West Red Lake Gold Mines' Operational Mechanics: De-Risking the Madsen Ramp-Up

• West Red Lake Gold Mines declared commercial production at the Madsen Mine after sustaining throughput above 60% of the permitted design capacity of 800 tonnes per day across a two-month period in the second half of 2025.
• First quarter 2026 results reported 6,165 ounces sold at an average realised gold price of US$4,938 per ounce, generating C$41.8 million in total gold sales revenue. 2026 annual guidance is set at 35,000 to 45,000 ounces, with approximately 60% of that in the second half of 2026.
• The company routed lower-grade Austin zone ore through the mill during commissioning rather than drawing from the higher-grade 4447 complex, protecting the highest-grade inventory for steady-state operations.
• Reconciliation between the underground resource model and actual mill output is exact, supported by over 200,000 meters of underground definition drilling completed at 6 to 7 meter spacing - a spacing that removes grade interpolation risk between drill holes at the narrow-vein widths of this deposit.
• The monthly breakeven has fallen from approximately 4,000 ounces under the prior operator to approximately 2,000 to 2,500 ounces, meaning the company covers all site costs at roughly half the output required before the prior operator faltered.
• The growth roadmap targets sequential access to the 4447, 904, and Fork satellite mining complexes through 2026 to 2027, with a Phase 1 shaft refurbishment and an updated pre-feasibility study (PFS) combining Madsen and Rowan, both targeted for the second half of 2026.

What Has Happened

West Red Lake Gold Mines (TSXV:WRLG | OTCQB:RLGMF | FRA:HYK) has declared commercial production at the Madsen Mine in Red Lake, Ontario - a milestone that has proved elusive at this asset. Management points to three specific operational decisions as the reason this restart is succeeding where previous attempts at Madsen failed to sustain.

Commercial production at Madsen required maintaining throughput at 60%-70% of permitted capacity for approximately two months, with operational stability at both the mine and the processing plant. The first quarter of 2026 financial results reported 6,165 ounces sold at an average realized gold price of US$4,938 per ounce, generating C$41.8 million in total gold sales revenue. The company carried approximately C$48 million in cash as of December 31, 2025, and has not indicated any requirement for further equity financing.

The route to this outcome required three distinct risk reductions: protecting high-grade inventory during commissioning by sequencing lower-grade ore first, validating the resource model against actual mill output through over 200,000 meters of tight-spaced underground drilling, and operating at a gold price that cuts the monthly cash breakeven to roughly half what the prior operator needed to survive. Each of these is measurable, verifiable from disclosed data, and directly traceable to the company's capital allocation and sequencing of operating decisions.

Commissioning Strategy & Grade Protection

Grade surprises are the fastest way for underground gold mines to destroy cash flow forecasts. West Red Lake Gold Mines managed this by sacrificing early grade to protect future profitability. Routing lower-grade Austin zone ore through the mill during commissioning, rather than the higher-grade 4447 complex, meant that any mechanical downtime, recovery shortfall, or equipment tuning during startup destroyed value by grading the material at approximately 5 grams per tonne, rather than the 8 to 9 grams per tonne available in the 4447 area. The 4447 complex, where isolated December 2025 stopes returned approximately 9 grams per tonne through the mill, was preserved for the post-commissioning phase when steady-state operating conditions would allow full recovery capture.

President & Chief Executive Officer (CEO) of West Red Lake Gold Mines, Shane Williams, confirmed the logic directly:

"You don't want to be putting your best grade through your mill because if something happens, you've kind of lost your best grade. So you kind of use lower-grade material, some stockpile, some grade to build it up and get it done, and then you bring in your best grade, which the plan is for Q1 to get into this triple 47 area."

By December 2025, throughput had reached 86% of permitted capacity, with peak days recording approximately 1,000 tonnes per day against the 800-tonne-per-day design rate. The mill's nameplate capacity of 1,100 tonnes per day provides a 300 tonnes per day throughput buffer above the 800 tonnes per day operating target, meaning the grade transition into the 4447 complex does not require any infrastructure expansion to capture the higher-grade upside.

