PureGold Red Lake Mine

PureGold Red Lake Mine: Overview

Following the release of the feasibility study in February 2019 outlining a 12-year, high-grade underground mining operation with a production rate of 800 tonnes per day (“tpd”) and robust economics, a construction decision was made in August 2019. 

Detailed engineering, procurement and construction have commenced. The project is fully funded for initial capital costs and first production is expected by the end of the year.

With a robust development plan and outstanding potential for growth along with substantial opportunities for scalability, the PureGold Red Lake Mine is simply phase one of our growth strategy.

PureGold’s rapid pace from acquisition and exploration through development to pending production from the PureGold Red Lake Mine, the team’s command of the Red Lake district geology and the quality of the exploration and engineering programs are reflected in the global mining leaders that chose PureGold to invest in. These investors include Eric Sprott and Rob McEwen who built multi-billion dollar companies Kirkland Lake Gold and Goldcorp, respectively, through the discovery of new, high-grade multi-million ounce deposits at the historic Fosterville, Macassa and Red Lake mines. Two additional key strategic investors include Newmont Goldcorp and AngloGold Ashanti. Collectively, these strategic investors represent 30% share ownership.

High Grade Deposit

The PureGold Mine ore body is an exceptional foundation on which to build a gold mining company.  With Probable Mineral Reserves of 3.5 Mt at 9.0 g/t containing 1.0 million ounces of gold included in a Mineral Resource of 7,196,000 Indicated tonnes grading 8.9 g/t gold for 2,063,000 ounces of gold and 1,880,000 Inferred tonnes grading 7.7 g/t gold for 467,000 ounces of gold, the PureGold Red Lake Mine is the highest grade development stage gold deposit in Canada today, and will be in the top 8 percentile globally when in production.1,2

The PureGold Mine is based around a newly defined reserve accessed by new development and shares geologic attributes including host rocks, alteration style, and structural setting with other major mines in Red Lake Including Newmont Goldcorp’s Red Lake Mine.

The high-grade and low-capex nature of the PureGold Red Lake Mine is highly levered to gold price: at US$1,500/oz. the after-tax NPV5% is C$390 million with an after-tax IRR of 51%.1

Supporting the move to production, this “data-rich” deposit has over 1.3 million metres of drilling defining a resource model with an average drill hole spacing of just over six metres between drill holes. Conducted in late 2018, PureGold’s successful test mining program and the Feasibility Study completed in 2019 have further de-risked the project.

Location: Red Lake Gold Mining District

Over its nine decade history, the Red Lake Mining District in northwestern Ontario has produced more than 29 million ounces of high grade gold, making this one of the largest and highest grade gold producing districts in Canada.1  The PureGold Mine is an important part of this history and will be a critical component of the future of the district.

Infrastructure and Land Position

The 47 square kilometre patented land position is host to two significant past producing mines, the Madsen Red Lake Mine and Starratt-Olsen Mine which together produced approximately 2.6 million ounces of gold. Substantial infrastructure is in place, including a mill and tailings facility, grid power and paved highway access, a 1,275 metre deep shaft and headframe, 27 levels of underground workings, a portal and ramp, and substantial permits. The existing infrastructure provides a solid foundation on which to build a modern long life mining and processing operation.1

Production Stage: the First Phase in the PureGold Red Lake Mine Strategy

Over the coming months, the Company will be focused on:

  • Commencement of construction activities to meet a target of first gold production in late 2020
  • Optimizing the project execution schedule, detailed engineering, procurement and permitting updates;
  • Initiation of hiring strategy to facilitate the rapid, 13-month development schedule.

References:

  1. See the National Instrument 43-101 technical report entitled “Madsen Gold Project Technical Report, Feasibility Study for the Madsen Deposit, Red Lake, Ontario, Canada” with an effective date of February 5, 2019 and dated July 5, 2019 for complete details, available on the Company’s website at www.puregoldmining.ca or Sedar profile at www.sedar.com.
  2. National Bank: “Gold Sector Analysis & Review”, October 2018.

Darin Labrenz, P. Geo, President and CEO of the Company, is a Qualified Person within the meaning of NI 43-101. Mr. Labrenz has reviewed and verified that the technical information contained herein is accurate and approves of the written disclosure of the same.

The PureGold Red Lake Mine is located within the Red Lake Greenstone Belt (RLGB) of the Archean Superior Province craton of the Canadian Shield. The RLGB is approximately 50 km by 40 km and comprises 2.99 2.70 Ga deformed and metamorphosed supracrustal (volcanic and sedimentary) rocks intervening between three main granitoid batholiths. The RLGB boasts a prolific history of gold production over a 90 year history. All major deposits in the RLGB are hosted within the ca. 2.99-2.96 Ga Balmer Assemblage which includes the belt’s oldest volcanic rocks that are predominantly of submarine mafic thoeliite and ultramafic komatiite composition. Gold deposits in the RLGB are classified as orogenic gold deposits (Groves et al., 1998) and characterized by an association with crustal-scale fault structures. Gold deposition in orogenic gold deposits is typically syn-kinematic and syn- to post-peak metamorphic and is largely restricted to the brittle-ductile transition zone.

