Gold Stock Ramps Up Production as Prices Hit New High

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West Red Lake Gold Mines Ltd. (WRLG:TSX.V; WRLGF:OTCQB; FRA:UJO) has reported its third-quarter operational update for the Madsen Mine in the Red Lake Gold District of Northwestern Ontario. The company confirmed that ramp-up activities remain on track, with production, efficiency, and ore movement all showing quarterly gains.

During the third quarter, the Madsen Mine produced 35,700 tonnes of ore at an average grade of 5.4 grams per tonne gold. The mill poured 7,055 ounces of gold, which were sold at an average price of US$3,456 per ounce for gross proceeds of CA$33 million. This compares to 5,260 ounces poured in the second quarter for CA$24 million and 496 ounces in the first quarter for CA$2.1 million. The company noted that mined and poured ounces may not align due to timing and gold in circuit.

Ore tonnage increased month over month as part of the broader ramp-up strategy. A key development in the quarter was the transition to underground waste rock storage. This change allowed the mine to reallocate trucking resources from waste haulage to ore haulage, resulting in higher ore movement rates. On several days in late September, the mine moved more than 1,000 tonnes per day, including a record of 1,400 tonnes.

Processing at the mill also shifted in August to using only direct-mined tonnes rather than a combination of mined and stockpiled ore, aligning output more closely with ongoing mining activity. Maintenance systems improved over the quarter, supporting consistent equipment availability for haul trucks, drills, and scoops.

The company continued to track reconciliation between modeled and actual mined grades, with results remaining strong. Sill development, which made up 25 to 30% of milled tonnage, averaged 8.8 grams per tonne gold during the quarter.

West Red Lake Gold also reported a successful bought deal financing that closed in September, raising total gross proceeds of CA$40.65 million. A cash commission of CA$2.27 million was paid to Raymond James Ltd., the lead underwriter.

Gold Sector Sees Record Capital Inflows as Prices Surge and Volatility Mounts

The gold sector saw unprecedented capital inflows during the third quarter of 2025, supported by rising prices and heightened global uncertainty. By late October, gold briefly reached a new all-time high, extending gains that began earlier in the year. Bloomberg reported on September 30 that gold had climbed more than 10% during the month of September alone. Analysts attributed the rally to a combination of fiscal and geopolitical concerns, including the threat of a U.S. government shutdown, which reinforced gold's role as a defensive asset.

Also on September 30, Goldman Sachs Research issued a market outlook citing ongoing central bank purchases and expectations for looser monetary policy from the U.S. Federal Reserve as key drivers of gold's recent strength. Analyst Lina Thomas pointed to survey results indicating that 95% of central banks expected global gold reserves to increase over the next 12 months, with emerging markets projected to account for the bulk of new demand.

O'Keefe reaffirmed a Buy rating and CA$2.20 target price.

While the broader tone remained constructive, some technical analysts advised caution. In his September 30 market note, Stewart Thomson observed that gold had reached a key technical level of US$3,800 per troy ounce. He cautioned that short-term pullbacks were possible given continued fiscal strain and elevated geopolitical risk, but noted that prices above US$3,000 remained supportive for producers. Thomson suggested that conservative investors might consider limiting profit-taking to approximately 30% of their gold holdings.

Investor enthusiasm was also reflected in capital market activity. On October 1, Rocks Daily reported that gold mining companies raised a record sum through equity offerings in the third quarter. Proceeds from share issuances reached the highest level ever recorded for the sector, signaling strong investor confidence and a growing appetite for gold exposure amid continued market volatility.

As Stockhead reported on October 7, Gold continued to shine in early October as the XGD index climbed 1% during morning trade on the ASX, following bullion's surge to a new all-time high of US$3,922 per ounce. The move came as global markets grappled with limited economic visibility amid a U.S. government shutdown and mounting investor uncertainty. Analysts described the rally less as a sign of exuberance and more as a flight to safety, with gold increasingly seen as one of the few remaining assets that investors trust in volatile times. The gains stood in contrast to the broader market trend, with tech stocks under pressure and the ASX briefly crossing the 9000 mark before dipping 0.13% by midday.

