One of the newest entrants to the prolific Red Lake gold district in northwest Ontario, Pure Gold Mining (PGM:TSXV), is about to start a 9,000-metre drill campaign on its Madsen project. The drills are expected to start turning next week and will target the known mineralization where the high-grade resource is currently hosted as well as new targets.
The Red Lake district of Ontario is the single most productive and highest-grade gold districts in the world. It hosts Goldcorp's Red Lake Mine complex, which is the world's richest gold mine. Over 28 million ounces of high-grade gold have been pulled from the district to date.
The Pure Gold program is expected to cost $4 million. That will pay for not only the 9,000-metre drill program but also a 1,643-line-kilometre geophysical survey, structural mapping and geochemical soil and rock sampling. The company has approximately $8 million in working capital.
"We are excited to launch our 2014 drill program as we begin to test targets developed through our proof-of-concept exploration model," stated Darin Labrenz, president and chief executive officer of Pure Gold. "Initial drilling is designed to increase the mineral resource and will test near-surface targets along the 12-kilometre Madsen trend. Drilling will expand to test highly prospective targets generated from early exploration activity with a goal of discovering new zones of high-grade mineralization along the 10-kilometre-long ultramafic contact."
The Madsen gold project hosts two former gold mines (Madsen and Starrett-Olsen). Madsen produced over 2.4 million ounces of gold at an average grade of 9.7g/t gold from 1938 to 1999 (on and off).
The project currently hosts an Indicated mineral resource of 3.236Mt of 8.93g/t gold containing 928,000 ounces, with another 788Kt at 11.74g/t gold containing 297,000 ounces in the Inferred category.
According to the 2013 Natural Resource Holdings ranking, the Madsen project is the 14th highest-grade undeveloped gold project in the world and 5th in North America.
The property has existing mine infrastructure, including an operational headframe, a 1,275-metre shaft and a 500-tonne-per-day mill.
A new interpretation of the role of folded ultramafic contacts and structural controls has resulted in multiple recent discoveries in the Red Lake district, including Goldcorp’s high-grade zone at the Red Lake mine complex, the Bruce Channel system at the Cochenour mine, and the F2 gold system at Rubicon’s Phoenix mine.
The environment and mineralization at Madsen’s 8 Zone is similar to other recent high-grade discoveries in the district.
The upcoming drill program will focus on near-surface step-out drilling around the high-grade mineralization in the Madsen mine trend, as well as exploration drilling at the McVeigh Ramp, Fork Zone, Junction, Point and other high-priority targets across the property.
This is the third iteration of gold companies for Mark O'Dea's Oxygen Capital (the others are Burkina Faso gold developer True Gold and Nevada/Turkey gold explorer Pilot Gold).
In December 2013, Pure Gold (then Laurentian Goldfields) announced they would be acquiring the Madsen gold project from Sabina Gold and Silver for $3.75 million cash and more in work commitments as well as changing the name and adding Oxygen Capital alum Mark O'Dea, Troy Fierro and Len Boggio as well as Graeme Currie to the Board. Mr. Currie is now the Chairman of the company.
The Red Lake district is some of the most sought after real estate in the gold business and Pure Gold is the third largest landholder with a 50-square-km land package.
Shareholders of the company include AngloGold Ashanti and Rob McEwen, who hold 11.8% and 11.6% of the company, respectively. Management holds over 7% of the company.
Pure Gold trades at $45 per Indicated ounce in the ground which - given the fact that these are some of the highest grade ounces in the world, have access to mining infrastructure, are in Canada and are in the hands of some of the most successful explorers/developers - are very cheap ounces.