West Red Lake Gold Mines (TSXV: WRLG; US-OTC: WRLGF) reported drill results as high as 17.77 grams gold per tonne across 5.5 metres while it builds up inventories of ounces to support restarting production next year at its Madsen mine in northern Ontario.
That intercept in the McVeigh zone, from 44.5 metres depth in hole MM24D-01-4081-025, included 2.2 metres grading 38.56 grams gold and 0.5 metre at 19.15 grams gold from 49.5 metres depth, the company reported Tuesday.
In the Austin zone, west of McVeigh, hole MM24D-09-4796-025 cut 12.1 metres at 7.35 grams gold from 92.9 metres depth, including 2.5 metres grading 19.39 grams gold from 93.5 metres depth.
“The exceptional drill results that continue to be produced from McVeigh are very encouraging and highlight the opportunity that remains in this shallow, high-grade, easily accessible portion of the Madsen deposit,” West Red Lake CEO Shane Williams said in a news release.
“The Madsen deposit has plenty of meat left on the bones while also offering significant upside as we continue to access deeper portions of the main deposit.”
In an analyst note, Matt O’Keefe of Cantor Fitzgerald said the high-grade results boost confidence in near-term production ounces at Madsen, located in the Red Lake Gold District of northwestern Ontario.
“They also highlight the opportunity that remains at McVeigh, the shallow, high-grade, easily accessible portion of the Madsen deposit, and from the deeper Austin zone which demonstrates the significant upside in accessing deeper portions of the main deposit,” O’Keefe said.
The drill highlights come as the company looks towards finishing a prefeasibility study in a few months before its planned restart of Madsen, which was producing until 2022 when former owner Pure Gold Mining sought creditor protection. West Red Lake acquired the company and Madsen last year in a bought deal financing for about $25 million.
Other highlights from the McVeigh zone show 2 metres at 36.62 grams gold from 51.5 metres depth in hole MM24D-01-4081-028, including 0.6 metre at 100.44 grams gold from 52.4 metres depth.
Hole MM24D-01-4081-027 cut 5 metres at 10.82 grams gold from 43 metres depth, including 1 metre grading 11.44 grams gold from 44 metres depth, and 0.5 metre at 64.71 grams gold.
Pure Gold started producing at the site in 2020, but was in commercial production for less than two years before financial difficulties forced it to seek creditor protection. The company bought the historic Madsen mine in 2014. It produced 2.5 million oz. of gold at an average grade of 9.7 grams gold between 1938 and 1999.
Madsen hosts 1.65 million indicated oz. of gold grading 7.4 grams gold, and 370,000 inferred oz. gold at 6.3 grams gold, based on a cut-off grade of 3.38 grams gold and a gold price of US$1,800 per oz. according to a 2021 resource estimate.
Shares in West Red Lake gained 3.6% to C54¢ apiece on Tuesday morning in Toronto, valuing the company at C$190.8 million. Its shares traded in a 52-week range of C31¢ to C75¢.
