Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
West Red Lake Gold Mines (TSXV: WRLG) is raising $20 million through a private placement of gold-linked notes to fund the development and advancement of its Madsen gold mine project in Ontario.
Led by Raymond James as the lead agent, the financing will comprise units of West Red Lake that each contain gold-linked notes in the aggregate principal amount of US$1,000 plus 710 common share purchase warrants.
The notes will bear a coupon rate of 12% per annum, calculated and payable quarterly in arrears, and will mature on December 31, 2029. Starting 2026, the company will cause gold to be placed in escrow on a quarterly basis into a gold trust account.
The total principal amount of notes outstanding will be reduced by the company on a quarterly basis, commencing on March 31, 2026, and with the final payment on December 31, 2029, in accordance with a pre-determined payment schedule.
The notes will amortize based on a guaranteed floor price of $1,800/oz. Any excess proceeds by which the gold price exceeds the floor price will be paid to investors as a premium.
Canadian businessman and renowned mining financier Frank Giustra, who holds 11.07% of West Red Lake’s outstanding common shares, intends to purchase 3,700 of the units, representing $3.7 million in gross proceeds.
“The offering marks another key step in the financing process as we focus our efforts on the development of a derisked and robust restart plan for the Madsen gold mine while minimizing dilution to our shareholders,” stated Shane Williams, CEO of West Red Lake.
The former-producing Madsen gold mine was acquired through its April 2023 takeover of Pure Gold Mining (TSXV: PGM). Between 1938 and 1999, it outputted 2.5 million oz. at an average grade of 9.7 g/t gold. Pure Gold restarted mining in 2020, but that only lasted for about a year before financial struggles caused the mine to be placed into care and maintenance.
West Red Lake Gold Mines ended Tuesday’s session 3% higher at C$0.68 a share, for a market capitalization of C$134 million ($99m). The stock traded between C$0.31 and C$0.93 over the past 52 weeks.
