High-Grade Gold Discovery in Ontario Promises Significant Growth

Source: Streetwise Reports 07/11/2024

West Red Lake Gold Mines Inc. (WRLG:TSXV; WRLGF:OTCQB) has announced promising drill results from its 100% owned Madsen Mine in the Red Lake Gold District of Northwestern Ontario. Read to find out what the latest drilling campaign, conducted in the North Austin Zone, has identified.

West Red Lake Gold Mines Inc. (WRLG:TSXV; WRLGF:OTCQB) has announced promising drill results from its 100% owned Madsen Mine in the Red Lake Gold District of Northwestern Ontario. The latest drilling campaign, conducted in the North Austin Zone, has identified significant high-grade gold mineralization, including intersections of 13.40 grams per tonne (g/t) gold (Au) over 10 meters and 12.21 g/t Au over 3 meters. These results are part of an ongoing effort to expand the North Austin Zone, which represents a new area of high-grade mineralization extending the current Madsen resource to the northeast. The North Austin Zone remains open down-plunge and along strike, indicating further potential for resource growth.

The recent drill results build on the positive outcomes previously reported in May and February of this year, reinforcing the quality of the resource area. The North Austin Zone, situated adjacent to existing underground development, could potentially be developed early during future mine restart and production phases.

Shane Williams, President and CEO, stated, “The North Austin drilling continues to deliver meaningful results, which is a testament not only to the quality of this resource area but also to our technical team’s understanding of the structural controls and ore shoot geometries in this emerging part of the Madsen deposit.”

Digging Into The Gold Mines

The gold mining sector has demonstrated significant growth and resilience in recent years, supported by diverse operations and substantial economic contributions.

According to an article on Gold.org, “Gold mining is a global industry with operations on every continent except Antarctica, and gold is extracted from mines of widely varying types and scale.” The World Gold Council noted that “mines and gold mining operations have become increasingly geographically diverse, far removed from the concentrated supply of four decades or so ago when the vast majority of the world’s gold came from South Africa.”

Despite the geographical diversification, new discoveries have become less frequent. “Overall levels of mine production have grown significantly since 2008, although substantial new discoveries are increasingly rare,” reported Gold.org. The commitment to responsible mining and trading practices remains strong, with the World Gold Council and its member companies supporting these principles. They emphasized that “the project development timeline and mine lifecycle is long – it often takes decades to move from discovery to production, underscoring the commitment and stability within the gold mining sector.”

In a July 4 write-up by Statista, it was highlighted that “in 2023, the top 40 mining companies in the world generated a net profit of approximately 90 billion U.S. dollars.” The global revenue generated by these top companies was substantial, with “the global top 40 mining companies, which represent the vast majority of the industry, generating more than 840 billion U.S. dollars of revenue in 2023.” Profitability in the sector also showed a positive trend, as “for 2023, the top 40 mining companies kept 11 cents of profit out of every U.S. dollar they earned.” The resilience of the industry was further illustrated by the rebound in net profit margins, with “the average net profit margin of the world’s top 40 mining companies rebounding to 11 percent in 2023.”

Statista noted, “Despite fluctuations in the net profit margin over the years, the mining industry continues to generate substantial revenue and profit, reflecting its resilience and importance in the global economy.”

In a May report, S&P Global highlighted the robust activity in the metals and mining sector’s mergers and acquisitions (M&A) landscape. “M&A activity in the metals and mining sector that fit our criteria for this study has been steady year over year, albeit skewed by the megadeal between Newmont and Newcrest,” stated S&P Global. The report detailed that “in 2023, there were 47 deals — 30 focused on gold, 14 on copper, and three on nickel — for a total deal value of 26.36 billion U.S. dollars.”

The strength of the gold price, which averaged above US$2,000 per ounce for the year, added to the attractiveness of gold-focused transactions. S&P Global noted, “Given the head start imparted by the Newmont-Newcrest merger, it was no surprise that gold would shine in the M&A landscape.” Looking forward, “Commodity Insights expects both copper and nickel markets to turn into deficit by 2028, prompting us to expect the slow but steady shift in focus on those metals in M&A to continue in 2024 and beyond.”

West Red Lake Catalysts

West Red Lake Gold Mines Ltd. has several catalysts that position the company for future growth. The North Austin Zone, with its high-grade gold intersections, remains a priority expansion target as underground drilling continues. The company is also working towards a planned mine restart in the second half of 2025, with ongoing drilling aimed at delineating and defining the high-value mineral inventory needed to support this objective.

As per the news release, the company’s strategic focus includes further defining the near-term mining inventory and expanding the current mineral resource at the Madsen Mine. The North Austin Zone, along with the Austin and South Austin Zones, continues to be a focal point for drilling, targeting the more continuous and higher-grade portions of the mineralization. This strategy aligns with the company’s goal of enhancing its resource base and preparing for future production phases.

