Thanks DT. I think you are going to do very well investing at this point, as most of the damage and dilution was already inflicted to longer-term shareholders. Now that they are actually putting out gold production numbers and have the operations working, maybe they can start making some cheddar in these record high gold prices to feed the exploration side of the business.

I’ve considered averaging down here in Lion One, but at this point, I want to see more proof in the pudding with future quarterly operations updates. I’m just going to let the stock price appreciate, but am down 49% in it, so… it’s going to be a while before that position is out of the red. I just checked, and it is officially my worst performing portfolio position out of 58 total positions… so very disappointing, but maybe they are hitting a better chapter in their journey moving forward.

On the plus side, I noticed 36 of the positions are well in the green, with a number up triple digit percentages, so those bail out the stinkers. 😉

Hi Doc – We talk about West Red Lake Gold a lot on this show, because they are show sponsors of the KE Report, and I’ve been invested in them, ever since Doc Jones brought it to our attention that they were going to buy the Pure Gold assets out of receivership.

Many of us have been following the journey of the Madsen Mine for a long time (ever since when Claude Resources was operating there in 2014, 2015, 2016….) Pure Gold took over the reigns next, and actually did a great job on the exploration side of the business, and even derisking and development. Personally, I made many great returns investing in Pure Gold during those years, and even sold out my final position on the news of their first gold pour. If I had ended my investing journey there with Pure Gold then it would have been a slam-dunk investing win for many years in a row.

However…. I noticed the company run into the inevitable startup challenges with the mine commissioning and launch into commercial production and watched it waffle. The stock price really got hit hard after the first 3-6 months of production didn’t get off to a good start, and at that time I felt the worst was behind them and started repositioning in the stock. We were having Darren on the show that was assuring us that things were back on track and they had worked through most of their issues. That was clearly not the case and it was a mistake for me to get back in during the their producing chapter, as was averaging down in the stock later, because that prior team just had no idea what they were doing with being a production story and it became a sinking ship, and then sunk. That was a really sad end to the Pure Gold journey, and overshadowed all the good years of growth that many have forgotten. (very much a parallel to Alexco, which also did fantastic with exploration and development, and then failed as producers).

Pure Gold was having too much “overbreak” in their ore initially, bringing in too much waste rock and diluting down their expected mined grades too much, and then they had even further challenges with reconciliation of the recovered grades versus their economic studies. That team was a trainwreck and really they were not the right team to be operating Madsen. The Claude team had done a better job on a smaller budget prior to them, but were just in a tough metals market in those years with much lower gold prices.

—>> I have MUCH more confidence with the West Red Lake Gold team with Shane as CEO (as a prior successful mine builder) and Will as VP of Exploration, and we’ve had them on the KE Report every few weeks giving all kinds of different exploration, derisking, and development updates. One of those updates a few months back was that WRLG actually recently poured some gold recovered when cleaning out their mill, and it was found out that Pure Gold had installed many components incorrectly and even put the liners in backwards, where all this gold was collecting in them and not making it through the rest of the circuit. This was a big contributing reason for the grade reconciliation not matching up, and bodes well for the WRLG team when they actually start up mining next year with the mill actually working correctly.

Additionally, the Pure Gold team had onerous debt loads that forced them to go right into mining the McVeigh Zone further up near surface in the Madsen Mine, but it has really complicated geology and is not easy to mine. Because there was a constant boot on their neck from the lenders to keep producing, they didn’t have the time to figure out the mine sequencing or other areas of the deposit.
Only in the end of their story did they really start getting into the much better Austin Zone, but by that time it was too late to bail water to keep the ship from sinking.

In contrast, the team at West Red Lake Gold Mines has taken their time for the last year to really do some quality infill definition drilling and has delineated much better areas to start mining at North Austin, Austin Main, and South Austin. They have dewatered down many more levels, and now have access all the way down to level 12, whereas Claude only got down to level 7, and Pure Gold stayed mostly up in the higher levels at McVeigh. This is going to be a totally different, and much more cogent strategy.

This is allowing the West Red Lake Gold Mines team to drill from underground (which is way more cost effective and way less meters than doing it from surface like Pure Gold was doing). This also means that in the 4th quarter of this year, they are going to drill the bonanza-grade 8-Zone from underground and it could be very similar to the high-grade zone that put Gold Corp and Rob McEwen on the map at the nearby Red Lake Gold Mine back in the day.

