When West Lake Red Gold (WRLG.V) purchased the Madsen Mine from Pure Gold in April 2023, it was one of the most hated assets in Canada. In the wake of a failed mine, investors lost money, bills were unpaid, and the pain was real and widespread.
“Vancouver-based Pure Gold ran into trouble when it encountered both grade and production shortfalls at its Madsen Mine soon after putting it into production,” reported the Globe & Mail on October 31, 2022.
Pure Gold applied for creditor protection. When this happens, “it is only the debtholders who stand to salvage some of their holdings, while equity holders typically get wiped out.”
“Beyond the impacted shareholders, many others were left in the lurch when the mine was shuttered,” reported North Ontario Business. “Dozens of mining contractors and service and supply companies were collectively owed $149.3 million”.
When it was announced that West Red Lake Gold (WRLG.V) was purchasing the Madsen Project from Pure Gold, the press release stated that “Mining investor Frank Giustra, who owns 18.1% of WRLG shares, has committed to lead the proposed financing.”
“Writing a check makes you watch your investment closely,” stated Giustra. “I look forward to contributing to the company’s growth and energizing this iconic Canadian gold camp for future generations.”
Giustra’s statement signalled to investors that WRLG had already gained an advantage over its predecessor: access to capital.
But there was much more work to do to win the trust of the investment community.
We knew it was imperative we do four things:
Communicate our vision for the Madsen Mine.
Create a series of short-term objectives.
Be transparent and honest about the challenges we face – and most importantly
Deliver on our promises.
We informed the market that, in our view, poor decisions around mine financing and lack of mine building expertise resulted in Pure Gold mining an insufficiently defined deposit with inefficient mining methods and high costs.
The strategy for the Madsen Mine Restart was clearly stated:
1. De-risk Resources
(in-fill and expansion drilling, UG development)
2. Restart Planning
(engineering, mill expansion assessment, optimization)
3. Restart Execution (assembling team, community relations, focus on operability and profitability).
West Red Lake Gold Intersects 68.36 g/t Au over 1.1m and 13.83 g/t Au over 3.95m at South Austin Zone – Madsen Mine (April 18, 2024)
West Red Lake Gold Intersects 25.12 g/t Au over 5.5m, 39.46 g/t Au over2m and 18.60 g/t Au over 4m at South Austin Zone – Madsen Mine (March 4, 2024)
West Red Lake Gold Closes Us$22,340,000 Of Gold Linked Notes Offering (March 20, 2024)
West Red Lake Gold Intersects 9.15 g/t Au over 3.3m and 10.66 g/t Au over 2.6m at North Austin Zone – Madsen Mine (February 7, 2024)
West Red Lake Gold Intersects 47.44 g/t Au over 3.2m, 21.64 g/t Au over 7m and 296.83 g/t Au over 1m at South Austin Zone – Madsen Mine (December 5, 2023)
West Red Lake Gold Strengthens Management Team (September 25, 2023)
West Red Lake Gold Intersects 66.66 g/t Au Over 2.0m, 21.84 g/t Au over 3.11m and 6.27 g/t Au over 10.1m at Rowan Mine (August 29, 2023)
West Red Lake Gold Intersects 50.52 g/t Au Over 4.0m, 15.40 g/t Au over 4.2m and 10.41 g/t Au over 4.2m at Rowan Mine (August 1, 2023)
West Red Lake Gold Announces Appointment of Hugh Agro To Board Of Directors (July 27, 2023)
West Red Lake Gold Mines Strengthens Leadership (June 6, 2023)
The Madsen Gold Mine – is fully permitted and has a brand-new 800+ tonne per day mill, a tailings and water treatment facility. [1]
The Madsen Mine deposit presently hosts an NI 43-101 Indicated resource of 1.65 million ounces of gold grading 7.4 g/t gold and an Inferred resource of 0.37 million ounces of gold grading 6.3 g/t gold. [2.] [3.]
With Frank Giustra’s support, we have made a decision to optimize this mine before restarting production. We currently have about 120 employees on site at the Madsen project, working to achieve this objective.
As we continue to report the results of this aggressive development, we hope to deepen the trust we have established with the investment community.
The Red Lake Gold District has yielded over 30 million ounces of gold from high-grade zones and hosts some of the world’s richest gold deposits.
By Shane Williams
President and CEO of WRLG
By Shane Williams
President and Chief Executive Officer of WRLG
To understand the potential of our Madsen project, it’s important to know the history of the region.
Back in the 1920s, the Red Lake District had eight or nine small high-grade underground mines. With limited mining technology, the miners couldn’t get too deep.
