A struggling Red Lake gold mining company has turned to a well-respected mining veteran and company builder for help to get back on track.
PureGold Mining is bringing former Kirkland Lake Gold CEO Tony Makuch aboard as a technical advisor.
Barely a year into commercial production, the company is struggling financially and operationally to get the former Madsen Mine complex into top gear.
The former president-CEO of Kirkland Lake Gold, who resigned that post in February, will provide input on mining activities, development strategies, exploration efforts and organizational efficiencies.
Makuch brings to Red Lake more than 40 years of experience in mine management, operations and technical know-how to a mining camp in northwestern Ontario that he is familiar with.
Among his achievements at Kirkland Lake Gold was guiding the company into a $30-billion merger with Agnico Eagle Mines, establishing the latter as the world’s third-largest gold producer.
Before that, Makuch served an eight-year stint as president-CEO of Lake Shore Gold in Timmins, growing that company from a junior explorer to a more than a 180,000-ounce-per-year producer, culminating in a merger with Tahoe Resources. Among his other career stops include senior management positions at FNX Mining, in restarting old mines and building a new mine in the Sudbury basin, and at Dynatec where he was involved in several mine development and shaft sinking projects, including for Goldcorp at Red Lake.
“I spent 10 years of my career in the Red Lake Camp, and I hold a soft spot for both the people and the rocks that have made the district world renowned,” said Makuch in a statement. “I see an opportunity to be involved in the creation of value through careful planning, executing, and maintaining a commitment to operational excellence."
PureGold president-CEO Mark O’Dea said he was looking forward to working with Makuch.
“Tony’s operational skills in high-grade underground mines, including in Red Lake, add significant bench strength to PureGold’s growing operational team. His track record as a driving force behind some of the gold mining industry’s most successful companies in the last decade speaks for itself.”
The Vancouver miner also announced it intends to raise $30 million, and maybe more, this month through a non-brokered private placement offering. The company said it may boost that to $40 million based on demand. The offering closes May 13.
The money will be earmarked to ramp up the daily mining rate to 800 tonnes per day, to implement its cost-cutting programs, for some updated mineral resource studies, and for general corporate purposes.
The company’s largest shareholder, AngloGold Ashanti, holds a 19.9 per cent stake.
“This financing will give the company the opportunity to get back on track to becoming a great new mining business in Canada,” said COO Terry Smith in a statement.
“We have all the ingredients we need to turn around the operation including a strong geological understanding of the asset, a newly established lower cost base, and a talented team that can deliver. We are excited to get to Q3 when we’ll be operating a stable, cash-flowing operation, with a new technical report coming soon thereafter outlining the bright future that the PureGold Mine has.”
The company said it’s “well on its way” toward reaching a stated goal of a 30 per cent reduction in operating and sustaining capital costs by the second quarter of this year. Last month, operating and sustaining costs were down 27 per cent - $3.8 million - compared to every monthly costs in the first quarter of this year. Further reductions are expected in May.
A new mineral resource estimate and a life-of-mine plan are expected to be released by the fourth quarter of this year.
