Pure Gold Mining – Canada’s Fort Knox
Darin Labrenz, CEO of Pure Gold Mining got me interested in Gold this week and his mine, the Pure Gold Red Lake mine, hasn’t event started producing yet. First pour is scheduled before the end of the year and before too long the mine could be producing 100,000 oz/year from their phase 1 plans alone. The first phase has a mine life of 12 .3 years and Phase 2/3 could see production rise to 150/200k oz/year.
The resource is pretty impressive, being spread over 47 square kilometres and with a number of underground mining zones. The high gold grades rank the mine the 17th highest grade in the world with an average grade of 9g/tonne. These high grades help drive low costs which are only $787/oz. There is a higher grade deposit in “Zone 8” which will come in phase 2. It was exciting to hear that prospecting had been faster and with better results than originally anticipated.
The management team have plenty of gold mining experience across the globe as well as a lot of experience working in the Red Lake region of Ontario. Between them they own 5% of the company and have also attracted a number of very experienced gold investors including Rob McEwen, Eric Sprott, AngloGold Ashanti and Newmont who together own over 30% of the shares.
The mine is fully funded and once in production will produce significant free cash flows. Initially these cash flows will enable expansion of the existing ore body, further exploration of the area and developing the phase 2 and Phase 3 plans but over time there could be a lot of cash coming back to shareholders.
The recording can be seen on the Yellowstone Advisory YouTube channel, follow this link
and the presentation slides are available here
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3 comments
The lower risk Canadian option is to own some Sprott Inc (SII). Their royalty model makes them one of my favourite PM stocks. Note that Gold spot is currently $1896/toz, I'm glad I'm long gold and silver right now:-)
Not heard of Sport Inc but will take a look. Thank you
Hi YellowStone Advisory. You are very welcome.
Sprott is one of the main Gold/Silver/Platinum/Palladium players in North America. Market cap is 1.33 bn. They have their fingers in lots of important pies in you look into their business. They are low risk Vs the miners and are "all over the gold space" so they should presumably continue to excel as precious metals go higher. This however is now being reflected in their share price.
They also vault precious metals and run physical Gold/Silver/Platinum/Palladium ETFs which, unlike most ETFs, offer the ability of "taking physical delivery of the actual metal". Hence why gold bugs like me hold some of their ETFs also.
Saying all this, to be honest they have jumped >50% in value since March so I'm not sure if it is wise to buy their stock at these levels. It might be wiser to wait for a pull back when gold is monkey hammered back down by the bullion banks. Note SII are currently paying a 2.3% p.a. dividend.