West Red Lake Gold Mines Ltd. (WRLG:TSX.V; WRLGF:OTCQB; FRA:UJO) intends to achieve three months of consistent throughput and mill performance and finish the mine improvement projects underway at its Madsen project in Ontario's Red Lake Gold District before declaring commercial production there, reported Matthew O'Keefe, analyst at Cantor Fitzgerald, in a Sept. 4 research note.
"These items are expected to be completed in H2/25, putting West Red Lake Gold on track to declare commercial production by Q1/26," O'Keefe wrote.
124% Return Implied
Cantor reiterated its CA$2.20 per share target price on the gold explorer-developer whose share price at the time of O'Keefe's report was about CA$0.98, the analyst noted. From this price, the return to target is 124%.
"The stock continues to offer good value, trading at 0.4x net asset value (NAV) versus peers trading between 0.8x–1x," O'Keefe wrote. "We remain confident that as it successfully moves through the ramp-up phase, the high-grade nature of the mine with its significant upside potential should ultimately drive a premium valuation."
West Red Lake Gold remains a Buy.
It has 348 million shares outstanding and a CA$341.1 million (CA$341.1M) market cap.
Final Preparatory Work
O'Keefe reported the contents of the company's Sept. 3 webcast, including its planned path to commercialization, its ongoing mine development work and exploration drilling, and all that it has done at Madsen since acquiring the asset two years ago.
West Red Lake Gold has a trio of pre-commercialization capital improvement projects in progress that it expects to complete this fall. One is refurbishment of the shaft, for which a new rope and 5-ton skip are due to arrive this month. Once this is done done, the company will be able to skip 350 tons per day (350 tpd) from 11L. The second project is the cemented rock fill plant mobilized last month. Once this is ready, the company may use the many empty stopes as waste rock repositories, thereby reducing waste that must be brought to surface and improving mine costs and efficiency. Lastly, as far as procuring necessary equipment, some trucks and scoops have yet to be delivered to the site.
By doing these projects, West Red Lake Gold aims to ensure cost stability and solidify its near-term mine plan so it can provide 2026 guidance, wrote O'Keefe.
Emphasis on Drilling
The company completed definition drilling for the model for 2025 and is using the results to guide mine development. Now definition drilling is focused on 2026 and 2027 target areas.
Also, West Red Lake Gold is doing more exploration drilling, with the goal of extending and growing the Austin deposit to the east. Exploration potential includes the nearby Rowan deposit, too, of which a preliminary economic assessment (PEA) was done recently. It outlines an underground mine producing and delivering to Madsen about 35,200 ounces of 8.5 grams per ton (8.5 g/t) gold per year over a five-year life of mine. In Year 1, mining is to be frontloaded in a high-grade, near-surface zone averaging 10.4 g/t gold. Necessary development at Rowan includes 1.4 kilometers (1.4 km) of underground capital works to establish initial access.
According to the PEA, the project should yield a post-tax NPV5% of CA$239M and an internal rate of return of 82%, assuming a US$3,250 per ounce gold price.
West Red Lake Gold will continue drilling, evaluation and environmental and permitting work, next year in advance of a prefeasibility study, slated for completion by Q3/26. Rowan could be permitted for construction in 2027, and production could begin in 2029.
Now Cash Flow Positive
O'Keefe reviewed the highlights of West Red Lake Gold's Q2/25 financials. The company's gold sales generated CA$24.3M in revenue, resulting in CA$8.6M in gross profit. Net income was CA$3.5M. Operating cash flow was CA$5.9M.
At the end of Q2/25, the company was cash flow positive. Cash on hand was CA$23.7M, working capital was CA$1.7M. Cantor expects West Red Lake Gold to keep growing its working capital in the months ahead. Debt amounted to CA$80.9M.
Work Done Thus Far
West Red Lake Gold has made significant progress at Madsen, including a mine restart in May, O'Keefe reiterated. The company did 150 km of definition drilling, reinterpreted the resource model based on tightly spaced drilling and completed a prefeasibility study. It implemented a 4-meter tailings dam lift, built a 114-person camp, added a new primary crusher and obtained major pieces of underground equipment.
Mine development continues on schedule. So far, 4 km of new underground access were added and about 50 stopes were identified, mostly in McVeigh and the 960-970 zone. The bulk sampling program reconciled the resource and mining methods. For H2/25 the mine plan sees the bulk of ounces coming from the 1155 zone, the 960-970 zone and McVeigh.
The mill is performing well at its permitted throughput rate of 650 tpd. A few trials of running throughput to 800 tpd were successful. Between the mine restart in May and the end of June, Madsen produced 5,350 ounces of gold.
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