Analyst Commentary Supports Growth Outlook

Cantor Fitzgerald analyst Matthew O'Keefe has provided consistent coverage of West Red Lake Gold, highlighting both near-term progress and long-term potential. On September 12, O'Keefe reaffirmed a Buy rating and CA$2.20 target price, representing 124% upside from the company's CA$0.98 share price at the time. He reported that the Madsen Mine had poured 5,350 ounces of gold through June, with the mill operating at 650 tonnes per day and 95% recovery, and that trial runs at 800 tonnes per day had been completed. O'Keefe also pointed to more than 150 kilometers of definition drilling and continued progress on shaft refurbishment, cemented rock fill installation, and underground equipment deliveries.

From a financial standpoint, he noted that the company generated second-quarter revenue of CA$24.3 million, gross profit of CA$8.6 million, net income of CA$3.5 million, and operating cash flow of CA$5.9 million. West Red Lake Gold ended the quarter with CA$23.7 million in cash and CA$1.7 million in working capital. "The company was cash flow positive in Q2/2025," O'Keefe wrote, "and should continue and build its working capital position in the months ahead."

He also reviewed the Preliminary Economic Assessment (PEA) for the Rowan project, which showed a post-tax Net Present Value of CA$125 million and a 42% internal rate of return at a gold price of US$2,500 per ounce. At US$3,250 gold, Rowan's value increased to CA$239 million with an 82% internal rate of return. O'Keefe concluded that "the high-grade nature of the mine with its significant upside potential should ultimately drive a premium valuation," noting that the stock traded at 0.4x net asset value compared to peer averages between 0.8x and 1.0x.

In a separate note dated September 24, O'Keefe described Rowan as "a key growth project that will provide the company with a near-term path to producing over 100 Koz of gold at Red Lake." He also confirmed that proceeds from a recent flow-through share issuance would be used to fund advancement of the project.

On September 5, John Newell of John Newell & Associates offered a similarly constructive outlook, emphasizing the company's dominant land position in the Red Lake gold district. He credited the acquisition of the Madsen Mine and ongoing exploration success for renewing investor attention. "The stock has spent years building a long base," Newell wrote, "and rising volume now points to a potential breakout."

Operational Advancements Point to Production Readiness

West Red Lake Gold outlined several critical components that it plans to complete ahead of declaring commercial production at the Madsen Mine. The first of these, underground waste storage in historic voids, became fully operational in September. A previously mined stope near the 1155 mining complex was determined to be significantly larger than expected and is now being filled with up to 2,000 tonnes of waste rock per day. This has supported increased ore production through better truck utilization and ventilation capacity.

The company is also preparing to begin shaft-based ore transport. Originally constructed in the 1950s and rehabilitated in 2024, the Madsen Shaft is expected to begin moving 350 tonnes of ore per day in November. Necessary hoist components were delivered in August, and the remaining skip equipment is scheduled to arrive in October.

Additional mining equipment is expected to arrive within the next two months, including a 42-tonne haul truck and two Komatsu scoops. These will complete the mine's planned fleet and support continued ramp-up.

West Red Lake Gold also expects to complete its 2026 mine plan before year-end. This plan includes all detailed operational metrics and will provide the structure for transitioning to commercial production. The company noted that progress across geology, engineering, maintenance, and water treatment functions remains aligned with ramp-up objectives.

In parallel with its work at Madsen, West Red Lake Gold continues to advance the Rowan project in the Red Lake District. Rowan is expected to contribute an additional 35,000 ounces of gold annually once in production, complementing output from Madsen and enhancing the company's regional profile. 

Ownership and Share Structure

According to Refinitiv, strategic investor Sprott Resource Lending Corp. holds about 8% of West Red Lake Gold.  Institutions own about 30%, while management, insiders, and advisors hold around 10%. The remaining shares are held by retail investors.

The company's market capitalization is CA$384 million, with a 52-week stock price range of CA$0.52 - CA$1.18.