By Dr. Allen Alper, PhD Economic Geology and Petrology, Columbia University, NYC, USA
Interview with John Kontak, President, West Red Lake Gold Mines Inc. (CSE: RLG; FWB: HYK; OTCQB: RLGMF) Focused on High Grade Gold in Canada’s Prolific Red Lake District (PDAC 2017 Booth # 3122)
West Red Lake Gold Mines Inc. (CSE: RLG; FWB: HYK; OTCQB: RLGMF) is focused on gold exploration and development in the
prolific Red Lake Gold District of Northwestern Ontario, Canada. We learned from John Kontak, President of West Red Lake
Gold that the company has a 3100 hectare property in three parcels: two parcels are 100% owned by West Red Lake, the Mt.
Jamie parcel and the Red Summit parcel, with former mines on each property; and the high grade Rowan Mine property is a
60% joint venture with Goldcorp. The company's main focus has been on the Rowan Mine property, where they are the
operator. Currently, the company is in the middle of a two or three year exploration program at Rowan Mine, with the gold
of expanding the Rowan gold deposit to something around two million ounces. And there is also a second exploration target
where two regional gold bearing structures intersect on the Rowan Mine property. According to Mr. Kontak, who believes in
gold as an asset class, the company is closely held with major share positions held by management and a few institutional
Dr. Allen Alper: This is Dr. Allen Alper, Editor-in-chief of Metals News, interviewing John Kontak, President of
West Red Lake Gold. Could you update our readers on what's happening with West Red Lake Gold Mines, John?
John Kontak: We have the West Red Lake Project property in Red Lake, Ontario, where we're in a joint venture
with Goldcorp. Goldcorp, of course, was founded in Red Lake, Ontario. We have a 3100 hectare property. It's actually in
three parcels. Two parcels we own 100%, the Mt. Jamie parcel and the Red Summit parcel, both have former mines on the
property, but our two main drill targets during the course of 2016 and for 2017 are on the Rowan Mine property portion
of our 3100 hectare property. That's a joint venture with Goldcorp, where we're 60% owner and operator and Goldcorp is
Just speaking briefly of the regional geology, our property is about 20 kilometers west of the major Goldcorp complex in
Red Lake, where they have the Red Lake Mine, the Campbell Mine, and the Cochenour Mine. The Red Lake Gold District has
produced about 30 million ounces of gold and about 18 million ounces have been produced by Goldcorp. Our property has
about 12 kilometers of strike length on the Pipestone Bay St. Paul Deformation Zone, which is a major east-west trending
geological structure in the Red Lake Gold District, a world-class gold district known for its high-grade ore.
We have two main drill targets that are both on the Pipestone Bay St. Paul Deformation Zone. One is the Rowan
Mine deposit, where we released a NI 43-101 compliant Technical Report in February of 2016 which included an inferred
resource estimate of 1,087,000 ounces grading 7.57 grams of gold per tonne, within 500 meters of surface, so a classic,
near surface, narrow vein gold deposit.
The second drill target is where the Pipestone Bay St. Paul Deformation Zone is intersected by the Golden Arm
Structure, a second regional gold bearing structure. Such geological intersections can host major gold deposits.
John Kontak: What we're doing both in terms of the drill results in the second half of 2016 and as we plan for
the work programs for 2017, we're going to explore to greater depth below the inferred resource area at the Rowan Mine
deposit. We're going to work our way down to about 1000 meters during the course of the next number of years. We're
working a two or three year program with the goal to double the size of the gold deposit.
The grade tends to perhaps increase as you go to depth in Red Lake, and so maintaining the high grade resource in
terms of grams per tonne as we grow the size of the deposit. With improving gold sentiment and deposit values
beginning in early 2016 all the macro pieces appear to be in place looking out over the next few years. As we get more
value per ounce in the ground in Red Lake, as the gold sentiment improves, and we grow the size of our deposit, we think
we can do good things for our shareholders by drilling out the Rowan mine deposit over the next few years. Our September
news release and our December news release reported on the two 2016 drill programs.
