VANCOUVER (miningweekly.com) – South Africa-based multinational gold producer Anglogold Ashanti has agreed to lift its ownership stake in Canadian project developer Pure Gold to 14.9% through a C$7.4-million investment.

The deal comes on the back of a parallel private placement led by Sprott Capital Partners as lead underwriter to buy on a bought-deal private placement basis 11.29-million Pure Gold units, at C$0.62 each, for gross proceeds of C$6.99-million. As part of the financing, Pure Gold is also issuing four-million flow through shares at C$0.75 each, for gross proceeds of C$3-million, which brings the offering to C$9.99-milllion.

Each unit will comprise one Pure Gold common share and one-half of one common share purchase warrant, allowing the holder of each whole common share purchase warrant to acquire one common share of the Pure Gold for two years from the closing of the offering, at a strike price of C$0.85.

Anglogold has previously held about 11.4% of Pure Gold.

Pure Gold’s flagship Madsen project, in Ontario’s Red Lake district, has produced about 30-million ounces of gold since the 1930s.

A September preliminary economic assessment has outlined a resource of 5.78-million tons of ore grading 8.86 g/t gold in the indicated resource category, holding an estimated 1.65-million ounces of gold, and an inferred resource of 590 000 t grading 9.4 g/t for 178 000 oz of yellow metal, at a cutoff grade of 4 g/t gold.

The company has announced added resources from two satellite deposits in December, with the discovery of several zones of high-grade mineralisation at the Wedge target boding well for the project’s upside potential.

Pure gold has reported that it has successfully reopened and is in the process of reconditioning the Madsen underground ramp, including the installation of new ground support, a new water line, mine air heating and ventilation, power line construction and commissioning, and communications infrastructure.

The company has embarked on a definitive feasibility study slated for completion before year-end.