Pure Gold Mining Inc (TSXV: PGM) is a Canadian based mining company. It is engaged in the exploration and development of gold and other precious and base metal properties in Canada.

Key Updates:

• Increase in average throughput: In Q3FY21, the company reported an increase in the average daily throughput of 685 tonnes per day, up 35% on y-o-y basis driven by increased stope access and mill upgrades.

• Extended net loss: At the end of Q3FY21, the group reported a net loss of CAD 13.172 million, as compared to CAD 9.729 million in pcp. The above was primarily due to the inclusion of the cost of sales amounting to CAD 21.874 million, higher interest and finance costs (CAD 2.407 million v/s CAD 0.058 million in pcp) and a foreign exchange loss of CAD 4.923 million versus a foreign exchange gain of CAD 1.522 million in pcp.

         Q3FY21 Income Statement Highlight (Source: Company Report)

• Cash flow update: During the third quarter of FY21, the company reported cash used in operating activities of CAD 12.190 million, which is higher than the cash used of CAD 7.221 million in pcp. The above is primarily due to the higher net loss incurred during the period.

Stock Recommendation:

The company is in its initial stages of operations and is conducting drilling activities and working on upgrading its milling facilities. Notably, the group is yet to report a notable mineral reserve that would support its future operations. The company might witness a liquidity crunch due to the absence of stable cash flows. Moreover, the stock of PGM also closed below its 50-days and 100-days simple moving averages, indicating a bearish trend. Hence, considering the aforesaid facts, we give an ‘Avoid’ rating on the stock of PGM at the last traded price of CAD 0.87 on November 18, 2021.

One-Year Technical Price Chart (as on November 18, 2021). Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.

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