Klondex Mines Ltd. (TSX:KDX) (NYSE American:KLDX)
(“Klondex” or the “Company”) reported today its preliminary
operating results for the fourth quarter and full-year 2017. In
addition, the Company reported that its Investor Day, previously
scheduled for February 7, 2018, has been postponed as Paul Huet,
the President and CEO of the Company, is recovering from pneumonia
and is restricted from traveling. An alternate date will be
determined in the near future.
2017 Operating Results:
- Mined 222,233 gold equivalent ounces (“GEOs”)
- Produced 189,456 GEOs, an increase of 17% from 161,289 GEOs
produced during 2016
- Fire Creek and Midas delivered GEO production in-line with
guidance
- Sold 190,865 GEOs, an increase of 20% from 159,118 GEOs sold
during 2016
Total GEOs produced were less than the lower end
of the most recent guidance range primarily due to results from
Hollister and True North. At Hollister, the Company made the
prudent decision to defer the processing of a majority of the mined
Hollister ore as it continued to optimize recoveries at the Midas
mill for this ore. Stockpiles at the end of 2017 contained
approximately 15,000 GEOs from 44,000 tons at a GEO grade of 0.40
opt. Mined ounces at Hollister were in line with expectations. In
addition, the expected production results were not achieved at True
North as a result of aggressive expectations and operational
issues.
Mr. Paul Huet, the Company’s President and CEO
commented, “2017 was a year of progress and learning for Klondex.
The Company produced more ounces than any year in the Company’s
history, 28,000 GEOs or 17% more than last year. Our core
operations, Fire Creek and Midas, continue to perform well, as
expected. However, we were not successful in delivering on our
overall Company plan. Integrating our two recently developed
assets, Hollister and True North, simultaneously was more
challenging than we thought it would be. The processing of
Hollister ore through the Midas mill was delayed during the year as
we work to improve ore recoveries, which resulted in production
delays and a stockpile accumulation. In addition, we were not able
to deliver on our plans at True North and had to make a difficult
decision there, placing mining operations on care and
maintenance.”
Mr. Huet continued, “Looking forward, we expect
that Fire Creek and Midas will continue to deliver consistent
results from our operations in Nevada. We also expect significant
growth in production at Hollister in 2018. The new modifications to
the Midas mill are underway and recoveries for the Hollister ore
are now approximately 80%, with additional improvements expected.
In addition, the changes we have made at True North will result in
improved profitability for the Company and provide optionality as
we evaluate the district. Overall, we have learned from the
challenges of 2017, and I am confident in our team and the plans we
have developed for a successful 2018.”
Fourth Quarter and year to date 2017
Operating Results
|
|
|
|
|
|
|
Three months ended December 31,
2017 |
|
Twelve months ended December 31,
2017 |
Consolidated |
|
Nevada Total |
|
Canada Total |
|
Total |
|
Nevada Total |
|
Canada Total |
|
