President and CEO of West Red Lake Gold Mines. I am here to talk a little bit about West Red Lake and our strategy on developing the Red Lake region, a pathway to 150,000 ounce a year production in Red Lake. I have some forward-looking statements, which I will be going through, so please review them on our website. We are in Red Lake region of Ontario. This is a very favorite area within Canada. It has produced over 20 million ounces of gold at an average grade of around 16 g per ton. We have two properties in Canada. In this region, we have the Madsen complex, which we bought a number of years ago. This is in fully production at the moment.
We went back into commercial production in January of this year, and we are ramping that over at the moment, a system ramp up in 2026. We also have another property in this region called our Rowan property, which we have just put a new resource on. We are creating a hub-and-spoke model over time in Red Lake, where we believe we get that pathway to 120,000 ounces a year. Our mining is very strategic in Madsen. It is fully permitted. We have a fully IBA agreement in place. We have ample tailings opportunity. We have a mill that can be ramped up from currently 800 tons a day to over 1,500 tons a day. A little bit show you Madsen and Rowan.
Rowan property is about 80 km by truck, trucking the material, and our concept is to use the Madsen facilities and truck material from our Rowan property into the Madsen complex. We have done a PEA last year on Rowan. We show a plan of 30,000 ounces-35,000 ounces a year from our Rowan Deposit, a small underground mine. With Madsen, we have done a pre-feasibility study to show that pathway at 65,000 ounces a year. Combined, we have 100,000 ounce a year production in Red Lake as we develop. We are working on a pre-feasibility study currently that combines those two projects together to show that pathway to 100,000 ounces a year over a 10-year mine life. With Madsen, we are in production.
We went into commercial production in January of this year, and we had a Q1 and a Q2, and really 2026 is about ramp up. You can see our Q1. We have had significant ramp up of our ounces from Q1 to Q2. Our revenue cash flow continuing to ramp up. We expect as we go into Q3 and Q4, we will expect to see that ramp up continue, and I would expect by into Q1 of next year, we will be in that true profit rate that will continue as our normal true profit rate. 2026 a little bit, get Madsen up and running, ramp up Madsen over time. As we get into 2027, there are a number of different areas that we will focus on that I will be able to go through to show you how we use that ramp up from there.
As we get into 2028 and 2029, we bring in our other deposits there and use that ramp up. I am going to go into a number of different areas here to show that. Madsen has a bit of a history, as people are probably aware. I think our strategy is a little bit different. We are multiple complexes. There are multiple complexes around Red Lake that we saw that we use as a buffer for production. Obviously, the Madsen mine has lots of depth extension. We are mining currently in this 904 area you see, quite high up in the system. There is also a number of other deposits, the Fork deposit, which we will get into, and also the Starratt-Olsen deposit, which is another historical mine on the property.
These are ones that we are drilling and exploring and developing to, which will give us this multi-platform growth in Red Lake, as well as the depth extension that I will go through. Some of the questions I get a lot from Madsen. What is the remnant mining? How do you plan on developing Madsen and ramping it up? This is a case in point. This is called our 904 area. We have had fantastic drill results over the last three to four months. You can see some of the high grades, sort of good mining widths. We are just really into the top of this 904 area. This is an area that was never mined historically. It was left by the historical mining. It is a large count, it is 5-level complex. This is an area that will move into production plan in 2027.
This is one of the key areas for next year. High-grade area within the existing Madsen mine. There are a number of these as we go down deeper in the mine. There are a number of these non-remnant areas, which would form the basis of the 2027 and 2028 production plan over time. There is the Fork deposit. This is another deposit that we drilled over last year. We are now doing development, underground development. It is only 400 m away from the Madsen mine. We are halfway through that development down into that Fork deposit. Fork has about 50,000 ounces at 556 g. This is a non-remnant area, another independent mine in the Madsen mill. If you think about it, 904 and Fork become the key production areas in 2027 and 2028. We also have mining in our Madsen as well.
We have three production centers feeding into our Madsen mill. Another mine is Starratt-Olsen. This again was a mine that was drilled or was produced back in 1950. We are drilling that currently at the moment. It is another only 400 m away from Fork deposit, and we will be drilling that this year if we can develop a resource on that, which we know there is drilling results on it. We will then be using that development next year, and then that is the curiosity we are working. There is a number of these deposits which we have always as an independent mine feeding into Madsen mill. Interestingly, you can see there, level 16 there on the bottom of the Madsen Mine. This was an area back in the 1950s. They actually developed a level.
