Impact: Positive
West Red Lake Gold (WRLG) reported results of a Pre-Feasibility Study (PFS) for its 100%-owned Madsen mine in Red Lake. The study outlined a 7.25-year LOM with average annual production of 67.6k oz Au over six years at an average operating cost of US$919/oz and initial Capex of $44.1M. At a long-term gold price of US$2,200/oz, the project generates an after-tax NPV5% of $315M, IRR of 255%, and payback period of <1 year. We believe the PFS is quite robust given the incorporation of a significant amount of new drilling, realized operating costs, and best mining practices. This should ensure that management does not face the same challenges as the prior owner of the project – see our initiation report for a discussion on how WRLG plans to properly develop and operate the mine. While there was no update to the MRE, we believe there remains potential for resource growth through the expansion of known zones and new discoveries. We maintain our BUY rating and target price of C$2.35/sh for WRLG.
