Waterton Yesterday's volume surge signals a potential change in sentiment. Three days ago, Waterton filed an early warning report indicating that they had acquired an additional 164,000 shares (.09%) at CAN$1.89. They hold a 7.6% stake or 10.09% stake if you include the exercise of the out of the money warrants they acquired from the sale of Hollister. The warrants are exercisable at $6 and have a 15yr term, so the real stake is 7.6%.
What is very unusual is that Waterton is known for its debt financing deals and very rarely, if ever does it buy equity stakes. What is known is that Waterton has the best insight into Klondex assets in Nevada having held the debt on the Fire Creek assets and selling their Hollister interest to Klondex. The market (shorts) has rightfully punished Klondex for its production shortfalls and lack of timely communication which created more doubt. Having said that, yesterday's volume surge was impressive and I attribute it to the Waterton early warning release. Is Waterton increasing its stake or are shorts starting to cover? That is the question that will be made known over the coming weeks.
I suspect Waterton is well aware of the value of the Nevada land package assembled by Klondex and they believe the assets to be under-valued. I see no other reason for Waterton buying equity other than to eventually put Klondex into play or effect change that will surface the true value of the Klondex assets.
NOTE: Klondex will be removed from the TSX index on March 16, 2018, and that will result in 8-9M shares being sold. The 2017 financials will be reported in or around that time as well and hopefully, that coincides with a Klondex turnaround plan.
Bottom Line: Should be an interesting next few months for Klondex.