Area Map
Madsen satellite map
Madsen headframe, mill and tailings facility

The Madsen property is host to two significant past-producing mines, existing mine infrastructure, current Mineral Resources, and multiple exploration targets in a geological setting analogous to other modern high grade discoveries in the Red Lake District.

Madsen's '8 Zone', discovered in 1969 along an ultramafic lithologic contact zone, is a quartz carbonate vein hosted high grade gold deposit, with mineralization similar in style and host environment to more recent discoveries in the district. Historic drilling at the 8 Zone has been resampled by Pure Gold and returned high grade values including 38.26 g/t gold over 7.5 metres (see News Release July 8, 2014).

At Madsen, the more than 10 kilometres of ultramafic contact, are highly prospective for additional high grade discoveries, and numerous recent and historic discoveries along this contact have only been partially advanced. Pure Gold is pursuing a strategy of exploring for additional near surface high grade mineralization along the 12 kilometre long Madsen Mine trend, and the 10 kilometre long ultramafic corridor.

PROJECT HIGHLIGHTS

  • Location: Located in Red Lake, Ontario, an established mining jurisdiction with more than 28 million ouncesof high grade gold produced to date.
  • High Grade: Madsen is one of the highest grade undeveloped deposits in the world2. High grade gold near ultramafic contacts have been identified in the 8 Zone, Fork Zone, and Russet South.
  • Mineral Resources: Current mineral resources from four zones within the historic Madsen Mine include:
    - Indicated mineral resource of 928,000 oz gold in 3.24 million tonnes grading 8.93 g/t Au3

    - Inferred mineral resource of 297,000 oz gold in 0.79 million tonnes grading 11.74 g/t Au3
  • Past Producer: The property is host to three past producing mines, including the Madsen Mine which produced 2.4 million ounces of gold.
  • Permitted: Located on patented ground with permitted tailings facility
  • Infrastructure: Existing mining infrastructure in place, including a 550 tonne per day mill, a 1,275 metre deep shaft and headframe, portal and decline, 27 levels of underground workings, connected to roads and power
  • Positive PEA Study3: Base case Preliminary Economic Assessment ("PEA") completed in April 2016, evaluating development opportunity utilizing existing infrastructure and a portion of the mineral resource
    - Pre-Tax NPV(5%) of $104 million, IRR of 74% 

    - After-Tax NPV(5%) of $76 million, IRR of 62%

(1) Compiled from Ontario geological survey reports 
(2) Source: Natural Resources Holdings Global Gold Mines & Deposit Rankings of 2013
(3) 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.

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 Location
Madsen Geology

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 replacement-style disseminated gold in the sub-parallel Austin and McVeigh horizons, while quartz vein-hosted gold mineralization dominates in the 8 Zone. 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 very low angle, and converge to the west, where the Austin and McVeigh Horizons coalesce into a single unit, where the mineralization is indistinguishable between them. An estimated 95% of the historic drilling and production activity was solely focused on the Austin horizon, while the vast majority of the equivalent McVeigh horizon was left untouched. We believe the McVeigh horizon has the potential to host comparable tonnages and grades to the Austin horizon.

(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 an Indicated mineral resource of 928,000 oz gold in 3.24 million tonnes grading 8.93 g/t Au, and an Inferred mineral resource of 297,000 oz gold in 0.79 million tonnes grading 11.74 g/t Au.

The mineral resource statement prepared for the Madsen Gold Project considers data from 13,624 boreholes (816,367 metres) drilled between 1936 and 2009 and 4,446 historical underground stope chip samples. The resource estimation work was supervised by Glen Cole, P.Geo, of SRK Consulting, an "independent qualified person" as defined in NI 43-101. The effective date of this mineral resource statement is April 20, 2016.

The mineral resource reported only considers gold mineralization from four zones accessible from the historic Madsen Mine underground workings. Other gold mineralized zones occurring on the Madsen property were not included.

Consolidated Mineral Resource Statement for the Madsen Gold Project - April 20, 2016

Class

Zone

Tonnes

Gold Grade
(g/t)

Contained Gold
(ozs)

Indicated

Austin

1,677,000

7.92

427,000

South Austin

850,000

9.32

254,000

McVeigh

374,000

9.59

115,000

 8 Zone

335,000

12.21

132,000

Total:

3,236,000

8.93

928,000

Inferred

Austin

108,000

6.3

22,000

South Austin

259,000

8.45

70,000

McVeigh

104,000

6.11

80,000

8 Zone

317,000

18.14

185,000

Total:

788,000

11.74

297,000

Mineral resources are not mineral reserves and do not have demonstrated economic viability. All figures have been rounded to reflect the relative accuracy of the estimates. The mineral resource is reported at a cut-off grade of 5.0 g/t gold based on US$1,000 per troy ounce gold and gold metallurgical recoveries of 94 percent.

For more information, 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 Mineral Reserves and do not have demonstrated economic viability.