Rock units of the RLGB are multiply deformed and metamorphosed. On the PureGold Mine Property, this complex deformation history is most readily explained through an early phase of tight upright folding (D1) and an overprinting minor folding event and associated widespread foliation development (D2). Significantly, the PureGold Mine, Fork, Russet South, and Wedge deposits all occur within planar structures (shear zones) that developed generally axial-planar to property-scale D1 folds. These early planar mineralized structures are the main targets for further gold exploration at the PureGold Mine and although they have been strongly overprinted by penetrative D2 deformation and metamorphism, they can be effectively identified by a distinct series of mineral phases (alteration), vein styles (blue-grey, deformed quartz veins) and quartz porphyritic intrusions that pre-date gold mineralization and occur within the D1 shear zones.

In some ways, the PureGold Red Lake Mine deposits seem atypical in that they are strongly overprinted by deformation and metamorphism rather than being syn- to post-peak metamorphic. The age of D1 deformation and gold mineralization, however, is poorly constrained and if the overprinting deformation is unravelled from the PureGold Mine deposits, they closely fit the orogenic gold deposit model including an association with crustal scale structures and an association with pervasive structurally-controlled carbonate alteration and quartz-carbonate.

  1. See the National Instrument 43-101 technical report entitled “Madsen Gold Project Technical Report, Feasibility Study for the Madsen Deposit, Red Lake, Ontario, Canada” with an effective date of February 5, 2019 and dated July 5, 2019 for complete details, available on the Company’s website at www.puregoldmining.ca or Sedar profile at www.sedar.com or Click here to download the Technical Report for the Madsen Gold Project, Red Lake, Ontario, Canada

Infrastructure

The existing infrastructure on-site at the PureGold Red Lake Mine  combined with the high-grade mineral resources contributes to a robust project. 

The PureGold Mine was the second largest historic producer in Red Lake over a 38 year period and was rebuilt, permitted, and mined briefly in the late 1990’s.

The mine is located approximately ten kilometres southwest of the town of Red Lake, Ontario. Located on patented claims, there is year-round access to the property via Ontario Highway 618.  Numerous secondary roads transect the 4,700 hectare property providing simple access for exploration programs.

The existing PureGold Mine infrastructure includes:

  • mill and processing facility
  • Tailings management facility; Existing Environmental Compliance Approval based on a 1,089 tonne per day operation
  • 5 compartment,1,275 metre deep shaft and headframe
  • 27 levels of underground workings, recently dewatered and rehabilitated to 16 level
  • Portal and Decline: Underground exploration and delineation drilling commenced via the PureGold Red Lake Mine portal in July 2017. The ramp currently  provides access to the upper 4 levels of the mine

The mine is connected to roads and power and has access to an experienced workforce in the Red Lake area.

The mill consists of a single stage crushing circuit and a two stage grinding circuit, which is then followed by cyanide leaching. The leached gold is collected in a carbon-in-pulp circuit which is subsequently stripped using mild caustic and collected on stainless steel mesh cathodes by electrowinning. The product from electrowinning is refined into dore bars in an induction furnace. Ontario Hydro supplies power via overhead lines at 44KV to a step-down transformer on the PureGold Mine.

The mill has been kept on care and maintenance since 1999. Other infrastructure includes the headframe, hoists, vent raises, coreshack/warehouse, shop, project offices, and ancillary buildings.

(1) See the technical report titled “Madsen Gold Project Technical Report Feasibility Study for the Madsen Deposit, Red Lake, Ontario, Candad effective February 5, 2019 and dated July 5, 2019“ for further information, available at www.puregoldmining.ca . Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.

Gold was originally reported in the Red Lake area in 1897 by R.J. Gilbert of the North Western Ontario Development Company. The exploration and mining history of the Red Lake Mining district dates back to 1925, when significant gold was first discovered by prospector L.B. Howey. The gold bearing veins he discovered were developed into Red Lake's first producing mine, the Howey Mine.

Since 1925, a total of 28 mines have operated in the district producing approximately 29 million ounces of gold. Over 85 percent of this gold was produced from two mines; Newmont Goldcorp’s Red Lake Mine Complex, acquisition by Evolution Mining announced in 2019, and PureGold's Red Lake Mine. The PureGold Mine was the first million ounce gold producer in the Red Lake district.

