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West Red Lake Pre-Feasibility Study Projects 255% IRR with VP Gwen Preston · Financial Survival Network

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  Speaker 1: It is sort of a worst case scenario study from
• 0:03
  Speaker 1: that perspective, but yeah, it's still generated results that we're
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  Speaker 1: going to be producing almost seventy thousand ounces of gold
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  Speaker 1: a year over the six years of full production that
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  Speaker 1: are in this study, and those ounces are going to
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  Speaker 1: generate seventy million dollars Canadian in free cash flow over
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  Speaker 1: those on.
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  Speaker 2: Average over those seven years.
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  Speaker 1: And the IRR, the internal rate of return on this
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  Speaker 1: thing is two hundred and fifty five percent.
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  Speaker 2: The Financial Survival Network now, more than ever, the Financial
• 0:39
  Speaker 2: Survival Network.
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  Speaker 3: Welcome.
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  Speaker 4: This is Financial Survival Network. I'm your host, Carrie Lets.
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  Speaker 4: We are getting an important sponsor update from West red
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  Speaker 4: Lake Gold's VP of Communications, Gwenn Preston. Gwent. It's great
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  Speaker 4: to have you back on the show. Hey, the big
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  Speaker 4: news you're released your preliminary feasibility study, which we're talking
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  Speaker 4: pre call should be called the worst the absolute worst
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  Speaker 4: case scenario, and in this case, the worst case scenario
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  Speaker 4: looks pretty good.
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  Speaker 2: Yes, I love that capture.
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  Speaker 1: I mean worst case scenario in that you use the
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  Speaker 1: you know, the independent consultants who do these mind plans
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  Speaker 1: use extreme conservatism, right, so the cutoff price that they
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  Speaker 1: used to determine which tons were economically viable to mine.
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  Speaker 2: That was one thy six hundred.
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  Speaker 1: And eighty dollars sixteen eighty reserve price cut off for
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  Speaker 1: determining which tons are economic to mine. I mean, that's
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  Speaker 1: one thousand dollars below the current gold price. So that's
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  Speaker 1: as a starting point, really conservative, and then you apply
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  Speaker 1: that so that squeezes down the amount of tons that
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  Speaker 1: you can mine from the amount that you have nowhere there,
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  Speaker 1: squeezes it down to just the highest grade small areas,
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  Speaker 1: and then you apply a conservative gold price to the
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  Speaker 1: financial model. You apply a twenty two hundred dollars long
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  Speaker 1: term gold price to the financial model, which.
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  Speaker 2: Squeezes things down again.
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  Speaker 1: So yes, it is sort of a worst case scenario
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  Speaker 1: study from that perspective, but yeah, it's still generated results
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  Speaker 1: that we're going to be producing almost seventy thousand ounces
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  Speaker 1: of gold a year over the six years of full
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  Speaker 1: production that are in this study, and those ounces are
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  Speaker 1: going to generate seventy million dollars Canadian in free cash flow.
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  Speaker 2: Over those on average over those seven years.
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  Speaker 1: And the IRR the internal rate of return on this
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  Speaker 1: thing is two hundred and fifty five percent, which is
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  Speaker 1: of course, a crazy number in the grand scheme of
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  Speaker 1: mining studies, where usually you're desperately trying to get about
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  Speaker 1: thirty percent.
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  Speaker 2: And if that just reflects.
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  Speaker 1: That we did the We bought an asset that was
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  Speaker 1: mostly built, and then we raised a hundred million dollars.
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  Speaker 2: We raised and spent one hundred million dollars last.
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  Speaker 1: Year, so that the denominator in the IRR, the amount
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  Speaker 1: left to spend that number is really small. That's why
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  Speaker 1: you end up with a really hot rate of return
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  Speaker 1: because we're pretty much done the spend.
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  Speaker 2: We're turning this mine on very soon.
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  Speaker 1: It really nice to get this study out the door
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  Speaker 1: so we can talk about production, even if it is
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  Speaker 1: a very constrained version of what we are actually going
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  Speaker 1: to do.
