Pure Gold has also re-arranged financing with its lender Sprott Resource Lending Corp., which provided around C$12 million ($9.2m) of additional liquidity within the next 15 months.
The two firms agreed on temporary reductions to the minimum cash and minimum working capital ratio covenants to $5 million for the months ending June 30 and July 31, 2022.
Pure Gold noted might not be able to comply with its covenants in the future without further amendments from Sprott.
“The company does not intend to comment further unless and until the Board of Directors of the company has approved a specific course of action or the company has determined further disclosure is appropriate or necessary,” it said.
The Vancouver-based miner poured first gold at the end of 2020 and announced the start of commercial production in August 2021. Its PureGold mine, however, has struggled to consistently produce at its nameplate capacity of 800 tonnes a day, despite mill upgrades that intended to increase capacity to 1,000 tonnes a day.
Construction delays, bad scheduling, problems with equipment, and “strategic misalignments, were quoted by the miner to explain production shortfalls. The mounting issues triggered a change in leadership early this year.
Production at the mine has continue to fall, with head grades falling to 4.27 grams per tonne in the quarter ended March 31. Shares in the company closed 6% down in Toronto on Tuesday at C$0.16, giving Pure Gold a market capitalization of C$109.66 million (roughly $83m).
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