Pure Gold Mining Inc. (TSX-V:PGM), one of the company’s founded by Vancouver’s Oxygen Capital, has shut down just a little over a year after it went into full commercial production.
Pure Gold today announced it has applied for creditor protection. The company’s shares, which traded at $0.70 per share on March 25, have since fallen to $0.02 per share.
“After careful consideration of PureGold’s cash position, scheduled debt payments, forecast revenue and expenses, all available alternatives to an application for creditor protection... the board of directors of the company has determined that it is in the best interests of PureGold and all of its stakeholders to file an application for creditor protection,” the company said in a new release.
Pure Gold is one of the four mining companies created by Vancouver mining house Oxygen Capital. Oxygen Capital was co-founded by Mark O’Dea, Don McInnes, Alex Holmes and Sean Tetzlaff after the team sold Fronteer Gold to Newmont Mining Corp. (NYSE:NEM) for $2.3 billion in 2011.
The Pure Gold mine is located in the Red Lake district of Ontario. It went into full production in August 2021, but has fallen short of its production guidance. The mine simply hasn't generated enough positive cash flow, the company said in its interim financial statements in August.
"The continued operations of the company is dependent upon mining operations meeting production targets, the company’s ability to generate positive cash flow, and to raise additional funds in order to meet current obligations and to finance the continued development and operations of the Pure Gold Mine," the company said.
"While we believe the mine has significant value, in 2021 it performed well below guidance," the company said in an August Management and Discussion and analysis.
Earlier this year, the company announced a major shakeup in senior management aimed at improving the mine's performance. But on October 24, the company announced it was suspending the mine’s operations, as the mine had “not yet achieved consistent positive site-level cash flow.”
The company said it was down to $2 million in cash, had a net working capital deficit $13 million and was unable to secure financing.
“If additional outside financing is not obtained in the short term, PureGold will not be able to meet its obligations as they become due, resulting in a default under its debt obligations,” the company said in an October 24 release.