At the same time, what you'll see in those news releases is that about a kilometer to the east of the Rowan mine
deposit you have the intersection of two regional gold-bearing structures. The Pipestone Bay St. Paul Deformation Zone
east-west trending geological structure is intersected by the Golden Arm Structure and adjacent NT Zone coming from the
southwest and trending to the northeast. When you get the intersection of two major regional gold-bearing structures you
have the potential to find a large deposit. Goldcorp, our 40% funding partner, understands this because just 20
kilometers to the east is where two gold bearing structures intersect, that took Goldcorp from a company that was tens
of millions of dollars in market cap and changed them into a multi-billion dollar company.
Long story short, Al, is that we have a relatively straight forward exploration play as we drill the Rowan Mine deposit.
Ken Guy, our exploration manager, has been with Tom and me for previous projects exploring and developing gold deposits
in that Archean Greenstone geology in Ontario. He's very familiar with that, and we think we will bring value to our
shareholders and move the company forward in value as we drill out the deposit over the next number of years and ride an
improving gold sentiment. And we also provide our shareholders with more of a blue sky play at the Structural
Intersection where you could find a significant Red Lake style gold deposit.
What we do is de-risk the gold project for the mining industry. As well as conducting drill programs, we're
starting the permitting and baseline studies, water samples, etc., as we prepare to sell these assets to gold producers
and allow all our shareholders get a win.
Dr. Allen Alper: That sounds excellent. It sounds like you're in a great place, discovering excellent gold
resources, and you're next to a great neighbor there, and you're getting great support from Goldcorp, so that sounds
John Kontak: We've winterized the exploration camp, and the drill remains on the property. We intend to be
drilling in the first quarter of 2017 and continue to drill more or less on a quarterly basis and keep providing the
drill results to the market. To some extent, it's a very simple game. We're drilling the Rowan Mine deposit, going to
depth, and working to expand the resource estimate. We're getting about $30 an ounce in the ground right now in Red
Lake. In a good gold market you can see multiples of that. Then there is the blue sky potential of the Structural
People that follow gold as an asset class are looking for gold to form a higher bottom, and then move forward in the
course of 2017 and form a higher high. We think that we're going to be in a positive gold sentiment for an extended
period of time, and we're going to de-risk this asset and make it valuable to industry players that are using up their
assets every day as they mine for gold.
Expressed in Canadian dollar terms, the price of gold is quite strong. Canadian miners sell it in U.S. dollars,
but for Canadian gold miners, they're getting something around $1400 an ounce Canadian dollars right now, and they're
producing gold for under $1000 an ounce and brings value to what we're doing in terms of de-risking an asset and showing
how this could be an economic underground gold mine right there in Red Lake, with all the labor, power, roads, mills
Tom and I and Ken Guy and others, we've done this before. I’m directing my comments toward the Rowan Mine
deposit. When it comes to the Structural Intersection, we're developing a whole technical team, Al, because as you know
when you get regional gold-bearing structures intersecting, you get the folding and fracturing of the rock which can
create larger more valuable gold zones. That's what happened with Goldcorp a few kilometers to the east.
Dr. Allen Alper: That sounds excellent. John, could you tell me a bit more about your background and Tom's
background, and your team and your board?
John Kontak: Yes. I think an important thing is that Tom and I have worked on prior Ontario gold exploration
and development companies along with Ken Guy, our exploration manager. We believe, as a management team, that in the
junior gold sector a lot of the value is created during the exploration and development stage. Gold producers know this.
Juniors like ourselves, with proven track records, are the best people to be managing these work programs and allocating
the dollars and identifying the targets. That's what we do.
We have three former mines on the property, so we're looking for gold where gold was found before, but also we
know how to drill out a deposit and have it recognized by first the street, in the capital markets basis, but then
ultimately to sell the asset within the industry to a gold producer as a way to create the most value for shareholders.
I'm a lawyer by training, so I take care of a lot of the administration of the company. Tom's from a fourth-generation
Canadian mining family here in Toronto, so he takes care of a lot of the capital markets and strategy type questions.