Total |
Ore tons mined |
|
95,619 |
|
|
89,706 |
|
|
185,325 |
|
|
356,697 |
|
|
309,343 |
|
|
666,040 |
|
Gold equivalent grade
mined (opt)(1) |
|
0.48 |
|
|
0.12 |
|
|
0.30 |
|
|
0.53 |
|
|
0.10 |
|
|
0.33 |
|
Gold equivalent ounces
mined(1) |
|
45,483 |
|
|
10,415 |
|
|
55,893 |
|
|
190,409 |
|
|
31,824 |
|
|
222,233 |
|
Ore tons milled |
|
98,714 |
|
|
88,624 |
|
|
187,338 |
|
|
329,948 |
|
|
297,826 |
|
|
627,774 |
|
Gold equivalent grade
milled (opt)(1) |
|
0.46 |
|
|
0.11 |
|
|
0.30 |
|
|
0.55 |
|
|
0.10 |
|
|
0.33 |
|
Gold equivalent ounces
produced(1) |
|
38,453 |
|
|
9,169 |
|
|
47,619 |
|
|
161,536 |
|
|
27,919 |
|
|
189,456 |
|
Gold
equivalent ounces sold(1) |
|
40,686 |
|
|
8,993 |
|
|
49,676 |
|
|
165,016 |
|
|
25,850 |
|
|
190,865 |
|
GEO
Ratio(1) |
|
76.5 |
|
|
73.8 |
|
|
76.6 |
|
|
73.1 |
|
|
72.7 |
|
|
73.1 |
|
(1) Gold
equivalent ounces ("GEO") and grades are computed as the applicable
gold ounces/grade plus the silver ounces/grade divided by a GEO
ratio. GEO ratios are computed by dividing the average realized
gold price per ounce by the average realized silver price per ounce
received by the Company in the respective period. Preliminary GEO
ratios are listed above. |
|
|
|
|
|
|
|
|
Three months ended December 31,
2017 |
|
Twelve months ended December 31,
2017 |
Nevada |
|
Fire Creek |
|
Midas |
|
Hollister |
|
Aurora |
|
Nevada Total |
|
Fire Creek |
|
Midas |
|
Hollister |
|
Aurora |
|
Nevada Total |
Ore tons mined |
|
28,162 |
|
|
37,454 |
|
|
20,440 |
|
|
9,563 |
|
|
95,619 |
|
|
123,754 |
|
|
156,927 |
|
|
66,453 |
|
|
9,563 |
|
|
356,697 |
|
Gold equivalent grade
mined (opt)(1) |
|
0.76 |
|
|
0.36 |
|
|
0.44 |
|
|
0.17 |
|
|
0.48 |
|
|
0.90 |
|
|
0.33 |
|
|
0.38 |
|
|
0.17 |
|
|
0.53 |
|
Gold equivalent ounces
mined(1) |
|
21,292 |
|
|
13,514 |
|
|
9,021 |
|
|
1,652 |
|
|
45,483 |
|
|
111,125 |
|
|
52,116 |
|
|
25,464 |
|
|
1,652 |
|
|
190,409 |
|
Ore tons milled |
|
32,522 |
|
|
35,583 |
|
|
21,046 |
|
|
9,563 |
|
|
98,714 |
|
|
134,152 |
|
|
157,363 |
|
|
28,870 |
|
|
9,563 |
|
|
329,948 |
|
Gold equivalent grade
milled (opt)(1) |
|
0.73 |
|
|
0.34 |
|
|
0.41 |
|
|
0.17 |
|
|
0.46 |
|
|
0.88 |
|
|
0.32 |
|
|
0.37 |
|
|
0.17 |
|
|
0.55 |
|
Average gold recovery
rate (%) |
|
90.2 |
% |
|
89.7 |
% |
|
70.5 |
% |
|
63.5 |
% |
|
85.6 |
% |
|
91.7 |
% |
|
90.8 |
% |
|
71.0 |
% |
|
63.5 |
% |
|
90.1 |
% |
Average silver recovery
rate (%) |
|
72.6 |
% |
|
74.3 |
% |
|
53.9 |
% |
|
31.9 |
% |
|
66.3 |
% |
|
82.1 |
% |
|
81.9 |
% |
|
55.5 |
% |
|
31.9 |
% |
|
79.3 |
% |
Gold equivalent ounces
produced(1) |
|
21,180 |
|
|
10,371 |
|
|
5,914 |
|
|
985 |
|
|
38,453 |
|
|
108,126 |
|
|
45,062 |
|
|
7,371 |
|
|
986 |
|
|
161,536 |
|
Gold
equivalent ounces sold(1) |
|
25,420 |
|
|
10,512 |
|
|
4,752 |
|
|
— |
|
|
40,686 |
|
|
112,455 |
|
|
47,298 |
|
|
5,281 |
|
|
— |
|
|
165,016 |
|
GEO
Ratio(1) |
|
76.5 |
|
|
76.6 |
|
|
76.5 |
|
|
76.5 |
|
|
76.5 |
|
|
73.5 |
|
|
72.8 |
|
|
76.3 |
|
|
76.3 |
|
|
73.1 |
|
(1) Gold
equivalent ounces ("GEO") and grades are computed as the applicable
gold ounces/grade plus the silver ounces/grade divided by a GEO
ratio. GEO ratios are computed by dividing the average realized