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 mine complex
Madsen mill
Interior of Madsen mill
Madsen headframe
Permitted tailings facility

The Madsen Gold Project is located approximately ten kilometres southwest of the town of Red Lake, Ontario. Year-round access to the property is via Ontario Highway 618.  Numerous paved and gravel secondary roads transect the 4,500 hectare property providing easy access for exploration programs.

Madsen mining infrastructure consists of the following:

  • 550 tpd mill, installed in 1996
  • 5 compartment, 1,275 metre deep shaft
  • 27 levels of underground workings, recently dewatered and rehabilitated to 16 level
  • Permitted tailings management facility

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.

Madsen, 1949
Madsen, 1960

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; Red Lake Mine Complex (Campbell/Dickenson) 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 1935 and 1974, where 2.5 million ounces of gold were produced at an average grade of 0.289 oz/t Au (9.91 g/t Au);
  • Acquisition, exploration, underground development, permitting, and installation of the mill complex and tailings management facility by Claude Resources from 1998 and 2000;
  • Brownfield exploration completed by Placer Dome under an option from Claude between 2001 and 2005. Discovery of several new zones including Fork Zone 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.

In addition to the historic production and the mineral resource, upside exploration potential exists at the Madsen Gold Project with numerous other gold zones identified on the property. A new understanding of the role of folded ultramafic/mafic contacts and D2 structural controls has led to multiple high grade discoveries in the Red Lake District since the cessation of mining at Madsen.  For example, the high grade 8 Zone, which was discovered in 1969 at the Madsen Mine, has many similar characteristics to the modern Red Lake discoveries including proximity to folded ultramafic contacts, and significantly higher gold grades.

At Madsen, Pure Gold is prioritizing and advancing the numerous gold zones with the goal of expanding the mineral resources and discovering additional high-grade ounces using modern exploration techniques.

2017 Exploration Program

Pure Gold’s 2017 exploration program is designed to focus on resource growth and concurrently advance Madsen towards operational readiness. A four rig, 70,000 metre diamond drill program is planned, collared from both surface and underground.

Surface drilling is designed to expand the resource through wider step-outs at the McVeigh, Austin and A3 targets. Pure Gold has also received the necessary approvals to re-open the McVeigh Portal and ramp to allow for underground exploration. Opening the Portal will provide immediate access to the footwall of the McVeigh and Austin horizons allowing for cost effective underground drilling which is expected to provide higher drill density to better define possible mining shapes, as well as allow exploration drilling to continue to expand the resource.  It will also allow for a field inspection of the underground headings, including rock mass characterization, as well as detailed underground geological mapping and sampling to refine the structural setting.

It is anticipated that the Portal will be re-opened in February with underground diamond drilling scheduled to begin by the end of the second quarter. Pure Gold also anticipates releasing an updated resource in H2, which will incorporate more than 150,000 metres of new diamond drilling.

For a complete list of 2017 drill results to date, click link below:
http://sites/default/files/2017-DH-Intercepts-Table-May_11_002_2.pdf

For a complete list of 2016 drill results to date, click link below:
http://puregoldmining.ca/sites/default/files/2016-DH-Intercepts-Table-January-11.pdf

For a complete list of 2015 drill results, click link below:
http://puregoldmining.ca/sites/default/files/2015-DH-Intercepts-Table.pdf

For a complete list of 2014 drill results, click link below:
http://puregoldmining.ca/sites/default/files/2014-DH-Intercepts-Table.pdf

Russet South Cross Section
Russet South target
Russet South drill plan

Russet South represents a possible near-surface, up-dip expression of the 8 Zone. Multiple historical drill holes have intersected mineralization with intercepts up to 2.0 metres grading 29.1 g/t gold. The 8 Zone resource is approximately 1,600 metres down-dip of the ultramafic contact, which has seen minimal drill testing.

Airborne magnetics, soil sampling, prospecting, and structural mapping conducted by Pure Gold in 2014 identified multiple target areas at Russet South associated with NW trending shears zones intersecting ultramafic fold noses. Drilling at Russet South has delineated three separate zones - Alpha, Beta and Kappa - which together form part of a large altered mineral system currently measuring approximately 600 metres long by 350 metres wide at surface. This target has now been drilled to a depth of approximately 200 metres, with gold mineralization encountered from surface, remaining open in all directions. Significant drill results are shown in the Table below:

Table 1 – Russet South Significant Assay Results(1)

Hole ID

From (m)

To (m)

Length (m)

Au (g/t)

Zone-Target

PG15-027

96.0

99.5

3.5

9.5

Alpha

Including:

98.0

99.5

1.5

18.8

 

PG15-028

75.0

86.0

11.0

8.2

Alpha

Including:

77.0

82.0

5.0

15.0

 

PG15-031

13.2

16.1

2.9

39.1

Beta

Including:

13.2

14.9

1.7

34.4

 

And including:

14.9

15.4

0.5

36.2

 

And including:

15.4

16.1

0.7

52.4

 

PG15-032

47.3

49.0

1.7

37.5

Beta

Including:

47.3

48.0

0.7

83.8

 

