Overtime required to secure buyer for Red Lake mine

It may be late spring or early summer before a new owner is named for the Pure Gold Mine at Red Lake.

On March 7, a B.C. court granted a second extension to Pure Gold Mining in its CCAA (Companies' Creditors Arrangement Act) proceedings to grant the Vancouver company more time and "breathing room" to land a buyer for its inactive operation in northwestern Ontario. The first extension was granted in January.

The stay period was set to expire March 10. The Supreme Court of British Columbia justice has now extended the CCAA process by almost two months to May 8. 

The gold company entered creditor protection on Halloween. A court-supervised sales process is underway. KSV Advisory is the court-appointed monitor. 

Gold production at the mine was halted Oct. 24  The entire operation has been on care and maintenance status ever since. A skeleton crew of 53 remains the payroll out of the original workforce of 274. They're still ordering supplies to keep the mine and mill in working order. 

According to recent court documents, the mining company and Sprott Resource Lending – Pure Gold's biggest creditor, owed more than $133 million, and now its interim lender – are still sifting through and meeting with "several" potential bidders.

The sales process had been hampered this winter by the lack of available critical  information needed for bidders to perform their due diligence on the operation. 

The primary reason was the delay in completing a scoping study, designed to show the mine's economic longevity and production plans, replete with a detailed restart plan. It's now available in an online data room for interested parties to peruse.

To work through the two-month extension, Pure Gold said additional working capital needed that includes paying remaining on-site employees through a retention fund. The court granted an amendment to the financing facility by increasing the maximum available borrowings from US$10 million to $15 million.

The Pure Gold Mine is located 10 kilometres southwest of Red Lake on the site of the former Madsen Mine and includes 4,600 hectares of property. It entered commercial production in early August 2021.