It's about half a kilometer all the way along towards Starratt-Olsen and towards Fork, and that shows the potential. There's lots of drilling results we have from down there, and that shows the plunge line of Starratt-Olsen and Fork towards that level. That gives a lot of opportunity for us to go in, do a lot of drilling, and chase those plunge lines of both Starratt-Olsen and Fork down at depth. That's what we're very excited about. We've been down at that level. We dewater down there, and our team are getting set up to do drilling down deep at the bottom of Starratt-Olsen Mine. I'm also going to talk about a lot of the expansion and exploration associated with Madsen. One of that area that's highlighted there is called the Derlak area.
This is an area that was excluded from our pre-feasibility study that we did last year. We are doing an extension drive across the ore body, which really opens up that whole area and whole plunge that was excluded from the pre-feasibility study and our reserves. At the time, it was a distance away, but once we put in this drive, we'll be able to access that material and develop it further. I'll talk a little bit about our Rowan property. Rowan is another property we picked up, and it again has a historical production across it. Mount Jamie, Rowan Deposit, Red Summit, they were all independent mines back in the day. We drilled that over the last number of years. Again, it's a very, very high-grade satellite.
We've got over 500,000 ounces at over 14 g, which is actually one of the highest grade undeveloped underground mines in Canada at the moment. We've seen the depth extension of that, pretty typical. There is a roadway from Rowan to Madsen. It's about 80 km of a trucking distance, and we've done a PEA on Rowan showing a 35,000-ounce-a-year production feeding into our Madsen mill. Given our Madsen mill has the potential to ramp up from 800 tons- 1,500 tons, we have that opportunity to bring that material in. The trucking calculation we've done, think of it, you lose about a gram a ton over the time as you bring that material in. That gives you a multi-platform growth within Red Lake. Again, a little bit on Rowan. It's a very different system than Madsen. It's quartz vein hosted. It's very close to surface.
We haven't drilled it very deep at the moment, and within that area, we've half a million ounces at 13 g. It is open at depth, as you'll see at the bottom of there. We've had our highest grade hits at the bottom of Rowan, as you see, as it extends in depth. Also it's very close to surface, so it allows us to get into ore very quickly. About six months of underground development, we attack into that ore body, and that allows us to develop that. We are currently in permitting of that process, and that would come into production schedule around 2029 of the process. If you think about Madsen, where we are today, versus next year into 904 into Fork and then Rowan, that gives us that multi-platform growth all in non-remnant new fresh ore versus Madsen where we are today.
Again, a little bit on the highlights of the region. We have a number of deposits also in that region of Red Lake. There are a number of deposits which you can see there owned by different groups over the years have been consolidated. These are an opportunity for us. These are smaller deposits. They are non-core to the various companies that own them. They all have resources on them. A lot of them have high-grade resources on them, and that really gives us the opportunity over time to consolidate the whole district. There's a couple of them we're working on. There's some of them we're looking at. You can see five to six different deposits around Red Lake consolidating in the region.
We believe if we can sit with Madsen and Rowan and a couple of other of these deposits, we see a pathway all the way to 150,000 ounces a year. Our mill is doing currently 800 tons a day. We are mining 1,000 tons a day underground for Madsen. That gives the potential as we take on these other deposits to ramp up over time and develop a multi asset. We have a permit. It's very strategic. We have a permit. We have First Nations support in the region, and we also have over CAD 315 million of tax losses associated. When I picked up the asset, we bought the asset. We brought on a lot of tax losses associated with that, and also with the new tax regime that's in Canada, both Rowan and these other deposits can be developed under that profile.
That allows us to raise money under CDE associated with that to develop the project as we go forward. A little bit on our share structure. Current market CapEx is just over CAD 300 million. We have a number of analysts cover at the moment, and we've quite a lot of warrants outstanding, which potentially would bring in money over time. I would also show the value proposition. 150,000 ounces in the Tier 1 location. A good analogy to that would be a Wesdome sort of structure, Hemlo sort of structure. That'll give you the upside. Hemlo produces around 130,000 ounces, Wesdome around 150,000 ounces- 70,000 ounces. You can see the value opportunity that we can create over time. We're pretty much in control of that. We own Madsen, we own Rowan, and we're in production at the moment.
A little bit of a summary on West Red Lake. I'm open for some questions, if there's any questions.
We do have some time for questions. If you have a question, please raise your hand so our microphone can be brought forward. Maybe a quick one from me then. Hard not to notice the positive free cash flow in Q2. Ask the obligatory capital return framework question. Do you have an idea in mind as the ramp-up continues, would there be capital returns to existing shareholders? Or do you plan to put all that straight back into the ground and development side?
