High-Grade Gold Strikes at Madsen Boost Confidence for Production Restart in 2025

Source: Streetwise Reports 10/09/2024

West Red Lake Gold Mines Inc. (WRLG:TSXV; WRLGF:OTCQB) has reported drill results from its 100% owned Madsen Mine, located in the Red Lake Gold District of Northwestern Ontario. Read why the company CEO is calling these results successful and the optimism he has for the mine’s potential.

West Red Lake Gold Mines Inc. (WRLG:TSXV; WRLGF:OTCQB) has reported drill results from its 100% owned Madsen Mine, located in the Red Lake Gold District of Northwestern Ontario. Key intercepts from the South Austin Zone include 37.09 g/t (grams per tonne) gold (Au) over 3.12 meters, with a higher-grade interval of 174.28 g/t Au over 0.62 meters, as well as 18.11 g/t Au over 2.76 meters, including 42.01 g/t Au over 1 meter. These results further define high-confidence ounces within the South Austin Zone, contributing to an ongoing effort to bolster WRLG’s resources and support the planned production restart at Madsen in the latter half of 2025.

Shane Williams, President and CEO of WRLG, highlighted the significance of these findings in the news release, stating, “The underground definition drilling program at Madsen has been very successful. The value added from this high-confidence, tightly spaced drilling cannot be overstated.” Williams noted that these ongoing discoveries in adjacent zones reinforce WRLG’s belief in the untapped potential of the Madsen deposit as the company progresses toward full-scale production.

The Golden Market

The gold mining sector has shown notable strength amid economic and political fluctuations. According to The Speculative Investor on October 7, analysts believed that regardless of the outcome of the 2024 U.S. presidential election, both major candidates’ policies would support a weaker US dollar, which would, in turn, drive up gold prices over the next year.

They noted, “The outcome of the November 2024 Presidential Election will be consistent with our view that the U.S. dollar’s foreign exchange value will continue to trend downward, and the U.S. gold price will continue to trend upward.” This trend, they suggested, would be bolstered by the candidates’ economic stances and ongoing concerns over U.S. debt.

Taylor Combaluzier from Red Cloud Securities also maintained a favorable view in his October 3 research note, with a “Buy” recommendation and a target price of CA$2.00 per share for WRLG.

In support of these sentiments, recent data from Bloomberg on October 8 illustrated increased consumer demand for physical gold, with major retailers like Costco reporting that bullion was difficult to keep in stock.

This surge in demand mirrored broader trends as gold remained a popular choice for wealth preservation, especially during times of inflation. Bloomberg noted that “spot gold has jumped nearly 30% this year, successively hitting record highs,” with gold outperforming other assets, including U.S. equities and bonds.

Reuters observed on September 19 that gold prices rose over 1% when the U.S. Federal Reserve initiated a new monetary easing cycle, which had the effect of boosting gold prices “to an all-time high” near the $2,600 mark. UBS analysts went on to project that this rally could continue, targeting US$2,700 per ounce by mid-2025, a projection they felt reflected gold’s position as a “safe asset during political and economic uncertainty,” especially as lower interest rates generally provide support to non-yielding assets like gold.

West Red Lake’s Catalysts

West Red Lake Gold is poised for growth and operational success due to several key catalysts. The recent high-grade intercepts from the South Austin Zone highlight the company’s potential to add valuable ounces to its resource base as new discoveries continue to emerge in adjacent zones.

This drilling strategy, as presented in West Red Lake’s investor presentation, focused on high-confidence and high-grade areas and aligns with WRLG’s objective of optimizing resources ahead of production. The company’s timeline for production, marked by the completion of a pre-feasibility study in early 2025, supports WRLG’s goal of commencing operations in the latter half of the year. This timeline positions WRLG strategically to deliver on resource estimates and a smooth production ramp-up.

Further bolstering WRLG’s readiness, the company benefits from extensive infrastructure, including a fully operational 800-tonne-per-day (tpd) mill that demonstrated a 95% gold recovery in previous phases. With an expansion potential of up to 1,500 tpd, WRLG’s existing assets provide a clear pathway toward efficient production. Situated within Canada’s rich Red Lake gold district, WRLG is advancing its flagship project with the aim of establishing itself as a prominent gold producer.

Analysts On WRLG

Bob Moriarty from 321Gold expressed a strong outlook for West Red Lake Gold Mines Inc. on October 1. Moriarity highlighted that the company’s acquisition of the Madsen Mine for US$6.5 million was a strategic move, given the mine’s previous valuation of US$1.15 billion. Moriarty emphasized the company’s controlled share structure, with 70% held by management, insiders, and strategic investors, which he saw as beneficial to its long-term stability. He noted that WRLG’s flagship Madsen Mine project includes a reported 43-101 resource of 2.1 million ounces of gold, and the company’s phased approach — completing a 40,000-meter definition drill program and commencing an additional 10,000 meters — would likely contribute to consistent value creation. Moriarty reiterated his positive stance on WRLG, labeling it as a top choice for Canadian investment. [OWNERSHIP_CHART-5614]

Taylor Combaluzier from Red Cloud Securities also maintained a favorable view in his October 3 research note, with a “Buy” recommendation and a target price of CA$2.00 per share for WRLG. He pointed out that the recent high-grade drill results at the Upper 8 target, such as 14.2 g/t Au over 4.1m and 44.17 g/t Au over 1.3m, demonstrated the project’s promising potential.

Combaluzier projected that the Madsen project’s existing infrastructure and high-grade resource could position WRLG for near-term cash flow, particularly with a new Preliminary Feasibility Study (PFS) expected in Q4 2024. Additionally, Combaluzier highlighted that WRLG’s surface drilling costs at the Upper 8 target, at approximately CA$200/m, support continued exploration with cost efficiency, adding to the company’s investment appeal.

Ownership and Share Structure

Advisor Frank Giustra owns 9.4% of West Red Lake as a strategic investor and insider, according to the company’s investor presentation. Sprott Resource Lending Corp. owns 18.6%, VanEck Gold Fund owns 4.1%, Accilent Capital Management owns 4%, and Evolution Mining Ltd. owns 1.6%. About 31% is with institutions, the company, with the rest in retail.

The company’s market cap is CA$212 million. The 52-week range for the stock is CA$0.47 to CA$1.04​.

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Important Disclosures:

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, )

Source: https://www.streetwisereports.com/article/2024/10/09/high-grade-gold-strikes-at-madsen-boost-confidence-for-production-restart-in-2025.html