Thank you for standing by. This is the conference operator. Welcome to the West Red Lake Gold Mines Pre-Feasibility Study results webcast. As a reminder, all participants are in listen-only mode, and the event is being recorded. After the presentation, there will be a Q and A session. Participants are encouraged to submit their questions using the form at the bottom of the webcast frame. If management is unable to make it through all of the questions during the allotted time, someone will follow up with you by email the day following. I would now like to turn the floor over to Shane Williams, Chief Executive Officer. Please go ahead.
Thanks, and thank you to everyone for joining us today. Today, we're going to walk through the integrated Madsen Pre-Feasibility Study, which we released this morning, just really to understand the operation, what that tells us about the operation we're building, and the work we need to do to deliver that plan. Before we get into the numbers, I would ask everyone to review the forward-looking statements and technical disclosures on slides two and three. The study is based on Probable Mineral Reserves and contains forecasts and assumptions that are subject to execution, permitting costs, and gold prices. I'd like to start off at this slide here. This is a good place to start because it outlines and shows one of the reasons why we're in Red Lake, the vision and strategy of the company, and one of the reasons we focus on both Madsen and our Rowan properties.
Red Lake is a tier one jurisdiction. It's a region where over 20 million ounces of gold have been found, and most of that gold has been high-grade. We also see this opportunity as a region that majors want to be. Obviously, the big mines there are the old Goldcorp mines, which are now run by Evolution. Kinross, in the last number of years, has moved into the region with their purchase of the Great Bear project. We saw this region as a region where we could consolidate. Historically, in Red Lake, there has been a lot of small-run mines, and we saw the opportunity to consolidate this district. We see the potential for over 150,000 ounces a year in Red Lake to build the foundation of West Red Lake and the gold mining company, based upon the Madsen mill and operation.
Madsen mill, one of the reasons we liked the Madsen Mine was it's a fully operational mine. It's fully permitted, so permits are in place. It has First Nations consent on the project. It has a mill that was built in the last number of years, fully operational, and it has tailings capacity for long term within the Red Lake region. Also, we originally acquired our Rowan property, which gives us the opportunity to consolidate the region and create this hub-and-spoke model. There's also significant, both near-term and district-scale exploration upside, which I'll walk through in later slides. I might also add that we're not the first group in this region to consolidate. Many years ago, Rob McEwen, who created Goldcorp, actually also saw that opportunity and brought the two mines together, which was the Dickenson and Campbell mine.
Both of these mines, he consolidated that region and grew his company into Goldcorp, which ultimately became one of the biggest companies. We are following a well-worn strategy in Red Lake, where we saw the same sort of opportunity. A little bit here on the key results. I would also add a little bit of context to this. This is the integrated PFS, and so it is based on an integrated operation with a single operation around Madsen. We have permitted Madsen Mine with all the infrastructure that is in place already, that is in operation today. What we are bringing is we are developing the Rowan satellite deposit, which is a high-grade underground mine, which we are trucking the material to Madsen, with first production in 2029.
Originally, back on our strategy was always to have Madsen as the base and to sweeten the grade or bring in high-grade feed to Madsen to bring the overall grade of the operation to a higher level. This is the first stage of that strategy. As you can see the sort of numbers, we can get to over 100,000 ounces a year of gold production once Rowan comes into production. We have a reasonably small CapEx to grow that mine into that 100,000 ounces a year. We generate over CAD 1 billion of cumulative after-tax free cash flow, and the NPV is around CAD 764 million. I might add that this operation is very leveraged to gold price. We used a very CAD 3,500 long-term gold price.
As you will say, over the last number of years, you will see that not six months ago, people were using CAD 4,500 gold. We are very leveraged to gold price. A 10% increase in gold prices generates over CAD 1 billion of NAV and increases the NAV by around 31%. So, very leveraged to gold price, this operation. Here we get into the details really on how we build up that production over a number of years. It is based on Madsen as an existing operation, in operation today, and we ramp up Madsen over the next number of years into 2027 and 2028. In the meantime, we are developing the Rowan property, and so Rowan comes in late in 2029, and we start to build up from Rowan. If I jump back a little bit, we did a PEA on Rowan last year.
