West Red Lake Gold Mines Ltd. (WRLG:TSX.V; WRLGF:OTCQB; FRA:UJO) will continue to ramp up processing and production through H2/25 at its 100%-owned Madsen mine in Red Lake, Ontario, reported Taylor Combaluzier, vice president and mining analyst, Red Cloud Securities, in a June 26 research note.
"The company has rapidly worked to turn around the asset since acquiring it in 2023 and can now take advantage of the robust gold price environment," Combaluzier wrote.
Red Cloud maintained its CA$2.50 per share target price on the emerging gold producer, trading at the time of Combaluzier's report at CA$0.88 per share, the analyst noted. From that price, the return to target is 184%.
West Red Lake Gold remains a Buy.
Recap of Ramp-Up So Far
Combaluzier reported that the company started its ramp-up on May 11, initially feeding the mill sill material that had been stockpiled during the bulk sampling program. This material, of lower grade than stope material, was mined during level access development.
West Red Lake Gold began incorporating stope material in early June. As this higher-grade material has been used, the mill head grade has improved. The average gold grade increased to about 6.5 grams per ton (6.5 g/t) between June 12 and 15 from about 3 g/t between June 1 and 2. (The average life-of-mine head grade in the prefeasibility study [PFS] is 8.16 g/t gold, for about 67,600 ounces per year of gold production over 7.25 years.)
West Red Lake Gold primarily has been sourcing mined tons from South Austin and McVeigh and will continue to do so throughout the year. These two zones host about 25% and about 5% of Madsen's Indicated and Inferred contained metal. Mill throughput has averaged 650 tons per day (650 tpd), and gold recoveries have averaged about 95%. These figures compare to ones outlined in the PFS of 800 tpd and 95.7%.
Recently West Red Lake Gold shut down the mine for 40 hours and the mill for 52 because of a fatality but since has resumed operations.
Along with ramping up, the company has been drilling, too, aiming to expand and define high-grade lenses at South Austin. So far this year, it has completed 38,393 meters (38,393m) of definition drilling. Of this total, 19,904m were done in Q2/25.
Thoughts About Madsen
Combaluzier shared Red Cloud's expectations for Madsen in the future. One is that throughput and recoveries should increase as mining ramps up.
With a favorable gold market, West Red Lake Gold should be able to develop larger stopes and use lower-cost mining methods, specifically cheaper longhole stoping versus more expensive mechanized cut and fill. This way, the company could mine more of the resource and need less access development per ounce, thereby resulting in more efficient mining and reduced costs.
Longer term, West Red Lake possibly could incorporate the Fork and Rowan deposits into the mine plan. Rowan may be one of the first deposits to act as a spoke to the Madsen hub in a potential hub and spoke model. Like Rowan, Fork hosts potentially mineable high-grade tons near workings and near surface as well.
As far as economics of Madsen, according to the PFS, at a US$2,200 per ounce gold price, the project should generate an after-tax net present value discounted at 5% of CA$315 million (CA$315M), an internal rate of return of 255% and a less than one-year payback.
What to Watch For
Combaluzier noted three key catalysts for West Red Lake Gold. More results of infill and regional drilling are to come and will be reported on an ongoing basis. Progress with the Madsen mine ramp-up is to continue. Commercial production is slated for Q4/25.
Stock Specifics
Combaluzier reported that West Red Lake Gold has 343.5 million (343.5M) basic shares outstanding and 533.20M diluted shares outstanding. Its market cap is CA$302.3M. Its 52-week range is CA$0.52–0.98 per share.
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