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Pure Gold to sell noncore Red Lake claims to Premier

2nd December 2015

By: Megan van Wyngaardt

Creamer Media Contributing Editor Online

  

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JOHANNESBURG (miningweekly.com) – TSX-listed Premier Gold plans to expand its Hasaga property, in the Red Lake mining district of Ontario, by buying claims from TSX-V-listed Pure Gold Mining for $5-million and a 1% net smelter royalty (NSR).

Pure Gold has agreed to sell claims, which it considers to be noncore, to Premier Gold. The 513-ha land package is immediately west and adjacent to Premier’s the Hasaga property.

Announcing the agreement on Wednesday, Premier CEO Ewan Downie said the acquisition was consistent with the company’s strategy to acquire prospective assets in mine-friendly jurisdictions with proximity to infrastructure.

“This transaction strengthens our project portfolio by increasing our land exposure in an existing project area, and signals our satisfaction with results coming from the 2015 exploration programme at Hasaga.”

Drilling on the newly acquired lands would start in early 2016 and would test the on-strike potential of the Hasaga porphyry.

In a separate statement, Pure Gold CEO Darin Labrenz described the transaction as a “logical step” for both companies.

“It will provide Pure Gold with immediate cash and share consideration without diluting shareholders equity, which will continue to allow the company to devote funds to our highly prospective Madsen gold project. The sale also provides Pure Gold with continued exposure to the Buffalo claims through the NSR,” he said.

The sale of the 28 noncore mining claims represented about 10% of the area held under the Madsen gold project and did not include any of the infrastructure or mineral resources associated with the Madsen mine, or any of Pure Gold’s primary exploration targets.

While the Buffalo claims were known to host gold mineralisation on the margins of the dome stock granodiorite, it did not host the mafic-ultramafic contact that Pure Gold had been successfully targeting for high-grade gold mineralisation.

The claims would be sold at $2.5-million payable upon closing, as well as share consideration of $2.5-million. The sale would also include 1% NSR on the majority of the Buffalo claims divested. Premier Gold would have the right to acquire 50% of the NSR for $1-million.

The sale was expected to close on or before December 18 and was subject to certain conditions including, but not limited to, the completion of definitive documentation and receipt of all necessary approvals, including the approval of the TSX-V.

On closing it was anticipated that the company would have about $7.1-million in cash and short-term investments to continue to advance its exploration and development efforts at Madsen.

PURE GOLD’s 2016 EXPLORATION PROGRAMME
Pure Gold’s exploration focus in 2016 would be to drill test and advance near-surface high-grade targets associated with the prospective mafic-ultramafic folded stratigraphy to the north and west of the historic mine workings, as well as advance evolving near-mine targets that have developed out of recent structural interpretation and modelling. 

The company would also continue engineering studies to assess the existing mining and milling infrastructure, and assess potential development opportunities within the existing resource base and nearby prospects. The engineering study would be used in designing additional drilling for the purpose of upgrading and expanding the current mineral resource.

Pure Gold was currently preparing for a minimum 6 000 m winter drill programme, designed to test prospective near surface targets, starting in January 2016.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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