Madsen Portal and Ramp Entrance
Madsen headframe, mill and tailings facility
Reconditioning the Madsen Ramp
Madsen Location

Madsen Gold Project - Overview

Pure Gold Mining is advancing a high grade mine with existing infrastructure and permits to operational readiness and resource growth from a 2017 Preliminary Economic Assessment that projects 910,000 ounces of gold produced over 14 years and a robust after-tax internal rate of return of 47%1.

A Definitive Feasibility Study for the Madsen Gold Deposit is in progress with metallurgical, plant, infrastructure, and development studies proceeding. Results are expected in the fourth quarter of 2018. Environmental baseline and permitting updates are also underway. A production decision is expected in late 2018.

In December, 2017, the Company announced a new and expanded mineral resource estimate for the Madsen Gold Project incorporating two new satellite deposits the Russet South and Fork Deposits in close proximity to the Madsen mine and mill complex1. An aggressive exploration program subsequently resulted in the discovery of the Wedge satellite deposits in January 20182. Continued exploration drilling at Wedge, Fork, and Russet has been successful and is expected to provide potential expansion and project scalability opportunities at Madsen3. Exploration drilling is expected to continue through 2018. Drill results from the Wedge, Russet South and Fork Deposits will be incorporated into an updated resource estimate and economic study in Q4 2018.  

PROJECT HIGHLIGHTS

Location: Located in Red Lake, Ontario, an established mining jurisdiction with more than 29 million ounces of high margin, high grade gold produced to date4.

High Grade: Madsen is one of the highest grade undeveloped Gold deposits in the world5. High grade gold mineralization is structurally controlled and hosted in altered basalt near ultramafic contacts.

Existing Infrastructure and Permits: The 47 square kilometre patented land position is host to two significant past producing mines, including the Madsen Mine which together produced approximately 2.5 million ounces of gold over a 36 year operating history. Substantial infrastructure is in place, including existing power and paved highway access, a 1,275 metre deep shaft and headframe, 27 levels of underground workings, a portal and ramp which is currently open and active for exploration and a mill and tailings facility with an existing Environmental Compliance Approval which allows for operation of a 1,089 tonne per day milling and processing facility1.

Current Mineral Resources Estimate1: 

  • Indicated mineral resource of 1,744,000 ozs gold in 6.24 million tonnes grading 8.7 g/t Gold (4 g/t cut-off);
  • Inferred mineral resource of 296,000 ozs gold in 1.16 million tonnes grading 7.9 g/t Gold (4 g/t cut-off)

Economics:

  • In December 2017, the Company released a Preliminary Economic Assessment (PEA) for an underground mining operation as a long life, high margin mine, with low initial capital requirements and fast timeline to production.
  • The PEA presented an after-tax net present value (at a 5% discount rate) of $258 million and an internal rate of return of 47% with a 2.8 year payback of initial capital with production of 910,000 ounces of gold during a mine life of 14 years. The pre-production construction period would be 12 months with an initial capital investment of $51 million1.

Satellite deposit growth through exploration provides potential scalability:

  • Madsen’s satellite deposits are outcropping at surface, road accessible, close to existing milling infrastructure (1-3 kilometres), and remain open for expansion.

 

  • In May 2018, the Company announced an additional 21,000 metres of exploration drilling with the goal of demonstrating expansion and project scalability opportunities at Madsen through satellite resource growth6

 

  • Drill results from the Wedge, Russet South and Fork Deposits will be incorporated into an updated resource estimate and initial economic study, on track for Q4 2018. 

Financed: 

  • The Company is fully funded to complete the definitive feasibility study, finalize remaining mining and processing permit updates, complete the extraction of a 7,200 tonne bulk sample, and undertake 21,000 metres of exploration drilling focused on increasing the scale of the project beyond that contemplated in the feasibility study6

 

Phil Smerchanski, P.Geo, Vice President, Exploration of the Company, is a Qualified Person within the meaning of NI 43-101. Mr. Smerchanski has reviewed and verified that the technical information contained herein is accurate and approves of the written disclosure of the same.

