The Madsen Mine & The Golden Runway
West Red Lake Gold will restart the Madsen Gold Mine in 2025. Madsen is built and permitted and sits atop 1.7 million indicated ounces of gold in rock averaging 7.4 g/t gold. That’s the kind of strong gold grade that made Red Lake the high-grade gold capital of Canada. West Red Lake Gold’s team saw a gold bull market coming and bought Madsen (which had stumbled under a prior operator) in early 2023 because they saw a clear opportunity to use their deep mining expertise and access to capital to unlock this opportunity for their investors.
Companies putting new mines into production can generate some of the best returns in mining. West Red Lake Gold’s Madsen Mine is a rare new gold mine starting production in 2025.
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Historical Price Of Gold
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The Optimal Investment Zone of the Lassonde Curve
The transition from developer to producer often creates a great investment opportunity, and sensibly so – companies that go from only spending money to making money deserve a higher valuation. West Red Lake Gold plans to make this transition in 2025.
Sitting in the Sweet Spot of the Golden Runway
Production Target H2 2025
There are very few new gold mines starting up in 2025. West Red Lake Gold spent 2024 pushing to prep the Madsen Mine for restart to deliver this Golden Runway opportunity to investors.
The Sweet Spot in Gold Mining
West Red Lake Gold Mines (Ticker: WRLG) is nearing the end of an ambitious yet measured journey to breathe new life into a past-producing gold mine in Ontario, Canada. The company’s recent acquisition of the Madsen Mine presents a compelling opportunity for investors interested in near-term gold production with the potential for a significant valuation rerating. However, what sets West Red Lake Gold apart is not just the asset itself, but a methodical and risk-averse strategy to bringing a historic, high-grade gold mine back online.
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A District with A Storied Past
West Red Lake is centered in the historic Red Lake gold mining district of Ontario Canada. The district has produced over 30 million ounces of gold since the first gold rush in the 1920’s and is an important contributor to Canada’s ranking as the fifth largest gold producer globally. And the region isn’t done yet. Exploration spending is on the rise and companies like West Red Lake are close to turning on significant sources of new, high-grade production.
The Deal of the Decade?
The eyes of the gold industry have been firmly on West Red Lake ever since the company scooped up the past producing Madsen Mine in 2023, for only $6.5 million in cash, after the previous operator spent over $350 million on permitting, 200 km of drilling, mine engineering, a brand new mill, and a new mine portal and series of underground tunnels. With the mine restart planned for mid-2025, West Red Lake is close to proving the purchase was one of the smartest buys of a distressed gold asset this decade.
The Madsen Mine
Deal of the decade
Acquired for
$6.5M Cash
$350
Million of Capital Investment
- 800+ TPD Mill
- Equipment & Water
- Treatment Plant
Resources
1.7M ounces gold @ 7.4 g/t indicated
0.4M ounces gold @ 6.3 g/t inferred
No Geological Surprises
Unlike the previous operator of Madsen, the West Red Lake team is taking no chances with the historically challenging, but rewarding geology found in the Red Lake district. 42,500 metres of definition drilling has already been completed since October 2023, with more to come. The team is tightening drill spacing to only 6 metres from the previous operators 20 metres, dramatically increasing the reliability of the geological model critical to a profitable mine restart.
No Operational Suprises
West Red Lake is doing everything possible to maximize production visibility. Definition drilling has been focused on parts of the defined resource that offer the grade and tonnage potential and are efficient to access. This includes parts of the Austin zone, South Austin, McVeigh, and North Austin The operational team already has a mine plan for the first 18 months of operation (100,000 ounces) and expects to have at least two years of mining runway at restart. Nothing has been left to chance.
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Exploration Upside
While definition drilling has been key to derisking the restart, 10,000 metres of exploration drilling is ongoing to test new targets along the geologic structure that hosts the gold at Madsen – targets like MJ, North Staratt, and north Venus – and a new near-surface target in the distinctive rock unit that hosts the super high grade but deep 8 Zone at Madsen. This Upper 8 target is already looking like a new discovery.
