Pure Gold cuts Red Lake resource base by 20%

Pure Gold Mining (TSXV: PGM) has released an updated mineral resource estimate for its namesake operation in Ontario’s Red Lake gold camp, reporting 20% fewer ounces in the resource categories.

A new technical report completed by SRK sees the mine’s global resource base falling to 2 million oz. from 2.5 million oz. and the average grade reducing to 7.2 grams gold per tonne from 8.7 grams per tonne.

The new resource estimate entails 8.7 million tonnes grading 7.2 grams gold per tonne containing 2.02 million oz., down from 9.1 million tonnes grading 8.7 grams per tonne, or 2.53 million oz. previously estimated in 2019.

While the decline is material (20%), the bank had been concerned the actual drop would be worse, given SRK’s history of taking an overly conservative approach to revised resource estimates, wrote Laurentian Bank Securities Equity Research analyst Barry Allan in a note.

The analyst notes a revised mine plan is yet to be completed. However, the bank’s internal model shows a reduced number of recoverable gold ounces to 1.32 million oz. from 1.93 million oz. previously.

Allan attributes the lower production profile to a lower overall grade profile, from 7.2 grams per tonne to 8.7 grams per tonne, and slower start-up to initial capacity at indicated reserve grade (delayed one year to a 7.2 g/t mill feed grade), but also due to a three-year reduction in mine-life (fewer tonnes mined).