Gradually, the technology got better. By the 1950s, the Red Lake Mine went 1,200 meters deep. The two main mines, Campbell and Red Lake, had historic ore grades averaging 22 grams gold/tonne. These two companies were mining the same orebody, known as “The Campbell-Red Lake Deposit”.
In 1989, Rob McEwen, an innovative Canadian mining entrepreneur, took over the Campbell-Lake deposit.
McEwen published 50 years of proprietary geological data from Red Lake on the internet, offering $575,000 in prizes for the best exploration ideas. More than 1,000 participants from 80 countries took part, creating 50 new targets, which yielded total gold resources valued at $6 billion.
Most significantly, McEwen’s company drilled an area called – unimaginatively but accurately – “The High-Grade Zone” which transformed The Red Lake Mine from a 50,000-ounce producer in 1997 to a 500,000-ounce producer in 2001. During this time cash costs fell from $360 per ounce to $60 per ounce.
With the gold grades and continuity coming out of the Madsen and Rowan Deposit, we are on a pathway to a profitable gold mine.
But as our knowledge of the Red Lake geology deepens, we are deploying exploration resources toward several under explored zones that could radically change our production profile, in the same way that the “High Grade Zone” transformed Gold Corp.
Red Lake is famous for its high-grade narrow gold veins. About a billion years ago, when the molten gold came up through cracks in the hard rock, occasionally it would hit a softer area of rock. When this happens, instead of narrow veins, you get a pooling of metallic fluids.
We believe that we may have several of these zones, analogous to Red Lake Mine’s “The High-Grade Zone”.
We are currently digging into the bigger opportunity around Madsen, following up on the tantalizing drill hits at the 8 Zone and Deep Austin.
The Madsen Gold Mine – is fully permitted, and has a brand-new 800+ tonne per day mill, a tailings and water treatment facility. [1]
The Madsen Mine deposit presently hosts an NI 43-101 Indicated resource of 1.65 million ounces of gold grading 7.4 g/t gold and an Inferred resource of 0.37 Moz of gold grading 6.3 g/t gold. [2.] [3.]
With Frank Giustra’s support, we have made a decision to optimize this mine before restarting production.
By Shane Williams
President and CEO of WRLG
I previously wrote about the transformation of the Red Lake Mine following the discovery of “The High-Grade Zone”, which took that company from a small producer to one of the biggest, most profitable gold miners on the planet.
Following drill hits at the 8 Zone and Deep Austin, our team is pursuing transformational opportunities at the Madsen Project.
The “High-Grade Zone” is not the only example of a transformational discovery. The Fosterville gold mine in Victoria, Australia is another project where a zone of pooling gold radically changed the economics of the mine.
Gold was originally discovered in the Fosterville area in 1894. Thomas O’Donnell and his son found a seam of coarse gold a metre wide, a stone’s throw from their front porch.
Five tons of the ore were crushed, yielding 12 ounces of gold (64 gram/tonne rock). At $19/ounce, the initial haul was worth $228, which at time would buy you 1,140 kilograms of bacon, 11,000 loaves of bread or 22,000 daily newspapers.
The excitement spread quickly across Australia. Within months, there were 900 miners in the region. The ore was mined until 1903, when they ran out of surface material. During this time span, Fosterville produced 28,000 ounces of gold.
Photo courtesy of Agnico Eagle
The present-day Fosterville mine started underground mining operations in 2005, initially producing gold from near-surface, low-grade mineralization.
In 2015, when the mine was owned by Kirkland Lake Gold, high-grade visible-gold mineralization was intercepted at depth, leading to the discovery of the Eagle Zone and, a year later, the ultra-high-grade Swan Zone which transformed Fosterville into one of the world’s richest gold mines.
The Swan Zone became a two-million-ounce deposit, grading about 30 grams/tonne. In the 4 years following the discovery of the Swan Zone, Kirkland Lake stock price increased 4,000%.
Fosterville is now owned by Agnico Eagle, which has a market cap of $46 billion. Last year Fosterville celebrated the production of its 4 millionth ounce of gold. There are nine years of mine life left. In 2023, Fosterville produced 277,000 ounces of gold at a total average cash cost of $488/ounce.
Discoveries like Fosterville’s Swan Zone can create life changing wealth for shareholders. These discoveries seldom happen by accident. You won’t find the drill rig team consulting psychics. It’s the result of skilled geologists, accumulating enough knowledge to take an educated risk, drilling in new areas, often from new angles.
Moving forward, we anticipate interesting drill results from the 8-zone, Deep Austin, and other exciting conceptual targets stemming from our growing understanding of the geology at Madsen. Recent renovations of the underground system are allowing us to drill aggressively from new angles.
The Madsen Mine deposit presently hosts an NI 43-101 Indicated resource of 1.65 million ounces of gold grading 7.4 g/t gold and an Inferred resource of 0.37 Moz of gold grading 6.3 g/t gold. [2.] [3.]