PG15-038

173.8 174.5 0.7 20.0 Beta

PG16-067

111.4 115.4 4.0 2.9 Alpha
Including: 114.9 155.4 0.5 15.0

 

  128.0 129.3 1.3 56.2

 

PG16-069

183.5 187.0 3.5 22.1 Alpha

Including:

185.2 187.0 1.8 36.9  

PG16-089

16.8 17.8 1.0 17.3 Beta

PG16-091

24.2 27.1 2.9 20.1 Beta

Including:

24.2 25.2 1.0 42.2  

PG16-099

92.0

93.0 1.0 17.7 Kappa
 
(1) Assay composites were calculated using uncut assays and are reported as drilled widths and interpreted to vary between 60% to 100% of true widths.
Fork Zone target
Fork Zone cross section
Fork Zone drill plan

The Fork Zone is a 2003 discovery located midway between the Madsen and Starratt-Olsen Mines. Surface drilling by Placer Dome and Claude Resources intersected gold mineralization for approximately 700 metres along strike, defining a mineralized corridor measuring approximately 50 to 100 metres wide, with drill intersections up to 10.3 metres grading 17.32 g/t Au. No geologic model or mineral resource was defined.

Pure Gold has re-logged and re-sampled much of the historic drill core at Fork Zone to gain a better understanding of mineralizing controls and to produce a new geologic model. This process identified a previously unrecognized F2 fold in the mafic-ultramafic stratigraphy and an associated steeply dipping, north-south striking silicified structure hosting specks of visible gold.

In the fall of 2014, Pure Gold drill tested this high-grade silicified structure and successfully delineated it for approximately 275 metres in strike length and to a vertical depth of 200 metres. The high grade structure ranges from 1 to 2 metres in true width and is open along strike and to depth. Significant assays results for the drill holes that intersected the structure are listed below.

Fork Zone - Significant Drill Hole Assay Composites

Hole ID

From (m)

To (m)

Length (m)

Au (g/t)

PG14-006

85.0

86.8

1.8

14.6

Including:

85.0

86.0

1.0

22.5

PG14-009

118.0

120.0

2.0

6.8

Including:

119.0

120.0

1.0

11.1

PG14-011

152.5

156.0

3.5

17.2

Including:

154.4

156.0

1.6

33.8

PG15-037

133.9 146.0 12.1 3.9

Including:

133.9 135.5 1.6 8.4

Including:

143.5 146.0 2.5 7.3

In early 2015, Pure Gold completed a 1,000 metre drilling program at Fork Zone to test the southern and down-plunge extent of the high-grade structure, which is projected to intersect the prospective folded mafic-ultramafic contact identified by Pure Gold.

Pure Gold released results of a Preliminary Economic Assessment ("PEA") study1 on its 100%-owned Madsen Gold Project on April 20, 2016. The PEA provides a base case assessment of developing a portion of the mineral resources by utilizing existing mining infrastructure, including the permitted mill and tailings facilities.

PEA Highlights
Base case parameters assume a gold price of US$1,175/oz and an exchange rate (US$ to C$) of 0.80.

  • Pre-Tax NPV5% and IRR of $104 million and 74% respectively with a 1.5 year payback period
  • After-Tax NPV5% and IRR of $76 million and 62% respectively with a 1.5 year payback period
  • Mine life of 6.5 years with average annual gold production of 47,191 ounces and peak annual gold production of approximately 58,000 ounces
  • Life of mine ("LOM") diluted head grade of 8.3 g/t gold
  • Pre-production capital cost estimated at $20.1 million with a 12 month pre-production period
  • LOM sustaining capital costs estimated at $39.2 million
  • LOM cash cost of US$571/oz2 and LOM cash cost plus sustaining cost of US$692/oz

The PEA envisions an underground mining operation utilizing existing mining, milling, and tailings management infrastructure at Madsen. The existing McVeigh portal is approximately one kilometre from the existing mill, and currently provides access to the top 150 metres of the mine workings. The PEA mine plan includes further ramp development to a depth of 600 metres to access the upper 12 levels of the mine.

Additional opportunities exist to expand the base case scenario through project exploration and resource growth. Opportunities for enhancement include:

  • Expansion potential within the McVeigh: Mineral system open with current exploration targeting mineralization below current mining
  • Greater permitted processing capacity: Existing Environmental Compliance Approval allows for operation of a 1,089 tpd mill and CIP circuit
  • Property wide exploration success: Discoveries at Russet South and property wide exploration

The PEA was prepared by Nordmin Engineering Ltd., Mining Services Division of Sudbury, Ontario ("Nordmin"). Nordmin reported on the scoping-level capital costs, operating costs, and project economics associated with the potential development of the Madsen mineral resource.

The PEA is preliminary in nature and includes inferred mineral resources that are too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that PEA results will be realized. Mineral resources are not mineral reserves and do not have demonstrated economic viability.

(1) For full details, 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) Cash costs include estimated mining, milling, mine-level G&A, and refining costs. 

 

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