Model Validation & Underground Drilling Density

West Red Lake Gold Mines drilled over 200,000 metres underground at 6 to 7 meter hole spacing before finalizing mine designs - a discipline the company credits with achieving exact model-to-mill reconciliation where prior operators faltered. The company's rule of completing definition drilling 6 to 8 months ahead of mine design meant that by the time ore entered the mill, the geological model had already been validated against development samples.

Williams described the reconciliation outcome:

"The team prepared an excellent presentation that showed all the stopes and areas we've mined today are spot on with the resource model that we put in the new updated resource model, and that really shows the value of all the drilling we've done in that re-reconciliation is something that's very, very clear now. There it is, we have reconciliation on the model.”

Exact model-to-mill reconciliation means the 1.65 million ounce indicated resource at 7.4 grams per tonne and 0.37 million ounces inferred at 6.3 grams per tonne - per the June 2023 mineral resource estimate (MRE) using a cut-off of 3.38 grams per tonne at US$1,800 per ounce gold, prepared by SRK Consulting - can be used in mine planning with confidence that grade assumptions will hold at the mill.

Lowering the Financial Breakeven Threshold

Pure Gold Mining, the immediate prior operator at Madsen, required approximately 4,000 ounces of gold per month to cover site costs. When throughput shortfalls during commissioning held production below that threshold, the operation consumed cash without generating offsetting revenue, ultimately causing the prior operator to falter. West Red Lake Gold Mines acquired the asset after that outcome and now operates at a gold price that is double what it was at that stage.

Williams quantified the resulting breakeven shift:

"Our pre the previous operator pure gold you know they had they they had to have a gold an average gold production rate of around 4,000 ounces to break even you know we have the luxury of the gold price is double what it was at this stage you know that gives you a lot of leeway it gives you the time to ramp up so you know 2,00 2,500 ounces a month is freak is gener is paying all the bills at Matson."

In the first quarter of 2026, production of 5,667 ounces against a monthly breakeven of 2,000 to 2,500 ounces, the company is generating cash above its minimum operating threshold. The full-year guidance of 35,000 to 45,000 ounces, weighted 60% toward the second half of 2026, targets a production step-up as the 4447 complex transitions into the primary feed source.

What to Watch Next

West Red Lake Gold Mines discloses the following confirmed milestones. The 960 and 4447 complexes are targeted for active mining in the first and second halves of 2026, respectively. The 904 complex - a non-remnant area of approximately 200 meters by 200 meters with minimal historic workings - is targeted to enter the production profile in the first half of 2027, supported by 2026 drilling intercepts of 215.46 grams per tonne over 5.35 meters and 219.73 grams per tonne over 4.8 meters.

The Fork satellite deposit, located approximately 250 meters from existing Madsen infrastructure, is targeted to commence initial development in the second half of 2026 and enter production in the first half of 2027. The current Fork resource stands at 20,900 ounces indicated and 49,500 ounces inferred at an average of 5.2 grams per tonne, with a high-grade core target of 130,000 to 150,000 tonnes at 8 to 9 grams per tonne for 33,000 to 43,000 ounces. The Phase 1 shaft refurbishment, also targeted for the second half of 2026, is expected to scale shaft haulage capacity as development moves deeper. An updated pre-feasibility study (PFS) combining Madsen and Rowan is targeted for the second half of 2026, providing the next formal economic baseline for the consolidated asset.

The Rowan deposit, located 80 road kilometres from the Madsen Mill, carries a resource of 195,746 ounces indicated at 12.87 grams per tonne and 115,719 ounces inferred at 8.76 grams per tonne at a cut-off of 3.8 grams per tonne and US$1,800 per ounce gold. The Preliminary Economic Assessment (PEA) targets initial construction in the first half of 2029, with Rowan contributing an estimated 35,200 ounces per year for 5 years as a toll-milled satellite feed to the Madsen Mill under the hub-and-spoke strategy.

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