West Red Lake up 42% on Madsen gold mine deal
![](https://resourceworld.com/wp-content/uploads/2018/07/Pure-Gold-Mining-Photo.jpg)
West Red Lake Gold Mines Ltd. [WRLG-TSXV] said Monday it has struck a binding deal with bankrupt Pure Gold Mining Inc. and Sprott Resource Lending Corp. to acquire the Madsen gold mine and associated land in Red Lake, Ont.
West Red Lake said it will acquire the asset via the acquisition of all the issued and outstanding shares of Pure Gold, a company that recently sought protection under the Companies Creditors Arrangement Act (CCAA). West Red Lake has agreed to pay $6.5 million in cash, issue 28.5 million common shares and grant a 1.0% secured net smelter royalty on the Madsen Mine, and make up to US$10 million in deferred consideration payments.
The share issue and the NSR consideration is expected to accrue to Sprott as a fund managed by Sprott, which ranks as a senior secured lender to Pure Gold.
In conjunction with the acquisition, West Red Lake has announced details of a $20 million bought deal private placement, plus an underwriters’ option of $5 million. As a result, West Red Lake said it will become a debt-free, and well capitalized explorer and developer of high-grade gold in the Red Lake mining camp.
West Red Lake shares jumped 42.8% or 18 cents to 60 cents on the news on volume of 930,870. The shares are currently trading in a 52-week range of 62.5 cents and 31 cents.
West Red Lake shares began trading in early January, 2023, following the completion of an amalgamation between the company and DLV Resources Ltd. [DLV.H-TSXV].
West Lake Gold Mines is based on Vancouver and focused on gold exploration in the Red Lake Gold District of northwestern Ontario. Its key West Red Lake project is located 15 kilometres west of the Red Lake Mine Complex, which consists of three mines and two mills operated by Evolution Mining Ltd. [EVN-ASX] (on a 69% West Red Lake and 31% Evolution basis).
The amalgamation with DLV was announced after West Red Lake completed a non-brokered private placement of flow-through shares that raised $4.1 million. The company issued 86.3 million flow-through shares, priced at $0.0475 with proceeds earmarked for exploration on the Red Lake property.
A numbered company (1291308 BC Ltd.) controlled by mining financier Frank Giustra acquired 62 million shares that were issued in the offering. Giustra, who owns 18% of West Red Lake, has pledged to lead the proposed financing. “The acquisition appeals to me due to its high-grade resources, modern infrastructure, potential and strategic location,’’ he said. “I look forward to contributing to the company’s growth and energizing this iconic Canadian gold camp for future generations.’’
Pure Gold’s CCAA filing came in December, 2022 after the company suspended operations and immediately put its Madsen mine on care and maintenance.