We have done a lot of exploration drilling, and the team have grown Rowan quite a bit. In the mine plan, we saw that we had in the PEA 35,000 ounces. We now can see with the growth potential, we can push that to 50,000 ounces a year. We have pushed the ounces of Rowan. Obviously, it is higher grade. You can see the diluted grade of Rowan is around that 9 g sort of number, and Madsen stays around that 6 g. I would also, in the Pre-Feasibility Study on Madsen, we used the majority of the mining was cut-and-fill, so the grade was much higher on the reserve. In this study, we have kind of gone back and we have looked at our operations to date over the last 18 months.
We've mainly been doing long hole open stope mining, which obviously is less selective than we used in Pre-Feasibility Study, so we get an average grade of around 6 g in the reserve. The combined average grade between the two operations is around that 6.8-7 g per ton. I would say that we've done a blended rate between Madsen and Rowan, the idea is that we would blend both, obviously on around a ratio of two to one, and then Madsen only as Rowan drops off. I would also add that Rowan is very open. We've done limited drilling so far, and we see a lot of potential to grow Rowan faster. I would say that that 100,000 ounces is very doable to continue that over a few number of years. Again, a little bit on our cash flow.
Again, as I spoke about, we're very leveraged to gold price. Both Madsen and Rowan, and most mines in the Red Lake region, are heavily on fixed costs. As obviously the gold price rises up, as you'll see there in the after-tax cash flow, as the gold price or the production ramps up, the AISC comes down. You'll see that early years with as the production in Rowan and Madsen, and then Rowan comes in, our AISC will go down over the number of years. We have an AISC of around CAD 2,400-CAD 2,500 an ounce. Our CapEx associated with developing this project is around CAD 200 million. Again, back to our PEA on Rowan, we had a CapEx, a smaller CapEx, but again, just to remind listeners, at that time, we were doing a hub-and-spoke model, and we were doing a DSO operation.
We had used, not using Madsen, we had just used mills close by. Some of the additional capital associated with bringing Madsen to accept that material and grow the project over time. We have some tailings additional to do, we have some infrastructure to do, and we also have some work to do in the mill to bring that. The mill goes to 1,350 tpd, which allows that material to grow and allows the mill to grow. There is some additional CapEx which was not in the PEA of Rowan, which has been added now into this PFS to show that growth profile over time. A little bit here again further on the production, and as you can see, we've had some operations. We've been in operation nearly nine months now, since we declared commercial production.
We are making steady progress on Madsen into production. As you can see, over time, you step up tonnes production, AISC comes down, and we average around that 100,000 ounces a year from 2029 onwards. As I said, that we see a lot of potential to extend that mine life. This is what we've defined so far, particularly on Rowan, and we see growth potential across Rowan and also on Madsen. The focus will be over the next number of years to grow both of those ore bodies to extend that 100,000 ounces a year over a number of years. A little bit again, I talked a little bit about our reserves and resources. We've now just under 1 million ounces of reserves in West Red Lake.
If I recall, that's about 85% increase from our last Pre-Feasibility Study, and the reserve grade is around 6.8 g/ton Au. That's made up of Madsen and Rowan. We've declared the first reserves on Rowan, just over 300,000 ounces of high-grade gold. Madsen, as I spoke about, we've readjusted the mining method more towards long hole, which we're actually doing on site at the moment, and focus, which brought the average grade of the reserve down. This is life of mine grade as well within the mine of the Pre-Feasibility Study. it gives us an overall combination of 6.8 g/ton, sort of just under a million ounces.
