West Red Lake Gold Mines Ltd. Signs Binding Letter to Acquire Pure Gold’s Madsen Mine

West Red Lake Gold Mines Ltd. has entered into a binding letter agreement with Pure Gold Mining Inc. and Sprott Resource Lending Corp. to acquire the Madsen Gold mine and associated land package through the acquisition of all the issued and outstanding shares of Pure Gold. 

The agreement is subject to approval of the British Columbia Supreme Court in Pure Gold's ongoing proceedings pursuant to the Companies Creditors Arrangement Act. 

The deal sees WRLG paying $6.5 million in cash, issue 28,460,000 common shares and grant a 1.0% secured net smelter royalty on the Madsen Mine as consideration for the acquisition, as well as make up to US$10.0 million in deferred consideration payments. 

The share and NSR consideration are expected to accrue to Sprott as a fund managed by Sprott is the senior secured lender to Pure Gold. In conjunction with the acquisition, WRLG has entered an engagement letter with Canaccord Genuity in respect of a "bought deal" private placement of subscription receipts for gross proceeds of $20,000,050 and an underwriter's option of $5,000,100. 

Following the transaction, WRLG will become a leading, debt-free, and well-capitalized explorer and developer of high-grade gold in the historic Red Lake gold camp.

"The acquisition of the Madsen Mine is a major step and positions us as a leader in Red Lake gold exploration and development. This transaction is highly accretive to WRLG shareholders,” said Tom Meredith, CEO and Director of WRLG. 

“The path forward involves defining a critical mass of high-grade reserves and resources, optimizing the project for sustainable cash flow, and executing on the vision,” Meredith declared. 

“This includes conducting infill drilling, resource expansion, regional exploration, underground development, restart planning, engineering studies, and maintaining a strong focus on operability, community benefits, and investment in people and infrastructure,” Meredith added. “With a wealth of targets near the Madsen Mine, alongside regional prospects and those within our existing Rowan Project, we are confident that the brightest days for our consolidated portfolio are just ahead."

Madsen Mine Highlights
As a flagship asset, the Madsen Mine commanded a peak market capitalization of about $1.15 billion in 2021. Madsen is a past-producing mine that has benefited from $350M historical investments in
brownfields site with permits to restart production, existing infrastructure including an 800  tonne per day mill, double ramp access, significant underground mine development, 1,275 metre shaft, tailings management facility, water treatment facility, all-season access and nearby workforce.

Located in Red Lake, one of the major mining districts with 30 M oz of gold produced to date. Madsen is strategically surrounded by major producers Evolution Mining  and Kinross Gold. 

Mining investor Frank Giustra, who owns 18.1% of WRLG shares and has committed to lead the proposed Financing, commented, "I am proud to be supporting the company that continues the work of past generations at the Madsen Mine. The acquisition appeals to me due to its high-grade resources, modern infrastructure, potential, and strategic location. I look forward to contributing to the company's growth and energizing this iconic Canadian gold camp for future generations."

Closing of the Acquisition is subject to various conditions precedent including receipt of all required regulatory approvals including the approval of the TSX Venture Exchange, receipt of the reverse vesting order from the Supreme Court of British Columbia and the parties entering into a definitive agreement for the Acquisition by no later than May 1, 2023.

Pursuant to the binding letter agreement referenced above Frank Giustra and a group of associates agreed to guarantee the initial $6.5 million cash payment for the Acquisition and in consideration for that guarantee will receive warrants to purchase 3,750,000 shares of WRLG exercisable at $0.42 per share for five years. Fiore Management and Advisory Corp. has acted as advisor in connection with the Transaction and will receive 5% in advisory fees.

WRLG is a mineral exploration company that is publicly traded and dedicated to creating value for its shareholders by discovering new gold mines in the highly productive Red Lake Gold District of Northwest Ontario, Canada. This district has yielded 30 million ounces of gold from high-grade zones and hosts some of the world's richest gold deposits. WRLG holds an extensive property position spanning 3,100 hectares in West Red Lake, including three former gold mines - Rowan, Mount Jamie, and Red Summit. The West Red Lake Project covers a 12-km strike length along the Pipestone Bay St. Paul Deformation Zone and WRLG plans to continue exploring this property along strike and to depth in 2023. 

For further information: Jasvir Kaloti, CFO & Corporate Secretary, Tel: (604) 609-6110; Amandip Singh, VP Corporate Development, Tel: (416) 203-9181, Email: asingh@wrlgold.com or visit our website at https://www.westredlakegold.com

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