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  Speaker 4: Yeah, and imagine if it showed the most likely scenario
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  Speaker 4: that IURR would go astronomical exponential.
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  Speaker 2: I think. So, I mean we are going to mine.
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  Speaker 1: We very much expect to mine higher tonnage than is
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  Speaker 1: in this on a daily basis.
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  Speaker 2: Higher overall tonnage.
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  Speaker 1: So we expect it to be a bigger mine on
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  Speaker 1: a daily basis that lasts longer.
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  Speaker 2: The grade might be a bit lower than what's in
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  Speaker 2: this because these red lag systems have a really high
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  Speaker 2: grade core to the vein, and then they do have
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  Speaker 2: a halo, so call it.
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  Speaker 1: Another meter of width a half meet on each side
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  Speaker 1: that averages three or four grams per ton. That three
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  Speaker 1: or four gram per ton halo that got excluded from
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  Speaker 1: this study because it was an economic based on that
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  Speaker 1: sixteen eighty.
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  Speaker 2: US gold price. So we it'll be slightly lower grade,
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  Speaker 2: but it'll be more.
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  Speaker 1: Times and you'll daily end over the life of mine,
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  Speaker 1: and that will economically work out better.
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  Speaker 2: So we're going to produce the number of ounces that
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  Speaker 2: we state or more, and we.
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  Speaker 3: Expect hopefully that the costs will be a bit lower
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  Speaker 3: as well, because that wider mining approach long hal stoping
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  Speaker 3: instead of the cut and fill that's really focused on
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  Speaker 3: the narrow stuff, is about half the mining costs.
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  Speaker 2: So there's a lot of potential upside in all of
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  Speaker 2: these numbers.
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  Speaker 4: Yeah, and then even without the upside, two hundred and
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  Speaker 4: fifty five percent IRR. You know, hedge funds in the
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  Speaker 4: New York City would kill for that kind of are
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  Speaker 4: in fact, they've been known to. But we look at
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  Speaker 4: operation date Q two that's still on track.
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  Speaker 1: Yeah, So in Q two well, I guess in Q
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  Speaker 1: one in March, we're going to turn on the mill
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  Speaker 1: so that.
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  Speaker 2: We can process the bulk samples.
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  Speaker 1: And then so that'll process the bulk samples, which is
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  Speaker 1: really important, we'll be able to compare the tonnage and
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  Speaker 1: grade that we say we're going to deliver to the
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  Speaker 1: tonnage and grade that we actually delivered for those bulk
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  Speaker 1: samples from a few parts of the mine, and then
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  Speaker 1: we will roll into production mining. Now we want to
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  Speaker 1: we want to say that it's sort of near the
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  Speaker 1: end of Q two that we're guaranteed to be doing it.
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  Speaker 1: But that's that's absolutely the timeline that we're in.
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  Speaker 4: That's pretty exciting to see project like this given up
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  Speaker 4: for dead, resurrected and made operational and profitable. Pretty good.
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  Speaker 4: Any are there any obstacles you see in the path.
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  Speaker 4: It's just a question of doing the work. Now. Is
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  Speaker 4: there anything potentially that we should be aware of?
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  Speaker 1: You know, really the key obstacle was making sure that
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  Speaker 1: we had the money in place so that we could
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  Speaker 1: do the work. Like you said, the other thing is
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  Speaker 1: just getting the work done, and that was the other
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  Speaker 1: big achievement that you and I discuss pre call that's
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  Speaker 1: happened since the last time I was on the show,
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  Speaker 1: which is that we closed the deals to put the
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  Speaker 1: money in the bank so that we are funded to
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  Speaker 1: get this thing into production.
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  Speaker 2: So that was we did a.
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  Speaker 1: Financing in the fall, but then at the beginning of
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  Speaker 1: this year we closed a debt facility with Nabari.
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  Speaker 2: That's a thirty five million US debt facility. We've pulled
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  Speaker 2: the first.