 

    1. See the National Instrument 43-101 technical report entitled “Technical Report for the Madsen Gold Project - Restated Preliminary Economic Assessment and Initial Satellite Deposit Mineral Resource Estimates” with an effective date of December 14, 2017 for complete details, available on the Company’s website at www.puregoldmining.ca or Sedar profile at www.sedar.com.

2) See News Release 18-02, January 31, 2018

3) See News Release 18-20, August 16, 2018

4) Lichtblau, A.F., Paterson, W., Ravnaas, C., Tuomi, R.D., Pettigrew, T.K., Lewis, S. and Wiebe, K. 2018. Report of Activities 2017, Resident Geologist Program, Red Lake Regional Resident Geologist Report:Red Lake and Kenora Districts; Ontario Geological Survey, Open File Report 6336, 100p.

5) Source: Natural Resources Holdings Global Gold Mines & Deposit Rankings of 2013

6) See News Release 18-13, May 30, 2018

 

 

Madsen Location
Pure Gold Underground Geologist Robert Scott Mapping Geology at the Madsen Gold Project
Madsen Geology & Deposits

The Madsen Gold Project is located in the Red Lake greenstone belt, one of Canada's most prolific gold producing districts, with over 28 million ounces of gold produced since 1927 at an average grade of 15.6 g/t Au1. The greenstone sequence occurs within the Uchi Subprovince of the Superior Province of the Canadian Precambrian Shield.

The Madsen Mine produced 2.5 million ounces of gold at an average grade of 9.7 g/t Au1 from two sub-parallel composite, stratigraphic units known historically as the Austin and McVeigh "Tuffs". These "Tuff" horizons are defined by a heterogeneous assemblage of Archean (approximately 3000 to 2960 Ma) mafic volcanic tuff, breccia, pillowed and massive basalts and volcano-sedimentary rocks that occur at the top of the more regionally extensive Balmer Assemblage. Here, the Balmer Assemblage is juxtaposed in angular unconformity against the much younger (approximately 2748 to 2739 Ma) Confederation Assemblage, which is defined by sequences of predominantly mafic to intermediate, calc-alkaline and tholeiitic volcanic rocks. This unconformity is a fundamental geological break spanning more than 200 million years of earth history; and the vast majority of the gold produced from the Red Lake district was mined from within 1.5 kilometres of this major structure.

At the deposit scale, gold mineralization is mainly structurally controlled disseminated gold hosted in Balmer mafic volcanic rocks adjacent to ultramafic intrusive rock units, while quartz vein-hosted gold mineralization dominates in the 8 Zone deposit. Historic mining focused on high grade pods within the hanging wall Austin horizon, and less so in the McVeigh footwall horizon. The high grade pods are clustered in sheared, folded and attenuated corridors that transect the stratigraphy at a low angle.

(1) Lichtblau, A.F., Ravnaas, C., Storey, C.C., Tuomi, R.D., Tims, A., Debicki, R.L., Pettigrew, T.K., Paju, G.F. and Wetendorf, J. 2016. Report of Activities 2015, Resident Geologist Program, Red Lake Regional Resident Geologist Report: Red Lake and Kenora Districts; Ontario Geological Survey, Open File Report 6314, 130p.

Phil Smerchanski, P.Geo, Vice President Exploration of the Company, is a Qualified Person within the meaning of NI 43-101. Mr. Smerchanski has reviewed and verified that the technical information contained herein is accurate and approves of the written disclosure of the same.

 

MINERAL RESOURCES:

The Madsen Gold Project has a current Indicated mineral resource of 1,744,000 ozs gold in 6.24 million tonnes grading 8.7 g/t Au, and a current Inferred mineral resource of 296,000 ozs gold in 1.16 million tonnes grading 7.9 g/t Au1.

