Purchase of additional 100% owned patent claims on key structural break in Red Lake locks in long term future of Madsen Gold Project
VANCOUVER, B.C. – Pure Gold Mining Inc. (PGM – TSX-V) (“Pure Gold” or the “Company”) is pleased to announce that it has signed a Definitive Agreement to acquire a 100% interest in the 219-hectare Derlak Gold Property from Orefinders Resources Inc. (“Orefinders”). Consideration payable for the property purchase includes $0.5 million in cash and 1,290,322 common shares of the Company.
The Derlak property consists of 11 patented mining claims filling an important keyhole gap in the Madsen Gold Project claim package, and combined with existing 100% owned Madsen claims, provides exposure to a contiguous 47 square kilometre land package. Strategic rationale for the property purchase include:
- New property package covers the key structural break in the Red Lake District that hosts the past-producing Howey, Hasaga, Buffalo, Madsen, and Starratt Olsen gold mines.
- Secures the long term future of Madsen’s northeast plunging Austin Horizon mineralization:
- Madsen’s past production, plus current mineral resource, form a sizable high grade gold mineralized system which is open for expansion down plunge;
- Projected upper limit of the Madsen mineralization crosses the Derlak acquisition boundary at approximately 1.2 kilometre depth, and projected lower limit crosses the Derlak acquisition boundary at approximately 2.2 kilometre depth;
- Similar deposits in the camp (Goldcorp’s Red Lake Mine Complex) are currently being exploited at vertical depths of up to 2.4 kilometres;
- Drill hole AD-11-01 intersected Madsen mineralization at 2.1 kilometres vertical depth and 700 metres below the mined stopes, returning 14.3 g/t gold over 2.0 metres and confirming the depth potential in this plunge direction1.
“Acquisition of the Derlak Property is consistent with Pure Gold’s strategy of consolidating properties in the Madsen Gold Project that have the potential to host high-grade gold deposits,” said Darin Labrenz, President and CEO of Pure Gold. “Madsen historically produced well over 2.4 million ounces to a vertical depth of 1,200 metres, where it remains open down plunge. Large Archean gold systems typically have very deep roots, and drilling by previous operators confirms the down plunge extension of the Madsen mineralized system, intersecting high grade gold at a depth of 2,100 metres. Our current phase of exploration at Madsen continues to focus along the Madsen-to-Starratt mineralized corridor, with surface and shallow underground exploration close to the existing permitted mining infrastructure. Madsen is a large gold system, and this strategic acquisition secures future large-scale exploration potential of Austin, which remains open to depth.”
The closing of the transaction is expected in March 2017, and is subject to receipt of all required regulatory and third party consents and satisfaction of customary closing conditions and documentation.
For a map showing the location of the property acquisition, click link below:
For a long section showing Austin horizon relative to the property acquisition, click link below:
The Madsen Mine operated for over 36 years with historic production of 2.5 million ounces at an average grade of 9.9 g/t gold. The Madsen Gold Project hosts a permitted mill and tailings facility, and access to power, water and labour. The Madsen Gold Project has an Indicated Resource of 928,000 ounces gold at 8.93 g/t gold (in 3.24 million tonnes) and an Inferred Resource of 297,000 ounces gold at 11.74 g/t gold (in 0.79 million tonnes)1. The mineral resource is based on 13,624 drill holes, evenly dispersed throughout the mineral resource. 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.
In addition to the mineral resource, the Madsen Gold Project hosts a number of prospective new discoveries including the Fork Zone and Russet South targets, as well as, two significant historic underground mines. Pure Gold believes the opportunity exists to advance these targets through the application of modern exploration science and a new understanding of the district.
(1) See the 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.
Qualified Persons and 43-101 Disclosure
Phil Smerchanski, P. Geo., Vice President, Exploration for the Company, is the designated Qualified Person for this news release within the meaning of National Instrument 43-101 (“NI 43-101”) and has reviewed and verified that the technical information contained herein is accurate and approves of the written disclosure of same.
ABOUT PURE GOLD
Our mandate is pure and simple. To dream big. To colour outside the lines. To use smart science and creativity to unlock the next major discovery at the Madsen Gold Project in Red Lake, Ontario. And become Canada’s next iconic gold company.
ON BEHALF OF THE BOARD
Darin Labrenz, President & CEO
All statements in this press release, other than statements of historical fact, are "forward-looking information" with respect to Pure Gold within the meaning of applicable securities laws, including, but not limited to statements with respect to those that address potential quantity and/or grade of minerals, potential size and expansion of a mineralized zone, proposed timing of exploration and development plans. Forward-looking information is often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "planned", "expect", "project", "predict", "potential", "targeting", "intends", "believe", "potential", and similar expressions, or describes a "goal", or variation of such words and phrases or state that certain actions, events or results "may", "should", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking information is not a guarantee of future performance and is based upon a number of estimates and assumptions of management at the date the statements are made including, among others, assumptions about future prices of gold and other metal prices, currency exchange rates and interest rates, favourable operating conditions, political stability, obtaining governmental approvals and financing on time, obtaining renewals for existing licences and permits and obtaining required licences and permits, labour stability, stability in market conditions, availability of equipment, accuracy of any mineral resources, successful resolution of disputes and anticipated costs and expenditures. Many assumptions are based on factors and events that are not within the control of Pure Gold and there is no assurance they will prove to be correct.
Such forward-looking information, involves known and unknown risks, which may cause the actual results to be materially different from any future results expressed or implied by such forward-looking information, including, risks related to the interpretation of results at the Madsen Gold Project; changes in project parameters as plans continue to be refined; current economic conditions; future prices of commodities; possible variations in grade or recovery rates; the costs and timing of the development of new deposits; failure of equipment or processes to operate as anticipated; the failure of contracted parties to perform; the timing and success of exploration activities generally; delays in permitting; possible claims against the Company; labour disputes and other risks of the mining industry; delays in obtaining governmental approvals, financing or in the completion of exploration as well as those factors discussed in the Annual Information Form of the Company dated June 17, 2016 in the section entitled "Risk Factors", under Pure Gold’s SEDAR profile at www.sedar.com.
Although Pure Gold has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Pure Gold disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise unless required by law.