West Red Lake Gold Mines Ltd.'s (WRLG:TSX.V; WRLGF:OTCQB; FRA:UJO) bulk sample program at its Madsen gold project in Ontario's Red Lake District yielded positive reconciliation results, reported Matthew O'Keefe, Cantor Fitzgerald analyst, in a May 7 research note.
"The positive test results derisk the project further and signal that West Red Lake Gold can move to start ramping up the mine with confidence, which the company has noted will happen in the coming months," O'Keefe wrote.
219% Return Potential
On the news, Cantor maintained its Buy rating and CA$2.20 per share target price on the Canadian explorer, noted the analyst.
"We remain confident that the restart of the Madsen mine will be successful and that the high-grade nature of the mine, with its significant upside potential, should ultimately drive a premium valuation," O'Keefe commented.
West Red Lake Gold's current share price is CA$0.69 per share. From this price, the return to target is 219%.
The company has 343.2 million (343.2M) basic shares outstanding and 517M fully diluted shares outstanding. Its market cap is CA$236.8 million. Its 52-week range is CA$0.52–0.88 per share.
About the Sample, Results
O'Keefe described the sample and the reconciliation results. The 14,490-ton bulk sample included material from three main resource zones at Madsen: Austin, South Austin and McVeigh. Material was extracted in accordance with the workflow and methodology to be used for day-to-day operations at Madsen.
The predicted and actual grades and tonnages were close. This speaks to how important definition drilling and tailed stope design are to accurate modeling of gold mineralization. West Red Lake Gold carried out 90,000 meters of definition drilling since October 2023.
The Madsen bulk sample produced 2,498 ounces of gold, during which the mill performed as expected, with gold recovery averaging 95%.
The average gold grade was shown to be 5.72 grams per ton (5.72 g/t), about 0.7% higher than the predicted average grade of 5.68 g/t for the target areas.
"Overall, these results are in line with expectations and, importantly, validate the company's geological and resource model, mining method and mill performance," O'Keefe wrote.
As for readiness to restart Madsen, the underground development continues, noted O'Keefe. The mill is staffed and ready.
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