West Red Lake raising $20 million from upsized financing
West Red Lake Gold Mines Ltd. [WRLG-TSXV] said it is upsizing a previously announced bought deal financing that is now expected to generate aggregate proceeds of $20 million.
The company was previously expecting to raise $12.3 million by issuing 14.5 million charity flow-through units priced at $0.8487 each.
West Red Lake said it will now issue 23.6 million charity flow-through units at a price of $0.8487 per unit. Each Charity flow-through unit will consist of one common share of the company and one common share purchase warrant. Each flow-through unit warrant will entitle the holder to acquire one common share of the company at an exercise price of 90 cents per share for 36 months from closing, which is expected to occur on February 25, 2025.
West Red Lake shares rose 1.6% or $0.01 to 64 cents. The shares trade in a 52-week range of $1.04 and 52 cents.
News of the upsized financing comes after West Red Lake recently announced the results of a pre-feasibility (PFS) study for the imminent restart of its 100%owned Madsen Mine project in the Red Lake Gold District of northwestern Ontario. Production is set to resume in the second quarter of 2025.
The PFS envisages average annual production of 67,600 ounces of gold annually over six years of full production, within a 7.2-year mine life. The operation is expected to generate $69.5 million in average annual free cash flow from an operation with average total operating cost of US$919 per ounce and an average all-in-sustaining cost of US$1,681 an ounce.
The construction and capital investment to mine startup is now substantially complete. A bulk sample is currently being mined; a mill startup to process the bulk sample is planned for March, while 21 kilometres of modern underground development (since 2019) provides good mining access and represents significant time and cost savings.
“West Red Lake Gold has worked intensely over the last 16 months to greatly improve our knowledge of the orebody and de-risk the project with the objective of executing a successful restart of the Madsen Mine; and this PFS is the culmination of that effort,’’ said West Red Lake President and CEO Shane Williams. “This initial reserve mine plan only taps well defined and tightly drilled parts of the deposit relatively close to existing workings and still generates robust margins based on a production rate of 70,000 ounces per year, that generate almost $400 million in post-tax-free cash flow over a seven-year mine life.”
The company said it sees multiple opportunities to extend the mine life and enhance the economic returns of the Madsen mine, including 1.1 million ounces of indicated resources that remain outside this initial mine plan. The company is eyeing resource growth near reserves and existing infrastructure, discovering new high-grade, near mine zones that add to the mine plan such as the Upper 8 Zone, and using a higher reserve cut-off price (the PFS used US$1,680 an ounce).