gold price per ounce by the average realized silver price per ounce
received by the Company in the respective period. Preliminary GEO
ratios are listed above. |
|
|
|
|
|
|
|
|
Three months ended December 31,
2017 |
|
Twelve months ended December 31,
2017 |
Canada |
|
True North Mine |
|
True North Tailings |
|
Canada Total |
|
True North Mine |
|
True North Tailings |
|
Canada Total |
Ore tons mined |
|
82,159 |
|
|
7,547 |
|
|
89,706 |
|
|
228,495 |
|
|
80,848 |
|
|
309,343 |
|
Gold equivalent grade
mined (opt)(1) |
|
0.12 |
|
|
0.04 |
|
|
0.12 |
|
|
0.12 |
|
|
0.04 |
|
|
0.10 |
|
Gold equivalent ounces
mined(1) |
|
10,120 |
|
|
295 |
|
|
10,415 |
|
|
28,208 |
|
|
3,616 |
|
|
31,824 |
|
Ore tons milled |
|
81,077 |
|
|
7,547 |
|
|
88,624 |
|
|
216,978 |
|
|
80,848 |
|
|
297,826 |
|
Gold equivalent grade
milled (opt)(1) |
|
0.12 |
|
|
0.04 |
|
|
0.11 |
|
|
0.12 |
|
|
0.04 |
|
|
0.10 |
|
Average gold recovery
rate (%) |
|
92.0 |
% |
|
89.0 |
% |
|
92.0 |
% |
|
93.0 |
% |
|
91.0 |
% |
|
93.0 |
% |
Gold equivalent ounces
produced(1) |
|
8,906 |
|
|
263 |
|
|
9,169 |
|
|
24,636 |
|
|
3,285 |
|
|
27,919 |
|
Gold
equivalent ounces sold(1) |
|
8,730 |
|
|
263 |
|
|
8,993 |
|
|
22,606 |
|
|
3,244 |
|
|
25,850 |
|
GEO
Ratio(1) |
|
73.8 |
|
|
73.8 |
|
|
73.8 |
|
|
72.7 |
|
|
72.7 |
|
|
72.7 |
|
(1) Gold
equivalent ounces ("GEO") and grades are computed as the applicable
gold ounces/grade plus the silver ounces/grade divided by a GEO
ratio. GEO ratios are computed by dividing the average realized
gold price per ounce by the average realized silver price per ounce
received by the Company in the respective period. Preliminary GEO
ratios are listed above. |
|
Nevada Operations:
Fire Creek
The Fire Creek mine continues to excel and
performed in-line with guidance for the year. For the fourth
quarter, 28,162 tons at a grade of 0.76 AuEq opt were mined at Fire
Creek. For the year, 123,754 tons at a grade of 0.90 AuEq opt were
mined. Fourth quarter and year-to-date (YTD) recovered GEOs were
21,180 and 108,126, respectively. Sold ounces for the same
periods were 25,420 and 112,455 GEOs as metal inventories were
depleted during the year.
Midas
The Midas mine also performed in-line with
guidance for the year. For the quarter, 37,454 tons at a
grade of 0.36 AuEq opt were mined at Midas. For the year,
156,927 tons at a grade of 0.33 AuEq opt were mined. Fourth
quarter and YTD recovered GEOs were 10,371 and 45,062,
respectively. Sold ounces for the same periods were 10,512 and
47,298 GEOs as metal inventories depleted throughout the year.
Hollister
The Hollister mine had its best quarter of
mining in the fourth quarter, mining over 9,000 GEOs, as the
majority of the underground rehab was completed in the third
quarter and development was advanced providing additional access to
the Gloria vein. For the quarter, Hollister mined 20,440 tons at a
grade of 0.44 AuEq opt. For the year, Hollister mined 66,453 tons
at a grade of 0.38 AuEq opt. Fourth quarter and YTD recovered GEOs
were 5,914 and 7,371, respectively. Sold ounces for the same
periods were 4,752 and 5,281 GEOs. Stockpiles at the end of 2017
contained approximately 15,000 GEOs from 44,000 tons at a GEO grade
of 0.40 opt.
