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High-Grade Drill Results Announced from Northwestern Ontario Gold Project

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West Red Lake Gold Mines Inc. (WRLG:TSXV;WRLGF:OTCQB) has released promising drill results from its wholly owned Madsen Mine located in the Red Lake Gold District of Northwestern Ontario, Canada. Find out what these results say about Red Lake's future plans.

West Red Lake Gold Mines Inc. (WRLG:TSXV;WRLGF:OTCQB) has released promising drill results from its wholly-owned Madsen Mine located in the Red Lake Gold District of Northwestern Ontario, Canada. The focus of the drilling was the high-grade South Austin Zone, which has an Indicated mineral resource of 474,600 ounces grading 8.7 grams per tonne gold, with an additional Inferred resource of 31,800 ounces at the same grade.

The drill results showcase significant gold intercepts, with highlights including 8 meters at 16.69 grams per tonne gold from 73 to 81 meters, which includes 1 meter at 127.98 grams per tonne gold from 78 to 79 meters. Another notable result is 17.83 meters at 6.17 grams per tonne gold from 69.00 to 86.83 meters, with several high-grade sub-intervals. These results are indicative of the high-grade nature of the South Austin Zone and support the company's plans for the eventual restart of production at the Madsen Mine.

Shane Williams, President & CEO, stated in the company news release, "The exceptional drill results highlighted in this news release really demonstrate the quality of the South Austin zone. We are encouraged by the very broad intercepts of mineralization averaging above 6 grams per tonne gold, which are accentuated by a number of very high-grade intervals. These thicker portions of South Austin could be more amenable to higher tonnage mining methods which is expected to help reduce overall mining costs. Furthermore, the new mineralized lens the team is defining footwall to South Austin between the historic 7 and 9 Levels is quite exciting and demonstrates the discovery potential that still exists within and adjacent to the Madsen deposit."

Why Gold?

The gold market has demonstrated remarkable resilience and potential, even in the face of seemingly adverse conditions. As Technical Analyst Clive Maund wrote in a June 11 report, "We were wholly unfazed by gold's sharp drop last Friday, realizing that in the larger scheme of things, it was just a 'storm in a teacup.'" This sentiment reflects a broader understanding that, "We are sanguine in the face of such developments because we know that with the entire world becoming a banana republic, gold and silver are — and must be — the go-to assets."This underscores the fundamental strength of gold as a safe haven asset in times of economic uncertainty.

In an environment characterized by hyperinflation and currency devaluation, the intrinsic value of gold and silver remains unchallenged. "How, therefore, can the value of gold or silver, that are real money, drop in a hyperinflationary environment? The answer is that they can't, which means that if you want to preserve your capital, you have to own them," Maund postulated in his June 11 note. Adding, "Gold and silver are best because they are the most fungible, meaning they are easily exchanged or traded." 

Recent market trends also support the bullish outlook for gold. "The gold market continues to hover around US$2,350 an ounce but could see some bullish momentum as the U.S. labor market continues to cool," wrote Kitco on June 5. This cooling is reflected in the latest employment data, where "The labor market is solid, but we're monitoring notable pockets of weakness tied to both producers and consumers", as Nela Richardson, Chief Economist at ADP told Kitco. As a result, "The gold market is seeing solid gains in initial reaction to the latest employment data."

The broader economic environment further enhances gold's appeal. "Growing slack in the U.S. labor market continues to support growing market expectations that the Federal Reserve will loosen its monetary policy before the end of the year" (Kitco, June 5). This potential shift in monetary policy could drive new investment flows into gold, solidifying its role as a crucial asset in preserving wealth.

Gold's historical correlations have also been challenged recently. "Gold is supposed to have a few ironclad correlations — rules that it has followed almost without fail for decades. But none of those are safe any longer," wrote Katusa Research on June 4.  "Every golden rule has been broken. And investors who don’t understand why — or the new rules for gold — stand to miss out on a completely new, exploding market".

Company Catalysts

West Red Lake Gold Mines Ltd. is advancing its Madsen Mine with a strategic focus on high-grade gold zones, as evidenced by the latest drill results. The company's efforts to define and expand high-confidence ounces in the South Austin Zone are critical to its strategy of restarting production. The broad intercepts and high-grade intervals reported in the recent drill results are likely to enhance the economic viability of mining operations at Madsen, potentially lowering overall mining costs due to the feasibility of higher tonnage mining methods.

Additionally, the identification of a new mineralized footwall lens parallel to the South Austin Zone opens up further exploration and expansion opportunities. This discovery helps to underscore the untapped potential within and adjacent to the Madsen deposit. Drilling and exploration in this area to will continue to define the South Austin zone and this new lens. 

What Experts Are Saying

Red Cloud Securities echoed these hopes in their June report on the company.

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West Red Lake Gold Mines Inc. (WRLG:TSXV;WRLGF:OTCQB)

*Share Structure as of 6/14/2024

Analyst Taylor Combaluzier wrote, "We are encouraged to see the company extending mineralization at North Austin." He then added, "These results reinforce our belief that Madsen’s high-grade resource, along with the expansion potential of the deposit and mill, are key factors that could potentially lead to near-term cash flow for WRLG, as noted in our initiation report." Red Cloud has West Red Lake Gold listed as a Buy, with a target price at US$1.80 and an implied return of 161%. 

Ownership and Share Structure

According to Reuters, 2.30% of the company is held by management and insiders.

Advisor Frank Giustra owns 9% as a strategic investor and insider, and Sestini & Co. Pension Trustees Ltd. owns 1.58%, with 4.26 million.

26.06% is with institutions. Sprott Resource Lending Co. has 18.58%, with 50.03 million shares. Van Eck Associates Corp. has 4.46%, with 12 million shares, and Accilent Capital Management Inc. has 2.94%, with 7.91 million.

 The company's market cap is reflective of its ongoing drilling success and strategic expansion efforts. The 52-week range for the stock is US$0.3096 to US$0.75​.

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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.
  3.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 

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