Pure Gold Mining Inc said on Monday that gold production at the PureGold mine in Ontario, Canada had disappointed in 2021 and it will need another $50 million in external financing.

Shares in Pure Gold Mining were down 28% at 29.44 pence on Monday morning in London.

The Vancouver-based mining company explained that gold production at the PureGold mine fell short of design capacity in 2021 due to challenges in maintaining access to enough high-confidence, high-grade stopes to provide high-grade ore to the mill.

It continued that a persistent shortage of high-grade ore from underground resulted in less-than-full utilization of the mill and, at various times, low-grade development material and stockpiles.

The company has since kicked off several initiatives which are expected to improve ore production, increase head grades, reduce operating and sustaining capital costs, and increase cash flow throughout the 2022 calendar year.

As of Monday, the company’s cash balance is approximately $9 million. As a result, Pure Gold Mining said it believes it will need to seek additional financing in the next 30 days to fund operations and to service the interest on its debt.

The company expects that, over the next six months, it will need approximately $50 million of external financing to reach sustainable positive free cash flow.

Looking forward to 2022, Pure Gold said it is targeting a minimum of a 50% increase in average daily ore production, a 30% increase in average head grade, and a 20% reduction in monthly operating costs compared to 2021.

For the first half of 2022, the company expects to mine and process ore at an average rate of between 600 to 700 tonnes per day at an average head grade of 4.0 to 5.0 grams per tonne of gold and average gold recovery of 95%.

This, it explained, translates to expected gold production of between 15,000 to 20,000 ounces for the half.

‘The wide-ranging optimization initiatives underway at PureGold designed to improve production, boost grade, and reduce costs all share one thing in common, and that is that they are long-term solutions designed to address the fundamental, underlying issues to ensure sustainable long-term success,’ said Chief Operating Officer Terry Smith.

Pure Gold will release its 2021 earnings on Wednesday.

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