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  Speaker 1: Fifteen million of that, still twenty million available on that,
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  Speaker 1: and that is the amount of money that we need
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  Speaker 1: to get this thing up and running.
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  Speaker 2: So that's the real That was the biggest.
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  Speaker 1: D risking step perhaps, I mean, the study is important
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  Speaker 1: because we want everyone to have a base case for
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  Speaker 1: what we're doing. But having the money in the bank
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  Speaker 1: now we can really put our heads down and just
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  Speaker 1: focus on making sure things like the mining at site
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  Speaker 1: ramps up in terms of rate and maintains accuracy. Like
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  Speaker 1: that's the kind of thing that is really essential in
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  Speaker 1: success at a high.
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  Speaker 2: Grade underground goal mine.
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  Speaker 1: Your miners have to mine in exactly the right places,
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  Speaker 1: and they have to do it with enough efficiency that
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  Speaker 1: you're doing the meters a day that your mind plan
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  Speaker 1: calls for. And so this test mining that we're doing
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  Speaker 1: right now. That's the stuff we're going to put through
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  Speaker 1: the mill in March. This test mining is amazing for
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  Speaker 1: that it is truly practicing before you do. So like
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  Speaker 1: the miners are practicing on mining in this the range
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  Speaker 1: of environments that's there, close to old stops.
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  Speaker 2: Not close to old stops, narrower areas, wider areas.
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  Speaker 1: We're practicing it so that we know exactly the right
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  Speaker 1: approach to be safe first and then accurate and efficient.
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  Speaker 1: So just ramping up that meterage and making sure that
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  Speaker 1: things are happening on site with the kind of like
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  Speaker 1: I say, accuracy, reliability and efficiency that they need to
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  Speaker 1: that's really fundamental in a new mind. So that's the
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  Speaker 1: biggest obstacle for us as a team over the next
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  Speaker 1: few months.
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  Speaker 3: Right.
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  Speaker 4: So it's just basically bringing all the details together and
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  Speaker 4: this will market Change's sixth success full mind restart, which
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  Speaker 4: has got to be some kind of record out there.
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  Speaker 2: It probably is.
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  Speaker 1: I wonder if there's anybody anybody else between builds and restarts.
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  Speaker 2: He's yeah, he's absolutely done a lot. He is. He's
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  Speaker 2: at the Mind sight right now.
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  Speaker 1: We were in Toronto last week marketing this prefeasibilities that
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  Speaker 1: he and he flew to the mind side and he
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  Speaker 1: sent me a picture of himself from inside. You you
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  Speaker 1: fly to red Lake from Winnipeg and it's about a
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  Speaker 1: forty five minute flight on a very very small airplane
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  Speaker 1: that's run by a company called bare Skin Airlines, And
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  Speaker 1: he sent me a picture from the inside of the plane,
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  Speaker 1: which seats about sixteen people. I think, you know, one
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  Speaker 1: person per side on each side of the aisle. He
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  Speaker 1: was the only person on the plane and it was
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  Speaker 1: minus three celsius inside the plane.
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  Speaker 2: And he, despite all of that, was very excited to
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  Speaker 2: be heading.
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  Speaker 1: To Red Lake because he loves being on site and
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  Speaker 1: making sure that this operational readiness is building up.
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  Speaker 4: Yeah, he's very much a hands on operator, and I
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  Speaker 4: guess thank goodness for Canada's bush pilots that kind of
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  Speaker 4: make the industry work. So we're going to look for
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  Speaker 4: Q two later in Q two start to production. But
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  Speaker 4: everything is happening now. Hey, we'll see you in Vancouver
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  Speaker 4: at VRICK. Everybody go over to Westredlakegold dot com sign
• 9:20
  Speaker 4: up for notifications. They're coming fast and furious, and the
• 9:25
  Speaker 4: ticker symbols in the US w l R GF and
• 9:30
  Speaker 4: of course in Canada wr LG Gwen. We'll see you soon.
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  Speaker 4: Thanks so much.
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  Speaker 2: Nice to see you, Kerry, We'll see you next week.
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  Speaker 2: The Financial Survival Network