Financial Survival Network AUDIO

West Red Lake Gold Mines restarted their mill and are experiencing positive results. The high gold prices are beneficial for their production, allowing them to mine lower grade material and use a lower cost mining method. The ongoing bulk sample is expected to produce a significant amount of gold and generate cash flow. The company has also set up a workforce camp to provide comfortable conditions for their employees. Full production is expected in the second half of the year. The NPV just at that $2,600, the 20% upside on the gold price, just on the financial model, not changing what tons you mine, but just on the financial model, that NPV is $500 million Canadian, instead of the $315 million, and again, that's not changing, that's not adding the tons that we think we're going to be able to add economically, that we know we're going to add economically to mine, so yeah, there's a lot of room on this, for this situation to run. The Financial Survival Network, now more than ever, The Financial Survival Network. Welcome, this is Financial Survival Network, I'm your host, Kerry Lutz, we are getting a major, and I do mean major, sponsor update from West Red Lake Gold Mines, and Communications VP, Gwen Preston, is with us now, Gwen, the mill has restarted, correct? It has, I am on site right now, as you might be able to tell, from the office that I'm sitting in, the mill is just up the hill behind me here, it was so exciting to get here at the beginning of this week, and hear those mills turning, and then the next day I got to go up and walk around and look at it all, and I mean, there's bubbles going through the aeration tank, and there's carbon, there's gold gathering on the carbon screens, it's going, it's really, really exciting. It's like a big machine, and it takes a long time to get it started, but once it starts, it keeps going. So before we get to anything technical stuff, what's happening in the community, first thing we got to talk about, record high gold prices. As we speak now, gold is 30-30 USD, and what does that mean for projected 70,000 ounces per year production? Yeah, so, I mean, it means great things, is the obvious answer, technically what can I talk about, well our pre-feasibility study, you know, that document has a 20% gold price upside case laid out, 20% upside for the long-term gold price in that study is only $2,600, so still $400 below the current gold price, and at $2,600, the free cash flow annually averages out at like $95 million, and of course that whole mine plan is based on a much lower gold price assumption when they went through and decided which tons would be economic to mine, that was based on a sort of $1,700 gold price assumption, so when you go back and look at what we're actually going to mine at a gold price environment that we're in right now, it really creates the short version of a detailed story there, is that it really enables a lot more continuity in the mineralization, instead of having to work with small lenses of particularly high grade, where those lenses are actually connected by some lower grade material, it makes a huge amount of sense in a gold market like this to also mine that lower grade material, and it means that we can use a lower cost mining method, so I got in the weeds a little bit there, but it's really important because this gold price environment not only does it mean that e-counts that we produce is worth way more, I mean our budget is based on selling gold at $2,500 US, and so we're making money from this, but we will make gold from this bulk sample, and we are going to get significantly more than $2,500 per ounce from that, and then going forward for what this mine can be, the gold price environment is just so exciting. So in other words, your cutoff grade goes way, way lower, because if you can get the higher grade going through that lower grade, who cares, it's $3,000 gold. That's exactly right, if you think of it as, if we're mining 6 gram, 8 gram, 12 gram, whatever it is right here, and then another lens of it right here, and in a lower gold price environment, you might do really selective mining and just take those two lenses, but in a higher gold price environment, you absolutely mine the whole block, and often at Madsen, the rest of that block also carries grade, maybe not 6, 8, or 12 grams, but it might carry 1, 2, 3 grams, and so it pays for itself, because you've already done the work, borne the cost of getting yourself over to that area, driving the tunnel over to that area, and then you get to use a lower cost mining method to take those tons out. So it really makes Madsen an easier mine, a more continuous mine, when you're working, when your incremental cutoff grade, so the grade that you apply to the tons around the tons that you're already going to mine, when that incremental cutoff grade drops down, it really opens up a lot of opportunities. Yeah, and as we know, there could be other pockets of higher grade gold that you might have otherwise not found going through that lower grade, because, you know, there's not real consistency of grade throughout. Absolutely, I mean, not only is there potential for positive surprises, like you say, in that lower grade stuff, I mean, the whole, I spent so much time with Jill, our chief geologist yesterday, I spent hours in her office, just getting the latest download on everything. And, you know, the pockets that they are just discovering, you know, here, there, outside of the resource, better in the resource, it's exciting. I mean, that's why you put the effort in to mine in Red Lake. Yeah, you got to do a lot of drilling, because of the potty nature of the deposit, but of the mineralization in this region. But the reason you do it, the reason people have done it for 26 million ounces of production already, is because you get those benefits, those surprises, because the systems here are just really rich. Absolutely. So, estimates, initial estimates for actual tons, grade, ounces from bulk sample, is that holding close to estimates? It is going very well. So, I mean, we haven't put out a lot of information on exactly what we're mining and things like that. We've said that the bulk sample will be at least 10,000 tons. It absolutely will be. It's going to be from six stokes that are in three different parts of the deposit. That's for sure. Each of those stoke areas, when we put out the results, we're going to give you the tonnage and the grade for each of those areas. And one of the big things that I spent my time with Jill yesterday talking about is how that's going. And at this point, we're just about to start putting the first stoke