Gold Junior Confirms High-Grade Gold in Its Canadian Mines

Junior gold exploration company West Red Lake Gold Mines Inc. (WRLG:TSXV;WRLGF:OTCQB) has announced that it intersected 10.34 grams per tonne (g/t) gold over 8 meters (m), 68.46 g/t Au over 1.1m, and 13.21 g/t Au over 5.5m within its Rowan Property — a showing of high-grade gold resource in the area.

These assay test results are from 10 drilled holes of the 16 holes completed so far — 14 of which total 2,314m at the Rowan mine, while two holes over 780m are in the Red Summit mine. These two mines, together with the Mount Jaime mine, comprise the 3,100-hectare (ha) Rowan Property.

The company said the rest of the six holes are still pending assays and quality checks from the Rowan mine area.

West Red Lake said that 90% of the holes have so far shown high intervals grading of not less than 5 g/t Au. The company mentioned earlier that 50% of the intersected and completed drill holes have visible gold in them.

These "high-grade mineralized vein zones" at the Rowan Mine are in-line with the company's expectations on gold grade, confirm the geologic model, and help to bolster the existing high-grade (9.2 g/t Au) 827,462 ounce Inferred Mineral Resource at the Rowan Mine.

For its part, the National Inflation Association is bullish that gold prices will continue to be on track to finish 2023 at US$2,670 per oz, further saying that gold can hit new all-time highs on June 16.

"This impressive first round of assays from the Phase 1 drilling program at the Rowan Property confirmed (our) expectations based on the numerous accounts of mineralization observed in the drill core by our geologic team.

The high-grade nature of gold mineralization at the Rowan Mine continues to impress and will undoubtedly make for an exciting drilling program as we continue to advance this high-priority asset in 2023," West Red Lake CEO Tom Meredith said.

All 16 holes are included in the Phase 1 exploration program of its 100% owned Rowan Property. An additional 4,000m of diamond drilling under Phase 1 is currently ongoing and expected to be completed by the end of June.

The 3,100-ha Rowan property is located 15 kilometers (km) west of the gold-rich Red Lake Gold District in Northwestern Ontario, Canada. The district has produced 30 million ounces of gold from high-grade zones and is home to some of the world's richest gold deposits.

The Catalyst: Phase 2 of Rowan Property, New Opportunities from Acquisition of Madsen Mine

While being concentrated on the Rowan mine, Meredith said the company is also looking to further explore target areas in the Red Summit mine as it presents a lot of potential.

"We look forward to continuing our efforts at Rowan while delivering a steady stream of high-grade drill results to the market for months to come. While Rowan is going to remain the focus of near-term drilling, our team is seeing a lot of potential at the mostly untested Red Summit target area, and we look forward to returning to this area for additional drilling later in the season," he said.

Upon the completion of the Phase 1 drilling by end-June, the Phase 2 exploration will start shortly. It will cover 10,000m of drilling, as well as the testing of newly developed targets over the remaining area of the 3,100 ha Rowan Property.

Technical analyst Clive Maund said, "RLG is regarded as a worthy addition to a portfolio of junior mining stocks."

The company said it has also finalized its definitive share purchase agreement with Pure Gold Mining Inc. to acquire the 80-square km Madsen Gold Mine, which will lead to more production in the future, and added exploration targets this year.

The acquisition included the underground mine, an 800-tonnes-per-day new gold mill, which was commissioned in 2020, a tailings facility, and a water treatment plant. The Madsen property is situated on the southeast side of the Rowan project.

The new mine sits well with the company's plan to explore new near-mine and high-grade gold resources and expansion opportunities and to de-risk future mining. It targets 8 to 10 g/t Au mineralization in the initial years of potential mine life in Madsen.

West Red Lake sees Madsen Mine as a "flagship asset (that) commanded over CA$1 billion in peak market capitalization."

This year, its focus on the mine is to conduct drilling exploration on previously identified targets, with the goal of defining a critical mass of high-grade gold resources.

Gold as Anti-Stagflation Hedge

Jared Woodard, Bank of America's investment and exchange-traded funds strategist said gold will shine as an ideal hedge for stubborn inflation, citing that gold is one of the few assets with no correlation to stocks and that it's also robust against inflation.

"That rare thing, an uncorrelated anti-stagflation hedge. Gold is worth owning for the times when financial assets offer negative real returns," Woodard said.

Gold futures rose by 8% this year, piercing the US$2,000 level as investors are seeking for safety haven amid a weakening global economy. Bank of America said gold has become appealing as the opportunity cost of financial assets dips.

"When corporate profits are falling, bonds are overpriced, cash lags inflation, and major currencies are leaking value, the anti-speculative intransigence of gold is a feature. When the opportunity cost of missing out on stocks and bonds is low, the gold price gets high," Woodard said.

For its part, the National Inflation Association is bullish that gold prices will continue to be on track to finish 2023 at US$2,670 per oz, further saying that gold can hit new all-time highs on June 16.

"[Gold stocks] will all become huge winners for NIA from their current share prices. NIA has researched almost every gold company, and these are the biggest opportunities in the market," the association said.

In mid-May, gold prices stayed well above the US$2,000 per ounce level and have recently been trading around US$1,900 per oz at the time of writing.

Why West Red Lake?

Technical analyst Clive Maund believed that West Red Lake, even as a junior gold company, will perform well and rated the stock an "immediate strong speculative Buy" last year.

"It is considered worth taking a larger position in this stock as the indications are so positive," Maund said.

Recently, Maund updated his opinion on the company in a May 26 release, saying, "West Red Lake is starting to look like a Buy here and will certainly be if it drops any further, and it is regarded as a worthy addition to a portfolio of junior mining stocks. What is thought likely to happen soon is that, perhaps after dropping a little more, it starts to move sideways to mark out an intermediate basing pattern in the coming weeks. So those interested should look to accumulate it on down days. The sector correction doesn't look like it has a lot further to run. The stock now trades in healthy volumes on the US OTC market, where the big upside volume since late March is viewed as very bullish."

The West Red Lake stock has been experiencing highs the past month after the news of the Madsen Mine acquisition was announced in April. Since then, the shares were traded in the CA$0.60 to CA$0.92 range, which is considerably higher than the CA$0.30 to CA$0.40 range in the first quarter of 2023.

Share and Ownership Structure

According to Reuters, 1.60% of West Red Lake's stock is held by management and insiders. Chairman and Interim CEO Tom Meredith has 0.47%, with 0.26 million. CFO Jasvir Kaloti has 0.11%, with 0.06 million. Director John Heslop has 0.09%, with 0.05 million. Director Susan Neale has 0.05%, with 0.03 million. 

17.27% is with strategic investors. 1291308 B.C. Ltd., owned by Frank Giustra has 13.50%, with 7.54 million shares. Frank Giustra himself has 0.83%, with 0.47 million. G Sestini & Co. Pension Trustees Ltd. has 2.59%, with 1.45 million, and Modern Farmer Media Inc. has 1.18%, with 0.66 million

14.16% is with institutional investor Accilent Capital Management Inc., with 7.91 million shares. 

The rest is in retail.*

According to MarketWatch, West Red Lake has a CA$32.65 million market capitalization, with 55.34 million shares outstanding and 44.73 million shares in the public float. It is trading at a 52-week day range of CA$0.58 to CA$0.61.

_{*These are percentages as of May 31, 2023, at 2:00 pm EST. Percentages and rates of ownership as subject to change, and the company does expect this change to be made upon the finalization of its transaction.} 

Important Disclosures:

1.  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.
2. Nika Cataldo wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
3. The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for 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. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

For additional disclosures, please click here.