West Red Lake Gold Mines Ltd.'s (WRLG:TSX.V; WRLGF:OTCQB; FRA:UJO) board greenlighted restarting the Madsen underground gold mine in northwestern Ontario's Red Lake District, and the decision came earlier than the mid-2025 target, reported Cantor Fitzgerald Analyst Matthew O'Keefe in a May 22 research note.
"We expect the mine to deliver over 30,000 (30 Koz) of gold in 2025 and 60 Koz of gold in 2026," O'Keefe wrote.
182% Potential Uplift
At the time of O'Keefe's report, the Canadian mining company was trading at about CA$0.78 per share, at 0.3x net asset value assigned by Cantor, a significant discount to gold producer peers at 0.8x, noted the analyst.
"With production now underway, we expect West Red Lake Gold's multiple to expand towards the peer average and our target price of CA$2.20 per share over the next couple of quarters as it proves its operating ability," the analyst wrote.
Cantor's target implies a 182% return for investors. West Red Lake Gold remains a Buy.
Ramp-up Slated for H2/25
O'Keefe pointed out that the decision to restart Madsen comes after two years of derisking work. After acquiring the asset in June 2023, West Red Lake Gold improved the existing infrastructure, further developed the mine and refined the mine plan. Most recently, it conducted bulk sampling testing that validated modeled grades and tons as well as mining methods.
The company will transition Madsen to a steady-state operation at about 500 tons per day (500 tpd) then ramp it up to 800 tpd in H2/25.
"This is in line with our estimates," wrote O'Keefe.
Stock Data
O'Keefe reported that at the time of his report, West Red Lake Gold had 343.2 million (343.2M) basic shares outstanding and 517M fully diluted shares outstanding. It had a market cap of CA$267.7 million and a 52-week range of CA$0.52–0.88 per share.
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