Madsen Mill Restart Moves Ahead as Underground Development Gains Momentum

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West Red Lake Gold Mines Ltd. (WRLG:TSX.V; WRLGF:OTCQB; FRA:UJO) has achieved key milestones in restarting the Madsen Mine in Ontario, including the successful reactivation of its mill and continued underground development. The company reported that the mill, which had been in a dry shutdown for 28 months, resumed operations on March 10, 2025, processing low-grade material ahead of introducing bulk sample feed from Stope 1.

West Red Lake Gold President and CEO Shane Williams highlighted the significance of the restart, stating, "Turning on the Madsen Mill to process the bulk sample was a very exciting moment for the entire West Red Lake Gold team, who have been working tirelessly in recent months as we push towards production." The company noted that the restart process has proceeded without operational issues.

In addition to the mill restart, underground development at Madsen has accelerated, with the pace increasing from an average of 20 meters per day in January to 23.8 meters per day in February. The Connection Drift, a key piece of infrastructure linking different areas of the mine, is now 94% complete, with just 84 meters remaining. According to Vice President of Operations Hayley Halsall-Whitney, the increase in development efficiency is essential in preparing the mine for operations and setting up operational flexibility.

The company also announced that it has drawn US$7.5 million from the second tranche of its US$35 million credit facility with Nebari Natural Resources Credit Fund II LP. This funding will support the remaining capital costs associated with restarting the Madsen Mine, as well as exploration and general working capital needs. West Red Lake Gold retains the option to draw an additional US$7.5 million from Tranche 2 and a further US$5 million in Tranche 3, subject to certain conditions.

The credit facility carries an interest rate based on a floating rate equal to the three-month SOFR reference rate plus 8.0% per annum, with a minimum floor rate of 4.0%. Principal repayment of 50% of the outstanding loan will begin 15 months after the first tranche drawdown, while the remaining 50% will be due at maturity in June 2028.

Gold Prices Hold Near Record Highs Amid Trade Tensions and Investor Demand

Gold prices have remained strong as global trade tensions and investor demand for safe-haven assets continue to drive the market. On February 24, US Global Investors reported that gold reached an all-time high of US$2,940 per ounce, pushing its market capitalization above US$20 trillion. The firm attributed this surge to escalating trade disputes between the U.S. and Europe, along with speculation over a possible revaluation of U.S. gold reserves. Frank Holmes, the report's author, stated, "If the audit confirms the reserves — which I believe it will — it could boost confidence in the U.S. government's finances. Conversely, if discrepancies are found, it could send shockwaves through global markets, adding further momentum to gold prices."

Chen Lin of What Is Chen Buying? What Is Chen Selling? expressed confidence in the company's financial position, stating that the latest financing round could be the "last financing" before achieving positive cash flow.

Following this peak, gold futures experienced a slight pullback. On February 26, Kitco reported that prices had stabilized after a US$40 decline, with the April contract trading at US$2,933.80 per ounce.

The report pointed to President Trump's trade policies as a key factor in the rally, stating that "expectations that Trump will proceed with his plan to impose import tariffs on goods from Canada and Mexico beginning March 4 continue to bolster gold prices." The publication also noted concerns that these tariffs could lead to higher consumer prices and inflation, further reinforcing gold's appeal as a hedge.

Despite some fluctuations, gold prices remained above US$2,900 per ounce in early March. On March 5, Reuters reported that gold was trading at US$2,913.99, down slightly by 0.1%. The report linked gold's resilience to investor caution ahead of the release of U.S. payroll data and ongoing trade tensions. Peter Grant, vice president and senior metals strategist at Zaner Metals, commented, "There's still buying interest out there now . . .  there's going to be some measure of caution ahead of [that past] Friday's (payrolls data), but the underlying trend remains favorable." The publication also noted that gold had reached 11 record highs since the start of the year, with trade war uncertainties playing a significant role in its sustained strength.

