Pure Gold mulls sale as Ontario mine is idled, default risk rises
Dual-listed Pure Gold Mining on Monday announced that it had placed its mine on immediate care and maintenance, after failing to secure additional funds to keep its namesake operations in Ontario, Canada, going.
The announcement sent PureGold's stock plunging on the LSE, wiping 74% off its market capitalisation in early morning trade.
The company, which also trades on the TSX, does not have the financial means to continue operations, complete its ongoing prefeasibility study or life-of-mine plan, it said.
The PureGold mine has not yet achieved consistent positive site-level cash flow and expected additional funding did not come through.
The miner explained that it had previously expected some additional funding this year, but that none of the warrants – priced at C$0.18 a share – issued in conjunction with its May 2022 financing had been exercised.
“Given current market conditions, the company no longer expects to receive any proceeds from warrant exercises prior to their expiry on November 25 to 27.”
PureGold has a $2-million cash balance and a net working capital deficit of $13-million.
"If additional outside financing is not obtained in the short term, PureGold will not be able to meet its obligations as they become due, resulting in a default under its debt obligations," the company said.
PureGold is working with its lender, a fund managed by Sprott Resource Lending, to evaluate near-term funding and strategic alternatives. This process included the possible sale or restructuring of the company.
The guidance for the fourth quarter has been withdrawn.
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