At the moment, we're in a ramp-up phase. Most of that money is going back into developing these other side. I think once we get that platform established next year, and as we ramp up that multi-asset strategy, that's the time we will be looking to provide some capital return.
You obviously have a lot of development ahead of you. How are you finding getting contractors? Do you have long-term agreements in place, that type of thing?
One of the advantages of Red Lake is its a lot of history of mining in that area. About 50% of our workforce are locals, live in the region, and about 50% are fly-in, fly-out. We have the potential to ramp up. It's also an attractive area. We have good facilities, and also because of the history of mining in the area, there's a lot of local service suppliers built up, a lot of contractors in the region. It's really an established mining jurisdiction, which allows us to get staff and bring in contractors with the support to develop the project.
What is your exploration budget for 2026?
For 2026, our budget has been CAD 10 million at the moment, and we will be ramping that up into next year. Obviously, given the potential, as this year was about developing cash flow, some of that will go in next year into exploration on some of these other deposits as we grow the platform.
Is the main focus of this year and maybe next year's exploration Madsen, or is it Rowan or both maybe?
Madsen, Rowan is kind of we've defined it. We now are gone into the permitting phase. We have 500,000 ounces developed, so that would be used as a satellite deposit. More so it would be developed on that Starratt-Olsen opportunity I talked about, and deeper Madsen. It allows us to build our platform of growth.
Just turn it back to the audience if there's any further questions. Maybe a couple others then. You mentioned that the mill capacity is 1,500 tons a day? How long does it take to get to that 1,500 tons a day from mining?
Currently, the mill was permitted for 800 tons a day. We're currently running 1,000 tons a day through that mill because it's an average over the year. We've just installed a crusher that allows us to get to 1,300 tons a day. Very little CapEx. I would say towards the end of next year, we'll be at that 1,500 tons a day and CAD 20 million of capital just to extend, add some pipes, et cetera.
Maybe along the lines of capital, how much life have you got left in the existing tailings facility? Do you need more capital for that?
Tailings facility, the advantage of this asset is, again, it has a long life of tailings available. We have lots of space to expand our tailings, and again, it's a small. We put in a new tailings lift as we bought the property. We expanded our tailings capacity, and we're now looking at doing the next stage of that tailings capacity. The advantage of our land is that we've good support from the First Nation and the government as well from a permitting. That's not a permitting constraint.
One of the things you mentioned quite a few times during your presentation is there's some parts of non-remnant mining versus remnant mining. What's the difference in cost between remnant mining and not remnant mining? What are some of the challenges associated with remnant mining?
This year is all about remnant mining. One of the challenges of remnant mining is obviously accessing the ore. It's more pods of ore that you're accessing. It's a lot of development to access that ore. That it's quite costly. It's about 40% more costly than non-remnant mining. Non-remnant mining is more you have panels of ore, so you're accessing small amounts of development, a lot of ore. It's more representation of the amount of development to get to the amount of ore. It's much, much cheaper, much more efficient mining as we move into next year.
Is your development in ore or is it not?
Development is in ore. Our ramp is in waste, obviously. As we do our development into those ores, we are doing long-hole open stoping. As we develop in there is ore in there. Driving the ore. About 25% of our ore is development ore, and about 75% is stope ore.
Just one. Oh, there is a question. Steve.
Just one other question, kind of big picture. Does the management decide whether the plan is long-term to develop this asset, get it really efficient, and sell it? Or use it as a stepping board to grow free cash flow, look for some superior resource that is yet been found, and to step it into a bigger company, maybe buy another asset. Do you guys have any plans like that yet?
Yeah. Our strategy when we set up the company was to grow to become a mid-tier producer over the next number of years. We picked this area and this opportunity as the first leg of that opportunity. We can develop that over, and we are in control of it. A lot of companies have projects, and they have development to do and permitting to do. We are in production today with a lot of growth potential, and that gives us the opportunity to grow over time and use that as a first platform of growth. We are actively looking for other opportunities. I think another advantage of our team is that I have a long history in our team of restarts. It gives us the opportunity to get into these restart projects.
There's not a lot of groups today who can get in and build companies over time. Take a lot of these tier three assets, tier two assets that the big majors are dropping out of, and then take these on, put in a team, and turn them around. I think that's a very strategy that a number of companies have done over the years. Bema Gold through that. Equinox Gold have built over time, and that's sort of the mirror strategy we're looking at to build that over time.
Unless there's any further questions, please join me in thanking Shane for his time today.
Thank you very much.