There’s been an exodus of front office leadership and technical expertise among the skeleton crew remaining at the insolvent Pure Gold Mine in Red Lake.
It’s taken more time than expected to secure a new buyer for Pure Gold Mining’s only asset and that’s played a factor in the steadily dwindling workforce at the mothballed northwestern Ontario underground mine and mill operation.
Earlier this month, the Supreme Court of British Columbia granted the company’s request to exceed the CCAA process by two months to May 8.
This has had consequences.
Pure Gold Mining – which entered CCAA protection last Halloween – and its court-appointed monitor, KSV Advisory, now report in recent court documents that financial steps need to taken to retain employees that are leaving for opportunities elsewhere.
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The court has approved their application for a Site Employee Retention Plan (SERP) to provide “bonus payments” to the remaining 38 Pure Gold employees. The amount is not to exceed $2.2 million.
These employees are considered critical to the mine's care and upkeep as well as helping with the CCAA process.
The mine is not operating. It was placed on care and maintenance on Oct.24, a week before the company entered creditor protection.
The on-site workforce immediately dropped from 275 to 50 employees last fall. Currently, there are 40 people at the site. Staffing will be further reduced to 38 by month’s end.
“Given that the process to secure a buyer has taken longer than anticipated, the company said it’s in everybody’s best interest to retain key site employees to keep the mine in a stable and secure state,” said Chris Haubrich, the company’s vice president of business and CFO, in an affidavit.
The key employees perform essential services to maintain the mine’s integrity such as water and tailings management, environmental compliance, project management, geology and records management, ventilation, ground control and survey, and around-the-clock operation of the mill and water treatment plant at the mine.
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Pure Gold is recommending the remaining employees be retained until Dec. 30, as reflected in the structure of staggered bonus payments. The SERP bonus payments will be funded out of cash flow, currently funded by Sprott Lending. Sprott is the only secured creditor and the interim lender through the CCAA process.
There’s also been a raft of departures from Pure Gold’s senior management team.
Gone are President-CEO Mark O’Dea, Chief Operating Officer Terry Smith, the mine’s General Manager Bryan Wilson, Exploration Vice President Phil Smerchanski, Chief Geoscientist Chris Lee, and Adrian O’Brien, director of marketing, as well as the entire board of directors.
Haubrich and Ashley Kates, vice president of financing, will be leaving March 31.
The company and monitor are also asking for a chief administrative officer (CAO) to be appointed to run the affairs of the mine.
The name being put forward to the court to fill the role is Jonathan Singh. He was recommended by Sprott.
The CAO would oversee the company’s day-to-day duties, make operational and personnel decisions, and have sole signing power.
Pending court approval, Singh will be paid a base fee of $32,500, plus HST, per month, plus expenses, as indicated through a consultant’s agreement.
In its report, the monitor, KSV, provided no updates on any prospective buyers of the mine.
The Pure Gold Mine is located 10 kilometres southwest of Red Lake on the site of the former Madsen Mine. The property includes 4,600 hectares of prospective gold ground. The mine entered commercial production in early August 2021.
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