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Report
A GOLDEN LIGHT IN VOLATILE TIMES;
NEAR-TERM CASH FLOWS @ FIRE CREEK
CORPORATE PRESENTATION
KDX:TSX; KLNDF:OTCQX
June 2013
1
1
FORWARD-LOOKING STATEMENTS
Forward-Looking Statements
This presentation may include certain statements that may be deemed “forward-looking statements." All statements in
this presentation or those made by Klondex management or representatives, other than statements of historical facts,
including the likelihood that bulk sampling will generate significant revenues and the possible results of future exploration
are forward-looking statements. Although the Company believes the expectations expressed in such forward-looking
statements are based on reasonable assumptions, such statements are not guarantees of future performance and
actual results or developments may differ materially from those in the forward-looking statements. Factors that could
cause actual results to differ materially from those in forward-looking statements include unsuccessful exploration results,
inability to obtain necessary permits and regulatory approvals, changes in metals prices, currency fluctuations, changes
in the availability of funding for mineral exploration, unanticipated changes in key management personnel, unavailability
of necessary equipment and contractors, and general economic conditions. Mining is an inherently risky business.
There is no guarantee that the Company will be able to carry out their work programs or that the results of those work
programs will be successful. Accordingly, the actual results may differ materially from those projected in the forwardlooking statements. For more information on the Company and the risks and challenges of their businesses, investors
should review the Company filings available at www.sedar.com and www.klondexmines.com.
CAUTIONARY NOTE TO U.S. INVESTOR CONCERNING RESOURCES
This presentation uses the terms “Indicated and Inferred” resources as defined in accordance with National Instrument
43-101. While such terms are recognized and required by Canadian Securities laws, the United States Securities and
Exchange Commission does not recognize them. Under the United States standards, mineralization many not be
classified as a “reserve” unless the determination has been made that the mineralization could be economically and
legally produced or extracted at the time the reserve calculation is made. “Inferred Resources” have a great amount of
uncertainty as to their economic and legal feasibility and readers are cautioned not to assume that all or any part of the
inferred resources exists or is economically mineable.
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MANAGEMENT – OPERATIONS-FOCUSED
Paul Huet – President, CEO and Director
●
●
●
25 years high-grade mining experience, particularly in narrow vein gold mining in Nevada
Led team taking Hollister Mine to 80k-100k gold equivalent oz/year; Mine Manager of Newmont’s Midas Mine; COO at Premier Gold
Extensive experience/knowledge in Mine Operations, Engineering, Geology, Exploration, Permitting and Safety
Jorge Avelino – Chief Financial Officer
●
●
25+ years of accounting and financial management experience across range of industries and public companies
Public resource company experience since 1986
Mike Doolin – General Manager
●
●
●
25-years with extensive experience in design and permitting of mining projects
Substantial experience in milling, metallurgy and assay operation; successfully managed large and small teams on multiple projects
Most recently served with Great Basin Gold as Esmeralda Mill Manager
Dr. Shuai Chen – Chief Engineer
●
●
17-yrs designing projects, specializing in underground mine design, planning and ground and cost controls in Nevada
Previously Chief Engineer for Atna Resources’ Pinson mine, Senior Engineer for Great Basin Gold’s Hollister mine and Senior Mining
Engineer for Newmont’s Midas Mine
Steve McMillin – Chief Geologist
●
●
25 years experience including grass-roots, near-mine exploration and underground production
Previously with US Steel, Newmont Exploration Ltd., Anglo Gold Jerritt Canyon, Queenstake Resources, Midway Gold
Sid Tolbert – Mine Superintendent
●
●
●
20 years of mining experience with extensive knowledge in the extraction of narrow, high-grade gold vein systems in Nevada
14 years with Newmont, including Mine Superintendent and Foreman at the Midas Mine and its Vista project at Twin Creeks
Extensive knowledge and understanding of underground mining methods, ground conditions, budgets and dilution management
Lucy Downer – Environmental Manager
●
●
18 years of environmental experience and has been instrumental in the success of several mining and environmental projects across North
America, primarily within Nevada
Graduated from Queens University in Ontario with an Engineering: Mining and Mineral Processing degree
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KLONDEX - HIGHLIGHTS
