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Klondex Mines Ltd.

Klondex Mines Ltd. is focusing on the exploration, development and production of its two high-quality gold and silver projects in the mining-friendly jurisdiction of north-central Nevada. The 1200 tpd milling facility is processing mineralized materials from the Midas mine and the Fire Creek project. Midas is fully permitted and has been in operation since 1998. Fire Creek is located ~100 miles south of Midas and is operating an ongoing bulk sampling program that began in 2013. All major infrastructure is in place at Fire Creek.

Expert Comments:

"My top pick in 2014 was Klondex Mines Ltd. As of late-February, it was up 36% over the previous 52 weeks. . .Klondex is generating significant free cash flow from its underground operations. It also has made significant discoveries that suggest its mine life can be extended. Its balance sheet has strengthened significantly in 2014 and it continues to target and expand on new mineralized zones. . .Klondex made several discoveries on the western portion of its Fire Creek operation consisting of the Karen, Hui Wu and Honeyrunner veins. These veins are already attributing to ~40% of the current production coming from Fire Creek. Even with positive operations, Klondex is giving investors an appetite for more, allowing its value to remain strong in times of turbulence. Klondex is ramping up its Fire Creek project in Nevada. Management is expecting to receive its full environmental impact assessment approval later in 2015 and that will allow the company to operate above and beyond its current small miners permit in Nevada and process greater amounts of ore from that deposit. Over 2015, underground development is expected to expand significantly with the number of working faces to increase from 18 to 30. That should get Klondex well above 300 tpd and begin targeting 150 Koz of combined gold-equivalent production from both its mining operations.

Klondex's ace up its sleeve remains Midas. I believe the entire market, including myself, is still underestimating its potential. Klondex will spend $15M on exploration and development there this year and is expected to target zones along the southern extent of the Colorado Grande vein where Newmont Mining planned to spend ~$50M on exploration before it scuttled that work when it acquired Fronteer Gold. We should see a new reserve calculation and mine plan on Midas by Q2/15. I wouldn't be surprised to see the stock move higher and a rerating on the heels of that new reserve and be further supported by exploration success there over 2015. The recently announced reserve calculation for Midas was a fantastic milestone for the company as reserves were expected to be depleted over 2015. It now contains a 2.8-year mine life with significant potential to convert additional ounces into reserves from the 1.1 Mt within the Measured and Indicated categories. I wouldn't be surprised to see the stock move higher and a rerating on the heels of continued execution and mine expansion at Midas. . .Klondex continues to bolt on quality management, all of whom have experience in Nevada, particularly at the Midas mine. I think it's a great move for Klondex as it continues to leverage knowledge of previous employees with experience at the Midas mine." read more >

Philip Ker, PI Financial (2/24/15)
"Klondex Mines Ltd. announced its initial reserve estimates for Fire Creek and Midas. . .approximately 330,000 oz gold and 2.8 Moz silver, highlighted by excellent reserve gold grades of 1.285 oz/t and 0.378 oz/t for Fire Creek and Midas, respectively, using a $1,000/oz gold and $18.53/oz silver price. . .this initial reserve estimate confirms upside still exists. . .the high grades outlined in the reserve were a positive surprise. . .we are confident that the company's exploration and development efforts over 2015 will lead to further discoveries and conversion of resources to reserves. . .we are increasing our target price from $2.85 per share to $3.00 per share."

Derek Macpherson, M Partners (2/24/15)
"Klondex Mines Ltd. announced initial reserve estimates for both Fire Creek and Midas, which imply a 3.8-year reserve life at Fire Creek and a 2.8-year reserve life at Midas. . .considering the reserves represent only a portion of the Measured and Indicated resource ounces (57% for Fire Creek and 25% for Midas) and the overall resource ounces (31% for Fire Creek and 16% for Midas), we believe that reserves are likely to grow in subsequent updates. Conservative assumptions highlight the company's ability to generate positive cash flow at the current gold price, or lower if required."

"Klondex Mines Ltd. is one of my favorite near-term gold production stories; it is producing gold and silver from its Midas mine, and is ramping up gold production at Fire Creek. Both are in Nevada. . .Klondex is in one of the best jurisdictions for operating gold mines, and now it has two. It also has a mill. This company is in a position to become a consolidator. Nevada has a number of small mines that could benefit from a very capable management team and a milling operation with excess capacity. . .at some point, there might be a takeover offer [for Klondex]. I would hope it remains independent for at least a while. There is a lot of value-added potential yet for that management team and the potential for further consolidation." read more >

Sam Crittenden, RBC Capital Markets (2/23/15)
"We view the initial reserves for Klondex Mines Ltd.'s Fire Creek and Midas as positive as grades are higher than our modeled estimates and they demonstrate the ability to generate positive free cash flow at current gold prices. The reserves have short mine lives (3.8 years at Fire Creek and 2.8 years at Midas); however, represent only 34% of the total resource at Fire Creek and 16% at Midas, and we believe additional ounces can be converted to reserves through exploration and engineering."

Oliver Turner, GMP Securities (2/23/15)
"This morning, Klondex Mines Ltd. announced initial reserves at Fire Creek and Midas in Nevada. . .with higher grades than we had anticipated (and currently model). We note that the reserves are run at $1,000/oz gold price and $15.83/oz silver price, providing significant downside protection while only extracting approximately 31% and 16% of the global resource bases of 784 Koz Au eq at Fire Creek and 813 oz Au eq at Midas. . .these resource bases (which we continue to expect to grow) provide ounce feed well beyond the current 3.8- and 2.8-year reserve lives at the two operations."

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Investing Highlights
 
Free Cash Flow From Operations
 
High Gold Grades
 
Low Cash Costs
Klondex Mines Ltd. Content