John Heslop, for example, the former president of PDAC, is on our board of directors. He joined us at the AGM in June.
He's a senior diplomat in the Canadian mining community, so John's very helpful. He's also a professional geologist who
has put mines in to production.
We're starting to look at the development studies. We're going to work away at this. We have a number of
institutional investors and shareholders who've been with us before. People that have stayed with us over the bear
market, and now, are people who understand that we're on a two or three year timeline here, in which we can take this
company that's worth $20 million today and potentially turn it into something that's worth hundreds of millions of
dollars by drilling the Rowan deposit, and if then we find the blue sky success at the Structural Intersection. It
could be a story that's much more. Our investors and our shareholders, by and large, understand this and have made money
before with us. They're working on these time frames. That's what we're looking to do, and we think that the gold market
and the gold sentiment will support us through that time frame.
Dr. Allen Alper: That sounds excellent. Could you tell me a bit more about your share and capital structure and
where the stocks are listed?
John Kontak: We are RLG on the Canadian Securities Exchange here in Toronto. We're RLGMF on the OTCQB in the
US, and we're on the Frankfurt Stock Exchange in Germany. We understand that in all three of those places, you have to
support your listing. A significant portion of our stock is closely held by institutional shareholders as well as
management and a few other key shareholders.
So we have a closely held stock with just over 106 million shares outstanding. and we have a float in Toronto
and New York and in Frankfurt. We're actively supporting those listings. In Canada, we've traveled to Vancouver and
Calgary and Winnipeg a couple times this year. Tom was speaking in Montreal and Atlanta recently. I was in Florida and
made two trips to the German-speaking world in the Fall of 2016 including Zurich, Frankfurt, and Munich.
At a certain level, Al, it's quite simple. You drill out the property, and you get out and tell people the story.
Those are the two things we do, and what we have been doing, and what we're going to do during the course of 2017. We're
going to drill quarterly, and news release the drill results quarterly in the course of 2017, and we'll be traveling. We
already have our first quarter travel plans in place, so we'll be out telling the story during the course of 2017. We're
planning for a gold sentiment that supports all that as the year moves along.
Dr. Allen Alper: That sounds very good. What are the primary reasons our high-net-worth readers/investors should
consider investing in your company?
John Kontak: I would say two things. One is just gold as an asset class, including gold equities. As I say,
we've been traveling a fair amount recently, but we've been going to places that understand gold as an asset class,
Zurich, Munich, Frankfurt, West Palm, Boca, San Francisco gold show, Toronto, Vancouver, even in Calgary. I've been to
Calgary a couple times this year, and as IAs and others move out of oil and gas as an asset class, one of the places they
find attractive is precious metals including gold. As sovereign debt increases, negative real interest rates in various
places, loose monetary policies etc, we think this will lead to an extended positive sentiment for gold and gold
The other answer I would give to a wealthy individual, for example, is that we as exploration and development
people think a lot of the value is created during the exploration and development stage. We have a track record. The
three things that I have told people, who've asked these questions at luncheons and different places recently, is that
not all boats have risen with the tide as the gold sentiment improved in 2016, but I think those companies that did rise
with the tide had three things, one of which is that they had proven management teams. They were following a template
which allowed them to move quickly and get everything going again once the gold sentiment improved, say in the first
quarter of 2016.
Another thing I think is very important is high grade deposits. The gold producers are going to be looking for
high grade as they look for assets to purchase. The third thing is people are looking for good jurisdictions. I guess
when things get roaring, as they did in prior bull markets, people have been going to central Africa and Latin America
and chasing maybe low grade deposits, etc. But as it gets going here, we have a proven management team, we're in the high
grade gold capital of Canada, and we're right here in Ontario that understands mining, and we have all the infrastructure
in place, etc. Those are just briefly the things I would list.
Dr. Allen Alper: I think those are excellent reasons for our high-net-worth readers/investors to consider
investing in West Red Lake Gold.
West Red Lake Gold Mines Inc.
82 Richmond Street East, Suite 200
Toronto, ON M5C 1P1
Office: 416-203-9181 x 4600