The Madsen Mine deposit currently hosts a National Instrument 43-101 Indicated resource of 1.65 million ounces of gold grading 7.4 g/t Au and an Inferred resource of 0.37 million ounces of gold grading 6.3 g/t Au. These resources, estimated at a cut-off grade of 3.38 g/t Au and a gold price of US$1,800 per ounce, provide a solid foundation for the company’s growth plans. With a robust exploration program and a clear path toward production, West Red Lake Gold Mines Ltd. is well-positioned to capitalize on the high-grade gold potential of the Red Lake Gold District.

Will Robinson, VP of Exploration at West Red Lake Gold Mines, discussed the company’s recent drilling results and their implications. “The results we put out were pretty spectacular,” he remarked in an interview with KE Report. “We were very happy with those results, as you pointed out, 16.7 grams per tonne over 8 meters, another one of just over 6 grams at almost 18 meters, and 7 and 12 grams over 12 meters.” Robinson emphasized the importance of these results for the company’s future plans, noting that “what this drill program is doing in South Austin is really increasing our confidence in this area of the deposit.”

Technical Analyst Clive Maund, “West Red Lake is therefore viewed as an even better buy now than when it was pointed out in the email alert last week following its having drifted a little lower in recent days, and it is rated an Immediate Strong Buy for all time horizons.”

Robinson also explained the strategic approach to drilling, saying, “This is part of the definition drilling program, giving us the density of data to inform the eventual short-term planning model and the mine planning model, which then we can build our stope shapes around.”

He highlighted the discovery of a new lens of mineralization, adding, “We’re actually defining a new lens of mineralization in the footwall of the main South Austin zone, which is particularly exciting for us.”

As the interview continued, Robinson further commented on the broader potential of the Austin deposit, remarking, “The South Austin Zone already has about half a million ounces, mostly in the indicated category at almost 9 grams per tonne. There is still room to expand this even though this is more risk drilling.” He also noted the broader exploration opportunities, stating, “We’re seeing a lot of brownfield opportunity to throw in what we’re calling Wildcat holes into this perspective geology.”

In terms of future developments, Robinson shared, “We’re planning to drill the 8 Zone in the second half of this year, probably towards September. Being able to drill that target from underground will be a huge advantage, shortening the holes and giving us much more control on the deviation.” He summarized the company’s near-term plans by saying, “The PFS is going to be the big one that everybody should be watching for. As these key pieces of infrastructure come into the mine and get installed, we’ll be updating the markets and our shareholders on all of that news.”

What Experts Are Saying…

Technical Analyst Clive Maund, in his analysis on June 16, provided a positive outlook on the company’s stock performance. He stated, “West Red Lake just came out with very good drill results from its Madsen Mine at Red Lake in Ontario this morning, and this at a time when the stock is very attractively priced, having dropped from a peak at over CA$1.02 in April. So it looks like an Immediate Buy here as close to the open as possible.” Maund noted that despite the market’s muted reaction to the news, “the results were good, and as we will proceed to see, it is looking attractive here after its recent losses have brought it back into buying territory.”

Maund highlighted the technical aspects supporting his view, explaining, “On its latest 6-month chart, we can see how West Red Lake continued to grind a little lower after the positive drilling results were released last week, but we can also see a couple of important non-confirmations – although recently weak, the Accumulation line did not drop to new lows with the price and the new low was not confirmed by momentum as the MACD indicator did not drop to new lows, which is a sign that downside momentum is dropping out which in this position is bullish.” [OWNERSHIP_CHART-5614]

He concluded, “West Red Lake is therefore viewed as an even better buy now than when it was pointed out in the email alert last week following its having drifted a little lower in recent days, and it is rated an Immediate Strong Buy for all time horizons.”

Ownership and Share Structure

According to Reuters, 2.30% of the company is held by management and insiders.

Advisor Frank Giustra owns 9% as a strategic investor and insider, and Sestini & Co. Pension Trustees Ltd. owns 1.58%, with 4.26 million.

26.06% is with institutions. Sprott Resource Lending Co. has 18.58%, with 50.03 million shares. Van Eck Associates Corp. has 4.46%, with 12 million shares, and Accilent Capital Management Inc. has 2.94%, with 7.91 million.

The company’s market cap is reflective of its ongoing drilling success and strategic expansion efforts. The 52-week range for the stock is US$0.3096 to US$0.75​.
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1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of West Red Lake Gold Mines Inc.
2. James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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( Companies Mentioned: WRLG:TSXV;WRLGF:OTCQB, )