West Red Lake Gold Mines has agreed terms for a loan of up to $95 million (C$132.8 million) from Gunvor USA, a subsidiary of Centalion Group, to refinance its existing secured debt and support its Madsen gold mine in Ontario’s Red Lake district. The binding term sheet provides an initial loan of up to $65 million and a further loan of up to $30 million subject to additional conditions, the second tranche aimed at potential development of the Rowan project.
The pricing is the point of the exercise. The proposed facility carries interest at one month SOFR plus 5.5 percent, against the Nebari facility’s three month SOFR plus 8 percent with a 4 percent floor on the reference rate. It matures five years after the initial draw, with no scheduled principal repayments on the first tranche for nine months, no prepayment penalty, first priority senior security over Madsen and Rowan backed by a parent guarantee, and a commercial agreement under which Gunvor would purchase all gold doré produced by the operation. At June 30 the company carried C$43.7 million under the Nebari loan and held C$31.2 million in cash.
The refinancing follows a difficult operating quarter. Madsen, which declared commercial production in January, produced 7,859 ounces in the third quarter, down 8.4 percent from the previous quarter, for nine month output of 22,102 ounces. Last week the company cut its full year guidance to 27,000 to 32,000 ounces from 35,000 to 45,000, citing labour shortages and difficult mining in previously worked areas of the mine, which a previous operator, Pure Gold Mining, shut in October 2022 before entering creditor protection.
The term sheet is binding but the money is not yet committed: funding requires due diligence, definitive financing and commercial agreements, delivery of security and approvals, so the $95 million ceiling should not be read as cash in hand. The company’s next catalyst is the Madsen and Rowan prefeasibility study, and its next financial results are due November 27. If the facility closes on the stated terms, West Red Lake trades a cheaper and longer debt stack for a single creditor holding both the security and the offtake, a concentration that matters if the ramp disappoints again.