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 at the time of the report 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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Important Disclosures:
- West Red Lake Gold Mines Ltd. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
- 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 Ltd.
- Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
- 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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Disclosures for Red Cloud Securities, West Red Lake Gold Mines Ltd., May 8, 2025
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Company Specific Disclosure Details Company Name Ticker Symbol Disclosures West Red Lake Gold Mines Ltd. TSXV:WRLG 1,2,3 1. The analyst has visited the head/principal office of the issuer or has viewed its material operations. 2. The issuer paid for or reimbursed the analyst for a portion, or all of the travel expense associated with a visit. 3. In the last 12 months preceding the date of issuance of the research report or recommendation, Red Cloud Securities Inc. has performed investment banking services for the issuer. 4. In the last 12 months, a partner, director or officer of Red Cloud Securities Inc., or an analyst involved in the preparation of the research report has provided services other than in the normal course investment advisory or trade execution services to the issuer for remuneration. 5. An analyst who prepared or participated in the preparation of this research report has an ownership position (long or short) in, or discretion or control over an account holding, the issuer’s securities, directly or indirectly. 6. Red Cloud Securities Inc. and its affiliates collectively beneficially own 1% or more of a class of the issuer’s equity securities. 7. A partner, director, officer, employee or agent of Red Cloud Securities Inc., serves as a partner, director, officer or employee of (or in an equivalent advisory capacity to) the issuer. 8. Red Cloud Securities Inc. is a market maker in the equity of the issuer. 9. There are material conflicts of interest with Red Cloud Securities Inc. or the analyst who prepared or participated in the preparation of the research report, and the issuer. Analysts are compensated through a combined base salary and bonus payout system. The bonus payout is determined by revenues generated from various departments including Investment Banking, based on a system that includes the following criteria: reports generated, timeliness, performance of recommendations, knowledge of industry, quality of research and client feedback. Analysts are not directly compensated for specific Investment Banking transactions. Recommendation Terminology Red Cloud Securities Inc. recommendation terminology is as follows: • BUY – expected to outperform its peer group • HOLD – expected to perform with its peer group • SELL – expected to underperform its peer group • Tender – clients are advised to tender their shares to a takeover bid • Not Rated or NA – currently restricted from publishing, or we do not yet have a rating • Under Review – our rating and target are under review pending, prior estimates and rating should be disregarded. Companies with BUY, HOLD or SELL recommendations may not have target prices associated with a recommendation. Recommendations without a target price are more speculative in nature and may be followed by “(S)” or “(Speculative)” to reflect the higher degree of risk associated with the company. Additionally, our target prices are set based on a 12-month investment horizon. Dissemination Red Cloud Securities Inc. distributes its research products simultaneously, via email, to its authorized client base. All research is then available on www.redcloudsecurities.com via login and password. Analyst Certification Any Red Cloud Securities Inc. research analyst named on this report hereby certifies that the recommendations and/or opinions expressed herein accurately reflect such research analyst’s personal views about the companies and securities that are the subject of this report. In addition, no part of any research analyst’s compensation is, or will be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.
