A Young High-Grade Gold Producer With Ambitions Of Growing To Mid-Tier Status
West Red Lake Gold CEO Shane Williams has dreams of seeing his company grow to being a 150,000 ounce/year gold producer, I wouldn't bet against him.
Two years ago, Shane Williams was appointed as President and CEO of West Red Lake Gold (TSX-V:WRLG, OTC: WRLGF). Since then, he has built a high-grade gold producer that restarted the Madsen Mine on schedule. The mine plan has Madsen producing 67,000 oz. a year in 2026, once the company completes ramp up this year. However, Williams’ real goal is to build West Red Lake into a 150,000 ounces/year producer over the next few years. He views Wesdome as an ambitious model for West Red Lake to strive to replicate.
At last week’s Rule Symposium in Boca Raton, Florida I had the opportunity to catch up with Shane to learn a little bit more about West Red Lake Gold.
Goldfinger: Shane, congratulations on the mine startup and the ramp up. Uh, a lot of work has gone into this and I'm sure it wasn't very easy.
Shane Williams: No, no. As I was just saying to somebody else, we were here last year and, uh, we weren't in production. We were just starting to get the process. People were just beginning to get into the story. And so, you know, it's nice to have come a year later. Not many companies have moved as fast as West Red Lake, within that year and are in production from a development story to a producer. So, it's great to be in production. We have a good team and it's been good. We're in production now and we're ramping up between now and the end of the year. So, yeah, I’m proud of the team’s progress.
Goldfinger: The West Red Lake Gold story is one that is many years in the making and now you're a real mining company. You’ve been ramping up and feeding the mill as much as 900 tonnes on certain days. The average head grade is also increasing. So tell us about that and what causes the variance in the throughput to the mill.
Shane Williams: Well, because we're in ramp up at the moment, we're testing the mill. So it's part of that testing process where the mill has run at 800 tonnes a day, but just so your listeners are aware the mill can actually go to 1200 tonnes a day. Everything is fine, so we are pushing the mill a little bit and that's why we're going 800 tonnes/day, 900 tonnes/day, we even got to 1,000 tonnes a day. The idea is to just see do we keep recoveries? Does the mill work fine? Is everything good? But all that's working well. That's why we're pushing the mill a little bit.
Goldfinger: So you're ramping up to 900 or 1,000 tonnes on certain days. And based on the results what is the mill telling you?
Shane Williams: So the mill is telling me that the mill is working well. You know, the mill was never an issue with this. And we just wanted to test that recoveries are good. The mill is working. Everything is working, and that's what we want to see. It's part of the ramp up process. That's what you want to understand before you get into full production. Does the mill work? Does it have good maintenance? Utilization? All of it. So, that's what we're trying to test. And so far, everything is going as planned.
Goldfinger: The Madsen mine has an average resource grade of about 8.2 g/t gold. But when you started up the mill you were processing three or four gram ore. The head grade is trending up, but tell us why it started out lower.
Shane Williams: That’s right. So when you start up a mill, there's always issues with a mill. It's been down for so long, you're starting it up, you're testing, you're trying to ramp it up. And when you're doing that ramp up, things can go wrong. You don't want to be putting your highest grade ore through the mill obviously because if something happens, it goes out the back door, it doesn't get processed. So when you start off a mill, as you're ramping up the mill, you're also trying to ramp up the grade.
You start at low grade, then you move to higher grade, and you move to higher grade. When it's all tuned, it's like a racing car. You put your best driver in it when it's all tuned up. So, that's kind of what's been going on. We start off with a lower grade, then we move to the next grade, then we move to the next grade, and then once we get to that run rate, then we put that higher grade material through.
Goldfinger: I see. So, eventually you will be running 7-9 gram/tonne material through the mill?
Shane Williams: Yeah. As we ramp up and do that, we would be getting to the higher grade material.
Goldfinger: And when do you expect you'll get to the higher grade stopes?
Shane Williams: So that would probably be well into next year I would say. The part of the mine we're in now, at the moment, has an average grade of around 6 g/t gold and then as we get deeper in the mine the grade will rise because the 8.2 g/t number is the average grade for the entire life of mine. So that's over a seven year mine life. Some parts of the ore body are 9 or 10 grams, some parts are four or five grams. So it's an average grade, you know, depending where you're mining, how you're mining, etc.
When they do a prefeasibility study, they look over the life of the mine. So it goes up and down, it varies year to year.
Goldfinger: What is the average throughput that you expect from now till the end of the year at Madsen and what do you expect the average rate to be?
Shane Williams: So I would say the average throughput would be in the 600 to 700 tonnes per day range. We'll try and keep it at that. The average grade would be roughly 6 g/t gold. Those are the numbers we're aiming for this year. Then in 2026, then it's fully ramped up where we’ll be averaging 7-8 grams/tonne ore and the throughput will be 800 tonnes per day. So that gives you the 60,000 to 65,000 ounces of annual production at full throughput.
Goldfinger: That’s a great explanation. Investors always want to know about the blue sky, how can the company grow? How can the company build ounces and expand the mine life? What's the possibility of expanding the mill? Please tell us about that.
