West Red Lake Gold Mines – The Strategy Behind The Recent Financing, And A Comprehensive Development and Exploration Update Building Towards The Madsen Mine Restart In Q2
Gwen Preston, VP of Communication at West Red Lake Gold Mines (TSX.V:WRLG – OTCQB:WRLGF), joins us to review the rationale behind the recent capital raise in tandem with all the development and exploration initiatives on the ground and underground, to support the restart of gold production towards the end of Q2 at the Madsen Mine, in the Red Lake district of Ontario, Canada.
We start off reviewing the corporate strategy behind the recent financing announced February 18th on the bought deal public offering, that was then upsized and closed on February 25th with 23,628,000 charity flow-through units of the Company at a price of C$0.8487 per Charity Flow-Through Unit for aggregate gross proceeds to the Company of $20,053,083.60. Gwen reiterated that this was definitely not because the mine restart is running into any challenges or cost overruns; but rather to provide optionality in a number of different ways to protect the company from predatory bids, fuel further development initiatives, and allow the company to be able to pounce on opportunities that may present themselves.
Next we got into all the all the mine restart activities well underway with the 185 employees and over 50 contractors busy with so many different initiatives from underground drilling, working on completing the connection drift, and working on producing the bulk sample and test mining stockpiles to run through the mill as an initial first step in the process of restarting the Madsen mine and mill. After the bulk sample is completed, then the operations team is still on track to begin commissioning the mill and starting put more through it over Q2 as things begin to ramp up to nameplate production in the second half of this year.
Wrapping up, we also focused on the overall exploration strategy for the company. We reviewed the successful infill and definition drilling at the South Austin Zone, with results released on February 26th, returning 114.26 g/t Au over 10.6 meters, 77.90 g/t Au over 3 meters and 24.48 g/t Au over 8.5 meters. In addition to all the definition drilling for the near-term mine planning, there is also still all the blue-sky exploration upside potential from multiple attractive targets that have shown potential. Gwen reviews key targets like Upper 8, North Shore, North Venue, the Fork deposit, targets in the confederation package of rocks, and the satellite Rowan Project. These areas will begin to get more drilling in the second half of this year, once the mine is back in operation and the revenues start coming in from gold production. There will be a lot of newsflow on tap in the weeks and months to come, as this is a very active time for the company and team at the Madsen Project.
If you have any follow up questions for the team over at West Red Lake Gold please email us at Fleck@kereport.com or Shad@kereport.com.
- In full disclosure, Shad is shareholder of West Red Lake Gold Mines at the time of this recording.
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Click here to visit the West Red Lake Gold website and read over the recent news we discussed.
I have not bought this yet. Is the stock issued free trading in 3 months? The warrant is certainly generous. Is the stock price sentiment a result of the placement or is there some doubt about on-time on budget profitable production?
As Gwen highlighted, the mine restart activities are on-time and budget, but there was a noticeable market reaction after the most recent capital raise. That is why we started off the discussion getting her to break down the company strategy and why they felt the need to do another raise.
Some investors jumped to the erroneous conclusion that this was because there were complications behind the scenes with the mine and mill restart. However, Gwen clarified several times that it was not because of concerns about the mine, but more the flexibility to move on development activities quickly if needed, to block predatory acquisitions if they were perceived to be in a position of financial weakness, and even to consider their own acquisitions if the opportunity presented itself.
WRLG is now a “show me” story at this point, where much of the market is waiting to see how the bulk sample goes, but more importantly, how the ramp up into commercial production, over the balance of the year goes.
Those warrants will create a pricing overhang, but if the company does execute on their plan, and starts producing gold at fat margins and generating good revenues in this higher-priced gold environment, then the proof will be in the pudding. It is likely they’ll get the overdue rerating post production, that most developers get in the “pre-production sweet spot” as Lobo Tigre has researched and shown at least a doubling (and sometimes a tripling) is typically the case. We’ll see how it goes, but for now they need to really execute on the mine ramp up over the next 9 months.
Given Gwen said there are no issues with development, does anyone believe they raised the cash to do an acquisition or ward off a take-over bid? The equity raise is more likely one last giveaway to their buddies with that 36 month warrant at a strike price that was reached in April 2024.
West Red Lake Gold Mines (WRLG) had the 3rd best drill intercept from last week.
Check out this table of the best drill hits released on Feb 28th:
https://www.linkedin.com/posts/minerdeck_weekly-gold-drilling-highlights-activity-7301226503445381120-xnFS/