On March 11, Kitco reported that gold surged as investors sought safe-haven assets amid further trade tensions. Gold futures climbed US$23.60 (0.81%) to US$2,923.10 per ounce for the April contract as of 3:55 pm EST. The increase followed the U.S. administration's announcement to double tariffs on Canadian metals to 50%, set to take effect the next day. Analysts noted that these heightened measures had "strengthened genuine concerns about a potential U.S. economic contraction." A weaker dollar further supported gold's gains, with the dollar index dropping 0.52% to 103.355, its lowest level since November 2024. Despite a slight rebound in U.S. equities, with the Dow Jones Industrial Average falling 1.1% to 41,433.48, gold continued to attract investors seeking stability. While still below its record close of US$2,963.20 on February 24, gold's upward momentum suggests continued strong demand amid ongoing global uncertainties.

 Financial Strength and Near-Term Production Potential

West Red Lake Gold has attracted positive attention from industry experts as it advances its Madsen Gold Mine toward production. In a March 10 report, Chen Lin of What Is Chen Buying? What Is Chen Selling? expressed confidence in the company's financial position, stating that the latest financing round could be the "last financing" before achieving positive cash flow. Lin indicated that he was personally acquiring shares from the open market at around CA$0.60, reinforcing his belief in the company's near-term transition to a cash-generating operation.

On March 5, Robert Sinn of Goldfinger Capital highlighted West Red Lake Gold's progress in ramping up operations at Madsen. He noted the company's financial strength, emphasizing that it had secured CA$31 million in cash and retained access to an additional US$20 million in debt financing. Sinn pointed to the company's ability to sustain operations through the production ramp-up phase, referencing the pre-feasibility study, which projects that once the mine processes 400 tonnes per day, the operation will be self-sustaining. He also underscored strong investor interest in West Red Lake's CA$20 million financing, which was significantly oversubscribed.

Gwen Preston, West Red Lake Gold's Vice President of Communications, further reinforced confidence in the company's strategy in an interview with Goldfinger Capital. She emphasized that the bulk sampling program is expected to provide a critical demonstration of the mine's ability to deliver expected grades and tonnage, a key factor in de-risking the project. She described the upcoming results as "the most important piece of news to come out of West Red Lake for a very long time," underscoring the significance of proving the company's ability to meet production targets.

Advancing Toward Production

West Red Lake Gold's near-term objectives focus on advancing production readiness at Madsen, as outlined in the company investor presentation. The bulk sampling program is expected to provide critical reconciliation data between projected and actual gold grades, informing the company's future mining approach. The processing of Stope 1 material is scheduled to begin next week, with results anticipated to further validate the restart plan.

Operational improvements are also progressing, including the commissioning of a new workforce accommodations facility with 114 rooms. With 60% of the mine's workforce hired locally, the camp is designed to enhance recruitment efforts while easing pressure on housing in the Red Lake community.

The company's mine plan is structured around an 800-tonne-per-day operation with an estimated gold recovery rate of 95.7%. The pre-feasibility study outlines an average annual gold output of 67,600 ounces over a six-year production period, with an all-in-sustaining cost (AISC) of approximately US$1,681 per ounce.

Beyond the initial reserve, West Red Lake Gold is actively evaluating additional resources at Madsen. The mine's indicated resource includes 1.1 million ounces of gold not yet incorporated into the current plan. The company is also conducting exploration drilling at high-grade zones such as Rowan, Fork, and the newly identified Upper 8 deposit. A preliminary economic assessment (PEA) in 2025 is expected to evaluate potential mine life extensions and increased throughput scenarios.

With gold prices near record highs, West Red Lake Gold is positioning itself for a smooth transition from mine development to full production. The completion of the Connection Drift, ongoing test mining, and continued resource expansion efforts remain key drivers in the company's strategy.

Ownership and Share Structure

Strategic investor Sprott Resource Lending Corp. holds about 16%. institutions hold about 30%, management, insiders, and advisors hold about 10%, and the remaining shares are held by retail investors.

The company's market cap is CA$200.28 million. The 52-week range for the stock is CA$0.52 to CA$1.04.