Pure Gold Mining is set to begin construction of the Madsen Red Lake Gold Mine located in the Red Lake Mining District in northwestern Ontario, Canada, as per the latest mining industry news.

The construction decision on the Madsen Red Lake Gold Mine was taken after the Canadian mining company secured a US$90 million project financing package from Sprott Resource Lending.

Pure Gold Mining said that the financing will 100% fund the costs to develop an underground mine at the Madsen Gold Project.  The financing from Sprott Resource Lending is made up of a credit facility for US$65 million, and a US$25 million callable gold stream.

Endeavour Financial is the financial advisor to Pure Gold Mining with Blake, Cassels & Graydon being the legal counsel.

The Canadian mining company revealed that with nearly CAD 90 million in the treasury on the closing of the first tranche of the financing, and a recently signed project agreement with Wabauskang First Nation and Lac Seul First Nation, will enable to immediately begin development activities of the Madsen Gold Project.

Pure Gold Mining aims to achieve first gold pour from the Madsen Red Lake Gold Mine by the end of next year.

Commenting on the finance package secured for the Madsen Red Lake Gold Mine, Darin Labrenz – President and CEO of Pure Gold Mining said: “We are very pleased with the financial commitments that Sprott have made towards the development of the Project.  We have achieved our objective of securing a flexible financing package on terms that are competitive and protect the upside for our shareholders.

“The optionality of repayment of both the Facility and the Gold Stream in a rising gold price environment provides an opportunity to refinance once in production and generating solid cash flows from the mine.”

The historical production of the Madsen Red Lake mine comes to 2.6 million ounces of gold and current indicated resource of 2,063,000 ounces gold at 8.9 g/t gold (in 7.2 million tonnes) and an inferred resource of 467,000 ounces gold at 7.7 g/t gold (in 1.9 million tonnes).

A recently released feasibility study for the Canadian gold mine outlines an 800 tonne per day underground mining operation having a 12-year mine life. The probable mineral reserves are estimated to be one million ounces of gold grading 9 g/t in 3.5 million tonnes, and an initial capital cost of CAD 95 million (US$71 million).

Dusan Petkovic – Principal of Sprott Resource Lending, commenting on the investment in the Madsen Red Lake Gold Mine, said: “As one of the largest investors dedicated to the natural resource sector, Sprott is excited to partner with Pure Gold on the development of the Madsen Gold Project.

“Our partnership with Pure Gold is consistent with our strategy of providing innovative and flexible capital to maximize the value of exceptional projects. We are pleased to participate alongside our colleagues at Sprott Capital Partners and play an integral role in fully funding the construction of the Madsen Red Lake Mine.”

For more updates on the Madsen Red Lake Gold Mine and other mining industry news, keep following Business News Today.

  Canada, Darin Labrenz, Dusan Petkovic, Madsen Gold Project, Madsen Red Lake Gold Mine, Ontario, Pure Gold Mining, Sprott Resource Lending