The history of the PureGold Red Lake Mine can be sub-divided into five main periods:

  • Operation between 1938 and 1976, where 2.5 million ounces of gold were produced at an average grade of 9.9 grams per tonne;
  • Acquisition, exploration, underground development, permitting, and installation of the mill complex and tailings management facility by Claude Resources from 1997 to 1999;
  • Brownfield exploration completed by Placer Dome under an option from Claude between 2001 and 2006. Discovery of several new zones including Fork and Treasure Box;
  • Dewatering, surface and underground drilling, and maiden resource estimate completed by Claude between 2006 and 2013;
  • Acquisition of the project by PureGold; consolidation of the properties along the PureGold Mine Trend; expansion of the Mineral Resource through focussed exploration; environmental and engineering studies, permitting, and advancement of the project towards develpment from 2014 - current .

Exploration: Advancing new discoveries to build out the next phase of mining and unveil the true potential of the PureGold Red Lake Mine

During the construction phase underway at the PureGold Mine, the PureGold exploration team is focused on a discovery drill program seeking to add additional new resources by growing the three satellite deposits and continued expansion and definition of the extensive 7 kilometre long gold system. The Company has been rewarded with recent bonanza-grade gold results at the Wedge deposit and is continuing to drill Wedge, Russet South, Fork EXT and numerous other high-priority targets throughout the year 1.

Recent results from the exploration program continue to demonstrate the continuity of the large high grade PureGold Red Lake Mine gold system. In less than two years, we have made a new discovery at Wedge, established it firmly as part of a related, 7 kilometre long gold system and have rapidly developed a brand new mineral resource in the Red Lake mining district 2. During this time, we have also produced maiden mineral resource estimates for two additional new discoveries, the Russet and Fork deposits 2.  With this understanding of the scale and tenor of gold mineralization firmly established, we are now drilling to expand and define this extensive gold system.

Surface drilling at the Wedge deposit has demonstrated the potential for these zones to continue to grow, with gold intercepts both within and outside of the current mineral resource.

2019 Wedge deposit drilling highlights1:

  • Infill and step-out drilling has been defined to upgrade and expand resources in the Wedge area.  Drilling result highlights in 2019 include:
    • 108.5 g/t gold over 1.0 metre from drill hole PG19-643;
    • 94.6 g/t gold over 1.0 metre from drill hole PG19-654;
    • 13.8 g/t gold over 1.0 metre from drill hole PG19-649;
    • 167.0 g/t gold over 1.1 metres from drill hole PG19-693;
    • 51.5 g/t gold over 1.5 metres from drill hole PG19-713.

In addition to ongoing exploration at Wedge, the current drilling campaign also includes the initial testing of the Fork EXT target which is located down-plunge of the near-surface Fork deposit and hosts strong alteration, blue-grey quartz veins, and anomalous gold in limited past drill testing. The Fork EXT target is hosted along the upper contact of the Russet Lake Ultramafic unit in an analogous geologic setting to the high grade 8 Zone of the PureGold Mine deposit. The 2019 exploration program will also continue surface work to prepare a further series of high priority exploration targets across the PureGold Mine Property for future discovery drilling. 

The Company’s drill program is expected to continue through 2019, with results released throughout the year.

PureGold's exploration and development studies benefit from:

  • A management team with expert technical knowledge of the Red Lake district geology and operations and a track record of successfully advancing mining projects to operational readiness and/or production and;
  • Utilizing data and learnings from more than 13,000 drill holes evenly spaced throughout mineral resource drilled by previous operators, and;
  • 67 kilometres of underground development and 38 years of active mining from previous operators, and;
  • A robust geologic model based on 27 levels of geological mapping and chip sampling; provides a solid understanding of the geology and continuity of mineralization, and;
  • Completed over 230,000 metres of diamond drilling (2014-present) 
  • Ongoing exploration growth program
  • Support from strategic investors who are global gold industry leaders including Eric Sprott, Rob McEwen, Newmont Goldcorp and AngloGold Ashanti

References:

