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Metals & Mining Industrial Metals & Minerals

"Klondex Mines Ltd is a gold and silver producer engaged in exploration, development, and production of its properties. The company has interests in three mineral properties: the Fire Creek Mine, and the Midas Mine and ore milling facility, both of which are located in the state of Nevada, USA, and the True North Gold Mine (formerly the Rice Lake Mine) and mill in Manitoba, Canada. The revenue... see more

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KLONDEX MINES LTD. > Hollister - an evaluation

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Post by JRafflesUK on Jul 25, 2017 4:09pm

Hollister - an evaluation

Hollister was purchased with an issue of 16m shares (a total cost of $80m at C$5 share).
At a today’s SP of, say, C$3.90, the Hollister value of those 16m shares is C$62.4m.
The Hollister GEO ounces for 2017 are expected to be 35,000, but that will be for approximately 9 months production. For illustrative purposes, assume the annual equivalent will be 45,000 ounces.
The head grade of circa 0.50 opt benefits from a short trucking distance to the Midas mill.
Using the market value attributed to Hollister today of C$62.4m and the annual equivalent production ounces of 45,000 ounces, this gives an EV of production ounces of C$1,377 for the Hollister project.
Bearing in mind that it is no secret that the purchase rationale for Hollister was the Hatter Graben property, then it seems an overreaction to depress the SP as a result of Hollister, when, at today’s SP, current production will more than justify the 16m shares issued to purchase Hollister [including Hatter Graben].

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Comment by passionatepiper on Jul 25, 2017 4:14pm

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Comment by phil_t on Jul 25, 2017 4:43pm

If it's worth $0, then in theory the market cap shouldn't drop more than what they paid for it. It's down well over $500M.

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Comment by passionatepiper on Jul 25, 2017 4:57pm

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Comment by NVminer49er on Jul 26, 2017 3:04pm

You've already stated that you've sold all your KDX stock. Why stick around just to spread lies & unfounded rumors? Ever been to the northern NV desert? try stick a drill rig on top of that mud during the winter without sinking it (and everything else) into the ground.

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Comment by passionatepiper on Jul 26, 2017 3:23pm

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Comment by CaptainConn on Jul 25, 2017 7:21pm

Good analysis. Traders can do whatever they want on half the usual volume but facts don't change. Good to see management converting their restricted shares to common shares at these levels. Waiting patiently for market to catch up with reality. 6 months, 1 year...as long as it takes. Will be adding to my position tomorrow. GLTA

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