through the mill. So, in a week, we internally will know how that reconciliation truly played out. At this point, what we have are the sampling of the samples, of the mining. So, you do sampling around. You do chip faces on the face. You do chip faces, like, as you go doing the mining. And then you also do muck samples. Muck is the terrible word that they use for the ore. They really need a more positive word. But anyways, they do muck samples. If the scoop is here, there's five different spots on the scoop where they sample. And so, that gives you an estimate of the grade of that stoke. And those estimates are coming in right where we want them to come in. So, we're really excited that we will be able to issue strong reconciliation results. And, you know, we will find out for sure over the coming weeks as we process these bulk samples through the mill. Okay. So, what's the timeline for full production, would you say? Yeah. So, we'll be consistent with what we've been saying, which is that we will ramp up through the second half of the year. So, right near, maybe just a bit before the middle of the year is when we expect to start putting consistent mineralization through the mill. All right. So, second half, we have to look forward to it. And financially, enough money to see this through. Yes, we do. So, that financing that we did, you know, gave us that additional financial strength, a little bit more just capacity to do things, to ramp up faster, to do the things that we need to do. And then I will note, this bulk sample is going to produce not a tiny amount of gold, right? Just you can do some very ballpark estimates. If we're mining 10,000 tons, take some even conservative estimates of what the grade is going to be in the recovery and whatnot. You can see that we're going to produce a reasonable amount of gold from this bulk sample. And then we're going to immediately sell it because that's the name of the game. So, we are going to pull in a reasonable amount of money from the bulk sample as well, which is just additional. So, yes, we're comfortable that we have what we need on that front. So, cash flow is right around the corner. Yes, it is. Absolutely. Okay. So, on to more benign or mundane issues, labor, community relations. You got a workforce camp being set up in use. And what's the feeling in the community? Yeah, that's actually a cool question. So, we did a grand opening of our camp just the other day, just two days ago. Did a ribbon cutting for the camp. This is a 114-person facility. You have, of course, a full kitchen and a gym and all of that. You know, in the recent iterations of the Madsen mine, the prior operator and us, and I think in the code days as well, there was never a camp. And so, the mine has always relied on local workforce, which is fantastic, but also when bringing people in as employees has had to rely on housing in the community. And it turns out when you also have Kinross ramping up their action at the Great Bear Project and other operators around, you know, there isn't actually, you know, it puts a lot of pressure on housing in a 5,000-person community, which is what Red Lake is. So, we're really excited to not have that pressure on the community, to have people in comfortable conditions. And we want to attract good workforce. This is a good mine. We're really optimistic that we're going to run a good, solid mine for many years. And we want the right people here. And so, you know, setting up a nice, comfortable, clean camp where everybody gets their own bathroom and there's good food, that actually really matters. It helps bring good people, and good people are what paves the way for success. And it sounds like a good place to open up an Airbnb in the Lake area now. I mean, a couple months ago, when I was trying to arrange for various people to come and visit site, we couldn't even find hotel rooms for them. We had to, like, kick some of our contractors out to a community that's down the road so that we could steal their hotel rooms so that we could have people come and visit, because that's how busy it was in the town of Red Lake. All right. So, it looks like the stars have aligned. Gold prices near record, at or near record highs. You got the money. The samples are conforming to the estimates. And everything is full sail ahead to full operation in the second half of 2025. Absolutely. I mean, I love spending time on site like I have this week. I sit in on the morning huddle and on maintenance meetings and all of that, and you just... It really reinforces a good reminder to me of something that I talk about a lot. Like, rents are complicated, and every layer of that machine matters. And so, if you're having an issue with procurement, if you're having an issue sort of down the chain with maintenance, if you're having an issue... These things have the potential to reverberate through the machine. And so, it really takes experienced leadership and focus to make sure that you address those, to realize that those things are happening and to address them. And I'd say this whole test mining and ramp up process that we've gone through, you can't put a price on the value of that opportunity for us, because we've gone through that. We're currently... We're still going through that. We're seeing the issues that crop up, and we're figuring out how to do better. And so, we're doing that now, instead of trying to manage that as we're in ramp up towards commercial operations. So, yeah, really exciting to see all the hard work that's going on here. Yeah. Hey, I would love to see an update of the NPV, to see what it is with these new gold prices. Even if you don't accept the current gold price, but go 80% of it to 90%, I'd love to see what the NPV would be now. Yeah. I mean, the NPV just at that $2,600, the 20% upside on the gold price, just on the financial model, not changing what tons you mine, but just on the financial model, that NPV is 500 million Canadian, instead of the 315. And again, that's not changing. That's not adding the tons that we think we're going to be able to add economically, that we know we're going to add economically to mine. So, yeah, there's a lot of room for this situation to run. Yeah. And that's really 15% below what the current gold price is. So, that's going to make a big difference there. Anyways, appreciate you coming on, Glenn. And make sure you all go over to westredlakegold.com, sign up for notifications, so you'll know exactly when the results come in for the sample bulk tonnage, ticker symbols in the US, WLRGF. And of course, in Canada, WRLG. Glenn, we'll talk to you soon and get a further update. Thanks so much, Terry. Good to see you.