●
●
●
●
●
●
Proven operations-focused management team
High-grade gold in safe mining jurisdiction
Straightforward and simple deposit
Fully-permitted to initiate small scale gold production at
Fire Creek in 2013
Low cash costs expected for 2013 trial mining
Fire Creek
Opportunity for upside:

KDX trading at a discount to peers:
EV/oz: $33/oz (MI&I) vs. avg. $45/oz
Ongoing Milestones:
Re-logging core
Updated
Resource
PEA
Critical Path to Cash Flows:
Final Milling
Agreement
Vent-raise
Access
4
Small-Scale
Gold
Production
from Bulk
Sample at
Fire Creek Q3 2013
FIRE CREEK - INFRASTRUCTURE ALREADY IN PLACE
JERRITT CANYON
MILL
Strategic location with local infrastructure:
● Located in the heart of Nevada’s gold trends with world-class
mines as neighbours
 At the intersection of Northern Nevada Rift (NNR) &
Battle Mountain Trends
 NNR host to Midas, Hollister, and Fire Creek: narrow
vein epithermal gold deposits
● Fire Creek and the Jerritt Canyon Mill accessible via federal
and state roads
● Favourable regulatory environment
● 5000 ft+ of underground workings already excavated (ramp,
decline and cross cuts)
● Power substation complete and connection to transmission
line completed March 2013
 Connection to site from substation pending
5
FIRE CREEK - CASH FLOWS EXPECTED 2013
N
● Bulk Sample to begin in Q3 2013
 Toll milling and transportation agreement with Veris Gold to
Jerritt Canyon Mill, 120 miles NE
 $112.50/ton milling; $36/ton transportation
Joyce
Vein
Vonnie
Vein
 Toll milling and transportation costs: $148.50/ton
● Start extracting from the Joyce Vein, at crosscut 5400
 Joyce Vein (A Vein): 0.9 m @ 95.5 g/t
 Vonnie Vein (B Vein): 1.5m @ 43.5 g/t
● 2013: deliver ~8,000 ozs AuEq from bulk sample
● Upon completion of updated resource and PEA, projections
for 2014 and 2015 targets will be available.
● Initial test-work supports +90% Au recoveries
Portal
Surge
Ponds and
Water
Treatment
Plant
Office
buildings
and core shack
500 ft
1000 ft
6
2013 UNDERGROUND IN-FILL DRILLING PROGRAM
N
13 opt Au
Target continuity of mineralization to the east
● Drilling on 23m (75ft) spacing
● ~ 9,754m (32,000 ft) of drilling
● Prior surface was drilling on 50m (164ft) spacing
● 16 easterly drill fans, 3 - 4 holes per fan
● East/West drill fan 9 complete; Fan1 assays
pending; currently drilling Fan 2
● Five westerly drill holes in fan 9 to test southern
extension of vent raise access
UNDER
EXPLORED
WEST ZONE
0.48 opt Au
over 42.8 ft
● Heavy red lines: 2013 u/g infill drill program: ~5 holes per fan
● Heavy black lines, completed 2013 fans, assays pending
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FIRE CREEK – RESOURCE MODEL
● Current resource of 1.6M ozs Indicated and 458k ozs
Inferred, dated May 2011
● Updated resource estimate targeted mid-2013, by
Micon International
 Will include 240,000 ft of core re-logging & geology
review; and an additional 120,000 feet of core
drilling
Klondex Mines Ltd.
●Source: Technical Report Data as of May 21, 2011;
NI 43-101 Compliant Resource
Released September 12, 2011
Note:
variable Au prices we Metric
can selectively
mine areas
Gold*At
Cutoff
Grade
Gold
and remain
economic
(g/t)
Category
Tonnes
(g/t)
(oz)
4.0
Indicated
5,176,050
9.9
1,647,052
4.0
Inferred
1,732,810
8.2
458,084
7.0
Indicated
2,145,283
17.6
1,215,019
7.0
Inferred
555,043
12.5
223,794
* Fire Creek remains economic at lower gold prices
Underexplored on
strike and at
depth
8
MAIN ZONE CONTINUITY, WEST ZONE DISCOVERY
Tremendous exploration potential
● Gold resources on less than 7% of the land package
● Main Zone: Underground in-fill drilling
 Joyce Vein: width and grade increases north from 5400 drift to 5370
drift
 Joyce Vein: new potential splay before the 5400 drift
 496.7 g/t (14.5 opt) Au over 1.82m (6ft) (press release: Jan. 2, 2013)
 True width at 5370-ACC crosscut estimated at 1.7m (5.5ft)
● West Zone: mineralization discovered by excavating the vent raise access
 3.6opt (123.9g/t) Au over 5ft (1.5m) at 528ft –533ft
 Fan 9: drilling in all 5 holes intercepted gold
mineralization
● South Zone: Near Portal discovery (April 2013)
 0.53 opt (15.5 g/t) Au over 42.8ft (13m) FC12-029U
Exploration drifting at
5370 cross cut in Joyce
Vein
West Zone: Fan 9 drilling
N
FIRE CREEK BULK SAMPLE PERMITS
● Issued Permits





Secured NDEP 6-month temporary discharge permit: 3/13
BLM permit # N-56088 Amendment allowing NV Energy to connect to offsite substation: 12/12
Class II Air Quality Operating Permit #AP1041-2774 (State): 3/11 & 7/12
Water Pollution Control Permit #NEV2007104 (State): 3/11, 11/11 & 6/12
BLM Notice to Proceed (Fed): 9/10
● Future Permits




Rapid Infiltration Basin (RIB) Permit – in process
 Geotechnical work begun to complete final RIB design
Easements to bring power on site – in process
Revised Plan of Operations (BLM) and Water Pollution Control Permit (State) – in process
NEPA documentation to expand to full production – initiated
10
KLONDEX ROAD MAP
Status
Strengthen Board
Est.
