Canada-based Pure Gold Mining’s board of directors has approved a construction decision for the Madsen Red Lake Mine.

The company has also closed a $90m project financing package with Sprott Resource Lending Corp. With a term of seven years, it includes a credit facility for $65m, and a $25m callable gold stream.

The proceeds will fully fund the initial capital costs to develop an underground mine at its Madsen Gold Project based on a Feasibility Study.

According to the company, $65m is in principal structured in multiple tranches with $25m as prepayment for 5.0% of the gold production until 50,000 ounces of gold has been delivered.

Pure Gold president and CEO Darin Labrenz said: “With access to the capital provided by the financing, the construction of the Madsen Red Lake Mine is now fully funded.

“The optionality of repayment of both the facility and the Gold Stream in a rising gold price environment provides an opportunity to refinance once in production and generating solid cash flows from the mine.

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“Combined with the recently completed equity financing, this package secures approximately C$90m of immediate funding enabling us to initiate construction and puts us on track for first gold pour by late 2020.”

Endeavour Financial is serving as financial advisor and Blake, Cassels & Graydon as legal counsel to the company.

According to the company, first production is targeted for late next year.

Last month, Pure Gold Mining, Wabauskang First Nation and Lac Seul First Nation signed a project agreement with respect to Pure Gold’s Madsen Red Lake mine in Ontario, Canada.