With Frank Giustra’s support, we have made a decision to develop these potentially transformational deposits as we optimize this mine before restarting production.
By Shane Williams
President and CEO of WRLG
Throughout 2023 and 2024, we have been focusing drill programs to test gold values in the Austin, North Austin and South Austin Zones at Madsen.
On June 11, 2024 we intersected 16.69 g/t Au over 8m, 6.17 g/t Au over 17.83m and 7.48 g/t Au over 12m at the South Austin Zone.
On May 7, 2024 we intersected 21.33 g/t Au over 3.1m and 6.75 g/t Au over 9m at South Austin Zone.
On April 18, 2024 we hit 68.36 g/t Au over 1.1m and 13.83 g/t Au over 3.95m at South Austin Zone.
On March 4, 2024 we intersected 25.12 g/t Au over 5.5m, 39.46 g/t Au over 2m and 18.60 g/t Au over 4m at South Austin Zone.
On December 5, 2023, we reported intercepts at the South Austin zone of 47.44 g/t gold over 3.2 meters and 21.64 g/t gold over 7 meters and 296.83 g/t gold over 1 meter.
On November 21, 2023 initial drilling at the North Austin Zone returned intercepts of 27.15 g/t gold over 10.28 meters and 22.31 g/t gold over 8.5 meters.
Much of the opportunity for growth within the North and South Austin extensions is an unmined area, not near old workings.
With the geological understanding we now have, and accurate models, we are confident that we can start production on continuous high-grade domains of the mine.
On June 5, 2024 we announced a goal to restart the high-grade Madsen gold mine in the second half of 2025.
It has taken a year of hard work to get to this point. During my career moving mineral assets along the development chain into production, I have learned that patience, effort, and experience are prerequisite to building and operating a profitable mine.
We are currently working on a pre-feasibility study detailing the restart plan. This study is targeted for release in the coming months.
Mine Restart Projects Underway or Imminent:
Connection Drift:
1,200-meter haulage way to connect the East and West portals/declines to enable bigger trucks, more efficient routings, and better ventilation and to eliminate surface trucking restrictions by moving mineralization underground.
Primary Crusher:
Install a permanent primary crusher as part of the Madsen mill, which previously relied on a temporary crusher.
Test Mining:
Initiate a test mining program to assess longhole stoping and cut-and-fill mining methods on the range of mining environments at Madsen. This will be an essential step in further de-risking the asset.
Camp:
Procure and install a mine camp to house 100 workers at the Madsen mine site.
Mine Dry:
Procure, install, and staff a facility with showers, change areas, and laundry where workers can transition in and out of work shifts.
Evaporators:
Install two (2) evaporator fans with the ability to manage 2,000 cubic meters of water daily, to increase overall water management capacity at the mine site.
Shaft Rehabilitation:
Continue the process of dewatering the mine and rehabilitating the existing shaft, which is now certified to move people for the purpose of inspecting shaft conditions.
Resource Definition Drilling:
(70%) of the drilling (approximately 27,000 meters) will be used to increase resource confidence across all known resource domains (Austin, North Austin, South Austin, and McVeigh)
Resource Expansion Drilling:
(30%) of the drilling (approximately 12,000 meters) will test the Company’s top targets including Austin extension and the 8 Zone down plunge extension target
With a year of work under our belts at Madsen, we know what needs to be procured, built, and developed at the mine site over the next six to twelve months to achieve our goal of restarting the mine in 2025.
The Madsen Gold Mine is fully permitted and has a brand-new 800+ tonne per day mill, a tailings and water treatment facility. [1]
The Madsen Mine deposit presently hosts an NI 43-101 Indicated resource of 1.65 million ounces of gold grading 7.4 g/t gold and an Inferred resource of 0.37 Moz of gold grading 6.3 g/t gold. [2.] [3.]
By Shane Williams
President and CEO of WRLG
The Madsen property is 47 square kilometers. That’s 14 times bigger than New York City’s Central Park. The size of our footprint dictates that we can not drill the whole property. We depend on geophysical techniques, airborne surveys and existing drill data to guide our exploration programs.
Most of the exploration work and drilling across our 47km2 Madsen property has been focused on the Balmer Assemblage of Rocks, with includes the main Austin deposit and the nearby North and South Austin deposits.
The flow of high-grade gold results coming from the Balmer rocks has kept us focused on these deposits close to the Madsen mine.
About 50% of the 47 km2 Madsen land package is in the Confederation Rock Package. This area has been largely ignored. In the early 2000s, many geologists considered the Confederation Rocks to be non-prospective for hosting significant gold mineralization.
