West Red Lake Gold Mines Ltd.'s (WRLG:TSX.V; WRLGF:OTCQB; FRA:UJO) bulk sampling program at its Madsen project in Ontario, Canada's Red Lake District reconciled with projections to a high degree, reported Taylor Combaluzier, Red Cloud Securities vice president and mining analyst, in a May 8 research note.
"This gives us confidence that the company is poised for success as it ramps up the mine in H2/25 and could potentially deliver better economics than outlined in the preliminary feasibility study (PFS)," Combaluzier wrote.
Implied Return is 268%
On the news, Red Cloud maintained its CA$2.50 per share target price on the gold explorer, trading now at about CA$0.68 per share. From here, the return to target is 268%.
West Red Lake Gold remains a Buy.
The company has 343.2 million (343.2M) basic shares outstanding and 540.6M diluted shares outstanding. Its market cap is CA$233.4 million (CA$233.4M). Its 52-week range is CA$0.52–0.87 per share.
Totals Exceed 95%
West Red Lake Gold completed a bulk sample for six stopes from three key resource zones, Austin, South Austin and McVeigh, and from it, produced 2,498 ounces of gold.
"We view the bulk sample results favorably given the actual tonnage, grade and contained gold came close to the predicted values," Combaluzier wrote.
As for total tonnage, it was predicted to be 15,170 tons, and in actuality was 14,190 tons, reflecting a 95.5% reconciliation.
Regarding grade over the three zones, the predicted average gold grade was 5.68 grams per ton (5.8 g/t). In reality, it was 0.7% higher at 5.72 g/t, indicating a 100.7% reconciliation.
With respect to total gold in the feed to the plant, the quantity was predicted to be 2,771 ounces. In actuality it was 2,664 ounces before accounting for losses to tailings, an amount locked up in the mill circuit and mill recoveries. Thus, this reconciliation was 96.1%.
Gold recovery from the bulk sample at the Madsen mill averaged 95%, consistent with the average gold recovery of 95.7% noted in the PFS.
What They Mean
These positive bulk sample results indicate that West Red Lake Gold developed a robust geological model of Madsen that accurately depicts its mineralization, wrote Combaluzier. This model "should be reliable and supportive of an underground mining operation" there.
The analyst pointed out that the model was guided by extensive definition drilling (90,000 meters since October 2023) and detailed stope design. Further, this drilling delineated high-confidence tons comprising about 90% of the 18-month mine plan.
The bulk sample reconciliation results also mean long-hole stoping may be used at Madsen instead of mechanized cut-and-fill methods, thereby lowering mining costs, noted Combaluzier. Respective costs in the PFS were CA$57.68 and CA$136.49 per ton, and this translates to a 58% cost savings with the long-hole stoping approach.
Also, the analyst reported, it could be profitable to include some lower-grade mineralization in the stope design, given high gold prices currently.
The PFS outlines mill throughput of 800 tons per day with an average life-of-mine (LOM) head grade of 8.16 g/t gold for about 67,600 ounces per year, over a 7.25-year LOM. The average operating cost was estimated at US$919 per ounce (US$919/oz).
Using a US$2,317/oz gold price, Madsen's project economics in the PFS were an after-tax net present value discounted at 5% of CA$315M, an internal rate of return of 255% and a payback period of less than a year.
Next Steps
Catalysts that investors can expect this year include additional results of West Red Lake Gold's infill and regional drilling, on an ongoing basis, noted Combaluzier.
Also, in Q2/25, the company plans to restart Madsen and in Q4/25, achieve a commercial production rate.
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