The mineral resource statement prepared for the Madsen Gold Project considers data from 14,627 boreholes drilled between 1936 and 2017. The resource estimation work was completed by Mark Jutras, P.Eng., M.A.Sc., Principal, Ginto Consulting Inc. an "independent qualified person" as defined in NI 43-101. The effective date of this mineral resource statement is December 14, 2017.

The mineral resource reported considers gold mineralization from four zones accessible from the historic Madsen Mine underground workings and two satellite deposits. 

Mineral Resource Statement for the Madsen Gold Project at a 4.0g/t Au Cut-off grade*1

Resource Classification

Deposit

Tonnes

Grade

(Au g/t)

Contained Gold (oz.)

 

 

Indicated

Russet South

259,000

6.70

56,000

Fork

194,000

6.47

40,000

Madsen

5,785,000

8.86

1,648,000

 

 

 

 

 

 

 

Inferred

Russet South

322,000

6.82

71,000

Fork

255,000

5.76

47,000

Madsen

587,000

9.42

178,000

*Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the Mineral Resources estimated will be converted into Mineral Reserves. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues. The CIM definitions were followed for the classification of Indicated and Inferred Mineral Resources. The quantity and grade of reported Inferred Mineral Resources in this estimation are uncertain in nature and there has been insufficient exploration to define these Inferred Mineral Resources as an Indicated Mineral Resource and it is uncertain if further exploration will result in upgrading them to an Indicated Mineral Resource category. All figures have been rounded to reflect the relative precision of the estimates. Mineral Resources are reported at a cut-off grade of 4.0 g/t gold based on US$1,200 per troy ounce gold and gold metallurgical recoveries of 92 percent.  Madsen Mineral Resources reported on August 2, 2017.  Russet South and Fork Mineral Resources are effective December 14, 2017. Mineral resources’ tonnage and ounces have been rounded to the nearest thousand.

  1. The mineral resource estimate reported herein for the Madsen Gold Project is set out in the NI 43-101 technical report “Technical Report for the Madsen Gold Project - Restated Preliminary Economic Assessment and Initial Satellite Deposit Mineral Resource Estimates” with an effective date of December 14, 2017.
Madsen mine complex
Madsen mill
Interior of Madsen mill
Madsen headframe
Permitted tailings facility
Madsen Portal and Ramp: ventilation, air and water lines - access to upper 150m of mine workings including Austin, South Austin, and McVeigh Deposits
Mill Conceptual Flowsheet

Infrastructure

The existing infrastructure on-site at Madsen Gold Project combined with the high-grade mineral resources contributes to a robust project. 

The Madsen Gold Project was the second largest historic producer in Red Lake over a 38 year period and was rebuilt, permitted, and mined briefly in the late 1990’s.

Madsen is located approximately ten kilometres southwest of the town of Red Lake, Ontario. Located on patented claims, there is year-round access to the property via Ontario Highway 618.  Numerous secondary roads transect the 4,700 hectare property providing simple access for exploration programs.

The Madsen Mine infrastructure includes:

  • 550 tonne per day mill
  • Tailings management facility; Existing Environmental Compliance Approval allows for operation of a 1,089 tonne per day operation
  • 5 compartment,1,275 metre deep shaft and headframe
  • 27 levels of underground workings, recently dewatered and rehabilitated to 16 level
  • Portal and Decline: Underground exploration and delineation drilling commenced via the Madsen portal in July 2017. The portal provides ramp access to the top 150 meters of mine workings including Austin, South Austin, and McVeigh Deposits. The PEA study contemplates underground mining with access through the portal.

Madsen Gold Project is connected to roads and power and has access to an experienced workforce in the Red Lake area.

The mill consists of a single stage crushing circuit and a two stage grinding circuit, which is then followed by cyanide leaching. The leached gold is collected in a carbon-in-pulp circuit which is subsequently stripped using mild caustic and collected on stainless steel mesh cathodes by electrowinning. The product from electrowinning is refined into dore bars in an induction furnace. Ontario Hydro supplies power via overhead lines at 44KV to a step-down transformer on the Madsen property.

