Canada’s Pure Gold starts trading in London

The Vancouver-based miner, which is advancing a high-grade gold project in Ontario, believes a dual listing will give it access to a much broader pool of international capital, at a time when junior miners in Canada are having a hard time competing with the booming cannabis sector.

Interest in the emerging business, which spiked after Canada legalized the recreational use of marijuana in October, has been sucking investment capital away from the mining sector, and hitting juniors hardest, a recent study by BDO shows.

While the report doesn't prove a direct correlation between the rising of investment in the marijuana sector and the decline in junior miners, it did find that financing for TSX and TSX-V listed juniors has decreased in the past year.

European investors had already shown interest in Pure Gold and its Madsen gold project, due to the high-grade nature of the orebody, low projected capital cost, short 13-month construction period, and location. 

The main problem, BDO's Sherif Andrawes says, is that investing in mining exploration faces the risk of demand ultimately outstripping supply, with the consequent price spikes and market volatility. Forecast consumption of metals in a world driven by the electrification of industries will inevitably go up. Without junior miners being able to secure the right capital, however, the industry “will forever be stuck in the boom-bust cycle,” BDO warns.

“Today marks an important new chapter for the company,” president and chief executive, Darin Labrenz, said in a statement. “We have already had good interest shown by European investors [but] we look forward to broadening our shareholder register as we approach our first phase of production.”

Pure Gold is advancing its Madsen gold project in the prolific Red Lake district of Northwestern Ontario, Canada. The miner recently released a technical report, which included the results of a preliminary economic assessment (PEA) on three satellite deposits — Fork, Russet South and Wedge —, representing the first conceptual expansion scenario for the future phased growth of Madsen.

The document highlighted a robust 12-year underground mining operation with an initial capital cost of C$95 million.

The mine plan envisions a combination of methods from conventional cut and fill (59%), mechanized cut and fill (16%) and longhole mining (25%).

The PEA also demonstrated the potential of these deposits to add C$51-million to the Madsen project after-tax net-present value (NPV) of 5% at an internal rate of return (IRR) of 39%.

At peak production, the mine is expected to yield about 125,000 ounces of gold with average annual production in years three through seven of approximately 102,000 ounces.