  1. See the news release: NR 19-20, “PureGold Intersects Bonanza Grade Gold Including 108.5 G/t Gold Over 1.0 Metre at Madsen Red Lake”, July 30, 2019 and NR 19-28 PureGold Drilling Intersects High Grade Gold Minerlaization at 8 Zone Gap and Wedge, December 16, 2019. 
  2. See the technical report titled “Madsen Gold Project Technical Report Feasibility Study for the Madsen Deposit Red Lake, Ontario, Canada“ with an effective date of February 5, 2019, and dated July 5, 2019 (the “Feasibility Study”), for further information, available at www.puregoldmining.ca or under the Company’s Sedar profile at www.sedar.com
PureGold Red Lake Mine, mill interior during pre-production upgrades.
Two Miners, underground at the PureGold Red Lake Mine.
Nighttime drilling. Exploration Drilling along the highly prospective 7km PureGold trend.
Monolith. PureGold Red Lake Mine headframe.
Exploration Drilling along the highly prospective 7km PureGold trend.
Downtown Red Lake Ontario.
PureGold Red Lake Mine, headframe in the distance.
PureGold Red Lake Mine headframe at dawn.
Chief Doug Riffel of Wabauskang First Nation walks with his young son during a tour of the PureGold Red Lake Mine.
PureGold Red Lake Mine underground test mining ore transfer.
PureGold Red Lake Mine underground miner Brock Hunter with bolting equipment.
PureGold Red Lake Mine bolting.
Geologists examine a face underground at the PureGold Red Lake Mine.
Geologist working on face underground at the PureGold Red Lake Mine.
PureGold Red Lake Mine, underground drilling.
PureGold Red Lake Mine, underground drilling.
PureGold Red Lake Mine, the first drill hole.
PureGold Red Lake Mine, Summer 2019.
PureGold President &CEO Darin Labrenz Signing First Nations Agreement, 2019.
Chief Derek Maud of Lac Seul First Nation, Chief Doug Riffel of Wabauskang First Nation and PureGold CEO Darin Labrenz.
PureGold Red Lake Mine core farm #1. Just a small portion of the 1,300 kilometres of core drilled at the PureGold Red Lake Mine.
PureGold Red Lake Mine underground test mining, Jumbo Drill.
PureGold Red Lake Mine underground test mining, mucking.
PureGold Red Lake Mine bolting.
PureGold Red Lake Mine logging core.
PureGold Red Lake Mine logging core.
PureGold Red Lake Mine underground test mining.
PureGold Red Lake Mine underground test mining, jumbo drilling off face.
PureGold VP of Exploration Phil Smerchanski at entrance to PureGold Red Lake Mine Ramp.

Mineral Reserve and Resources

The PureGold Red Lake Mine hosts a Probable Mineral Reserve of one million ounces at 9 g/t Gold in 3.5 million tonnes1.

The PureGold Mine Mineral Resources are 2,063,000 ounces at 8.9 g/t Gold in 7.20 million tonnes Indicated and 467,000 ounces at 7.7 g/t Gold in 1.88 million tonnes Inferred.1

The mineral resources for the Fork, Russet South and Wedge deposits were not incorporated in the 2019 Feasibility Study. Exploration and Delineation at these satellite deposits is ongoing.

Mineral Reserve1

 

 

Tonnes (Diluted)

Grade
(g/t gold)

Gold Ounces

Madsen

Probable

3,512,000

9.0

1,013,000

Notes:

The Qualified Person for the Mineral Reserve estimate is Michael Makarenko, P. Eng., of JDS Energy & Mining Inc. The effective date of the Mineral Resource estimate is February 11, 2019. Mineral Reserves were estimated using a US $1,275 /oz gold price and gold cut-off grade of 4.75 g/t for all mining zones with the exception of McVeigh which used a cut-off grade of 4.0 g/t. Other costs and factors used for gold cut-off grade determination were mining, process and other costs of $226.00/t, transport and treatment charges of $6.00 /oz Au, CAD:USD exchange rate of 0.78 and a gold metallurgical recovery of 95%. Tonnages are rounded to the nearest 1,000 t and gold grades are rounded to one decimal place. Tonnage and grade are in metric units; contained gold is reported as troy ounces. Rounding may result in summation differences.

 

Mineral Resource Statement1

Zone

Indicated

Inferred

Tonnes

Grade
(g/t gold)

Gold Ounces

Tonnes

Grade
(g/t gold)

Gold Ounces

Madsen

6,429,000

9.0

1,857,000

889,000

8.4

241,000

Fork

203,000

6.6

43,000

331,000

5.8

61,000

Russet South

241,000

7.2

56,000

352,000

7.5

85,000

Wedge

322,000

10.3

107,000

307,000

8.0

79,000

Total

7,196,000

8.9

2,063,000

1,880,000

7.7

467,000

Mineral resources are inclusive of Mineral Reserves and are reported with an effective date of February 5, 2019. Mineral Resources that are not included in the Mineral Reserves do not have demonstrated economic viability. Mineral Reserves are reported using a 4.75 g/t gold cutoff excepting a 4.0 g/t cut-off for the McVeigh Zone. Mineral Resources are estimated using $1,275/oz and a 95% recovery and are reported at a 4.0 g/t gold cut-off.

1. See the technical report titled “Madsen Gold Project Technical Report Feasibility Study for the Madsen, Red Lake, Ontario Canada” effective February 5, 2019, dated July 5, 2019 for further information, available at www.puregoldmining.ca or under the Company’s Sedar profile at www.sedar.com