As previously reported, metallurgical test work
is being performed to identify processing improvements to increase
the gold and silver recoveries of the Hollister ore processed
through the Midas mill. The recent mill modification, eliminating
all cyanide in the grinding circuit, planned for the fourth quarter
was not finished until the first week of January 2018. As a
result, the decision was made to stockpile the Hollister ore during
the fourth quarter in order to limit the risk of lower mill
recoveries and less revenue. In 2018, the Company has already
milled approximately 15,000 tons of Hollister ore at estimated gold
and silver grades of 0.48 and 3.20 opt, respectively. Gold and
silver recoveries for that material are estimated at approximately
80% and 65%, respectively. Ongoing metallurgical test work supports
that gold recoveries of 85-90% can be achieved with additional
modifications to the Midas mill circuit, including increasing leach
time and finer grinding. Design and engineering of these
modifications are being evaluated.
Canada Operations:
The True North mine in Manitoba, Canada produced
9,169 and 27,919 GEOs for the fourth quarter and full year,
respectively, approximately 7,000 GEOs short of the low end of the
revised guidance for the year. This shortfall was due to mining
lower than forecasted grades from the True North and Cohiba mines.
The lower mined grades are attributed to three issues:
- Delays in waste development postponed mining planned stopes in
the 711/713 areas of the True North mine;
- Excessive dilution from a hanging wall failure at True North,
resulting in additional tons with no grade;
- Negative model grade reconciliation at the Cohiba mine.
For the quarter, True North mined 82,159 tons at
a grade of 0.12 AuEq opt. For the year, True North mined
228,495 tons at a grade of 0.12 AuEq opt. Total fourth quarter and
YTD recovered GEOs from the mine were 8,906 and 24,636,
respectively. Total sold ounces for the same periods were 8,730 and
22,606 GEOs.
Tailings milled during the quarter totaled 7,547
tons at a grade of 0.04 Au opt. For the year, True North milled
80,848 tons from tailings at an average gold grade of 0.04 Au opt.
Recovered gold ounces from tailings for the fourth quarter and YTD
were 263 and 3,285 respectively.
As previously announced, following an extensive
review of the operational performance at True North, the Company
decided to place the mine under care and maintenance to review
strategic options and to provide optionality at higher metal
prices. This decision was largely based on the site’s inability to
achieve planned operating and cash flow targets in 2017 and to
refocus Company resources on Nevada assets. The Company will
continue to process tailings through the mill for the foreseeable
future in order to maximize cash flow and offset expected care and
maintenance costs.
2018 Guidance:
Below is a table summarizing Company guidance
for 2018.
|
|
|
|
|
|
|
|
|
Gold Equivalent Ounces
Produced(1) |
|
Production Cash Costs per Gold Equivalent Ounce
Sold(1) |
|
Capital Expenditures (thousands) |
2018 Full-Year
Outlook |
|
Low |
|
High |
|
Low |
|
High |
|
Low |
|
High |
Midas |
|
35,000 |
|
|
40,000 |
|
|
$ |
850 |
|
|
$ |
900 |
|
|
$ |
4,000 |
|
|
$ |
5,000 |
|
Midas Mill |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
16,000 |
|
|
18,000 |
|
Fire Creek |
|
100,000 |
|
|
105,000 |
|
|
450 |
|
|
500 |
|
|
23,000 |
|
|
25,000 |
|
Hollister |
|
37,000 |
|
|
40,000 |
|
|
920 |
|
|
970 |
|
|
5,000 |
|
|
7,000 |
|
Aurora |
|
4,000 |
|
|
5,000 |
|
|
550 |
|
|
600 |
|
|
200 |
|
|
500 |
|
Nevada
Total |
|
176,000 |
|
|
190,000 |
|
|
645 |
|
|
695 |
|
|
48,200 |
|
|
55,500 |
|
True North |
|
10,000 |
|
|
12,000 |
|
|
1,130 |
|
|
1,180 |
|
|
— |
|
|
— |
|
|
|
186,000 |
|
|
202,000 |
|
|
$ |
675 |
|
|
$ |
725 |
|
|
$ |
48,200 |
|
|
$ |
55,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Low |
|
High |
|
|
|
|
|
|
|
|
Corporate general and
administrative(1) (thousands) |
|
$ |
18,000 |
|
|
$ |
19,000 |
|
|
|
|
|
|
|
|
|
All-in sustaining costs
per gold ounce sold(2) |
|
$ |
940 |
|
|
$ |
990 |
|
|
|
|
|
|
|
|
|
Exploration
(thousands) |
|
$ |
10,000 |
|
|
$ |
12,000 |
|
|
|
|
|
|
|
|
|
(1) Includes share based compensation of approximately
$4 million, a non-cash item. |
(2) This is a non-GAAP measure; refer to the Non-GAAP
Performance Measures section of this Press Release for additional
detail. |
|
The Company expects to produce between 186,000
and 202,000 total GEOs during 2018 at an expected cash cost of $675
to $725 per GEO sold. Total production will not be equally
distributed by quarter during the year as higher levels of
production are expected during the second and third quarters due to
