West Red Lake Gold’s Tom Meredith on a mission to repeat past successes
When I started out as an analyst of junior mining companies, one of the key features I was taught to look for was simply where the deposit was located relative to the deposits of the major mines. The logic was two-fold, namely, if the junior’s deposit was in close proximity to a well-established mine, then the likelihood that there would be similar mineralogy was vastly increased. Secondly, the hope was that a major mine, looking to expand its own asset base, would take a strategic interest in the junior mine, either offering funding or expertise or both.
To this end, the continuing partnership between West Red Lake Gold Mines Inc. (CSE: RLG | OTCQB: RLGMF) (“West Red Lake Gold”) in Ontario, Canada and Goldcorp Inc. (TSX: G) aimed at delineating the Rowan mine and a nearby geological structural intersection has ensured that this junior has had a place on my radar for nearly two years. In this instance, Goldcorp is the funding partner and West Red Lake Gold, the operator. Goldcorp’s expertise in this area massively increases West Red Lake Gold’s chances of expanding the mineralized area quickly by offering targeting assistance.
Get our daily investorintel update
Executive Chairman of West Red Lake Gold, Tom Meredith has been on a mission to repeat his past successes; he led junior company Lexam VG Gold from having a market cap of $3 million to $200 million (Goldcorp was involved here, too), and recent exploration results have been encouraging enough to motivate a further drill program this coming March.
Why is this drill program so significant? As an investor in junior mining companies, one of the greatest pitfalls which one encounters are lax drill programs. Often this is due to financial constraints, or juniors that are keen to move onto the next phase, egged on by impatient investors who often do not appreciate the importance of thorough exploration. West Red Lake Gold is refusing to fall into this trap. In 4Q17, the company drilled five holes to a depth of 2,402 metres. In this next phase the management is heading down to significantly greater depth in pursuit of the largest resource possible, but a good mineralization was present throughout the most recent samples, with some smaller lengths (~0.4 – 1 m) returning upwards of 18 g/t Au. Most of the company’s efforts to date have focused around Rowan, where drilling and historic data support an inferred resource of 1.1 million oz, within 4.5 million tonnes grading 7.57 g/t gold.
Goldcorp has a 40% interest in Rowan while West Red Lake Gold holds the other 60%, including 100% of Mount Jamie Mine and Red Summit Mine. The Rowan mine property hosts significant regional gold bearing structures which intersect near the former producing mine. In fact, the property is situated on the Red Lake Archean Greenstone Belt which hosts the high grade gold mines of the Red Lake Gold District, and more accurately, within the east-west trending regional shear structure known as the Pipestone Bay St Paul Deformation Zone (the “PBS Zone”).
A second gold bearing regional structure, the Golden Arm Fault Structure and the sub-parallel Newman Todd Structure run through the property before crossing the PBS Zone resulting in an alluring exploration target approximately 1 km east of the Rowan Mine Zones. Only twenty kilometres to the East, a similarly important intersection of two regional gold bearing structures occurs proximal to the world class Red Lake and Campbell mines, providing a highly favourable geological model and illustrating the significant potential for high grade gold zones at West Red Lake.
West Red Lake Gold currently has a market cap of little more than ten-million, but something tells me that 2018 will be the year the stock makes a decent climb. Meredith has been fixing up the company since 2012 at the request of an active investor who believed the highly prospective asset was being poorly managed. Within two years, he’d cleaned out most of the deadwood. An ultimately great managers yield great projects.