Newcrest Mining, and Nevsun Resources.

Barbara Womersley, meanwhile, has been engaged as a Human Resources Lead for the company.

Pure Gold makes its electric investment case

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Newmont Goldcorp’s Borden development may have stolen the mine electrification limelight in the last 12-24 months in Ontario, Canada, but with this all-electric mine close to starting up, another project in the province is laying the groundwork to follow in its footsteps.

The Madsen project is a former-operating underground gold mine situated in the renowned Red Lake region. Since acquisition, Pure Gold Mining has been adding ounces to the 43-101 reserve and resource categories, while rehabilitating the old workings to generate a viable plan to re-start mining.

The February feasibility study outlined an economically sound project, costing C$95 million ($72 million) in upfront capital and returning an after-tax net present value (5% discount) of C$247 million using a gold price of $1,275/oz. This study included details of a mining and development fleet made up of a combination of diesel and battery-powered load and haul equipment.

With mine electrification still high on IM’s agenda following the inaugural Electric Mine conference in April, in Toronto, Dan Gleeson spoke with Pure Gold President and CEO, Darin Labrenz, to find out more about the company’s electric equipment plans.

IM: You recently raised C$47.5 million to continue development work and carry out further exploration at Madsen. Can you breakdown how much will go towards exploration/development?

DL: We’ve closed two raisings this year. The one earlier in the year was a C$5.2 million flowthrough raise designated for exploration. Those funds will go towards a drilling program in the order of 12,000 m directed towards those resources and discoveries that lie outside of the feasibility study mine plan…with the goal of being able to bring them into a future mine plan.

The C$47.5 million is what I would call the ‘equity component’ of a project financing package. Some of it may ultimately go into exploration.

Then, in August, we announced the $90 million project financing package with Sprott Resource Lending Corp comprised of a credit facility for $65 million, and a $25 million callable gold stream. This allows us even more flexibility on how we want to explore the exciting tenement as well as other opportunities.

IM: What type of development work is going on at Madsen currently?

DL: Last year, we conducted some trial mining, which involved extending the ramp a short distance; lateral development underneath the base of two stoping areas (as well as a couple of raises into those areas); and rehabilitation of the historical Number 2 level back to the existing shaft to provide secondary egress to the mine. We also initiated dewatering last year and have brought the water level down; right now, we’re holding it constant at about 250 m below surface. We’ve also done a lot of surface work to clean up and prepare the site for future activities.

With the debt financing now complete and a decision to construct by the board, detailed engineering in advance of site development work will commence immediately. We expect surface works and underground development to commence in Q4 (December quarter) of 2019.

IM: Based on current progress, when do you expect to produce first gold at Madsen?

DL: With access to the capital provided by the recently announced financing, the construction of the Madsen Red Lake mine is now fully funded. Combined with the equity financing, this secured approximately C$90 million of immediate funding enabling us to initiate construction and put us on track for first gold pour by late 2020.

IM: What factors came into play when deciding on the use of battery-electric equipment at Madsen?

DL: The key drivers for us were operating costs, environmental benefits and improved working conditions.

The use of electric equipment underground really eliminates a large component of the operational greenhouse gases that would be emitted from the mining operation, but also key is the reduction in ventilation requirements: the use of an electric fleet is going to require about 50% less ventilation. When you look at the life of mine at Madsen – with the combination of power and propane that would be used – you’re looking at savings of around C$41 million by going down the electrification route.

The ventilation benefits really increase with depth as you continue to push the mine down. Electrification allows the mine to push ramps down more efficiently, while reducing operating costs at the same time.

From a social, community and regulatory perspective, the move to a more environmentally friendly operating environment is also being well received.

IM: How did the company balance the capex issues with the opex benefits when choosing battery-electric haulage equipment over conventional diesel?

DL: The capex is higher for electric fleets – these costs are reducing, and I would expect to see them to continue to reduce into the future as that technology advances. Saying that, the increases in capital over diesel equipment are more than covered by the operating cost improvements that come with the reduced ventilation and heating requirements.

In an earlier study we completed we had a more pronounced combination of diesel and electric equipment. One of the things that has allowed us to further electrify this operation is the use of the existing shaft on the property. With this existing shaft, we will be transitioning to an operation that hoists ore and waste up the shaft, which reduces the haulage distance for the electric equipment. From an operational standpoint, in terms of the battery capacity and the need to recharge/replace batteries, it really advances our potential use of electric equipment.

One of the limiting factors in ramp-supported operations is ventilation. As you go deeper and deeper in a mine, you need to drive more and more air down to these depths. Ultimately, you get to a point with deepening a mine where you just cannot push enough air to clean out the diesel from the operating environment. With an electrified fleet, you can have narrower openings and you can push those ramps much deeper as the ventilation requirements are reduced.

IM: Have any investors raised concerns about this planned mine electrification?

DL: While we haven’t received any specific concerns, we have been asked about the technology’s availability and reliability. We can now point to several operations in Canada that are transitioning to electrical equipment. Many of the major equipment suppliers are also transitioning and starting to provide electrified versions of existing diesel equipment. That technology has been rapidly advancing and will continue to do so.

