WRLG Posts Best Quarter at Madsen, But Only 36% to Its Own Guidance Midpoint

West Red Lake Gold Mines (WRLG) just turned in the best quarter the Madsen mine has ever produced. The Q2 2026 print shows production up 51% quarter-over-quarter, all-in sustaining costs (AISC — what it really costs to produce an ounce) down 30%, and the mine's first positive free cash flow quarter since West Red Lake acquired the asset. The headline numbers look like a turnaround. The sub-headlines tell investors what to actually watch.

**The stockpile is the most important number in the release**

At quarter-end, 10,768 tons of broken rock sat on the Madsen surface holding roughly 1,500 ounces of gold — up from 79 ounces at the end of March. That is not a stockpile problem; it is a stockpile proof point. For the first time since West Red Lake bought Madsen, the mine is pulling rock out of the ground faster than the mill can process it. The mine produced 8,600 ounces and sold 8,300 during the quarter, so roughly 300 ounces of the production increase ended up in the pile rather than on the truck.

Mine tons went from 52,000 to 76,000 (+46%). Head grade climbed from 3.6 g/t to 4.3 g/t (+18%). Daily mining rate jumped from 572 tons per day to 878. The mill ran at 842 tons per day against a permitted capacity of 800 tons per day — "above its permanent capacity," as management put it on the call — and held recoveries at 95%.

**Margin per ounce quadrupled, even on a lower realized price**

The cost side moved in the same direction. Cash costs fell from $2,594/oz in Q1 to $2,000/oz in Q2. AISC dropped from $4,678/oz to $3,284/oz. Management's own framing: a relatively high fixed-cost base spread across more ounces.

Put prices and costs side by side, and Q1 was $260/oz of margin. Q2 was just over $1,000/oz — four times the per-ounce margin on a lower realized gold price ($4,300/oz in Q2 vs. $4,900/oz in Q1). Revenue rose 17% to $49 million. Income from mine operations totaled $20 million (up from $15 million). Adjusted EBITDA reached $22 million (+54%). Adjusted net earnings totaled $13 million (+98%).

**The cash catch**

WRLG reported $9.7 million of positive free cash flow in Q2. Cash on the balance sheet still fell from $36 million to $31 million. The reason sits in the definition: management's "free cash flow" is operating cash flow less sustaining capital and lease payments. It is not net of the $6.3 million of growth capital, interest, or debt principal.

Strip those items out, and the picture is less kind. Over the first six months of 2026: $35 million of operating cash flow, $38 million of capital spending, $18 million of interest/debt/principal/lease. Cash fell $11 million — or $23 million excluding warrant and option exercises. Net debt is $75 million ($106 million of debt against $31 million of cash, including $62 million of gold-linked notes and a $44 million draw on the NABARI facility). Working capital closed at negative $4 million.

Management acknowledged on the call that the existing debt was "designed as short-term back-end loaded financings" and that the company is "actively looking at options to lower cost of capital."

**Guidance requires another step-up**

Full-year production guidance is 35,000–45,000 ounces. Six months in, WRLG has produced just 14,000 ounces — 36% of the midpoint with half the year done. Management guided to roughly 60% of the year's production in the second half. Hitting the bottom of the range takes roughly 10,400 ounces per quarter from here (+21% over Q2). The midpoint requires about 12,950/quarter — a 50% step-up. Q2 was a 51% increase from Q1; the midpoint asks them to do it again and hold it.

Management listed the things that could get in the way: oversized material causing higher dilution, difficulty handling it through the existing crushing circuit, labor constraints on experienced underground miners, and difficult ground at depth.

**The peer comparison — and the dilution overhang**

The host's analysis compared WRLG against five gold producers of comparable size — Heliostar, Mako Mining, Jaguar, Surabi, and Luca. The screen is mixed. On enterprise value per ounce of production, WRLG screens roughly in line with peers ($8,500 vs. peer median $8,062). On EV/EBITDA, WRLG trades at 6.4x against a 3.8x peer median — a 68% premium on first-half numbers, 57% on a Q2 annualized basis. Q2 per-ounce margin was $1,000 at WRLG vs. $2,100 at Heliostar, $1,900 at Mako, and $1,551 at Jaguar.

The shortest line in the peer file: every comparator is in a net cash position. WRLG is the only one carrying net debt — roughly 1x EBITDA. On a like-for-like free cash flow build, WRLG yields -3.3% against a peer median of +7.6%.

On the equity side: 110 million warrants outstanding for roughly $95 million in cash. The $0.68 November tranche alone would bring in about $22 million (~$15 million net of the price gap at the ~$0.95 reference). Fully diluted, that takes the share count from 414 million today to 554 million.

**The Rowan resource and the upcoming PFS**

Rowan's updated resource came back at 335,000 indicated ounces grading 13 g/t. The fork access drift is half complete; the shaft refurbishment takes hoisting to 700 tons per day. Fork and the 904 complex are both slated for the 2027 mine plan. Management is still tracking toward a combined Madsen–Rowan pre-feasibility study release in mid-to-late September — the next hard catalyst on the calendar.

**What investors should actually watch**

Three things, in the order the video raises them:

1. **Can Q2's throughput hold?** The mill ran above its rated capacity. Management is targeting 1,000 tons per day in H2 — a 19% step from the Q2 run-rate. If oversized rock and labor shortages persist, that step gets harder. 2. **Does cash stabilize?** $5 million of cash burn in a "positive free cash flow" quarter suggests the financing clock is ticking. Watch the cost-of-capital commentary and any November warrant exercise data. 3. **The PFS readout.** A combined Madsen–Rowan operating entity changes the production profile and the capex ask.

As management put it on the call: "Q2 demonstrated the mine is capable of operating at such a level… it's really about getting that consistency as we move forward."