In the Sweet Spot for Mining Stocks
Historically, the best performing stocks in the mining sector are the ones who have already made a construction decision and are approaching first gold pour. West Red Lake is firmly in this category, less than 12 months from first gold.
Quantifying the Golden Runway
92%
Of Companies
Reach Production
Construction
Decision
568
DAYS
First Gold
Pour
Average Return =
111%
(*based on study of 124 stocks)
Source: The Independent Speculator
Significant Stock Rerating Potential
West Red Lake still trades like an unfinanced junior developer at 0.23x net asset value (NAV), when in reality the company is fully funded and on track for an imminent production restart. Even ignoring any exploration success, there could be notable stock upside potential from an NAV rerating alone. West Red Lake offers investors a truly scarce mix of elevated upside with less of the elevated operational risk that usually comes with it.
Transforming from Developer to Producer
The Valuation Uplift
Price to Net Asset Value Ratios for Gold Stocks
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CAUTIONARY STATEMENT AND FORWARD-LOOKING INFORMATION
The decision to continue with the advancement of the Madsen Mine restart and the Company’s operations and plans with respect thereto, as described herein (the “Madsen Mine Restart”), are based on economic models prepared by the Company in conjunction with management’s knowledge of the property and the existing estimate of indicated and inferred mineral resources on the property set out in the report entitled, “Independent NI 43-101 Technical Report and Updated Mineral Resource Estimate for the PureGold Mine, Canada”, with an effective date of July 31, 2022, as amended on April 24, 2024, a copy of which is available on SEDAR+ at www.sedarplus.ca. The Madsen Mine Restart is not based on a preliminary economic assessment, a pre-feasibility study or a feasibility study of mineral reserves demonstrating economic and technical viability. Accordingly, there is increased uncertainty and economic and technical risks of failure associated with the Madsen Mine Restart, in particular: the risk that mineral grades will be lower than expected; the risk that additional ongoing mining operations are more difficult or more expensive than expected; and the risk that production and economic variables may vary considerably, due to the absence of a detailed economic and technical analysis undertaken in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects.
Certain statements contained in this news release may constitute “forward-looking information” within the meaning of applicable securities laws. Forward-looking information generally can be identified by words such as “anticipate”, “expect”, “estimate”, “forecast”, “planned”, and similar expressions suggesting future outcomes or events. Forward-looking information is based on current expectations of management; however, it is subject to known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from the forward-looking information in this news release and include without limitation, statements relating to plans for the potential restart of mining operations at the Madsen Mine, the potential of the Madsen Mine; any untapped growth potential in the Madsen deposit or Rowan deposit; and the Company’s future objectives and plans. Readers are cautioned not to place undue reliance on forward-looking information.
Forward-looking information involve numerous risks and uncertainties and actual results might differ materially from results suggested in any forward-looking information. These risks and uncertainties include, among other things, market volatility; the state of the financial markets for the Company’s securities; fluctuations in commodity prices; timing and results of the cleanup and recovery at the Madsen Mine; and changes in the Company’s business plans. Forward-looking information is based on a number of key expectations and assumptions, including without limitation, that the Company will continue with its stated business objectives and its ability to raise additional capital to proceed. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such forward-looking information. Accordingly, readers should not place undue reliance on forward-looking information. Readers are cautioned that reliance on such information may not be appropriate for other purposes. Additional information about risks and uncertainties is contained in the Company’s management’s discussion and analysis for the year ended November 30, 2023, and the Company’s annual information form for the year ended November 30, 2023, copies of which are available on SEDAR+ at www.sedarplus.ca.
The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement. Forward-looking information reflects management’s current beliefs and is based on information currently available to the Company. The forward-looking information is made as of the date of this news release and the Company assumes no obligation to update or revise such information to reflect new events or circumstances, except as may be required by applicable law.
For more information on the Company, investors should review the Company’s continuous disclosure filings that are available on SEDAR+ at www.sedarplus.ca.
