A major blow to the Red Lake economy.
Pure Gold has announced it is suspending operations at the mine and putting it on maintenance and care immediately.
In a statement the company says the step follows an evaluation of several potential alternative scenarios and has become necessary because the mine has not yet achieved consistent positive site-level cash flow, notwithstanding recent reductions in operating costs and sequential quarter over quarter increases in production.
They add 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.
The Company continues to work collaboratively with its lender, a fund managed by Sprott Resource Lending Corp. (“Sprott”), to evaluate several near-term funding and strategic alternatives.
This process will include evaluation of all available options, including possible sale or restructuring scenarios, in order to preserve asset value for the benefit of all stakeholders.
The Vancouver-based company says its current cash balance sits at $2 million and its net working capital deficit sits at $13 million.
They had been hoping to secure outside financing to continue operations, but plans to exercise warrants at $0.18 per share fell through earlier this year.
CKDR News reached out to Pure Gold for further comment but an interview was declined.
