Junior Gold Company Generates Major Ontario Windfall

Source: Streetwise Reports 05/12/2025

West Red Lake Gold Mines Ltd. (WRLG:TSX.V; WRLGF:OTCQB; FRA:UJO) sold 2,350 ounces from its Ontario bulk sample for US$7.7 million, validating mine restart plans. Read more to find out how this positions the company for stronger economics.

West Red Lake Gold Mines Ltd. (WRLG:TSX.V; WRLGF:OTCQB; FRA:UJO) has announced proceeds of US$7.7 million from the sale of gold produced during its bulk sample program at the Madsen Mine in Ontario. According to the May 8 news release, the company sold 2,350 ounces of gold — out of a total 2,498 ounces produced — at a weighted average price of US$3,293 per ounce between late March and early May 2025. The remaining ounces will be sold upon final settlement with the refiner.

The bulk sample initiative forms part of West Red Lake’s strategy to validate its pre-feasibility mine plan and confirm expected grade and tonnage ahead of a planned production restart in the second half of 2025. The company acquired the Madsen Mine in 2023 and has since advanced a restart plan focused on implementing a more rigorous drilling program to improve resource confidence, upgrading underground development, and enhancing surface infrastructure to support efficient mine operations.

According to the company’s May 2025 investor presentation, the Madsen project has a projected after-tax net present value (NPV) of US$496 million based on a gold price of US$2,640 per ounce and a discount rate of 5%. The plan outlines annual gold production of 67,600 ounces over six years, with average diluted head grades of 8.2 grams per tonne and an expected gold recovery rate of 95.7% through an 800-tonne-per-day mill. The project’s initial capital requirement was estimated at US$44 million on January 7th, and the all-in sustaining cost (AISC) is forecasted at US$1,681 per ounce.

The company stated that it had CA$31 million in cash on hand as of February 26, 2025, and access to an additional US$20 million via a debt facility, both of which support its mine restart strategy. The mine’s historical performance and updated technical work, including tighter drill spacing of approximately 7 meters and enhanced underground access via a newly completed connection drift, aim to mitigate continuity and operational risks. The company also reported that the Madsen mill, which resumed processing after a 28-month dry shutdown, restarted smoothly.

Surge in Gold Prices Renews Focus on Junior Developers

Recent commentary across the industry has pointed to a shifting landscape for gold, with several analysts highlighting favorable conditions for both bullion and junior mining equities. On May 4, Ahead of the Herd noted that stagflation fears and broader macroeconomic uncertainty were fueling demand for gold as a defensive asset. The publication stated that “gold does well in stagflationary periods and outperforms equities during recessions,” referencing data showing that during past stagflationary cycles, gold returned an average of 32.2% compared to negative returns for equities.

On May 7, O’Keefe reiterated his Buy rating and raised his target price to CA$2.20.

On May 7, Stockhead reported that a record gold price, at over US$3,200 per ounce, was playing a major role in bringing new gold developers to the forefront, especially in the Australian market. The article emphasized that “normalizing conditions, waning inflation and a record high gold price… mean gold developers are flourishing once again.” It also highlighted that easing post-pandemic constraints had reignited several stalled expansion projects, with developers now advancing more aggressively.

In a May 9 report, Morris Hubbartt of Super Gold Signals commented that the gold equity sector had entered what he described as a “blastoff zone,” particularly for junior miners. He pointed to increased interest from investors as a sign that sentiment was shifting in favor of early-stage developers.

The positive momentum was further underscored in a May 12 editorial from Junior Stocks, which cited Canadian mining executive Rob McEwen’s bullish stance on the sector. McEwen projected that gold equities were on the verge of a dramatic re-rating, driven by growing institutional interest and increased central bank buying. He argued that even marginal projects could become viable at current bullion prices, and added that “this isn’t just a bull market for the metal — it’s the opening act of a much bigger show for gold equities.”

Analysts Highlight Progress and Revaluation Potential at West Red Lake Gold

In a March 19 research note, Cantor Fitzgerald analyst Matthew O’Keefe continued coverage with a Buy rating and a one-year target price that implied a 114% return. He pointed to construction progress at the site, including the 94% completion of the 1.4-kilometer connection drift, a ramp-up in underground development, and operational readiness supported by the company’s newly built 114-person camp facility.

