An updated mineral resource for Klondex's True North project that increases the Measured and Indicated resource by 32% and the Inferred by 45% caught the attention of several analysts.
Klondex Mines Ltd. (KDX:TSX; KLDX:NYSE.MKT) on March 29 released an updated mineral resource for its True North Gold mine located in Manitoba, Canada. Klondex acquired the mine in January 2016. The Measured and Indicated resource represents an increase of 32% in gold ounces over the September 2016 resource estimate and the Inferred resource increased 45%.
Paul Huet, president and CEO stated, "True North continues to evolve into an important asset in our portfolio. We believed our initial Mineral Resource Estimate was just the beginning and this update confirms that belief. Using the results from our own drilling program post acquisition, we continue to unlock the true potential of this asset by adding ounces at depth with additional tons at higher grades."
The resource estimate was well received by industry analysts. Jamie Spratt, an analyst with Clarus Securities, called the update positive and noted that "we are encouraged by the growth in the mineral inventory that further strengthens our view on the significant exploration upside available at True North from the multiple zones that remain open. We believe continued drilling should translate into mine life extension of the ~45 Koz/year production profile at True North."
Spratt also lauded the True North and Hollister acquisitions by noting, "we continue to believe that KDX is well positioned to deliver a compelling production growth profile by the addition of True North and Hollister mines that are expected to drive production toward 300 Koz by 2018."
Stuart McDougall, an analyst with M Partners, noted that Klondex "maintains a strong balance sheet, with year-end unrestricted cash of ~$48M, working capital of $33M and total debt of $30M. . .based on our revised estimates, KDX can fund its capital requirements from internal cash flow, even at current metal prices."
On March 26, prior to Klondex releasing True North's updated resource estimate, Jeff Killeen of CIBC noted, "2016 has been a transitional year for Klondex with the purchase of the True North and Hollister mines. 2017 is expected to see production ramp up at True North and first gold from a bulk sampling program at the Hollister mine." He added, "A mine plan and resource update for Hollister is scheduled for Q2/17 and could be the next catalyst for Klondex shares. Management has cemented a reputation as being experts in underground, narrow vein mining and points to the continued potential for resource expansion at Fire Creek from recent drill results."
Jamie Spratt of Clarus concluded, "Our thesis continues to be that KDX offers best-in-class production growth, low cost production and a solid management execution track record."
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1) Patrice Fusillo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
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Additional disclosures about the sources cited in this article
Clarus Securities, Klondex Mines Ltd., March 30, 2017
The analyst has visited the Company’s mining operations in Manitoba, Canada and Nevada, USA. Partial payment or reimbursement was received from the issuer for the associated travel costs.
Within the last 24 months, Clarus Securities Inc. has managed or co-managed a public offering of securities of this company.
Within the last 24 months, Clarus Securities Inc. has received compensation for investment banking services with respect to the securities of this company.
The research analyst and/or associates who prepared this report are compensated based upon (among other factors) the overall profitability of Clarus Securities and its affiliate, which includes the overall profitability of investment banking and related services. In the normal course of its business, Clarus Securities or its affiliate may provide financial advisory and/or investment banking services for the issuers mentioned in this report in return for remuneration and might seek to become engaged for such services from any of such issuers in this report within the next three months. Clarus Securities or its affiliate may buy from or sell to customers the securities of issuers mentioned in this report on a principal basis. Clarus Securities, its affiliate, and/or their respective officers, directors or employees may from time to time acquire, hold or sell securities discussed herein, or in related securities or in options, futures or other derivative instruments based thereon.
Each Clarus Securities research analyst whose name appears on the front page of this research report hereby certifies that (i) the recommendations and opinions expressed in the research report accurately reflect the research analyst’s personal views about the Company and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst’s compensation was, is, or will be directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.
M Partners, Intraday Note, Klondex Mines Ltd., March 29, 2017
M Partners does not make a market for an equity or equity related security of the subject issuer.
1. M Partners or its affiliates collectively beneficially own 1% or more of any class of equity securities of the company which is the subject of the research report. Yes
2. The analyst or any associate of the analyst responsible for the report or public comment hold shares in the company. No
3. M Partners or a director or officer of M Partners or any analyst provided services to the company for remuneration other than normal investment advisory or trade execution services within the preceding 12 months, (may seek compensation for investment banking services from the company herein within the next 3 months). No
4. The director, officer, employee or research analyst is an officer, director or employee of the company, or serves in an advisory capacity to the company. No
5. The analyst has viewed the material operations of the company. We define material operations as an issuer’s corporate head office and its main production facility or a satellite facility that is representative of the company’s operations. Yes. The analyst has viewed the material operations of the company. The analyst visited the True North mine in Manitoba in September 2016. A portion of the travel costs and meals were covered by the company.
6. M Partners provided investment banking services for the company during the 12 months preceding the publication of the research report. Yes
7. The analyst preparing the report received compensation based upon M Partners investment banking revenues for this issuer. No
Research Analysts: The Research Analyst(s) who prepare this report certify that their respective report accurately reflects his/her personal opinion and that no part of his/her compensation was, is, or will be directly or indirectly related to the specific recommendations or views as to the securities or companies. M Partners compensates its research analysts from a variety of sources and research analysts may or may not receive compensation based upon M Partners investment banking revenue.
CIBC, Street Smarts, March 27, 2017
Analyst Certification: Each CIBC World Markets Corp./Inc. research analyst named on the front page of this research report, or at the beginning of any subsection hereof, hereby certifies that (i) the recommendations and opinions expressed herein accurately reflect such research analyst's personal views about the company and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part ofthe research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.
Potential Conflicts of Interest: Equity research analysts employed by CIBC World Markets Corp./Inc. are compensated from revenues generated by various CIBC World Markets Corp./Inc. businesses, including the CIBC World Markets Investment Banking Department. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. CIBC World Markets Corp./Inc. generally prohibits any research analyst and any member of his or her household from executing trades in the securities of a company that such research analyst covers. Additionally, CIBC World Markets Corp./Inc. generally prohibits any research analyst from serving as an officer, director or advisory board member of a company that such analyst covers.
In addition to 1% ownership positions in covered companies that are required to be specifically disclosed in this report, CIBC World Markets Corp./Inc. may have a long position of less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon.
CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from this company in the next 3 months.
