Gold Developer Unlocks Major Funding for Historic Canadian Mine

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West Red Lake Gold Mines Inc. (WRLG:TSX.V; WRLGF:OTCQB) announced it has completed a US$35 million credit facility with Nebari Natural Resources Credit Fund II LP to be issued in three tranches.

The first, US$15 million, was drawn down on December 31, 2024. The following tranches will be for US$15 million and US$5 million, the company said.

"Closing this transaction with Nebari is a major de-risking step and gives West Red Lake access to up to US$35 million of non-dilutive capital at highly favorable repayment terms, which offers us solid operational flexibility going forward and allows the company to sustain the momentum as we push to restart the Madsen project," West Red Lake President and Chief Executive Officer Shane Williams said. "With this Credit Facility in place, West Red Lake Gold is well funded to restart the Madsen Mine in 2025."

The two companies entered into a non-binding term sheet in October 2024 and have since worked closely together "through a detailed due diligence process that investigated all aspects of West Red Lake Gold and the Madsen Mine project," West Red Lake said in a release.

The company said the proceeds will be used for completing the remaining capital costs to restart the Madsen Mine and other corporate, exploration, and working capital expenses.

"We have high confidence in the dedication and professionalism of the West Red Lake Gold team and look forward to the successful restart of commercial gold production at Madsen," Nebari Managing Director Richard Gaze said.

The Red Lake Camp is a cornerstone of Canada's role as the fifth-largest gold producer in the world. Gold was first discovered there in 1897, but it took 20 years for it to be explored fully because of the area's remoteness. Since large-scale mining began there in 1938, more than 26 million ounces (Moz) Au have been produced from underground mines there.

"The area is known for exceptionally high-grade Au, with one famous sample, the Campbell Mine Whopper, containing 431 ounces in a football-sized rock," Ian Burron wrote for Geology for Investors. Nearly a century later, "the last few years have seen the tide once again turn in Red Lake's favor."

Analyst Anticipates Mine Restart Will Be Successful

The maturity date of the credit facility will be 42 months following the closing of the first tranche, West Red Lake said. The company also has issued 5,867,376 bonus warrants to purchase common shares at CA$0.73 per share for the first tranche and will issue similar warrants for the later tranches.

West Red Lake Gold said the credit facility will enable it to continue its detailed mine ramp-up schedule, which in the coming months will include the test mining of bulk samples, continuing an increase in daily development meterage, starting up the mill in the first quarter and processing the bulk sample, and the ramping up of production mining in Q2.

Cantor Fitzgerald Analyst Matthew O'Keefe with Cantor Fitzgerald wrote in a December research note that the company's "strategy of near mine exploration is showing good potential for resource expansion from satellite deposits such as Fork, Upper 8 and Wedge and deeper areas like the 8-Zone and the down-plunge extension of Madsen proper."

"Additional drill results and updates from the ongoing test-mining program are expected through year-end," wrote the analyst, who maintained his Buy rating on the stock with a CA$1.40 per share price target. "The updated PFS (preliminary feasibility study) is expected in early 2025. Restart of the mine remains on-track for mid-2025."

"We anticipate the mine's redevelopment will be successful, and its high-grade nature will drive a premium valuation," O'Keefe continued.

Company Takes Second Look at Deposit

In December, West Red Lake announced it had "re-envisioned" its interpretation of the Fork Deposit. In a release, the company said it had "recognized a shallow, high-grade, low-plunging zone of gold mineralization that is located approximately 250 meters southwest from existing underground development at Madsen."

The new zone trends north-to-south and has been defined by previous drilling over an area of 400 meters by 250 meters, the company said. It shows potential for further expansion along strike to the south. The average thickness of the zone is conservatively estimated at approximately 2 meters based on existing core length intercepts.

O'Keefe called the development a "positive" for the company. "Fork has been re-envisioned as a high-grade near-mine resource expansion target that will be a top priority exploration target in 2025," he wrote. "The shallow nature of the target will allow further definition through surface drilling, and its proximity to existing underground development should allow its incorporation into the mine plan relatively quickly."

The Fork deposit currently contains an indicated mineral resource of 20,900 ounces grading 5.3 grams per tonne gold (g/t Au), with an additional inferred resource of 49,500 ounces grading 5.2 g/t Au, the company said.

The Catalyst: Will Gold's Rally Continue This Year?

Gold had quite a year in 2024, surging more than 27%, its strongest annual gain since 2010, Yahoo! Finance reported. Most experts believe it continues to be in a bull market as we enter the new year.

Kitco reported on Thursday that gold prices were higher in early U.S. trading.

"The precious metals markets are seeing buying support on this first trading day of 2025 amid a dip in U.S. Treasury yields and a rally in the crude oil market," Jim Wyckoff wrote for the site. "However, gains are being limited by a higher U.S. dollar index that hit a more-than-two-year high overnight. February gold was last up US$8.80 at US$2,649.80."

However, for the last four years, the first trading day of the new year has been a contrarian indicator, with the S&P 500 ending the year in the opposite direction it moved on the first trading day, according to Jim Reid, Deutsche Bank analyst, Wyckoff wrote.

The price of gold is set to rise further in 2025, say Wall Street analysts, although the pace of gains is likely to slow. Gold is expected to climb to about US$2,795 per troy ounce by the end of the year, according to the average forecast by banks and refiners surveyed by the Financial Times.

"That is about 7% above current levels," the Times' Leslie Hook wrote Thursday. "The yellow metal is expected to continue to benefit from buying by global central banks, which have been diversifying away from the dollar since the U.S. imposed sanctions on Russia following its 2022 full-scale invasion of Ukraine."

Ownership and Share Structure

Advisor Frank Giustra owns 9.4% of West Red Lake as a strategic investor and insider, according to the company's investor presentation. Sprott Resource Lending Corp. holds 18.6%, VanEck Gold Fund holds 4.1%, and Evolution Mining Ltd. holds 1.6%. Institutional ownership totals approximately 31%, with the remaining shares held by retail investors.

The company's market cap is CA$191.68 million. The 52-week range for the stock is CA$0.52 to CA$1.04.