West Red Lake secures $68 million commitment for mine restart
West Red Lake Gold Mines Ltd [WRLG-TSXV] said it has secured commitments totalling in excess of $68 million to finance the restart of its Madsen gold mine in northwestern Ontario. The company said Madsen remains on track to recommence production in 2025.
The financing package consists of the following components, including a US$35 million (approximately $48 million) loan facility with Nebari Natural Resources Credit Fund 11 LP, bearing interest of SOFR (secured overnight financing rate) plus 8.0%, with a term of 42 months. The company said a non-binding term sheet has been signed, and closing of the loan facility remains subject to entering into definitive documentation and due diligence.
The package also includes a $20 million bought deal equity offering of 28.9 million units of the company priced at 69 cents per unit. Each unit consists of one common share and one common share purchase warrant. Each warrant will entitle the holder to purchase one common share for 90 cents for 3.0 years from the date of closing.
The sole underwriter has been granted an over-allotment option to purchase at the issue price a number of additional units, common shares and warrants that is equal to 15% of the units sold in the offering. That option can be exercised in whole or in part, for 30 days after closing of the offering.
West Red Lake shares eased 10.8% or $0.08 to 66 cents and trade in a 52-week range of $1.04 and 46.5 cents.
“This finance package provides the capital anticipated to restart the Madsen mine, according to our detailed mine plan,’’ said West Red Lake President and CEO Shane Williams. “Upon closing this $68 million package, along with existing cash on hand, we anticipate the company will be well positioned to complete the Madsen prefeasibility study, the ongoing test mining program, the pro-active capital projects that are under way at the mine site, and the restart and ramp-up of the mine, including working capital and corporate requirements,’’ Williams said.
“We worked closely with our partners to develop a finance package that addresses the balance of the capital required for Madsen, as currently estimated in our mine plan, and preserves strong upside from Madsen mine for West Red Lake Gold shareholders.’’
West Red Lake acquired the Madsen mine project in June, 2023. The company has completed 40,000 metres of definition drilling alongside significant mine engineering and multiple capital projects and studies to inform a prefeasibility study that is targeted for release within a month.
Following the release of the prefeasibility study and the closing of the financing package, it is anticipated that the company intends to work towards a formal mine restart decision. Mill restart and commissioning will then follow.