Good morning, news out from mining junior Pure Gold Mining and newly producing Guyana Goldfields merits a closer look.
Pure Gold Mining (PGM:TSXV) and Premier Gold (PG:TSX) – Pure Gold Mining has agreed to sell 513 hectares of land to Premier Gold for $5 million in cash and shares and a 1% NSR, which looks like a win/win deal for both companies.
The property being sold is contiguous with Premier’s Hasaga property in Red Lake, Ontario, and Pure Gold bulks up its treasury without diluting shareholders.
Hasaga is an early-stage exploration project, with this year’s work the first major exploration program completed since 1988 & 1966. A previous mine on the property produced 640,000 ounces between 1930 and 1952.
Premier Gold has reported near-surface mineralization in the 2015 program and a 60,000-metre drill program is ongoing. Drilling on the newly acquired land is expected to start in early 2016.
“This latest property acquisition is consistent with our strategy to acquire prospective assets in mine-friendly jurisdictions with proximity to infrastructure,” stated Ewan Downie, Premier’s President and CEO. “This transaction strengthens our project portfolio by increasing our land exposure in an existing project area, and signals our satisfaction with results coming from the 2015 exploration program at Hasaga.”
Pure Gold will receive $2.5 million in cash on closing and $2.5 million in Premier Gold shares. A 1% NSR will also be retained by Pure Gold which Premier has the option to purchase 50% of for $1 million.
On closing, Pure Gold expects to have $7.1 million in cash and short-term investments. Shares last traded at 8 cents this morning, giving Pure Gold a market cap of ~$10.1 million.
“In our view, this transaction is a logical step for both companies. It will provide Pure Gold with immediate cash and share consideration without diluting shareholders equity, which will continue to allow the Company to devote funds to our highly prospective Madsen Gold Project,” stated Darin Labrenz, President and CEO of Pure Gold. “The sale also provides Pure Gold with continued exposure to the Buffalo Claims via the NSR.”
Guyana Goldfields (GUY:TSX) – Guyana is off to a great start at its newly producing Aurora gold mine. In the last 2 months, production totalled 21,903 ounces of gold which lead to positive cash flow. More than 17,000 of these ounces were produced in November, showing a strong ramp-up of the mine.
Guyana is on target to meet 2015 guidance of 30,000 ounces and is targeting production of between 130,000-150,000 ounces in 2016.
According to a technical report from 2013, Aurora is expected to be a low-cost producer with a mine life of 17 years. The company is definitely helped by the deposit’s average grade, about 2.74 g/t.
Scott Caldwell, President & CEO, states, “With the start-up of hard rock processing, we are one step closer to demonstrating successful implementation of full operations. In November we saw significant momentum and we expect December to be another outstanding month. We do not anticipate the upcoming secondary rainy season to have any material effect on our operations as these brief bouts of inclement weather have been accounted for within the mine and mill production plan.”
The stock has come off considerably from the $4 price in early September, likely due to gold price weakness. A nice bump occurred in late November as a few brokerages houses raised target prices.
The CEO has also picked up 30,000 shares in the open market in the past couple of weeks.
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