When one considers that all of the sunk costs have mostly been spent by prior teams (Claude & Pure Gold) and the mill is in place, and now properly installed and optimized, and that the West Red Lake Gold Mines team has spent a year defining the much better area to start mining, then I anticipate it very much will be a “3 times a charm” scenario at DT mentioned. They are getting the benefit of seeing 2 prior companies spend ~ $200 Million on everything, and are going to clean up shop with only needing to put in about $20-$30 million over the next year to put the Madsen Mine back into production.

Then layer in the fact the Frank Giustra is behind this company bankrolling it and bringing in his network, and has stated publicly several times, (most recently on Rick Rules podcast over at Rule Media), that he intends to use West Red Lake Gold Mines, to become a cash cow producer, to then go out an acquire and roll up other companies into it. Frank has done it before, and I see West Red Lake Gold Mines becoming much bigger than just the Madsen Mine and their nearby satellite Rowan Property over the fullness of time. The vision is to make it a multi-mine producer, and people looking at it today are able to get in before all that value creation.

Just my 2 cents as someone that has been following Madsen for a decade now, with each iteration of the company operators…. From Claude, to Pure Gold, and now West Red Lake Gold Mines, and as someone that has talked to the management team at WRLG dozens of times to ask questions and learn more about what went wrong with Pure Gold’s approach, and how they at WRLG are going to approach the restart in 2025. I’m stunned more people are not clued into what is going on here, but I think there are so many salty and wounded Pure Gold investors that they just don’t believe the mine can be run efficiently and profitably. By the time they do realize that, the valuation will be up multiple-fold. (not investing advice… just sharing my perspective after having spent several dozen hours learning more about this project over the years)

We literally just interviewed Will Robinson, VP of Exploration, yesterday regarding even more high-grade wide-intercept gold results that came back in from North Austin for anyone interested in learning more. We also discussed that they are going to eventually start trial mining certain areas from North Austin, Austin Main, and South Austin, in preparation for a full restart that is slated for the middle of next year.

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West Red Lake Gold – More Wide High-Grade Gold Intercepts Returned From North Austin Zone

https://youtu.be/ZJ4qpNEchcc

Here is their presentation 1.65 million ounces indicated and another 300 ounces inferred.

https://westredlakegold.com/wp-content/uploads/2024/07/West-Red-Lake-Presentation-2024-07-05_presentation.pdf

doesn’t sound like a monster deposit when compared to Lion One and Tuvatu mine, but sounds like their is enough drill targets to allow the resource to grow over time and maybe provide some some opportunities to expand the resource significantly. I like that Guistra is involved. Sounds like a pretty good story. Thanks for the history Ex.

I have been a Lion One shareholder for a while and was hurt when they surprised the market with the need to raise funds at the beginning of the year when they had previously told they did not need to raise funds to get the mine in production. So I have a little distrust for management, but they seem to be making the most out of the funds by expanding the production profile of the mine so I have slowly been accumulating shares on dips and averaging my basis down, but I agree with Doc that the stock could drift lower for the next few months and could create a double bottom before reversing higher so newer investors might need to remain a little patient.

Hi Charles, yes the deposit is smaller, but they’ve not even begun to test the limits along strike or at depth, and the Red Lake Mine next door goes down 4-5 times as much and that is where the goodies are. That is why I’m excited about 8-Zone getting tested. Also they have the Rowan deposit nearby with another 200,000+ very high-grade ounces that has only been drilled a little bit and will likely grow quite a bit at depth as well, and it will be a contributing satellite deposit.

I’m invested in both West Red Lake Gold and Lion One and see the vision of where they both can be solid producing assets in a bigger way in a couple years.

I would not touch anything……..Frank G…… sorry… but, his history is questionable ….

His history in gold mining is actually pretty impressive and he’s actively behind Aris Mining, West Red Lake Gold, and just got involved with NexGold (the new business combination of Treasury Metals and Black Wolf Copper & Gold). I believe you’re referring back to the Uranium One situation which is a different kettle of fish, than these gold development/production companies.

Always happy to share relevant info Charles. Cheers!