Speaker 1: It is sort of a worst case scenario study from
that perspective, but yeah, it's still generated results that we're
going to be producing almost seventy thousand ounces of gold
a year over the six years of full production that
are in this study, and those ounces are going to
generate seventy million dollars Canadian in free cash flow over
those on.
Speaker 2: Average over those seven years.
Speaker 1: And the IRR, the internal rate of return on this
thing is two hundred and fifty five percent.
Speaker 2: The Financial Survival Network now, more than ever, the Financial
Survival Network.
Speaker 3: Welcome.
Speaker 4: This is Financial Survival Network. I'm your host, Carrie Lets.
We are getting an important sponsor update from West red
Lake Gold's VP of Communications, Gwenn Preston. Gwent. It's great
to have you back on the show. Hey, the big
news you're released your preliminary feasibility study, which we're talking
pre call should be called the worst the absolute worst
case scenario, and in this case, the worst case scenario
looks pretty good.
Speaker 2: Yes, I love that capture.
Speaker 1: I mean worst case scenario in that you use the
you know, the independent consultants who do these mind plans
use extreme conservatism, right, so the cutoff price that they
used to determine which tons were economically viable to mine.
Speaker 2: That was one thy six hundred.
Speaker 1: And eighty dollars sixteen eighty reserve price cut off for
determining which tons are economic to mine. I mean, that's
one thousand dollars below the current gold price. So that's
as a starting point, really conservative, and then you apply
that so that squeezes down the amount of tons that
you can mine from the amount that you have nowhere there,
squeezes it down to just the highest grade small areas,
and then you apply a conservative gold price to the
financial model. You apply a twenty two hundred dollars long
term gold price to the financial model, which.
Speaker 2: Squeezes things down again.
Speaker 1: So yes, it is sort of a worst case scenario
study from that perspective, but yeah, it's still generated results
that we're going to be producing almost seventy thousand ounces
of gold a year over the six years of full
production that are in this study, and those ounces are
going to generate seventy million dollars Canadian in free cash flow.
Speaker 2: Over those on average over those seven years.
Speaker 1: And the IRR the internal rate of return on this
thing is two hundred and fifty five percent, which is
of course, a crazy number in the grand scheme of
mining studies, where usually you're desperately trying to get about
thirty percent.
Speaker 2: And if that just reflects.
Speaker 1: That we did the We bought an asset that was
mostly built, and then we raised a hundred million dollars.
Speaker 2: We raised and spent one hundred million dollars last.
Speaker 1: Year, so that the denominator in the IRR, the amount
left to spend that number is really small. That's why
you end up with a really hot rate of return
because we're pretty much done the spend.
Speaker 2: We're turning this mine on very soon.
Speaker 1: It really nice to get this study out the door
so we can talk about production, even if it is
a very constrained version of what we are actually going
to do.
Speaker 4: Yeah, and imagine if it showed the most likely scenario
that IURR would go astronomical exponential.
Speaker 2: I think. So, I mean we are going to mine.
Speaker 1: We very much expect to mine higher tonnage than is
in this on a daily basis.
Speaker 2: Higher overall tonnage.
Speaker 1: So we expect it to be a bigger mine on
a daily basis that lasts longer.
Speaker 2: The grade might be a bit lower than what's in
this because these red lag systems have a really high
grade core to the vein, and then they do have
a halo, so call it.
Speaker 1: Another meter of width a half meet on each side
that averages three or four grams per ton. That three
or four gram per ton halo that got excluded from
this study because it was an economic based on that
sixteen eighty.
Speaker 2: US gold price. So we it'll be slightly lower grade,
but it'll be more.
Speaker 1: Times and you'll daily end over the life of mine,
and that will economically work out better.
Speaker 2: So we're going to produce the number of ounces that
we state or more, and we.
Speaker 3: Expect hopefully that the costs will be a bit lower
as well, because that wider mining approach long hal stoping
instead of the cut and fill that's really focused on
the narrow stuff, is about half the mining costs.
Speaker 2: So there's a lot of potential upside in all of
these numbers.
Speaker 4: Yeah, and then even without the upside, two hundred and
fifty five percent IRR. You know, hedge funds in the
New York City would kill for that kind of are
in fact, they've been known to. But we look at
operation date Q two that's still on track.
