PureGold closes $6 million loan and progresses turnaround plan
Canadian gold miner PureGold has entered into an additional $6 million credit facility with Sprott Resource Lending as part of several agreements reached with the lender, including a new debt repayment schedule to improve the company’s liquidity. business and provide financial flexibility.
The new repayment schedule is the second amendment to the restated credit agreement of April 2021.
The additional, first priority, non-revolving credit facility allows drawdowns for payments due to Sprott, including payments of interest, gold streams and production payment agreements, the first such drawdown to be made with respect to amounts due to Sprott as of June 30.
The additional credit facility matures on December 31 and bears interest at 14% per annum.
In addition, PureGold, listed on the LSE and TSX-V, has agreed with Sprott to postpone the first four scheduled principal repayments, each representing 2.5% of the total principal amount, originally scheduled for the last day of September. and December of this year, and March and June 2023; while the final payment is due in August 2026.
The bullet payment will increase from 35% of the total principal amount to 45%, creating approximately C$12 million of additional cash for PureGold over the next 15 months that would otherwise have been earmarked for debt repayment.
In addition, PureGold has also agreed with Sprott to temporarily reduce the minimum cash and working capital ratio covenants to $5 million (approximately C$6.5 million at the current exchange rate) and 0.75x , respectively, for the months ending June 30 and July 31.
As of June 30, PureGold had C$13 million in cash, C$21 million in available cash, including the full supplemental credit facility, and a net working capital ratio of approximately 0.85x .
However, PureGold notes that it may not be able to meet its commitments in the future without further amendments from Sprott.
PureGold is also moving forward with its operational turnaround plan, updated life of mine plan and also launching a strategic review process with the goal of increasing shareholder value and value at its PureGold mine in Ontario.
President and CEO of PureGold Mark O’Dea says the company has initiated a strategic review process to explore potential alternatives to increase shareholder value and generate financial strength to enable the PureGold mine to reach its potential.
“We remain focused on achieving positive cash flow at the site level by the third quarter of this year, and delivering an updated NI 43-101 technical report and plan. life of mine by the fourth quarter,” he said.
The strategic review process, which has been launched with the help of advisers, could include a potential sale or merger of the company, the sale of part or all of the PureGold mine or various other financing alternatives. potential long term.
O’Dea adds that if PureGold can increase the value of the mine, it can also increase the value for its stakeholders, including, but not limited to, its shareholders, its employees and the local communities surrounding Red Lake.
Meanwhile, to better predict near-term production from the mine, PureGold is delaying an update to the 2022 forecast that was previously scheduled for June until August.