The mill has been kept on care and maintenance since 1999. Other infrastructure includes the headframe, hoists, vent raises, coreshack/warehouse, shop, project offices, and ancillary buildings.

(1)  See the Company's National Instrument 43-101 technical report entitled "Technical Report on the Preliminary Economic Assessment for the Madsen Gold Project", prepared by Nordmin Engineering Ltd., dated effective April 20, 2016. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.

(2)  Phil Smerchanski, P.Geo, Vice President Exploration of the Company, is a Qualified Person within the meaning of NI 43-101. Mr. Smerchanski has reviewed and verified that the technical information contained herein is accurate and approves of the written disclosure of the same.

Madsen, 1949
Madsen 1960's
Starratt-Olsen Mine 1949
Drilling at Russet Lake

Gold was originally reported in the Red Lake area in 1897 by R.J. Gilbert of the North Western Ontario Development Company. The exploration and mining history of the Red Lake Mining district dates back to 1925, when significant gold was first discovered by prospector L.B. Howey. The gold bearing veins he discovered were developed into Red Lake's first producing mine, the Howey Mine.

Since 1925, a total of 28 mines have operated in the district producing approximately 28 million ounces of gold. Over 85 percent of this gold was produced from two mines; Goldcorp’s Red Lake Mine Complex and Pure Gold's Madsen Mine. The Madsen Mine was the first million ounce gold producer in the Red Lake district.

The history of the Madsen Mine can be sub-divided into five main periods:

  • Operation between 1938 and 1976, where 2.5 million ounces of gold were produced at an average grade of 9.9 grams per tonne;
  • Acquisition, exploration, underground development, permitting, and installation of the mill complex and tailings management facility by Claude Resources from 1997 to 1999;
  • Brownfield exploration completed by Placer Dome under an option from Claude between 2001 and 2006. Discovery of several new zones including Fork and Treasure Box;
  • Dewatering, surface and underground drilling, and maiden resource estimate completed by Claude between 2006 and 2013;
  • Purchase of the project by Pure Gold in 2014 with the goal of consolidating the Madsen Mine Trend and expanding the mineral resource through focused exploration.

Madsen Gold Project

Underground & surface exploration and resource delineation drilling continues at Madsen with a Definitive Feasibility Study (DFS) underway and results planned for Q4 20181.

Pure Gold released a PEA in September 2017 along with initial resource estimates at the Fork and Russet South deposits, both located approximately 1.5km from the Madsen milling infrastructure.

Pure Gold's exploration and development studies benefit from:

  • A management team with expert technical knowledge of the Red Lake district geology and operations and a track record of successfully advancing mining projects to operational readiness and/or production and;
  • Utilizing data and learnings from more than 13,000 drill holes evenly spaced throughout mineral resource drilled by previous operators, and;
  • 67km of underground development and 38 years of active mining from previous operators, and;
  • A robust geologic model based on 27 levels of geological mapping and chip sampling; provides a solid understanding of the geology and continuity of mineralization, and;
  • Completed a total of 190,000 m of diamond drilling (2014-present) 

(1) Technical Report for the Madsen Gold Project - Restated Preliminary Economic Assessment and Initial Satellite Deposit Mineral Resource Estimates“, effective December 14, 2017 

Russet South Deposit

Gold at the Russet South Deposit is hosted within folded and boudinaged blue-grey quartz veins that appear to be the same as those characteristic of the 8 Zone within the Madsen Mine. At Russet South, the veins mostly occur within weakly deformed 10 m-scale wide, planar zones proximal to the northern contact of Russet Lake ultramafic volcanic rocks and on both the hangingwall and footwall of a smaller ultramafic sill parallel to this contact. The veins are most commonly hosted within relatively weakly biotite-amphibole altered basalt, though some occur within ultramafic rock and underlying iron formations. Despite the complicated arrangement of individual veins, due to their transposed nature, zones of high vein density, deformation, alteration and gold mineralization can be defined over hundreds of meters of strike length, trending generally broadly sub-parallel or at low angle to stratigraphy which is itself broadly folded about south-plunging D2 folds in the Russet area. When projected to surface, these zones of high vein density extend over a footprint of approximately 650 m by 650 m, and have been defined to a vertical depth of approximately 200 m below surface.

