Construction of TSX-V- and LSE-listed Pure Gold’s Madsen Red Lake mine, in Canada, has started, with the mine “perfectly timed” to benefit from a rising gold market, president and CEO Darin Labrenz said on Monday.

Gold has risen to nearly C$2 000/oz and at that level, Madsen Red Lake could generate C$800-million in cumulative pre-tax cash flow, he said in a statement, announcing the award of engineering partners for the project.

The company awarded the surface engineering and procurement contract to JDS Energy & Mining in partnership with Hatch and Knight Piesold. Further, the underground mine design engineering contract has been awarded to Dumas Mine Contracting.

With the engagement of our engineering partners, the company has started construction. Detailed design work on surface infrastructure, as well as underground electrical distribution, mine ventilation, mine service design and stope optimisation had been initiated, as well as equipment sourcing and the procurement of long lead time items. 

Pure also announced that engineering professional Dimitry Demianyuk had joined the company as project manager for Madsen Red Lake mine. As a key member of the site owner’s team Demianyuk would work with VP operations, Ken Donner, providing engineering management and project management focused on the optimisation of project scope, budget, quality and schedule.

The company also announced that chartered accountant Barbara Womersley had been engaged as a human resources lead for the company.

The Madsen Red Lake mine is said to be the highest grade development-stage gold project, and is fully funded to production, with first gold pour projected for late 2020.

The company secured $90-million in project financing from Sprott Resource Lending last month.

The Madsen mine will be an 800 t/d underground operation with a 12-year mine life. The feasibility study estimated a capital cost of $95-million. The mine has historical production of 2.6-million ounces of gold, a current indicated resource of 2.06-million ounces of gold at 8.9 g/t gold and an inferred resource of 467 000 oz gold at 7.7 g/t gold.