Mr. Paul Huet reports
KLONDEX REPORTS RECORD QUARTERLY PRODUCTION OF 51,833 GEOS; 2017 PRODUCTION GUIDANCE INCREASED ~36% FROM PRIOR YEAR
Klondex Mines Ltd.
has released its fourth quarter and full-year 2016 operating results, as well as selected operating guidance for 2017. The attached fourth quarter and full-year 2016 operating results table summarizes key operating highlights for the company.
FOURTH QUARTER AND FULL-YEAR 2016 OPERATING RESULTS
Three months ended Dec. 31, 2016 Twelve months ended Dec. 31, 2016
Fire Midas Nevada True Total Fire Midas Nevada True Total
Creek total North Creek total North
Ore tons
milled 27,721 53,809 81,530 63,962 145,492 120,553 190,982 311,535 95,710 407,245
Average
gold
equivalent
mill
head
grade
(oz/ton)
(1) 1.07 0.32 0.57 0.14 0.38 0.91 0.27 0.52 0.11 0.42
Average
gold
mill
head
grade
(oz/ton) 1.06 0.21 0.50 0.14 0.34 0.90 0.17 0.45 0.11 0.37
Average
silver
mill
head
grade
(oz/ton)
(2) 0.80 7.87 5.46 - 3.06 0.77 8.13 5.28 - 4.04
Average
gold
recovery
rate (%) 93.8% 93.5% 93.7% 93.4% 93.6% 93.6% 93.9% 93.7% 92.7% 93.6%
Average
silver
recovery
rate (%)
(2) 84.4% 83.9% 84.0% -% 84.0% 86.6% 86.7% 86.7% -% 86.7%
Gold
equivalent
produced
(oz)
(1) 27,873 15,391 43,264 8,445 51,833 102,352 47,747 150,099 10,198 160,457
Gold
produced
(oz) 27,613 10,537 38,150 8,433 46,583 101,286 29,824 131,110 10,187 141,297
Silver
produced
(oz) 18,729 355,317 374,046 853 374,899 80,593 1,345,989 1,426,582 853 1,427,435
Gold
equivalent
sold
(oz)
(1) 27,342 13,162 40,504 7,028 47,656 99,986 50,082 150,068 8,028 158,260
Gold sold
(oz) 27,035 8,354 35,389 7,016 42,405 98,723 31,777 130,500 8,016 138,516
Silver
sold
(oz) 22,103 351,946 374,049 853 374,902 95,454 1,374,685 1,470,139 853 1,470,992
(1) Gold equivalent ounces and grades are computed as the applicable gold ounces per grade plus the
silver ounces per grade divided by a gold equivalent ounce ratio. Gold equivalent ounce ratios are
computed by dividing the average realized gold price per ounce by the average realized silver price
per ounce received by the company in the respective period. Preliminary gold equivalent ounce ratios
for each respective segment are as follows:
GEO
ratio 72.1 73.2 7 2.4 71.3 71.4 75.6 75.1 74.7 73.1 74.5
(2) The company does not track this silver statistic at True North due to silver being trivial to that
operation.
Nevada operations
The company's operations at Fire Creek and Midas produced a record 43,264 gold equivalent ounces during the fourth quarter, bringing the full-year 2016 Nevada production total to 150,099 gold equivalent ounces, slightly above the top end of the company's guidance of 145,000 to 150,000 gold equivalent ounces. Fourth quarter production benefited from planned higher grades at both Fire Creek and Midas, as well as planned higher mining rates. As expected, the development work performed in the third quarter positioned the company to execute on its mine plans in the fourth quarter. Specifically, as planned, Fire Creek produced 53-per-cent-more ore tons at 65-per-cent-higher grades due to additional long-hole stoping. Midas realized a reduction of 15 per cent in long-hole silling and stoping mining widths, which improved mined head grades by approximately 22 per cent in the fourth quarter.
Canadian operations
The True North mine in Manitoba, Canada, produced 8,445 and 10,199 gold equivalent ounces for the fourth quarter and full year, respectively, in line with the company's guidance of 8,000 to 12,000 gold equivalent ounces. During the fourth quarter, the company stopped the tailing reprocessing project for the winter and began processing the stockpiled ore from the mine.