I would see we have a 10-year mine life now to support a longer runway for both Madsen and Rowan together integrated, where we had around an 8.5-year mine life on the Madsen Pre-Feasibility Study. One of the also things I would point out is there's a lot of opportunity to convert. We have a lot of resources still in the projects, both at Madsen and at Rowan, and as we grow those, there's an opportunity to convert them. I'll also add that we did the cutoff of late last year, so we've done about 65,000 m of drilling, which has not been included or updated into this reserves and resources. Again, this slide is good, back to what I've focused on.
Even though this, we see this as phase one of the phase two of our opportunities, there's a lot of the exploration upside and a lot of deposits that were not really included in this study, which gives us this pathway to growth. That's why we're confident on this 150,000 ounces a year. I look at the Madsen deposit a little bit. We have the Austin deposit, which is our main focus in Madsen. Last year, we did some further drilling on Fork, and we're actually developing the Fork as we speak. Fork is part of the mine plan in this Pre-Feasibility Study. There's also a number of other deposits around Madsen, which is the Wedge deposit, West deposit, which have resources in place, which we haven't really got to drill. These are also additional feeds to the Madsen project.
Also, we are starting to drill a Starratt-Olsen mine, an old historical mine in Red Lake, which hopefully we'll be able to release later this year some further results on this. We are seeing some high-grade results early in this project. Again, so that gives you that platform even around Madsen with the strategy we did exactly like Fork. We drill it over a number of years, then we make the decision to develop it. We develop down. Most of these are within a kilometer of the Madsen mill, which gives you that opportunity to feed more material into the Madsen mill to extend mine life and increase production. Then over at Rowan, Mount Jamie has not been included in this study.
Mount Jamie, we put a small resource on Mount Jamie, and at this stage, we are currently planning to drill that again this year and grow that deposit. We see that growing similar to the Rowan deposit. There is also another deposit called Red Summit. Again, they give you the sort of scale of the opportunity across the Red Lake platform, what is included, and as we develop further, we will add those into our mine plan, which I believe will increase the production rate and extend the production rate. Even within that, these do not even include further growth of Rowan as we go deeper. As people who have seen our opportunity, we have only defined down to around 300 m in Rowan. You know this deposit goes much deeper. Also at Madsen, there is a lot of opportunity at depth at Madsen.
We are down, defined down to about 1.2 km. Our neighbor Evolution, they are mining down at 3,000. When you put all that package together, we are very confident saying that we can get to that 150,000 ounces a year over many years within the growth. More importantly, that platform of growth is built around existing facilities. There is very little CapEx required. Most of that growth program could be done from existing cash flow as we ramp up. Again, I have come back to that long-term value we see in Red Lake. In today's world, we are in tier one jurisdiction. We are in Red Lake region in Ontario, and we have a scalable platform of growth based around Madsen, based around Rowan, and these other deposits.
Also, within the region, there are a number of other deposits that give us the ability to, over time, consolidate, further grow the potential of the Madsen complex. There is a lot of upside across our own portfolio to grow as well. Also, we see as we ramp up Madsen really is this year, we are in a ramp-up phase. As we move into next year and the operation, we move away from that remnant mining into majority of non-remnant areas and new areas of mining, which will change the production profile of Madsen and help us grow and ramp up Madsen over time. I would also add, we have over CAD 300 million of Canadian tax losses, which are very valuable today.
I might also add, associated with now the new law changes to the Canadian development tax incentives, these create a lot of opportunity now within Red Lake as we develop our platform and our portfolio of growth. These changes are really focused on development opportunities in Canada, allowing us to grow the project over time. I will then finalize, and I will open the floor for any questions on the project or the Pre-Feasibility Study.
Thank you. Once again, participants are encouraged to submit their questions using the form at the bottom of the webcast frame. If management is unable to make it through all the questions during the allotted time, someone will follow up with you by email in the days that follow. The first question is, how do AISCs differ from the previous PFS and current PFS?
