January 08, 2025

West Red Lake Gold Mines – Diving Into The Details Of The Pre-Feasibility Study At The Madsen Mine

23 minutes

Shane Williams, President and CEO of West Red Lake Gold Mines (TSX.V:WRLG – OTCQB:WRLGF), joins me to dive under the hood at the key metrics and takeaways from Pre-Feasibility Study (PFS) announced to the market January 7th, working to support the restart of gold production by end of Q2 at the Madsen Mine, in the Red Lake district of Ontario, Canada.

We started off digging into the some of the specific numbers noting the very high Internal Rate of Return (IRR) and low capex as positives for the Project. Shane also put more color around why the All-In Sustaining Costs (AISC) had moved higher, due to all the ongoing development work underground; but also highlighted ongoing initiatives that could bring that number down over time. Another key point we kept coming back to was that the PFS was simply a snapshot in time to show that the project is quite economically viable, but that it isn’t factoring in 1.1 million ounces of gold in the indicated category or all the other resources still in the inferred categories; not to mention the ability to bring in known deposits at Fork, or Rowan, or the new Upper 8 area. There are a number of levers the company can and will pull over time to show the upside and to optimize bringing in more higher-grade ore earlier in the mine plan.

Madsen Mine PFS Highlights:

Post-tax net present value (“NPV”) (5%) of $315 million at a long-term gold price of US$2,200 per oz. IRR (post-tax) 255% with a Discounted Payback Period less than 1 year.

High Grade Mine: Diluted head grade averages 8.2 g/t gold

Average Annual Production: 67,600 oz. gold per year over 6 years of full production, within a 7.2-year mine life

Strong Free Cash Flows: $69.5 million average annual free cash flow from an operation with average total operating cost of US$919 per oz. and average all-in sustaining cost (“AISC”) of US$1681 per oz.

These metrics and strong value reinforces the rationale to restart the Madsen Mine imminently based on this initial mine plan; with a production start date of Q2 2025. There is also potential for Madsen to grow beyond this initial plan with further definition and exploration drilling strengthens the rationale

Construction and Capital Investment to Mine Startup Substantially Complete.

Bulk sample currently being mined; mill startup to process bulk sample planned in March; 21 km of modern underground development (since 2019) provides good mining access and represents significant time and cost savings

Actual Costs: The Company has been operating underground for 16 months and the mill operated in 2022, which enabled a PFS based on realized costs for most operating metrics.

Wrapping up we also touched upon the strong endorsement and key milestone announced on January 2nd, that the Company has entered into a completed credit agreement with Nebari Natural Resources Credit Fund II LP pursuant to which the Company will borrow up to a maximum principal amount of US$35 million to be issued in three tranches of : (i) US$15 million (“Tranche 1”), (ii) US $15 million (“Tranche 2”), and (iii) US$5 million (“Tranche 3”). Tranche 1 was drawn down on December 31, 2024. Shane shared the level of due diligence that Nebari had conducted and how this was simply another layer of professional vetting that the Madsen Mine restart plan has checked off successfully.

If you have any follow up questions for the team over at West Red Lake Gold please email me at [email protected].

In full disclosure, Shad is shareholder of West Red Lake Gold Mines at the time of this recording.

Click here to visit the West Red Lake Gold website and read over the recent news we discussed.

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