West Red Lake raises $20m via gold-linked note financing
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.
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.
