Drill Results From Gold Asset Highlight Potential of Surface Zone
Research Report

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West Red Lake Gold Mines Inc.'s (WRLG:TSX.V; WRLGF:OTCQB) initial drill results from the Upper 8 target at its Madsen project showed the area to be "a shallower analog" of the deeper, high-grade 8 zone, a finding with positive implications, reported Taylor Combaluzier, Red Cloud Securities vice president and mining analyst, in an Oct. 3 research note.

"We believe continued exploration and optimization success at Madsen could unlock significant value and rerate the stock," Combaluzier wrote.

156% upside potential

The current share price of West Red Lake Gold Mines is about CA$0.78 per share, noted the analyst. With Red Cloud's target price on the British Columbia-based explorer at CA$2 per share, the implied return is 156%.

Combaluzier reiterated that West Red Lake remains a Buy.

Reason for drilling

The newly announced drill results are for the three initial holes drilled in the Upper 8 target at the company's flagship Madsen gold project in Ontario's Red Lake District, reported Combaluzier. He explained that the Upper 8 is the "projected, near-surface extension of the mineralized shear corridor that hosts the 8 zone."

West Red Lake drill tested the Upper 8 because historical data suggested it was geologically similar to the 8 zone.

Explanation of results

Combaluzier reported and discussed the new drill results. They revealed that the Upper 8 shares two significant characteristics with the deeper 8 zone: high gold grades and the same geology.

"This success shows that the broader project area remains prospective for new, high-grade deposits, like the 8 zone," the analyst wrote.

The grades of the gold (Au) mineralization encountered in the Upper 8 were as high as 44 grams per ton (44 g/t), with the highlight intercepts being:

• 14.2 g/t Au over 4.1 meters (4.1m) starting 354.8m downhole, including 44.17 g/t Au over 1.3m, from hole WRL24-002
• 6.33 g/t Au over 1.85m starting 332.5m downhole, including 20.63 g/t Au over 0.5m, from hole WRL24-003

Along with high grades, the style of mineralization at the Upper 8 was demonstrated to be the same as in the 8 (but different from that of the main Madsen deposit). In fact, drill results revealed both the Upper 8 and the 8 to be hosted in the same lithologic unit, with the Upper 8 located about 750m uplunge of the 8. Further, the orientation of the two zones suggests there could be subparallel structures between them.

"This success shows that the broader project area remains prospective for new, high-grade deposits, like the 8 zone," added Combaluzier.

More drilling planned 

West Red Lake's focus now will be on the Upper 8, the analyst wrote. While the deeper 8 zone has been attractive for mining, it has not been economically viable to do so from the existing underground infrastructure. The company will keep drilling the Upper 8, adding a second drill in the coming weeks. The analyst noted that the all-in cost to drill the Upper 8 is about CA$200 per meter.

"With the opportunity to delineate a shallower version of the 8 zone, we believe West Red Lake could potentially be on course to deliver some sizzle for investors should drilling continue to yield positive results," Combaluzier wrote.

Near-term catalysts

In his report, Combaluzier noted that in the near term, investors can expect additional Upper 8 drill results, infill and regional, on an ongoing basis, as well as a new prefeasibility study of Madsen in Q4/24.

Results of test mining and bulk sampling should follow, potentially in H1/25, and West Red Lake could restart the mine in Q4/25.