The 2017 mineral resource estimate at the Russet South Deposit considered data from 32,803 metres of drilling from 123 drill holes, of which 110 drill holes were drilled by Pure Gold. The data cut-off used for the resource estimate at Russet South is October 20, 2017.

The geologic model of the Russet South deposit is comprised of eleven domains that occupy the hinge zone of a broad, open F2 fold defined by iron formation and ultramafic units along with their enclosing volcanic stratigraphy. The deposit is separated into western and eastern areas, as seen in the Figure below. The western area is made up of seven sub-parallel domains with a northeast trend and shallow dip of approximately -40° to the southeast, sub-parallel to the plunging hinge line of the broad F2 fold. The eastern area is made up of four domains, where three of the domains are northeast-trending and dip to the southeast, with the other domain oriented parallel to the northwest-trending, steeply-dipping axial plane of the F2 fold. The latter domain corresponds to a discrete quartz vein that outcrops over a 150 metre strike length.  

 Figure: Geologic Model of the Russet South Deposit: 7 domains in the western area, 4 domains in the eastern area. Viewed to the Northeast.

 

Table: Mineral Resources* by Au Cut-off Grades - Effective December 14, 2017 – Russet South Deposit1

Au Cut-Off Grade

g/t

Indicated

Inferred

Tonnage

tonnes

Au Grade      g/t

Au Content

ounces

Tonnage

tonnes

Au Grade      g/t

Au Content

ounces

1.0

694,000

3.89

87,000

807,000

4.16

108,000

2.0

492,000

4.89

77,000

646,000

4.83

100,000

3.0

355,000

5.84

67,000

422,000

6.01

82,000

4.0

259,000

6.70

56,000

322,000

6.82

71,000

5.0

183,000

7.64

45,000

260,000

7.37

61,000

6.0

135,000

8.41

37,000

179,000

8.20

47,000

 

     *mineral resources’ tonnage and ounces have been rounded to the nearest thousand

It should be noted that mineral resources are not mineral reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the mineral resources estimated will be converted into mineral reserves. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.

The CIM definitions were followed for the classification of indicated and inferred mineral resources. The quantity and grade of reported inferred mineral resources in this estimation are uncertain in nature and there has been insufficient exploration to define these inferred mineral resources as an indicated mineral resource and it is uncertain if further exploration will result in upgrading them to an indicated mineral resource category.

(1)See the National Instrument 43-101 technical report entitled “Technical Report for the Madsen Gold Project -   Restated Preliminary Economic Assessment and Initial Satellite Deposit Mineral Resource Estimates” with an effective date of December 14, 2017 for complete details, available on the Company’s website at www.puregoldmining.ca or Sedar profile at www.sedar.com.

 

Exploration at Russet South is continuing with a goal of expanding the resource beyond this initial estimate.

Fork Deposit - near surface and adjacent to the Madsen Mine infrastructure

The Fork Deposit, like the Russet South Deposit, is a satellite deposit with mineralization exposed at surface in close proximity to the Madsen Mine infrastructure. Step-out drilling completed in H1 2017 intersected gold mineralization at the Fork Zone.