Shane Williams: So the mill actually has a good possibility of expanding. As I said, we’re testing it up to 1,000 tonnes per day. During the previous operators, they ran it to 1,200 tonnes. So as it stands today, the mill can process up to 1,200 tonnes per day. We published a PEA for the Rowan property, which is another property we own that’s located only 80 kilometers away from Madsen. In addition, we're looking at some other properties around the area. So once you get these properties they can all feed that material into the Madsen Mill, then we can ramp the Madsen Mill probably up to 1500 tonnes per day.
At that point you would have a very good scale operation, roughly double what it is today. At 1,500 tonnes/day with higher grade feed coming from Rowan, that would result in 120,000 to 150,000 ounces a year over time. So that's where our vision is to get to that Red Lake operation built on Madsen and a number of deposits to 150,000 ounces a year.
Goldfinger: That’s a powerful vision of having multiple satellite operations feeding one central mill in Red Lake. But that will likely take a few more years to fully manifest, correct?
Shane Williams: Yeah, probably starting with Madsen first and then ramping up over stages over the next two or three years.
Goldfinger: Tell us about the team, running a mine is a complex operation that requires a high level of teamwork. Who are some of the key members on the team?
Shane Williams: Yeah, so we've put together a good team, including a focus on hiring younger people who can help us to grow 5-10 years from now. As you're probably aware, in the mining industry there's not a lot of young people in the industry. There’s a lot of people who are at the end of their career. So the idea is to build a big company today and that takes five to seven years, you want a team that's in there early and can grow with that company. We've selected a team with some very good people I've hired. Also, you’ve got to understand that when you're doing what we're doing, an early stage construction, development, and operation it's a different skill set from earlier stages like exploration. The people who find the ore body shouldn't be the people who run the mines. It's a different skill set mentality. We've had to bridge all that gap.
So, we've done it in stages. We have a very good team now that I believe is a good platform to grow the company.
Goldfinger: Who is the mine manager at site?
Shane Williams: We have two key operational people. One is Hayley Halsall-Whitney, our VP of Operations.. She joined about five months ago. Sean McCormack is our GM and they're two people who came with lots of experience. They both actually came from Wesdome (TSX:WDO), you might know Wesdome. Both Hayley and Sean started at Kiena and Eagle River which were very similar to Madsen, older mines, brownfield projects, and they converted both of those into what Wesdome is today, a very big producer. That's kind of the model and why they came across to join the West Red Lake team and grow the company. Basically, I see Wesdome as a good analogy to West Red Lake as we go forward. Today, Wesdome produces around 160,000 ounces a year. That's kind of where we see ourselves getting to. People can do their own analysis of Wesdome, what it's worth and then they can look at West Red Lake and compare.
Goldfinger: I’m always fascinated by the end product of all the work that goes into gold mining. I saw you post a photo holding a gold doré bar on social media, I think it was like 500 ounces of gold. Where do you send that bar and how does West Red Lake get paid for it?
Shane Williams: In Canada, there's a number of companies who buy gold from mines, but effectively it ends up in the Canadian Royal Mint and they make coins out of it, or they keep it in their vault. As soon as they pick up the gold, we get paid. From a mine basis, once we somebody picks up the gold, we get paid.
Goldfinger: 500 ounces of gold is worth more than C$2 million today. Is there anybody who tries to steal that from the mine?
Shane Williams: As the price keeps going higher, it gets riskier for sure. Some of the big mines have a lot of security, you know, because the larger mines are not only producing gold, but they are sometimes storing gold. So, it can be quite a lot. You have to have good security protocols.
Goldfinger: Since the start of the year the gold price has risen considerably. How much does that help you to have a higher gold price? When you made the decision to run West Red Lake were you contemplating a $3,300 gold price?
Shane Williams: Yeah, that’s a good question. When we bought the property it was $1,500 gold. So when you think back to when we bought the project today, it makes a big difference in terms of economics. You know there's two things in gold mining that really help: 1. Grade 2. The price of gold. We have both at West Red Lake.
We have a high grade mine with strong gold prices. As an example, today we're producing 600 tonnes/day. Never mind about 800 tonnes or above, just at 600 tonnes/day we're producing about 2,500 ounces a month. At today's gold price in Canadian dollars, that's about C$10 million dollars a month. You know that’s basically enough to cover our cost every month without even going higher. Then when you go higher and increase production, that’s when we start generating larger profits. So it's a good time to be producing gold.
West Red Lake Gold Mines (Daily)
Goldfinger: Last question, what kind of news flow do you expect to have for the rest of the year? Will you publish a monthly update with production and cost metrics?
Shane Williams: Over the last year we published a regular construction update as some of your viewers will know. And so we'll start to do the same sort of updates as an operator. We had a monthly update out in June that you mentioned where we were showing the ramp up in the grade. Now we'd be putting out a number of them on a monthly basis as we go forward so people can see the amount we're producing during the ramp up.
Goldfinger: Thank you Shane, this was a great update conversation.
Shane Williams: Thank you very much.
Disclosure: Author owns WRLG.V shares at the time of publishing this interview. West Red Lake Gold Mines Ltd. has paid for the production and dissemination of this CEO interview.
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