KLONDEX MINES LTD. T.KDX

Notes from the Q4 MD&A.

[insideoutside]

My notes in italics/bold
 
1 Canadian operations
Total production for the year was 27,919 GEOs, approximately 7,000 GEOs short of the low end of the revised guidance. This shortfall was due to mining lower than forecasted grades from True North. The lower mined grades are attributed to .. excessive dilution from a hanging wall failure and negative model grade reconciliation.
 
Negative reconciliation is proof that the mine is depleted and needs to be decommisioned once the tailings are exhausted.  Terrible move by Klondex to get involved in this transaction.
 
Fire Creek Average gold recovery rate
2017 91.7%
2016 93.6%
2015 93.5%
 
Not only does Hollister have the abysmal 70.5% recovery rate, but they have canabalized FC recovery in an effort to blend the ore with Hollister.  This will raises AISC and also supports my belief that Holliser ore is not compatible with the Midas Mill regardless of how finely they grind it.
 
All in cost per oz sold (page57)
2017 1348
2016 1335
2015 1064
 
If costs do not drop quickly they face a liquidity event or share dilution. I am very skeptical of forward guidance given their failure to deliver in 2017. I hope they prove me wrong.
 
Exploration Budget (page 35)
2017 8.2m
2016 12.8m
 
G&A (page 35)
2017 19.4m
2016 15.8m
 
Canabilizing the exploration budget to raise salaries and other admin expenses while missing guidance and impairing the balance sheet. Seriously ? 
 
In order to increase the certainty of expected future cash flows, from time to time we may enter into financial instruments for a portion of our forecast gold and silver sales over the next one to twelve months. During the year ended December 31, 2017, we entered into forward trades which covered 171,036 and 1,084,896 gold and silver ounces at average prices of $1,261 and $17.24, respectively. (page 51)
 
How  much have they hedged in 2018 and at what price ? Scary.
 
Community - On August 17, 2017, the Company completed the donation of the Rock Creek lands, (more than 3,200 acres of lands), to the Battle Mountain Band of Western Shoshone Indians of Nevada. (page 43)
 
A good deed yes, but no disclosure or input from shareholders ? What other undisclosed commitments have they made ?

[Highwave]

I think you are one desperate short in need to cover some shares right now. True North is not depleted Midas Mill has already processed Hollister Ore at 80%. Huet during BMO said by 2nd Q they beieve they will be in 84% to 91% range. They have zero liquidity issues at this gold price. Cap ex is much lower and they are operating 3 mines in Nevada that they can manage better than TN. Increases in G

[insideoutside]

I am not short, I have no position. I did not lie, in fact, unlike you, I posted the page numbers of the MD&A I pasted from. Maybe you should open it up. If you have contradictory info please paste along with the source or link. Otherwise we know who is lying ! They have a potential big liquidity problem because 2017 All in cost AIC *not asic* was 1348 which is greater than the price of gold.

[Highwave]

No one goes thru that kind of effort with no position on a post. I live in Texas and I BS when I see it. TN was the reason for high AISC. The mine is closed and the high costs are over. Closing TN eliminated 20 million in cap ex that was spent in 2017. When you do 1st grade math you can see they were issuing forwards on a 3 and 6 month basis. The forwards paid off last quarter given the dip in

[insideoutside]

TN a mine with no economic gold is a liability not an asset.   "Negative Reconciliation" is a nice way of saying "the gold is not there dumbass". 32m for an empty hole, nice. Forward contracts have increased.  They keep doubling down to make up for losses on previous lots.  Klondex labels this risk managment.  Most call is gamblers ruin. ie doubling