Speaker 1: Yeah, So in Q two well, I guess in Q
one in March, we're going to turn on the mill
so that.
Speaker 2: We can process the bulk samples.
Speaker 1: And then so that'll process the bulk samples, which is
really important, we'll be able to compare the tonnage and
grade that we say we're going to deliver to the
tonnage and grade that we actually delivered for those bulk
samples from a few parts of the mine, and then
we will roll into production mining. Now we want to
we want to say that it's sort of near the
end of Q two that we're guaranteed to be doing it.
But that's that's absolutely the timeline that we're in.
Speaker 4: That's pretty exciting to see project like this given up
for dead, resurrected and made operational and profitable. Pretty good.
Any are there any obstacles you see in the path.
It's just a question of doing the work. Now. Is
there anything potentially that we should be aware of?
Speaker 1: You know, really the key obstacle was making sure that
we had the money in place so that we could
do the work. Like you said, the other thing is
just getting the work done, and that was the other
big achievement that you and I discuss pre call that's
happened since the last time I was on the show,
which is that we closed the deals to put the
money in the bank so that we are funded to
get this thing into production.
Speaker 2: So that was we did a.
Speaker 1: Financing in the fall, but then at the beginning of
this year we closed a debt facility with Nabari.
Speaker 2: That's a thirty five million US debt facility. We've pulled
the first.
Speaker 1: Fifteen million of that, still twenty million available on that,
and that is the amount of money that we need
to get this thing up and running.
Speaker 2: So that's the real That was the biggest.
Speaker 1: D risking step perhaps, I mean, the study is important
because we want everyone to have a base case for
what we're doing. But having the money in the bank
now we can really put our heads down and just
focus on making sure things like the mining at site
ramps up in terms of rate and maintains accuracy. Like
that's the kind of thing that is really essential in
success at a high.
Speaker 2: Grade underground goal mine.
Speaker 1: Your miners have to mine in exactly the right places,
and they have to do it with enough efficiency that
you're doing the meters a day that your mind plan
calls for. And so this test mining that we're doing
right now. That's the stuff we're going to put through
the mill in March. This test mining is amazing for
that it is truly practicing before you do. So like
the miners are practicing on mining in this the range
of environments that's there, close to old stops.
Speaker 2: Not close to old stops, narrower areas, wider areas.
Speaker 1: We're practicing it so that we know exactly the right
approach to be safe first and then accurate and efficient.
So just ramping up that meterage and making sure that
things are happening on site with the kind of like
I say, accuracy, reliability and efficiency that they need to
that's really fundamental in a new mind. So that's the
biggest obstacle for us as a team over the next
few months.
Speaker 3: Right.
Speaker 4: So it's just basically bringing all the details together and
this will market Change's sixth success full mind restart, which
has got to be some kind of record out there.
Speaker 2: It probably is.
Speaker 1: I wonder if there's anybody anybody else between builds and restarts.
Speaker 2: He's yeah, he's absolutely done a lot. He is. He's
at the Mind sight right now.
Speaker 1: We were in Toronto last week marketing this prefeasibilities that
he and he flew to the mind side and he
sent me a picture of himself from inside. You you
fly to red Lake from Winnipeg and it's about a
forty five minute flight on a very very small airplane
that's run by a company called bare Skin Airlines, And
he sent me a picture from the inside of the plane,
which seats about sixteen people. I think, you know, one
person per side on each side of the aisle. He
was the only person on the plane and it was
minus three celsius inside the plane.
Speaker 2: And he, despite all of that, was very excited to
be heading.
Speaker 1: To Red Lake because he loves being on site and
making sure that this operational readiness is building up.
Speaker 4: Yeah, he's very much a hands on operator, and I
guess thank goodness for Canada's bush pilots that kind of
make the industry work. So we're going to look for
Q two later in Q two start to production. But
everything is happening now. Hey, we'll see you in Vancouver
at VRICK. Everybody go over to Westredlakegold dot com sign
up for notifications. They're coming fast and furious, and the
ticker symbols in the US w l R GF and
of course in Canada wr LG Gwen. We'll see you soon.
Thanks so much.
Speaker 2: Nice to see you, Kerry, We'll see you next week.
The Financial Survival Network