Yeah, that one, I'll take that one. We did last year when we did the Madsen Pre-Feasibility Study, we had an AISC of around CAD 1,600 an ounce. I would say that that was early stage on Madsen. We've now had the benefit of 15 months of operational focus on Madsen, so we've got a much better reflective of what the actual AISC is. And we've also transitioned from that Pre-Feasibility Study. That was based on a cut-and-fill AISC, cut-and-fill mine methods, and we've moved the project now to a long hole open stoping. I would again, on AISC, so I mean, even though we're calling this a Pre-Feasibility Study, and that's mainly because we're bringing Rowan to that standard. On Madsen now, the cost associated with Madsen, the focus of Madsen, they're really at operational level. It's much more defined than Pre-Feasibility Study for Madsen.
This is our second study on Madsen now. We've done two rounds of mine design. We've done a lot of work on CapEx now. We've done CapEx projects. So from a cost focus, it's very defined around Madsen and what we've done. And we've applied a lot of those costs to Rowan, both mining method, both costs for production. So it's much more defined than a pre-feasibility that you would typically have on a project that's a number of years out. You're making some assumptions. These are based around real costs that we're experiencing today. Again, these projects are both heavily fixed costs. Labor and contractors is around 50%-60% of that. So basically, the AISC has changed overall because of our operational experience we've had over the last 18 months. Over to the next question.
Sure. What needs to happen to get the permit for 1,000 tpd?
As we outlined earlier a little bit a couple of weeks ago, we have purchased a crusher for the Madsen mill. We have the capability today, and we have been running a number of days, the Madsen mill at 1,000 tpd. We know we can do 1,000 tpd. For the back half of this year, the two months that are left, we have the ability to run 1,000 tpd because earlier in the year, we ran below that. The permit was based on 800 tpd on an average year. The team are working currently on putting together the documents to submit to discuss with the authorities on moving that to 1,000 tpd. Again, I would add the permit is based on an average for the year of 800 tpd.
It's more of a discussion based around a number of, around our, can we manage water, tailings management, et cetera, and we submit those to the authorities. That's ongoing as we speak. I do expect that by Q1 of next year, to be in a position to do 1,000 tpd. All right, next question.
Thank you. When will phase II and phase III of the shaft refurbishment be complete?
Yeah, we did put out a press release earlier this year on the pathway to the shaft. The way we've done the shaft is there's a number of levels in the shaft, and we're working on a two-phase approach to increase the shaft. We're looking at next year doing phase one of that study, and then we move on to 2028 where we do phase two of that study. Within that, we'll go to a level 10, then down to level 17. These are areas that the team have identified where historically there was old loading pockets. We believe that we can set up new facilities there and use the shaft to grow as we go down. Ultimately, the shaft goes all the way down to level 24, but that's over life of mine of the Madsen project. Next question.
Thank you. How will you fund the CAD 200 million CapEx?
I think it's important to clarify the CapEx a little bit. I mean, we've put the CapEx in at CAD 200 million, and that's made up of a number of different parts. Some of those parts are obviously the development of Rowan itself as a small underground mine, but also within that, there's also parts of the CapEx which is related to the Madsen expansion of the Madsen project. So some of those parts will be over phases. As an example, tailings, the CapEx associated with the tailings, some of that will be done out of sustaining CapEx that we would do over the number of years. We will be building that tailings expansion next year in the mine plan. So it's a mix of ongoing CapEx associated with sustaining CapEx associated with free cash flow.
It's also, we recently put in a debt facility that people would be aware of that had some contingent associated with the Rowan based on some milestones. Also, I would add that, we will look at, once we get a bit more defined on the permitting timeline, we will look at potentially some more debt facility associated with the Rowan property. I would also add that recently we've had some positive tax changes in Canada which allow development opportunities as we go forward and sort of benefit from tax facilities as we go forward on CDE, sort of raising capital associated with CDE. Next question.
Can you describe dependency on tonnes from being hauled up versus tonnes coming from the shaft?
Yeah. At the moment, I would say the dependency on the shaft is focused more so I mean, the shaft is not up and running yet. The dependency on the shaft is more focused as we go deeper in the Madsen Mine. As an example, at the moment, we're hauling from underground up the declines, two declines. We're hauling over 800- 900 tpd, and some days over 1,000 tpd. Even without the shaft today, we're still meeting those tonnage rates. As you will see, as Rowan begins to come in, that provides buffer feed for the Madsen mill, and that allows us to use the declines. We have two declines, so we have the ability to haul from two different areas, and we have a Connection Drift.
