Pure Gold Mining Share Discussion Threads

[king suarez] 25/8/2022 13:22

With such good grades it is surprising that they cannot make the economics work at the current Gold price?

[polaris] 22/8/2022 18:44

I fail to see how the current update leads to any other conclusion than the company is unviable.

The running costs are put at around $10M per month (i'm assuming US not CAD) and, at 875 tpd and 5g/t (top end and top end), the production at 100% recovery would be 12650 oz or so. At current pog, that yields around $22 M in revenues. Costs are $30 M for the Q...

Not only is 875 tpd and 5g/t unrealistic, so is 100% recovery and operating at 100% capacity for the Q. Even if they achieved this feat, the loss is $8 M per Q. Top line negative gross margin, despite the significant lowering of costs cf. previous Q.

On top of that the $106 M long term debt and liabilities well in excess of the current assets... Then again, this company has always had me at a loss for its valuation.

[loganair] 21/8/2022 21:43

As part of its turnaround strategy, Pure Gold has released an updated resource estimate for its namesake operation, reporting 20% fewer ounces in the resource categories. A new technical report completed by SRK sees the mine’s global resource base falling to 2 million oz. from 2.5 million oz. and the average grade reduced to 7.2 grams gold per tonne from 8.7 grams per tonne.

Breaking that down by category, total indicated resources now stand at 6.9 million tonnes grading 7.4 grams gold for 1.7 million oz. gold and inferred resources measure 1.8 million tonnes grading 6.3 grams gold for 366,200 oz. gold.

While the global resource decline is material, Laurentian analyst Allan had been concerned the actual drop would be worse, given SRK’s history of taking an overly conservative approach to revised resource estimates, he wrote a in a research note on Aug. 10.

Although a revised mine plan for the ailing operation is yet to be completed, the bank’s internal model shows a reduction in recoverable gold to 1.3 million oz. from 1.9 million oz. previously.

“In our opinion, PGM falls from being a 150,000 oz. per year producer to a 120,000 oz. per year producer (in 2026 at an indicated capacity of 1,000 tonnes per day),” said Allan.

[loganair] 21/8/2022 21:41

Another private investor pressed management for more clarity around production guidance.

O’Dea responded by pointing to the projections provided in the news release, which don’t give a clear picture of what to expect.

“We provided some tonnage and grade ranges that get you to the end of the third quarter. And we’re looking to get that in our back pocket and then come back to everyone with some near-term production guidance as the third quarter wraps up,” said O’Dea.

Pure Gold has guided for ore throughput for the third quarter to average between 775 to 875 tonnes per day at 4 to 5 grams gold per tonne. The company has also guided for expected mill recovery of 95% and operating plus sustaining capital costs of about $9.5 to $10.5 million.

IKN News sheds some more light on the math around the provided projections.

“Run the math on those criteria and you’ll work out that at the minimum guided throughput and grade, the PureGold mine produces around 8,500 oz. in 3q22 and at US$1,800 per oz., that’s US$15 million or so,” said the daily newsletter’s, Otto Rock.

“Or if your glass is half full and you assume 875 tonnes per day and 5 grams gold per tonne, the projected gold production would be around 12,000 oz. gold and the gross revenues would be U$21.65 million. So, if they guide costs at $10 million, they’ll make a margin and that’s a start.”

[loganair] 21/8/2022 21:40

In a note to clients, Laurentian Bank Securities Equity Research analyst Barry Allan pointed out the company was in serious financial trouble. “As of June 30, 2022, PGM held only about $12.7 million in cash following a $16.6 million consumption in cash flow for the quarter. Additionally, PGM’s working capital came in at a deficit of about $24.5 million and its debt-to-equity ratio in Q2 sat at 2:1 – all after a $31.1 million equity raise in May 2022.

“PGM continues to claim they are a quarter away from being cash flow neutral; however, it appears they are out of options as their cash reserves are depleted and difficult market conditions make an equity financing very dilutive. SRK is currently developing a new LOM plan for Q4/22, but Q4/22 may be too late given the poor state of the balance sheet,” wrote the analyst.

[loafofbread] 21/8/2022 20:53

Quite a decent interview on the Pure twitter feed.

Well worth watching.

[atlantic57] 17/8/2022 07:26

Loaf of bread I don’t understand your post can you eleaborate.
Are you/just saying that this is the most gold produced.

The figures remain abysmal .

Bankruptcy further dilution or being taken over for a pittance remain the red hot favourite.

[tnt99] 17/8/2022 07:16

Still losing money hand over fist they need to get a grip fast !!!

[loafofbread] 12/8/2022 08:15

A tweet last night from Pure showing record gold production.

[tnt99] 04/8/2022 21:39

Maybe worth a punt

[jbennett] 03/8/2022 14:30

Must admit I'm surprised there are still buyers for this, even as a punt..Probably my worst investment. So much for a world class asset in a safe jurisdiction. I didn't factor in they were a bunch of crooks! Here's hoping we get something back if it's bought out

[atlantic57] 29/7/2022 19:37

Good post Polaris a disastrous investment on my part.When the initial production problems happened I thought they were teething problems.

Little did I realise that the Company had literally no idea what they were doing.

[book5] 29/7/2022 19:31

to me the management is securing the wages, digging without previous drilling looks like a wild bet

[polaris] 29/7/2022 18:29

Look at the debt. Look at the warrants for share expansion. Look at the enterprise value. Look at the production stats and margins. Look at the debt repayment schedule.

This one is going to end up with the asset owned by the main lender - Sprott. It'll be recycled without the previous baggage - i.e. you as a shareholder. It has fallen a long way because the net value to shareholders at this point in time is basically zero. Avoid unless gold does a moonshot. Even then, there are many way better options out there to ride an uptick in pog.

[atlantic57] 29/7/2022 09:09

Moneyweeks analysis is laughable .

Unless there is a large spike in the gold price pure gold looks to be a basket case, with no indication that they have got to grips with the problems,

[kirk 6] 29/7/2022 08:50

This literally always opens down

[loganair] 26/7/2022 09:12

Moneyweek - If I had to pick somewhere to invest, I’d say the smaller producers are much more likely to receive a bid as larger players try and consolidate the sector on the cheap. Pure Gold Mining (LSE: PUR) and Pan African Resources (LSE: PAF) both appear undervalued with growth potential. Pan African also yields 5.5%.

[loafofbread] 26/7/2022 09:00

Early June the management bought in at 15 cents so you have to assume they will hold out for at least that in any takeover.

[tnt99] 21/7/2022 09:47

When are the next quarter results?

[tyranosaurus] 20/7/2022 16:05

What a shambles this company is.
I have zero expectation of seeing the price go up and am seriously considering selling out.

[atlantic57] 12/7/2022 19:33

Reading between the lines it would appear prospects are bleak.
By Now the new management have had time to evaluate and it feels like they are playing for more time.

The inability to generate positive cash flow is worrying.

[loafofbread] 12/7/2022 09:02

Thats the 'for sale' sign in the window.

[katsy] 20/6/2022 16:23

TSX up 15%, AIM down 20%

[kickingking] 15/6/2022 16:18

At the moment, I'm holding fire and will not make a rash decision. Will wait to see if they have managed to turn things around at the next update.It would have been better to give themselves warrants at say 50cents Canadian but even at 27c, it was the going market price. They have given themselves five years to purchase , so must believe the company will still be in business by then. If the next update is good, then can see 25p-30p. If gold also gets to go on a good run, them 50p+This is just my opinion and no advice for anyone to buy.