West Red Lake raises $73M for Madsen mine restart

West Red Lake Gold Mines (TSXV: WRLG) is set to raise about $73 million to help fund the proposed restart of its Madsen mine in Ontario, which it says remains on track for production in 2025.

The funding comprises a $48 million loan facility with Nebari Natural Resources Credit Fund II and a $20 million bought deal financing facilitated by Raymond James for the sale of over 36.2 million units priced at $0.69 each. The bought deal was originally set at $20 million but was increased to just over $25 million under the same terms on Friday, West Red Lake said in a release. 

West Red Lake shares had dropped 5.4% to 70¢ apiece by mid-day Friday, for a market capitalization of $188.9 million.

With this funding, along with existing cash on hand, West Red Lake said it is well positioned to complete its prefeasibility study for the Madsen mine, as well as other tests and capital programs underway at the site.

“This finance package provides the capital anticipated to restart the Madsen mine, according to our detailed internal mine plan,” CEO Shane Williams said in a release, adding that the company will work closely with its partners to develop a finance package that addresses the balance of the capital required for Madsen.

The Madsen mine was briefly restarted in 2021 by then owner Pure Gold, but was shut down a year later due to high costs and inconsistent production. Before that, the historic mine produced 2.5 million oz. of gold at an average grade of 9.7 grams per tonne between 1938 and 1999.

West Red Lake took over the project in June 2023 and has since completed 40,000 metres of definition drilling alongside significant mine engineering and multiple capital projects and studies to support a prefeasibility study, which is targeted for release within a month.

Following the study and closing of the financing package, the company intends to make a formal mine restart decision, followed by mill restart and commissioning. It recently began a test mining program that will run into the first quarter of next year, after which time the mine will transition to production mining.