For the next number of years, we don't see that dependency on the shaft, but as we get deeper in Madsen Mine and get into the depths of the mine and explore the new areas, that's where the dependency of the shaft kicks in, not for a number of years.
Can Rowan— Yes, sorry.
Go ahead.
Can Rowan be fast-tracked?
Yeah, so as you probably, or as some of your listeners are aware, there's a new permitting regime in Ontario now, and some recent companies have got into this fast-track process. This is one area that we are exploring at the moment, and this is a potential for sure that we're working on, to work with the government to potentially get Rowan into this list of fast-track permits within Ontario. From a permitting perspective, Rowan is a small footprint. It's a small underground mine. It has no infrastructure. It's under the regulations for a federal permit and the laws on permits. These are all opportunities that allow us to fast-track the Rowan property. That's one thing we will be working on, and if we get there, we will be able to announce that to the market.
Do you foresee any issues in permitting the mill to 1,350 tpd?
No, I don't see any issues. We're also looking at just, we are looking at 1,500 tpd from a permitting perspective to give us that flexibility. We are, even though we've kept the mill at the moment to 1,350 because from our studies as part of Pre-Feasibility Study, we've done a lot of metallurgical test work, and obviously to blend Madsen and Rowan and to understand the recovery. We've actually found at 1,350, we can go to 1,350 without changing grinding mills or any of the front-end circuits. So with the crusher we purchased, the mills we have at place, and some downstream additions, we can actually go to 1,350 tpd, and so minimal CapEx required. If we go higher, we do need to do some adjustments to the front of the crusher and the milling.
That's why we've kept it at 1,350, but our permit is actually looking at getting to that 1,500 tpd.
When will final permits be received for Rowan?
Our permitting process, as I said, we've been doing baselines for a number of years now. Probably by the end of this year, we'll start the permitting process. We have submitted some initial permit descriptions into the authorities, and we are working with those. I would suspect construction is looking to start at sort of mid-2028, with production planned for 2029.
Can we have some comments on the labor shortage challenges and strategy to address this?
Yeah, this is an industry-wide issue across the industry, but from a Madsen perspective, this is one area we are working on at the moment. We have talked to a number of different contractors. We have done well. We announced in our quarterlies around some opportunities we are working on. We have ramped up our hiring. We have moved, added a lot of people to our hiring recently, which has helped us. We have brought in a number of contractors, which we are in discussing, which will allow us to get to where we need to be to get to that full run rate. They are sort of the two focuses we are working on.
One moment, please. We will just wait to see if there are any further questions. No, that appears to be the last question. This concludes the question and answer session. I would like to turn the conference back over to Shane Williams for any closing remarks.
Again, I would like to thank you, everyone, for joining us here. We are focused at the moment on our near-term strategies to get Madsen where we believe it can be, and get consistency in the operation. I would also add to people on Madsen, this year Madsen versus next year Madsen is a completely different project. This year Madsen, we had some remnant mining to go through, but the majority of our mining and our mine plan next year is based on non-remnant areas. Fork, which becomes into the production plan next year, and this 904 area. That really transforms what Madsen will become. We always knew we had a ramp-up year this year, focused on going through these remnants, but next year it transforms into this non-remnant area. That is our primary focus on the project.
But also then we are working towards Rowan, the permitting of Rowan, getting Rowan into plan, and ultimately delivering on this Pre-Feasibility Study to that over 100,000 ounces a year. In the meantime, you will see from us a lot of exploration results, which show the potential of the area, plus potentially some opportunities to consolidate the district and build upon our hub-and-spoke model. Thank you all for joining us this morning. Thank you very much.
This brings to an end today's event. You may disconnect. Thank you for participating, and have a pleasant day.