Second Look at Drill Results Reveals New High-Grade Gold Zone
West Red Lake Gold Mines Inc. (WRLG:TSX.V; WRLGF:OTCQB) has "re-envisioned" its interpretation of the Fork Deposit at its Madsen Property in the Red Lake Gold District. Read why one analyst says the discovery will be a top priority for the company in 2025.
West Red Lake Gold Mines Inc. (WRLG:TSX.V; WRLGF:OTCQB) has "re-envisioned" its interpretation of the Fork Deposit at its 100%-owned Madsen Property in northwest Ontario's Red Lake Gold District.
In a release, the company said it has "recognized a shallow, high-grade, low-plunging zone of gold mineralization that is located approximately 250 meters southwest from existing underground development at Madsen."
Cantor Fitzgerald Analyst Matthew O'Keefe called the development a "positive" for the company in an updated research note on December 10.
"Fork has been re-envisioned as a high-grade near-mine resource expansion target that will be a top priority exploration target in 2025," wrote O'Keefe, maintained his Buy rating on the stock with a CA$1.40 per share price target. "The shallow nature of the target will allow further definition through surface drilling, and its proximity to existing underground development should allow its incorporation into the mine plan relatively quickly."
The Fork deposit currently contains an indicated mineral resource of 20,900 ounces grading 5.3 grams per tonne gold (g/t Au), with an additional inferred resource of 49,500 ounces grading 5.2 g/t Au, the company said.
The new zone trends north-to-south and has been defined by previous drilling over an area of 400 meters by 250 meters, the company said. It shows potential for further expansion along strike to the south. The average thickness of the zone is conservatively estimated at approximately 2 meters based on existing core length intercepts.
"What was once considered a somewhat broad, intermediate-grade portion of the satellite resource inventory at Madsen, Fork has now been re-envisioned as a high-grade near-mine resource expansion target that will be a top priority for the exploration team in 2025," said West Red Lake President and Chief Executive Officer Shane Williams. "The shallow nature of this target will allow for rapid advancement through surface definition drilling, and with its proximity to existing underground development, it's not difficult to see a path forward for Fork making its way into the production pipeline at Madsen. This strategy is directly in-line with WRLG's hub-and-spoke model for Madsen as we continue to evaluate and advance additional high-grade gold opportunities within the Red Lake district."
Tide Turning for Historic Gold Camp
The Red Lake Camp is a cornerstone of Canada's role as the fifth-largest gold producer in the world. Gold was first discovered there in 1897, but it took 20 years for it to be explored fully because of the area's remoteness. Since large-scale mining began there in 1938, more than 26 million ounces (Moz) Au have been produced from underground mines there.
"The area is known for exceptionally high-grade Au, with one famous sample, the Campbell Mine Whopper, containing 431 ounces in a football-sized rock," Ian Burron wrote for Geology for Investors.
Cantor Fitzgerald Analyst Matthew O'Keefe called the development a "positive" for the company in an updated research note on December 10.Nearly a century later, "the last few years have seen the tide once again turn in Red Lake's favor," Burron wrote.
According to West Red Lake, the Fork deposit lies within two shear zones spaced 100 meters to 150 meters apart, striking north-northeast. "The upper lens is known as the Main Zone and occurs along a shear zone that is continuous to the southwest with the shear zone that hosts the DV and CK Zones," the company said in its release. "The distribution of gold within this shear zone is controlled by the intersection with the contacts of minor ultramafic sills and iron formation units within the basalt."
O'Keefe with Cantor Fitzgerald wrote that the company's "strategy of near mine exploration is showing good potential for resource expansion from satellite deposits such as Fork, Upper 8 and Wedge and deeper areas like the 8-Zone and the down-plunge extension of Madsen proper."
"Additional drill results and updates from the ongoing test-mining program are expected through year-end," the analyst wrote. "The updated PFS (preliminary feasibility study) is expected in early 2025. Restart of the mine remains on-track for mid-2025."
"We anticipate the mine's redevelopment will be successful and its high-grade nature will drive a premium valuation," O'Keefe continued.
The Catalyst: Bulls Have 'Near-Term Momentum'
Despite slipping over 1% on Thursday "as investors booked profits after it briefly reached a five-week high earlier in the session," most experts agree gold remains in a bull market, Reuters' Sherin Elizabeth Varghese reported.
Streetwise Ownership Overview*
West Red Lake Gold Mines Inc. (WRLG:TSXV;WRLGF:OTCQB)
*Share Structureas of 10/3/2024Source: Thomson Reuters"Bulls maintain near-term momentum, though a pullback may occur ahead of the Federal Reserve meeting as investors lock in profits," said Zain Vawda, market analyst at MarketPulse by OANDA, according to Varghese. "Focus will shift post-meeting to guidance on the January session and future policy direction, which will be critical in determining the sustainability of further market gains."
Writing for Money on December 4, Marc Guberti noted that the yellow metal is up by more than 31% in 2024 and has delivered more than an 82% gain over the past five years. "Many big banks believe that gold is set to continue its rally in 2025 and beyond," he wrote.
Research from Goldman Sachs suggests that gold will climb higher as central banks in emerging markets continue to buy more gold, Guberti wrote, noting that Goldman Sachs research analyst Lina Thomas has mentioned lower interest rates as a catalyst for a 2025 gold rally.
Ownership and Share Structure
Advisor Frank Giustra owns 9.4% of West Red Lake as a strategic investor and insider, according to the company's investor presentation. Sprott Resource Lending Corp. holds 18.6%, VanEck Gold Fund holds 4.1%, and Evolution Mining Ltd. holds 1.6%. Institutional ownership totals approximately 31%, with the remaining shares held by retail investors.
The company's market cap is CA$190.88 million. The 52-week range for the stock is CA$0.52 to CA$1.04.
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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 Inc. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.For additional disclosures, please click here.