the processing of tailings. It is anticipated that production could
vary 5,000 to 10,000 ounces between the highest and lowest
producing quarters. Production from the Fire Creek and Midas mines
are expected to be in-line with 2017. Hollister mine production is
expected to ramp up during the year as the benefit of processing
the stock pile from 2017 is realized. In addition, Klondex has
begun processing historical Hollister tailings at the Aurora mill
and expects to realize incremental production from that operation
during 2018. Production from the True North mine in Canada will
decrease as mining operations will be suspended and most of the
GEOs produced will come from the processing of tailings. Total
All-in Sustaining Costs (AISC) are projected to be between $940 and
$990 per gold ounce sold for 2018.
The Company anticipates its 2018 capital
expenditures (“CapEx”) to be between $48 and $56 million, including
$16 to $18 million of capital to be spent on the expansion of the
tailings facility at the Midas mill. Total CapEx guidance consists
of $36 to $42 million of sustaining and $12 to $14 million of
non-sustaining capital. The majority of the capital is expected to
be spent at Fire Creek as the Company continues underground
expansion in the form of primary access development. Total
exploration expense is planned to be $10 to $12 million in
2018.
Webcast and Conference Call
Klondex will report its 2017 financial results
after the United States and Canada financial markets close on
Wednesday, March 14, 2018. The Company will conduct a conference
call and webcast the following morning at 7:30am PST/10:30am
EST.
Dial-In
Numbers:
United States and Canada Toll Free: +1
800-319-4610
Toronto: +1 416-915-3239
International: +1 604-638-5340
Conference call participants should dial in 5 to
10 minutes prior to the scheduled start time and ask to join the
Klondex call. A simultaneous webcast and presentation to accompany
the conference call will be available through the Investor
Relations section of the Company’s website or by accessing:
http://services.choruscall.ca/links/klondex20180315.html.
About Klondex Mines Ltd.
(www.klondexmines.com)
Klondex is a junior-tier gold and silver mining
company focused on exploration, development, and production in a
safe, environmentally responsible, and cost-effective manner. The
Company has 100% interests in four producing mineral properties:
the Fire Creek mine, the Midas mine and ore milling facility, the
Hollister mine, all of which are located in the state of Nevada,
USA, and the True North mine and mill in Manitoba, Canada. The
Company also has a 100% interest in the Aurora mine and ore milling
facility, also located in Nevada, USA.
Contact:
Mike Beckstead
Director, Investor Relations
O: 775-284-5757
M: 406-290-4165
mbeckstead@klondexmines.com
Cautionary Note Regarding
Forward-looking Information
This news release contains certain information
that may constitute forward-looking information or forward-looking
statements under applicable Canadian and United States securities
legislation (collectively, “forward-looking information”),
including but not limited to the potential benefits from placing
True North under care and maintenance, expected gold recoveries,
the Company’s achievement of the full-year projections for ounce
production and production costs, the pace of production during the
year, the Company’s ability to meet annual operations estimates,
and the Company’s capital addition expenditures. This
forward-looking information entails various risks and uncertainties
that are based on current expectations, and actual results may
differ materially from those contained in such information. These
uncertainties and risks include, but are not limited to, the
strength of the global economy; the price of gold; operational,
funding and liquidity risks; the degree to which mineral resource
estimates are reflective of actual mineral resources; the degree to
which mineral reserve estimates are reflective of actual mineral
reserves; the degree to which factors which would make a mineral
deposit commercially viable are present; the risks and hazards
associated with underground operations; and the ability of Klondex
to fund its substantial capital requirements and operations. Risks
and uncertainties about the Company’s business are more fully
discussed in the Company’s disclosure materials filed with the
securities regulatory authorities in Canada and United States
available at www.sedar.com and www.sec.gov, respectively. Readers
are urged to read these materials. Klondex assumes no obligation to
update any forward-looking information or to update the reasons why
actual results could differ from such information unless required
by law.
