West Red Lake Gold Mines Poises for Successful Restart of Madsen Mine

• West Red Lake Gold Mines is restarting the Madsen mine in Red Lake, Ontario, a prolific gold mining district known for its rich gold deposits. The company is working to bring the historically productive high-grade gold mine back into production.
• The company has spent 15 months de-risking the project and is close to releasing a pre-feasibility study (PFS).
• The upcoming PFS is expected to provide a clear and compelling path forward for the successful restart of the Madsen mine.
• The majority of the $350M of prior capital costs under previous owners are already sunk, allowing for a faster restart. Previous operators invested heavily in the Madsen project, building out substantial infrastructure including a mill, tailings facility, and underground development, and WRLG can now leverage this sunk capital to expedite the timeline and reduce the upfront costs of the restart.
• WRLG recently raised $29M, largely from new investors, signaling growing market confidence. Despite a challenging financing environment, the company has been able to attract significant capital, predominantly from new investors, to fund the Madsen restart.

West Red Lake Gold Mines (WRLG) is on the cusp of restarting production at the historic Madsen gold mine in the prolific Red Lake mining district of Ontario, Canada. After a false start by the previous operator, WRLG has spent the last 15 months de-risking the project. With a pre-feasibility study (PFS) expected by the end of November, the company believes it has the right team and strategy in place to succeed where others have failed.

On Track for November PFS

WRLG is currently putting the finishing touches on its PFS, which is expected to be released by the end of November. Over the past 15 months, in parallel with de-risking efforts, the company has been operating and collecting real data to feed into the study. As CEO Shane Williams explained:

"In a lot of early stage studies, you know, some engineer's doing some benchmarking studies, it's high level estimations, etc. I'm not sure people understand, but we've been operating now for over 15 months doing underground development, underground drilling. We have 120 people on site, so we have a very good handle on our costs for drilling, blasting, fuel, people - way more certain than actually a PFS or any feasibility [study] out there because we're actually doing the work."

This focus on collecting actual operating data to inform the PFS should result in a robust study that will provide the market with confidence in WRLG's plans and projected economics.

Leveraging Sunk Capital Costs

One of the key advantages WRLG has is the ability to leverage approximately $350 million of sunk capital costs from prior development at Madsen. This includes a fully constructed mill that previously operated at 1,000 tons per day (well above its 500 tpd design capacity), a water treatment plant, a tailings storage facility, and over 14,000 meters of underground development. By not having to spend significant capital on these major items, WRLG can focus its efforts and resources on the areas that will be critical to a successful restart.

Experienced Team Focused on Prior Challenges

To tackle the challenges that hindered the previous operator, WRLG has assembled an experienced management and technical team, helmed by CEO Shane Williams. Williams previously had success restarting the Lamaque project for Eldorado Gold, taking it from PFS to production in just 18 months.

The WRLG board includes industry heavyweights like Tony Makuch, former CEO of Kirkland Lake Gold, who has intimate knowledge of the Madsen mine and Red Lake district.

This depth of experience, along with a focus on the key issues that derailed prior efforts - namely understanding the resource and optimizing the mine plan - should bode well for WRLG's probability of success.

Interview with President & CEO Shane Williams

Successful Capital Raise Signals Market Support

In a challenging market environment, WRLG recently raised $29 million, with a significant component coming from new investors, to support its restart plans. This is on top of the $150 million raised since the current management team took over the project.

The ability to attract significant new investment speaks to the growing market confidence in WRLG's strategy and probability of success.

Key Investment Drivers

Looking ahead, the key drivers for WRLG will be the results of the upcoming PFS, continued de-risking of the mine plan and resource, and the execution of the restart plan. The company has laid the groundwork for success by assembling the right team, focusing on the prior challenges, leveraging existing infrastructure, and shoring up its balance sheet.

While there is always risk in any mining venture, WRLG appears well positioned to deliver on its goal of bringing Madsen back into production and generating sustainable positive cash flow. For investors looking for exposure to a high-grade gold asset in a world-class jurisdiction with a clear path to near-term cash flow, WRLG is definitely worth a closer look.

Conclusion

With a clear strategy to remedy past missteps, an experienced team, significant sunk capital, and a robust PFS on the near-term horizon, West Red Lake Gold Mines offers a compelling investment opportunity in the junior gold space. While not without risk, the company has made demonstrable progress in de-risking the Madsen mine restart and has the key pieces in place to potentially deliver outsized returns for investors. The upcoming PFS will be a key milestone to watch for and should provide greater clarity on the economics and timeline of this high-grade gold opportunity in the legendary Red Lake district.

Investment Thesis for West Red Lake Gold Mines

West Red Lake Gold Mines offers several compelling reasons to invest:

• The company benefits from approximately $350 million of sunk capital costs at the Madsen project, which should facilitate a faster and lower-cost restart. WRLG's high-grade gold resource is located in a top-tier mining jurisdiction and comes with significant exploration upside.
• Led by a proven management team with a track record of fixing struggling projects. Importantly, the key risks associated with the resource and mine plan are being actively addressed and mitigated.
• Pre-Feasibility Study (PFS) is expected by November and is anticipated to demonstrate positive project economics.
• WRLG's recent successful capital raise of $29 million signals strong market support and provides the company with ample runway to execute its plan.

As with any mining project, there are risks that investors should monitor. These include WRLG's ability to convert resources to reserves and deliver a robust mine plan that holds up under scrutiny. Given the asset's troubled history under previous ownership, there is also the potential for cost overruns and delays as the company moves towards production. Additionally, WRLG will need to secure remaining permits and approvals for operations and possible expansion.

For investors considering a position in WRLG, there are several actionable steps to take. First and foremost, conduct a thorough review of the full PFS once it is released. Pay close attention to the company's success in converting resources to reserves, the strength of the mine plan, and the overall restart economics and timeline. It will also be important to monitor WRLG's ongoing de-risking efforts, especially the results of resource definition drilling and test mining. Finally, be on the lookout for any offtake or financing agreements the company is able to secure, as these can be signs of further de-risking and strong market support.

Macro Investment Thesis

The investment thesis for West Red Lake Gold Mines touches on several key macro themes currently driving investor interest in the gold sector.

Firstly, with economic uncertainty high and real interest rates still firmly negative, gold remains an attractive safe haven for capital preservation and portfolio diversification. This is especially true for gold assets located in stable Tier 1 mining jurisdictions like Canada.

Secondly, with the low-hanging fruit in the gold sector largely picked and declining grades and depleted reserves a growing challenge for producers, high-grade deposits like Madsen are becoming increasingly sought after. Madsen benefits from an existing high-grade resource with significant exploration upside in the heart of the prolific Red Lake gold camp, home to some of the richest gold mines in the world.

Lastly, with inflation concerns on the rise and capital and operating costs across the mining sector escalating rapidly, projects like Madsen that benefit from significant sunk capital are becoming increasingly desirable.

The ability to fast-track the restart at a materially lower capital intensity is a significant differentiating factor for WRLG.

In an environment where investors are seeking gold exposure but remain risk averse and capital conscious, a high-grade project in the lowest-risk jurisdiction globally that is fully permitted with a new management team poised to capitalize on significant sunk capital is a very compelling investment proposition. When WRLG successfully demonstrate a viable path to production at Madsen with an attractive cost profile and near-term timeline, the market is likely to take notice and reward early investors.