Guidance for 2017
The company expects to produce between 210,000 and 225,000 gold equivalent ounces during 2017 at an expected cash cost of $680 to $710 per gold equivalent ounce sold. This represents an increase in gold equivalent ounces sold of approximately 37 per cent from the prior year as the company benefits from bulk-sampling production at its Hollister project in Nevada, as well as higher production from its True North mine in Canada, as ramp-up continues. Fire Creek and Midas's 2017 production is expected to be in line with the prior year.
The company also expects its 2017 capital expenditures to be between $57-million and $62-million with an additional $3-million to $5-million to be spent on exploration. The majority of the capital is expected to be spent at Fire Creek as the company continues underground expansion in the form of primary access development and advancement of a second portal. The company also expects to spend $7-million to $9-million at its newly acquired Hollister project in Nevada as it commences its bulk-sampling mining program and an underground definition drill program in the Gloria zone.
Attached is a key 2017 operating guidance table summarizing key 2017 operating guidance for the company.
KEY 2017 OPERATING GUIDANCE
GEO production Cash costs Capex ($M)
per GEO sold (1)
Low High Low High Low High
Midas 42,000 45,000 $ 925 $ 950 $ 11 $ 12
Midas mill - - - - $ 4 $ 5
Fire Creek 97,000 100,000 $ 475 $ 500 $ 27 $ 29
Hollister (2) 30,000 35,000 $ 935 $ 960 - -
------- ------- --- --- -- --
Nevada total 169,000 180,000 $ 670 $ 700 $ 42 $ 46
True North (3) 41,000 45,000 $ 725 $ 750 $ 15 $ 16
------- ------- --- --- -- --
Consolidated total 210,000 225,000 $ 680 $ 710 $ 57 $ 62
======= ======= === === == ==
Low High
Corporate G&A ($M) $ 15 $ 17
Hollister development ($M) $ 7 $ 9
Regional exploration
expense ($M) $ 3 $ 5
All-in costs per gold
oz sold (1) $ 1,070 $ 1,130
(1) This is a non-generally accepted accounting principle measure.
(2) Hollister is an exploration-stage mineral property, and as such,
production refers to the estimated quantities resulting from the
process of extracting mineralized materials from the earth and
treating that material in the mill/concentrator, yielding
concentrates containing metals.
(3) Based on an estimated Canadian-dollar/U.S.-dollar exchange rate
of 0.75 to 1.
Paul Huet, president and chief executive officer, commented: "The evolution of Klondex continues, and 2016 was a banner year in many ways. Most importantly, we extended our streak of no lost-time accidents at any of our operations, and we ended the year on a high note, producing a record 51,833 GEOs for the quarter, in line with our mine plans."
Mr. Huet continued: "We are excited to enter 2017 with four mines and three mills in Nevada and Canada. Fire Creek and Midas continue to be our flagship operations. We are also pleased with the progress thus far at True North in Canada and the recently acquired Hollister project in Nevada. We are well positioned for yet another record year in 2017."
About Klondex
Klondex is a well-capitalized, junior-tier gold and silver mining company focused on exploration, development and production in a safe, environmentally responsible and cost-effective manner. The company has 100-per-cent interests in three producing mineral properties: the Fire Creek mine and the Midas mine and ore milling facility, both of which are located in the state of Nevada, United States of America, and the True North gold mine (formerly the Rice Lake mine) and mill in Manitoba, Canada. The company also has 100-per-cent interests in two recently acquired projects, the Hollister mine and the Aurora mine and ore milling facility (formerly known as Esmeralda), also located in Nevada, United States of America.
Webcast and conference call
Klondex will report its 2016 financial results after market close on March 15, 2017. A conference call and webcast will be held the following morning on March 16, 2017, at 10:30 a.m. ET/7:30 a.m. PT. The conference call telephone numbers are listed as follows:
Canada and the U.S. toll-free dial-in: 1-800-319-4610
Toronto: 1-416-915-3239
International: 1-604-638-5340
Callers should dial in five to 10 minutes prior to the scheduled start time and ask to join the Klondex call. The webcast will be available on the company's website.
Qualified person
Scientific and technical information in this press release has been reviewed and approved by Brian Morris (AIPG CPG-11786), a qualified person within the meaning of NI 43-101.
We seek Safe Harbor.
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