Non-GAAP Performance Measures
We have included the non-GAAP measures “Production cash costs
per gold equivalent ounce sold” and “All-in sustaining costs per
gold ounce sold” in this press release (together, the “Non-GAAP
Measures”). These Non-GAAP Measures are used internally to assess
our operating and economic performance and to provide key
performance information to management. We believe that these
Non-GAAP Measures, in addition to conventional measures prepared in
accordance with GAAP, provide investors with an improved ability to
evaluate our performance and ability to generate cash flows
required to fund our business. These Non-GAAP Measures are intended
to provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with GAAP. These Non-GAAP Measures do not have any
standardized meaning prescribed under GAAP, and therefore may not
be comparable to or consistent with measures used by other issuers
or with amounts presented in our financial statements.
Our primary business is gold production and our future
development and current operations primarily focus on maximizing
returns from such gold production. As a result, our Non-GAAP
Measures are calculated and disclosed on a per gold ounce
basis.
Production Cash Costs per Gold Equivalent Ounce Sold
Production Cash Costs per Gold Equivalent Ounce Sold presents
our cash costs associated with the production of gold equivalent
ounces and, as such, non-cash depreciation and depletion charges
are excluded. Production cash costs per gold equivalent ounce sold
is calculated on a per gold equivalent ounce sold basis, and
includes all direct and indirect operating costs related to the
physical activities of producing gold, including mining,
processing, third-party refining expenses, on-site administrative
and support costs, and royalties (State of Nevada net proceeds and
other such taxes are excluded). Gold equivalent ounces are computed
as the number of silver ounces required to generate the revenue
derived from the sale of one gold ounce, using average realized
selling prices.
All-in sustaining costs per gold ounce Sold
All-in sustaining cost ("AISC") amounts are intended to provide
additional information only and do not have any standardized
meaning prescribed by GAAP and should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with GAAP. The measures are not necessarily
indicative of operating profit or cash flow from operations as
determined under GAAP.
Our calculation of AISC per gold ounce sold is consistent with
the June 2013 guidance released by the World Gold Council, a
non-regulatory, non-profit market development organization for the
gold industry. AISC per gold ounce sold reflects the varying costs
of producing gold over the life-cycle of a mine or project,
including costs required to discover and develop new sources of
production; therefore, capital amounts related to expansion and
growth projects are included.
AISC per gold ounce includes all: (1) direct and indirect
operating cash costs related to the physical activities of
producing gold, including mining, processing, third-party refining
expenses, on-site administrative and support costs, royalties, and
cash portions of net realizable value write-downs on
production-related inventories (2) general and administrative
expenses, (3) asset retirement and accretion expenses, and (4)
sustaining capital expenditures, the total of which is reduced for
revenues earned from silver sales. Certain cash expenditures,
including State of Nevada net proceeds and other related taxes,
federal tax payments, and financing costs are excluded.
Klondex has not reconciled forward-looking full
year non-GAAP performance measures contained in this news release
to their most directly comparable GAAP measures, as permitted by
Item 10(e)(1)(i)(B) of Regulation S-K. Such reconciliations would
require unreasonable efforts at this time to estimate and quantify
with a reasonable degree of certainty various necessary GAAP
components, including for example those related to future
production costs, realized sales prices and the timing of such
sales, timing and amounts of capital expenditures, metal
recoveries, and corporate general and administrative amounts and
timing, or others that may arise during the year. These components
and other factors could materially impact the amount of the future
directly comparable GAAP measures, which may differ significantly
from their non-GAAP counterparts.
Grafico Azioni Klondex Mines Ltd. (AMEX:KLDX)
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Da Ago 2024 a Set 2024
Grafico Azioni Klondex Mines Ltd. (AMEX:KLDX)
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