West Red Lake Gold: A Gold Mine of Achievements

In the heart of Canada's Red Lake district, West Red Lake Gold Mines Ltd. (WRLG) is on the cusp of a monumental achievement. The company's Madsen Mine, a high-grade gold deposit, is poised to commence production in mid-2025, marking a significant milestone in the company's journey. The path to this point has been one of relentless drilling, strategic planning, and a commitment to sustainability that sets WRLG apart in the mining industry.

The Madsen Mine's story is one of transformation and resilience. Acquired by WRLG in June 2023, the mine has undergone a remarkable turnaround. By October 2023, the company had published its first set of plans to advance Madsen and the nearby Rowan project. In June 2024, these plans were further detailed, outlining a list of projects designed to bring Madsen to production in 2025. The company's aggressive approach to drilling and underground development has been a key driver of this success.

WRLG set ambitious goals for underground drilling and development. The target was to complete 39,000 meters of underground drilling by the end of 2024. However, the company surpassed this goal by completing 88,191 meters of drilling from October 2023 through Q1 2025. This is more than double the initial target, demonstrating a high level of commitment and efficiency. Approximately 90% of these meters were dedicated to definition drilling, which involves drilling into known resources to tighten drill hole spacing and upgrade confidence ahead of stope engineering. This approach allows for a more accurate understanding of the resource, as it "increases confidence in the resource but it also allows the team to effectively define very high-grade zones of gold mineralization that may not be fully represented in the life-of-mine resource model." For instance, the company recently announced a high-grade panel between 8 Level and 10 Level (400m and 500m vertical depth) with 114.26 grams per tonne (“g/t”) gold (“Au”) over 10.6m, which has seen very little historic development and is a near-term focus for additional drilling.

The company also aimed to complete 3,200 meters of underground development at Madsen in 2024. They achieved 3,065 meters, which is 95.8% of the target, and have completed an additional 1,178 meters in 2025. This development work is crucial for accessing high-priority areas of the deposit and for preparing the mine for production. The company's aggressive approach to underground development has allowed them to access deeper portions of the resource that possess very attractive tonnage and grade profiles, many of which were never accessed by previous operators.

The advantages of this approach are clear. By conducting extensive definition drilling and underground development, WRLG has been able to build a high-confidence inventory of ounces, which supports the restart of production at the Madsen mine. This approach has also allowed the company to identify high-grade panels, such as the one in the Austin Zone, which are expected to deliver meaningful, high-margin tonnes during the first eighteen to twenty-four months of production. Additionally, the company's aggressive approach to drilling and development has allowed them to derisk the project and optimize mine planning, as they have a more accurate understanding of the resource and the infrastructure required to access it.

The economic indicators and financial metrics of the Madsen Mine make it a compelling investment opportunity. According to the Pre-Feasibility Study (PFS) published on January 7, 2025, the Madsen Mine is projected to generate an after-tax Net Present Value (NPV) of $315 million at a 5% discount rate and an Internal Rate of Return (IRR) of over 255%. These figures are based on an average annual production of 67,600 ounces of gold over 6 full years of production, within a 7.2-year mine life. The projected annual free cash flow is $70 million once in production. These economic results are particularly impressive given the conservative assumptions used in the PFS, including a gold price of US$2,200 per ounce, which is lower than the current spot price of around US$2,600 per ounce. This suggests that the actual economic performance could be even more favorable.

The Madsen Mine's economic viability is further supported by its high margins, with all-in sustaining costs in line with industry averages of $1,400-$1,500 per ounce. This is a significant advantage in the current macro environment, where gold prices are high and expected to remain so. The project also benefits from substantial prior investment, with an estimated $450 million already spent on infrastructure by previous operators. This reduces the capital requirements for WRLG and its shareholders, allowing for a quicker path to production.

In comparison to other gold mining projects in the Red Lake district, the Madsen Mine stands out due to its high-grade mineralization and the existing infrastructure. The Red Lake district is known for its long-life mines, such as the original Red Lake mine, which has been in operation since the 1800s and never had more than three or four years of reserves ahead of it at any time. These mines rely on continuous exploration and development to extend their mine life. The Madsen Mine exhibits similar geologic characteristics, with high-grade mineralization open at depth and along strike, providing substantial opportunity for production growth and mine life extension over time. Additionally, the Madsen Mine has several nearby satellite deposits that were not included in the PFS but provide further potential to feed the centrally located mill, enhancing project economics by increasing margins without having to expand throughput capacity.

The Madsen Mine's success story is a testament to WRLG's strategic approach and commitment to sustainability. The company's aggressive drilling and development program, coupled with its conservative financial assumptions, has positioned the Madsen Mine as a compelling investment opportunity. As the mine prepares to commence production in mid-2025, WRLG is poised to deliver on its promise of a high-grade, high-margin gold mine in one of the world's most prolific mining districts. The company's achievements to date reflect its dedication to responsible mining practices and its commitment to creating long-term value for its shareholders and stakeholders.