For us, looking to go into operations in the near-term, initially starting with the diesel equipment and transitioning into the electrical equipment reduces any risk from an availability and operating perspective.

IM: Is the move to start with diesel and go into electric also predicated on the flexibility required during development/production?

DL: It’s a few things. Primarily, when you look at the early years of mining, we are mining much shallower and the ventilation requirements are that much lower, so you see limited operational cost benefits when using electric equipment. From a capital perspective, initiating operations with diesel equipment allows us to be capital efficient, as well as equipment availability being high.

As we continue to deepen the mine, we transition into electric technology and then see operational cost improvements. This strategy also allows the industry more time to advance the electric technology.

IM: What was the reason behind the plan to use a tethered 6 t LHD close to the loading station and 6 t diesel LHDs elsewhere?

DL: The use of tethered equipment is a function of how much this 6 t LHD has to travel in the mine plan. Its purpose is to transfer muck into the loading pocket shoot, so it has a limited travel path.

On the other large LHDS, obviously we would use electric equipment should it be available at the time we need to procure it.

IM: Are you looking to use any other battery-powered or tethered equipment underground?

DL: We would look at electric equipment wherever it is practical and available. Currently utility vehicles such as man carriers, telehandlers, etc are available and will be utilised.

It will be something we consider at the time of the purchasing. We would look to use electric equipment as much as possible.

IM: Do you envisage other juniors going down a similar mine electrification route in the near-term?

DL: I believe so.

My perspective on this is that electrification of underground equipment is one of the great innovations in underground mining technology over the last decade. It has a very pronounced impact on operating costs, it obviously improves working conditions underground without the occurrence of diesel particulate matter and improves the ability to move your mine system deeper. It, importantly, also results in a real reduction in greenhouse gases, which reduces the environmental impact of underground mining.

Electrification is one of those rare cases where we see not only a strong operational reason for a move to that technology, but also a pronounced positive impact on the workforce and surrounding community.

Pure Gold looks at mine electrification options for Madsen underground project

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In another sign that the underground mining space is increasingly going electric, Pure Gold Mining has said it intends to use a combination of diesel and battery-powered load and haul equipment at its Madsen underground gold project in Ontario, Canada.

The company said all ramp and level waste development would be performed by an owner-operated fleet of one- and two-boom electric hydraulic drill jumbos, 3 cu.m capacity LHDs, 20-t haul trucks, scissor lift/bolters and other rubber tyred support equipment.

Pure Gold said: “Mining will be facilitated by a combination of diesel and battery-powered equipment, with diesel equipment being utilised for upper levels of the mine prior to refurbishment of the existing shaft and installation of a new double-drum production hoist.”

Following the refurbishment, battery-powered equipment is likely to be used, with the company explaining that its use will “eliminate emissions associated with the movement of ore and waste and will result in materially reduced ventilation and heating requirements”.

This information came out in the company’s press release announcing a feasibility study on Madsen, a former operating gold mine in the renowned Red Lake district.

Based on a probable mineral reserve of 3.5 Mt at 9 g/t, containing 1 Moz of gold, the company outlined a 12-year operation at Madsen, producing an average of 80,000 oz/y at an all-in sustaining cost of $787/oz.

The initial capital requirement of C$95 million ($71 million) would be paid back with an after-tax net present value (5% discount) of C$247 million (using a gold price of $1,275/oz), the company said.

Darin Labrenz, President and CEO of Pure Gold, said: “The Madsen-Red Lake orebody is an exceptional foundation on which to build a gold mining company. With access to existing infrastructure, a high-grade reserve, and exceptional growth potential, Madsen is one of the outstanding gold deposits in Canada.”

He added: “The completed study outlines a long life high-margin mine, with low initial capital requirements and a fast timeline to production. In addition, specific exploration targets and satellite resources not considered in the feasibility study suggest an opportunity for near-term growth to potentially further enhance the economics of the project.”

The feasibility study supports a high-grade 800 t/d underground mining operation with designed stopes containing 1 Moz of probable reserves, the company said. Madsen benefits from significant mining, milling and tailings infrastructure already in place, resulting in one of the lowest capital intensity, undeveloped gold projects in the world, according to Pure Gold.

Mining will be conducted from new ramp development using a combination of cut and fill and longhole mining methods. A new hoist house and double drum production hoist will use the existing shaft infrastructure to hoist ore and waste from the mine, commencing in year four of operations.

The Madsen implementation schedule spans a period of 13 months, with underground mine development commencing approximately nine months before the first gold pour. The initial capital outlay of C$95 million (including contingency) supports the construction of an underground mine and associated infrastructure, including the expansion of existing milling capacity to 800 t/d of ore.

Assuming the project execution starts in April, the first gold production would be expected in May 2020.

JDS Energy and Mining led the feasibility study, which included contributions from consultants such as Knight Piésold, Nordmin Engineering, MineFill Services, Integrated Sustainability, Lorax Environmental Services, Ginto Consulting and Equity Exploration Consultants.