Sprott Resource Lending Corp., a major mining financier, has sunk US$90 million into bringing a former Red Lake gold property back into production.
It prompted the board of directors at Pure Gold Mining to approve a "decision to construct" for their high-grade Madsen Mine gold project.
With two northwestern Ontario First Nation communities also on board with the project, the Vancouver developer announced in an Aug 7 news release that Madsen is now "fully funded" and the wheels are in motion to immediately begin development work.
The company expects the first gold pour will be sometime in late 2020.
Sprott's financing packaging consists of a credit facility for US$65 million and US$25 million gold stream.
Combined with the C$47.5 million they raised earlier in equity financing, Pure Gold said they have enough flexibility to continue exploration drilling on their 47-square-kilometre property and build up their gold resource base.
And the timing couldn't be better.
Gold prices have risen from US$1,275 per ounce--the number Pure Gold built the project's feasibility study on--to US$1,474 per ounce.
Moreover, the Canada dollar has remained stable at 75 cents against the US greenback. That translates to a record-high Canadian dollar gold price of C$1,957 per ounce.
Pure Gold's property contains the former Madsen and Starratt Mines, which over a 36-year production history mined 2.5 million ounces of gold. It's located just southwest of the community of Red Lake.
On the site, there's an existing mill, a tailings facility, power lines, a paved road, a headframe, a 1,275-metre deep shaft, 27 levels of underground workings, a portal and a ramp.
The current indicated resource is 2,063,000 ounces gold at 8.9 grams per tonne (g/t) gold, with an inferred resource of 467,000 ounces gold at 7.7 g/t gold.
A feasibility study released on Madsen back in February outlined a 12year mine life.
"We are very pleased with the financial commitments that Sprott have made towards the development of the project," said Pure Gold president Darin Labrenz in a statement.
"We have achieved our objective of securing a flexible financing package on terms that are competitive and protect the upside for our shareholders. The optionality of repayment of both the facility and the gold...