That narrative is changing. In 2016, LP Fault Zone (13.10 meters @10.50 g/t gold) was discovered near the known Hinge Zone (4.90 metres @15.18 g/t gold) at the Dixie Lake project, about 24 kilometers from Madsen.
LP developed into a large deposit – large enough that Kinross Gold bought Great Bear Resources to acquire LP – and the fact that it exists inside the Confederation Rock Package ignited new interest in these rocks.
Our team has been analyzing geologic evidence from previous work programs. This has demonstrated the prospectivity within the Confederation Rocks on our property. In 2024, we will continue to deepen our understanding of the mineralizing controls and economic potential over this part of the Madsen.
North Shore
Poorly mapped area in highly favorable geologic setting between Russet Lake ultramafic and Balmer-Confederation unconformity.
South of this zone, multiple mineralized shears crosscut stratigraphy.
Focus will be on exploration for additional similar shear zones.
Confederation South
Hosts some known occurrences such as the historic Faulkenham shaft.
Focus will be on mafic-felsic contact areas.
Confederation North
This area remains mostly untested.
Hosts some known mineral occurrences such as the high-grade #1 Vein, which was the original area being mined at Madsen before discovery of the surface expression of the Austin Zone.
Objective will be to search for manifestation of known shear zones in the Balmer (e.g. Starratt, Madsen, Derlak, etc.) projected into favorable contacts and geologic settings within the Confederation.
This strategy is representative of WRLG’s systematic and disciplined approach to exploration and target generation.
Above: Plan map showing the proposed layout of soil sampling and reconnaissance grids at Madsen. The North Shore grid area is denoted by green sample sites. The Confederation North grid area is denoted by red sample sites. The Confederation South grid area is denoted by purple sample sites.
The Madsen Mine deposit presently hosts an NI 43-101 Indicated resource of 1.65 million ounces of gold grading 7.4 g/t gold and an Inferred resource of 0.37 Moz of gold grading 6.3 g/t gold. [2.] [3.]
With Frank Giustra’s support, we have made a decision to optimize this mine before restarting production.
By Shane Williams
President and CEO of WRLG
In the last year we have conducted successful drill programs at the Rowan deposit (including 70.8 grams/tonne gold over 8.3 meters) and the Madsen deposit (including 47.44 grams/tonne gold over 3.2 meters).
Madsen currently has resources defined down to depths of over one kilometer. That sounds deep, but the Red Lake District is known for high-grade gold veins that typically get thicker at lower depths.
The discovery of a deep +15 g/t zone can radically change the production profile of a mine.
For instance, Newmont Goldcorp/Evolution’s Red Lake Mine produced 58,875 ounces of gold @ 8.1 g/t in 1995. The next year, they discovered a high-grade gold zone at 1,400 meters depth. By 2004, the Red Lake Mine was producing 552,000 ounces of gold @ 77.1 g/t.
Similar transformational growth occurred at Kirkland/Agnico Eagle’s Macassa Mine in Ontario. Average annual production was 31,000 ounces of gold @ 11.2 g/t gold in the 2000’s. Then they discovered the deep high-grade SMC deposit. By 2018, annual production at Macassa was 240,126 ounces of gold @ 21.6 g/t.
Red Lake is famous for its high-grade narrow gold veins. About a billion years ago, when the molten gold came up through cracks in the rock, it would occasionally hit a softer area of rock. So instead of narrow veins, you get a pooling of the metallic fluids.
Pure Gold did a limited amount of drilling in the 8 Zone. A strike length of 130 meters was established. The assays returned intercepts of 4.3 meters @ 466 g/t gold, 5.5 meters @ 342 g/t gold and 8.2 meters @ 120 g/t gold.
Pure Gold was forced to drill the 8-Zone from the surface, which was not efficient. We’re going to fix that problem by extending a ramp downward, so that we can drill closer to the target, with better accuracy and more useful angles.
If the 4.3 meters @ 466 g/t gold intercept is representative of further mineralisation, it could be transformative for West Red Lake Gold. This would not require upgrades to our infrastructure. The existing mill and tailings facility could handle an additional low-tonnage high-grade feed. Our fixed costs wouldn’t change much. It would be a kicker to the bottom line.
Given the geology of the Red Lake Camp, this 1,300-meter 8-Zone deposit could go much deeper than 1,300 meters. In the same gold camp, Evolution is mining at 3,000 meters depth. We are eager to find out how deep the 8-Zone goes.
There is a lot of work to be done on the 8-zone before we can make a confident projection about the economics. The metal is in a different rock type and we would need to upgrade the shaft. There is already a small indicated resource of 87,700 oz at 18 g/t gold. We intend to do the drilling and engineering work because rock that rich is rare and valuable.
By Shane Williams
President and CEO of WRLG