RE:RE:RE:RE:I agree..that is why I dont own KLDX I'm thinking the company was willing to risk this in order to lock in numbers and plan their year with guaranteed cash flow and, lets face it, they haven't excately sold out the farm. My investment in Klondex was made to achieve gold / silver leverage and the rationale included:-
- Klondex has the highest underground grade mine in the world and therefore would appear to be immune from gold price fluctuations.
- A part of my KDX investment proceeds came from the sale of KGI. Although KGI has the high grade Macassa mine, the company has about $100m in debenture debt.
- In contrast, KDX was not at risk from debenture debt, if there were to be a gold price fall.
- Moreover, KDX was not committed to capital expenditure beyond its significant cash reserves.
Forward gold sales have historically been applied by miners with high productions costs and which are under pressure from high debt.
As a result of the recent rise in the bullion price, pure bullion investments have outpaced the KDX share price. I agree that KDX has made excellent mine management decisions (in particular, the Rice Lake purchase) and is second to none that I know of in the gold mining arena.
However, in the 1m 30s video link below, the CEO says that
“…. management does not know how to fail….” In the circumstances, management should be prepared to back up their forward sales decision with a specific corporate risk that they were seeking to avoid, or otherwise state that their future policy is not to become a market speculator.
In the alternative, management have seemingly assumed the investment leverage decision that should be the domain of investors to make.
https://www.youtube.com/watch?v=bUFsnw4iM_Q