West Red Lake Gold’s South Austin strike extends Madsen gold zone

West Red Lake Gold Mines’ (TSXV: WRLG) latest drill results confirm the Madsen mine’s South Austin zone remains among the hottest targets in northern Ontario’s Red Lake district. Shares rose.

Highlight hole MM25D-12-4669-024 cut 18.7 metres grading 48.97 grams gold per tonne from a depth of 5 metres, including 2 metres at 428.8 grams gold, the company reported Tuesday. The hole, part of a 50,000-metre underground drill program, extended high-grade mineralization roughly 40 metres down plunge of the bulk-sampled Stope 6 panel. Red Lake is located about 560 km northwest of Thunder Bay.

“We find the results positive as they continue to confirm WRLG’s resource model,” Raymond James analyst Craig Stanley wrote in a note to clients. This is notable in areas close to existing infrastructure that should benefit mining rates early in the mine life. The analyst expects the company’s shares to outperform with a $1.59 target price.

The Red Lake camp remains one of Canada’s highest-grade gold districts. Today, the camp’s core producers are Australia’s Evolution Mining (ASX: EVN), Kinross Gold (TSX: K; NYSE: KGC) at the Great Bear project and West Red Lake looking to start mining at Madsen later this year. Juniors such as Renegade Gold (TSXV: RAGE; US-OTC: TGLDF) are expanding the district’s footprint in search of discoveries.

With permitting complete and a crusher online, the mill restarted on March 10.  And with a new drift feeding directly to the plant, West Red Lake says it’s on track to resume commercial production before year-end.

Frank Giustra-backed West Red Lake raised $30 million in equity late last year to fund tunnel drives and mill commissioning. At this year’s annual general meeting, management reaffirmed guidance for 40,000 – 50,000 oz. next year and pledged to deliver a full feasibility study by mid-2026.

Company shares gained as much as 11¢ or 14.7% to an intra-day high of 86¢ on Tuesday – a penny shy of the 12-month high. It has a market capitalization of $293 million.

A map showing West Red Lake Gold’s assets in the mining camp. Credit: West Red Lake Gold

Bulk sample

The underground drilling was unlocking significant value within the orebody, WRLG CEO Shane Williams said in a release on Tuesday.

“Tight-spaced drilling provides the resolution needed to properly quantify and realize further upside potential from the very high-grade pockets of gold mineralization ahead of stope design,” he said.

Earlier this month, West Red Lake shared results from its Madsen bulk sample. The almost-15,000-tonne sample averaged 5.7 grams gold, 0.7% higher than the 5.7 grams forecast. It produced 2,498 oz. at a 95% recovery rate that confirms the proposed mine plan can consistently surface target ore grades, Williams said.

After reporting “excellent” results from a bulk sampling campaign, Williams highlighted strong support from a rising gold market. He said the team feels high confidence as they prepare to boost production at Madsen in this year’s second half.

Rich mineralization

The South Austin deposit already hosts 1.81 million indicated tonnes at 8.7 grams gold for 506,000 contained oz. and 227,000 oz. of  a probable reserve at 8.2 grams gold, making it the district’s second-largest zone by contained ounces.

West Red Lake bought the Madsen mine in 2021. They quickly moved forward with bulk sampling and underground work. A pre-feasibility study outlined a $315 million after-tax net present value at US$1,700 per oz. gold.

Gold rose above US$3,250 per oz on Tuesday as investors bought bullion following a sharp decline in the previous session following a de-escalation in the U.S.-China trade war. It underlines the project’s leverage to rising metal prices.