Vancouver miner Pure Gold seeks creditor protection after suspending operations for lack of money

Article content

Vancouver-based Pure Gold Mining Inc. has applied for creditor protection a week after suspending its underground mining operations in Ontario.

Article content

The miner on Monday said it had applied for an initial order under the Companies’ Creditors Arrangement Act from the Supreme Court of British Columbia, adding it was considering “all available transactional and restructuring options” for the company.

Article content

“After careful consideration of Pure Gold’s cash position, scheduled debt payments, forecast revenue and expenses … the company has determined that it is in the best interests of Pure Gold … to file an application for creditor protection,” Pure Gold said in a press release.

Article content

The company on Oct. 24 suspended operations at its mine in Red Lake, Ont., about 100 kilometres from the Manitoba border, because it wasn’t able to obtain the financing needed to continue production and other activities. It also withdrew its production guidance for the fourth quarter.

Article content

“If additional outside financing is not obtained in the short term, Pure Gold will not be able to meet its obligations as they become due, resulting in a default under its debt obligations,” it said on Oct. 24.

The company, which began production at the mine in August 2021, said in a filing on March 30, 2022 that it experienced “lower-than-expected” gold grades due to shortages of high-grade ore, developmental delays, insufficient geologic information and other strategic issues.

Pure Gold changed its leadership team in early 2022 and tried to recover by cutting costs and improving operations and financial results.

The miner on March 28 said it would need about $50 million in six months for its operations. The company’s share price closed 40 per cent lower on the day that announcement was made, and it continued to fall.

Article content

About a week later, the company said it had been named in a civil claim in the British Columbia Supreme Court for allegedly failing to disclose information related to its mine’s operations. The miner, however, said the complaint was “unfounded and without merit.”

The company produced about 9,000 ounces of gold in the third quarter, which was within its guidance of 8,700 to 12,300 ounces of gold.

“Results for the third quarter would have been better, but for nine unexpected days of lost production in September due to downtime of the contract crusher and an unrelated issue with automation control electronics in the mill,” the company said on Oct. 6.

Pure Gold shares were trading for 1.5 cents on Monday morning, down 97 per cent on the year.

• Email: | Twitter:

Back to top button