Ralph Aldis: This was structured largely as a forward sale on the gold with a slight discount. That calculation that you just did—dividing the ounces by the money coming in by the ounces going out—is something many people in the industry don't do, but should. . .Klondex had been toll mining. This deal gives the company the Midas mine and mill. Other players in the area will want to send concentrate to Klondex's mill. This is a transformational step that will give Klondex a lot of credibility in the market. I visited Klondex in September. Paul Huet and the management team know what they're doing. The management team is buying stock, even in the market. It believe in what it is doing. Klondex is doing almost its entire market capitalization with this deal. The stock is still trading above the deal price. I think this really sets it up to have a stronger production profile and better margins.
"Klondex doesn't have its own mill. Klondex has toll milling agreements with both Newmont Mining and Veris Gold. In the current environment, saving capex is important. It allows Klondex to get cash flow very quickly. In fact, it has already started receiving payments from its toll milling agreements. This ability to generate cash in the near term should allow Klondex to continue exploring while doing the necessary development for steady-state operations. We model it reaching 500 tpd and producing over 80,000 oz gold in 2015; Klondex is able to fund the underground exploration drilling needed to meet these targets."