West Red Lake Gold Poised For Production as Gold hits CAD $4,100 per Ounce
According to a conservative Pre-Feasibility Study released in January 2024, the Madsen mine will generate $70 million/year in free cash flow @USD$2,200/ounce gold ($700/ounce lower than the current price).
Canada, 19th Feb 2025 – Sponsored content disseminated on behalf of West Red Lake Gold. On February 13, 2025, West Red Lake Gold Mines (TSXV: WRLG) (OTCQB: WRLGF) provided an update on restart readiness activities, including bulk sampling, mill start-up and underground development.
“We have 185 employees and 50 contractors currently active on site,” reported Shane Williams, President and CEO of WRLG in the February 13 press release.
According to a conservative Pre-Feasibility Study released in January 2024, the Madsen mine will generate $70 million/year in free cash flow @USD$2,200/ounce gold ($700/ounce lower than the current price).
The update makes it clear that West Red Lake Gold is close to producing gold at the Madsen Mine. Any resource company that goes into production has beaten long odds.
“As someone who has spent more than forty years financing and creating junior mining companies, I know full well what is involved in terms of risk, reward, heartache, and thrill,” wrote WRLG major shareholder Frank Giustra.
It is instructive to compare mining investment success rates with those in traditional forms of gambling.
Over the long haul, the success rate of poker players is 30%. At the roulette wheel the success rate is 5%, and for bettors at the horse track it’s only 1%.
The success rate of mineral exploration companies is even lower.
“The likelihood of a discovery leading to a mine being developed is very low,” confirms the World Gold Council. “Less than 0.1% (1/1,000) of prospected sites will lead to a productive mine.”
It typically takes 10-15 years to put a gold project into production. West Red Lake Gold is doing it in two years.
In its quest to become a gold producer quickly to take advantage of the strong gold market the team predicted was coming, WRLG gave itself an advantage.
In the 2023 acquisition of the Madsen Mine, the company acquired a modern mill, a 1,275-meter shaft and 19 kilometers of modern underground infrastructure. These assets were collectively valued at about $350 million. WRLG paid just pennies on the dollar.
The Madsen Mine was an asset that had failed recently, but West Red Lake Gold’s team understood that the failure stemmed from fixable mistakes. It took a team with significant mine building experience to see that.
Given the rarity of significant new mines coming on line, it’s no surprise there is a dearth of new-generation CEOs with a track record of mine-buidling.
West Red Lake Gold CEO Shane Williams was the VP of Operations and Capital Projects at Eldorado Gold, taking the Lamaque Gold project from a Preliminary Economic Assessment (PEA) to commercial operation in 18-months.
Now Williams is leading West Red Lake Gold to production at Madsen. The next key milestones on that path are completing and processing a bulk sample, finishing the 1.2-km Connection Drift between the two existing portals, and establishing stockpiles to be ready for consistent operations.
“The team is excited to get the bulk sample complete, which is expected to demonstrate that our approach to mining at Madsen works,” stated Williams in the February 13 press release, “followed by rolling into production mining and processing with an aim to start selling gold into this record price environment, where gold is selling for over CAD$4,100 per ounce today.”
Bulk Sample
The bulk sample program includes plans to mine at least 10,000 tonnes of material from six stopes.
The Company prioritized parts of the Madsen resource for extraction early in the mine life based on grade, tonnage, and ease of access.
The bulk sample program targets stopes in the 1099/1100 area of the Austin resource, the 1407 area of the McVeigh resource, and the 987 area of the South Austin resource.
Above: Long section showing part of the Madsen Mine deposit with bulk sample areas highlighted. Modern workings (post 2019) shown in green; Connection Drift in blue.
Mill Startup for Bulk Sample Processing
After 28 months of maintained dry shutdown, the mill is scheduled to restart later this month. First feed will be 3,000 tonnes of legacy low-grade material to pack out the grinding mills and establish dead beads in the process tanks. Feed will then transition to low-grade material mined by West Red Lake Gold.
“All operational readiness milestones have been met for the process plant,” said Hayley Halsall-Whitney, Vice President Operations. “The facility is fully staffed and ready for this first phase of mill operations.”
Connection Drift 80% Complete
The Connection Drift, the largest of the capital projects supporting restart of the Madsen Mine and a cornerstone of West Red Lake Gold’s approach to efficient mine operations, is now 80% complete.
To date 1,148 metres have been completed, of the 1,440-metre total length. The project remains on track for completion by the end of March 2025.
With the Connection Drift, West Red Lake Gold will be able to move all material on large haul trucks through the East Portal, which is situated close to the crusher and the mill.
Underground Development
From August 2024 to January 2025 the pace of new underground development increased notably, with average daily meterage rising 23% each month. In January, underground development averaged above 20 metres per day and the pace continues to increase.
Above: Total underground development at the Madsen mine by month
Camp and Mine Dry Installations
The Company expects to start housing workers in the camp in the second half of March, pending receipt of an occupancy permit that is in progress. The camp is a 114-person facility. It offers individual rooms with ensuite bathrooms for each worker, a kitchen and dining hall, and recreation space.
Above: The dining hall of the Madsen mine camp, with accommodation buildings visible behind
This Madsen Mine will tap a reserve averaging 8.2 g/t gold to produce approximately 70,000 oz. gold a year over 6 full production years, within a 7.2-year mine-life.
The Internal Rate of Return (IRR) is 170%.
There are 1.2 million indicated ounces that remain outside the reserve count. More drilling has strong potential to convert some of those ounces, as does the practical application of a higher reserve cut-off price than was used in the study, which was US$1680 per oz.
“We’ve built a realistic and achievable plan for this first mining opportunity at Madsen,” stated Williams. “We are confident we can deliver and that will justify returning the mine to production.”
The Madsen deposits presently host 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. [1.] [2.] [3.]
The technical information presented in this news release has been reviewed and approved by Will Robinson, P.Geo., Vice President of Exploration for West Red Lake Gold and the Qualified Person for exploration at the West Red Lake Project, as defined by NI 43-101 “Standards of Disclosure for Mineral Projects”.
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Disclaimer: West Red Lake Gold paid Global Stocks News (GSN) $1,750 for the research, writing and dissemination of this content.
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