The two mineralized structures converge at Fork toward the southwestern extent of the deposit and diverge toward the northeast resembling a two-pronged fork in level plan interpretations. Host rocks of the eastern structure are comprised of mafic volcanic flows, interflow iron formation and ultramafic sills. The broad Russet Lake ultramafic unit with minor amounts of mafic material is host to the western part of the structure. Both structures are cut by late, discordant felsic, intermediate and mafic dikes as at Madsen. The mineralized body is curvilinear, dips steeply (65°-70°) to the southeast and is weakly folded by steeply southeast plunging F2 folds. Gold is predominantly associated with deformed quartz veins hosted within an envelope of highly strained and hydrothermally altered rock oblique to the host volcanic stratigraphy. Less commonly, gold is found in replacement-style disseminations within altered basalts along and proximal to contacts with interflow iron formations or ultramafic sills transected by the eastern splay of the D1 gold bearing structure. Gold-bearing veins and associated alteration related to the west structure within the ultramafic rocks are considered analogous to mineralization at the 8 Zone Deposit. Geochemically, altered rocks at the Fork Deposit are sodium-depleted and potassium-enriched. The Fork Deposit has been drill tested over a 600 m strike length, to an approximate vertical extent of 375 m depth. The mineralized zones are typically 1 to 5 m thick.

The mineral resource estimate at Fork, the mineral resource estimate considered data from 44,087 metres of drilling from 117 drill holes, of which 21 drill holes were drilled by Pure Gold. The data cut-off used for the resource estimate at Fork is October 20, 2017.

For the Fork deposit, the geologic model is comprised of three domains: the hanging wall domain, the footwall domain, and the north-south domain. The hanging wall and footwall domains trend northeast and dip southeast and are spatially linked to discrete stratigraphic horizons. In the hanging wall domain, mineralization is predominantly localized in and around iron formation and ultramafic units; whereas, the footwall domain is hosted in basalt lenses within the deeper Russet Lake ultramafic body. The north-south domain is more steeply-dipping than the other two domains and transects the stratigraphy between them. It encloses a strongly silicified corridor that contains most of the higher grade intercepts in the deposit and is interpreted to represent a primary mineralizing structure. The wireframes of the three domains are displayed in the Figure below.

 

Figure: Geologic Model of the Fork Deposit: Hanging Wall, Footwall, and North-South Domains. Viewed to the Northeast.

 

Table: Mineral Resources* by Au Cut-off Grades - Effective December 14, 2017 – Fork Deposit

Au Cut-Off Grade

g/t

Indicated

Inferred

Tonnage

tonnes

Au Grade      g/t

Au Content

ounces

Tonnage

tonnes

Au Grade      g/t

Au Content

ounces

1.0

457,000

4.02

59,000

1,362,000

2.81

123,000

2.0

332,000

5.00

53,000

777,000

3.79

95,000

3.0

258,000

5.72

48,000

471,000

4.69

71,000

4.0

194,000

6.47

40,000

255,000

5.76

47,000

5.0

134,000

7.36

32,000

138,000

6.88

31,000

6.0

78,000

8.73

22,000

58,000

9.00

17,000

 

     *mineral resources’ tonnage and ounces have been rounded to the nearest thousand

It should be noted that mineral resources are not mineral reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the mineral resources estimated will be converted into mineral reserves. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.

The CIM definitions were followed for the classification of indicated and inferred mineral resources. The quantity and grade of reported inferred mineral resources in this estimation are uncertain in nature and there has been insufficient exploration to define these inferred mineral resources as an indicated mineral resource and it is uncertain if further exploration will result in upgrading them to an indicated mineral resource category.

(1)See the National Instrument 43-101 technical report entitled “Technical Report for the Madsen Gold Project -   Restated Preliminary Economic Assessment and Initial Satellite Deposit Mineral Resource Estimates” with an effective date of December 14, 2017 for complete details, available on the Company’s website at www.puregoldmining.ca or Sedar profile at www.sedar.com.

Exploration at Fork is continuing with a goal of expanding the resource beyond this initial estimate.

 

Click here to download the Technical Report for the Madsen Gold Project, Red Lake, Ontario, Canada