On April 3, Jeff Clark of The Gold Advisor reiterated a Strong Buy recommendation, describing West Red Lake Gold as being on the “preproduction golden runway.” He highlighted the potential for the stock to benefit from both the rising gold price environment and the company’s move toward production.

Reporting on April 14, Paul O’Brien of Velocity Trade Capital issued an Outperform rating with a target price of CA$1.25, reinforcing positive sentiment around the company’s near-term milestones and potential for revaluation.

On May 7, O’Keefe reiterated his Buy rating and raised his target price to CA$2.20, citing ongoing execution and increased visibility at Madsen. That same day, Chen Lin of What is Chen Buying? What is Chen Selling? reviewed West Red Lake’s recently completed bulk sample, stating, “Gold grades are pretty consistent, right on the prediction. This is similar to PVG bulk sampling if you remember, and should be very positive and give a boost to confidence when the mining starts in a month or so.”

In a research repot from May 8, Red Cloud Securities analyst Taylor Combaluzier maintained a Buy rating and CA$2.50 target price, representing a 268% return from the share price at the time of the report. Combaluzier emphasized that the bulk sample results “give us confidence that the company is poised for success as it ramps up the mine in H2/25 and could potentially deliver better economics than outlined in the preliminary feasibility study (PFS).”

He detailed reconciliation metrics from the bulk sample, noting that actual tonnage reached 14,190 tons compared to a predicted 15,170 tons, equating to a 95.5% reconciliation. The average gold grade came in at 5.72 grams per tonne (g/t), slightly above the predicted 5.68 g/t. Total gold in mill feed reconciled at 96.1%, while recovery averaged 95%, in line with PFS projections.

Combaluzier concluded that the data supported the strength of the geological model, underpinned by 90,000 meters of definition drilling since October 2023. He also noted that the potential switch to long-hole stoping from mechanized cut-and-fill could reduce mining costs by over 50%, based on PFS estimates of CA$57.68 per tonne versus CA$136.49 per tonne, respectively.

Momentum and Milestones: What to Watch in 2025

The company’s ongoing activities suggest several key developments for 2025. According to the investor materials, ramp-up of mining and processing at Madsen is expected to gradually increase toward the nameplate rate of 800 tonnes per day in the second half of the year. With no principal debt repayments due until 2026, the near-term focus remains on scaling operations efficiently.

Additionally, exploration work is underway to extend resources beyond the current mine plan. Targets accessed via the new connection drift include extensions of the McVeigh, South Austin, and Austin zones, while future drilling is planned at the Fork and Rowan deposits. The Rowan deposit, which holds an indicated resource of 476,323 tonnes at 12.8 grams per tonne, is currently under consideration for bulk sampling between 2027 and 2028. [OWNERSHIP_CHART-5614]

The company is also exploring opportunities in under-tested geological zones across its broader property, including areas within the Confederation rocks — now viewed as highly prospective based on recent sampling and mapping. These programs aim to identify additional high-grade mineralization to support future production scenarios beyond the existing pre-feasibility study.

West Red Lake continues to emphasize operational readiness, noting that over 200 personnel have been hired and safety performance remains strong. Underground development and stockpile growth are on track, with a high-grade stockpile target of 30,000 tonnes providing over one month of mill flexibility. As the company transitions from test mining to full-scale operations, continued updates on gold reconciliation results and drilling progress are expected to be important indicators of forward momentum.

Ownership and Share Structure

Strategic investor Sprott Resource Lending Corp. holds about 8%. Institutions hold about 30%, management, insiders, and advisors hold about 10%, and the remaining shares are held by retail investors.

The company’s market cap is CA$259 million. The 52-week range for the stock is CA$0.52 to CA$1.04.

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Important Disclosures:

1. West Red Lake Gold Mines Ltd. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of West Red Lake Gold Mines Ltd.
3. James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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( Companies Mentioned: WRLG:TSX.V; WRLGF:OTCQB; FRA:UJO, )

Source: https://www.streetwisereports.com/article/2025/05/12/junior-gold-company-generates-major-ontario-windfall.html