Costs
US
$M
-
New CEO and Operations Team
Complete
-
Funding ($23M Equity, $7M Debt)
Complete
-
Infill drilling – underground
Ongoing
$ 2.9
Mine infrastructure
Complete
$ 1.0
Examine, re-log core, pictures and metallurgy
Complete
$ 1.0
Prepare new resource
Ongoing
$ 0.3
Prepare PEA
Ongoing
$ 0.3
Vent raise construction
Ongoing
$ 1.4
Milling agreement
Complete
-
Power line installation
Ongoing
$ 1.3
Remaining drifting underground
Ongoing
$ 3.2
Temporary Discharge Permit
Complete
-
Water management (RIB)
Ongoing
$ 0.8
NEPA documentation to expand to full production
Ongoing
$ 0.5
Initiate Bulk Sample
Total Estimated Costs
$12.7
Total Spent to Date
$ 6.5
11
2012
Q3 Q4
Q1
✔
✔ ✔ ✔
✔ ✔
✔
✔
✔
✔
2013
Q2 Q3
Q4
Q1
2014
Q2 Q3
Q4
KLONDEX MINES LTD.
Board of Directors
Larry Phillips, Chairman, Co-founder IAMGold
Rodney Cooper, Labrador Iron Mines
Jamie Haggarty, JELL Advisors
Paul Huet, President and CEO
William Matlack, Scarsdale Equities
Blair Schultz, K2 and Associates
Symbol
52 Week Range
Average Volume (3M)
TSX: KDX
OTCQX: KLNDF
C$0.91 to
C$1.85
52k
Shares Issued and Out
64.4M
Fully Diluted
85.7M
Market Cap
C$87M
Enterprise Value
C$89M
Cash
C$7.0M
Debt:
Long-Term – due Jan 2015
C$8.6M
12
KDX SHARE PRICE PERFORMANCE VS. PEERS
3-mo Average Daily Trading Volume: 69,700
Source: Morningstar.com
13
KLONDEX SPONSORSHIP
● Klondex’s top shareholders include leading resource investors and substantial management ownership.
Top Shareholders
Coverage
Ownership*
% FD
Outstanding
K2 & Associates
11.5M
Glenn Pountney
Equity Research
Analyst
13.4%
Casimir Capital
Eric Winmill
7.8M
9.1%
Mackie Research Capital
Barry Allan
U.S. Global Investors
4.5M
5.2%
MGI Securities
Marc Pais
William Solloway
3.8M
4.4%
GMP Securities
Oliver Turner
Van Eck Global
3.0M
3.5%
PSP-MTL Private Sector Pension
3.0M
3.5%
Gold Energy & Tech Stocks
Jay Taylor
Investors Group
1.8M
2.8%
The Mining Speculator
Greg McCoach
William Matlack, Director
1.4M
1.7%
Paul Huet, CEO
1.2M
1.4%
Brendan Donohoe
1.1M
1.3%
Ownership (%)
Mgmt and Insiders
Top Shareholders
38M
46.2%
Institutional
* Includes shares, warrants, options
Retail
14
ATTRACTIVE VALUATION VS. JUNIOR GOLD PEERS
Klondex sells at a significant discount to
its peer group on an EV/resource basis,
yet Klondex has:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Strong management & Board
Funding in place
Great location
Impressive grade
Significant resource
Permitting largely in place
Direct site grid power imminent
Paved road access to toll mill
Near-term production from bulk
sample
EV / MI&I AuEq (Inclusive)
•
•
•
•
15
based on MI&I resources, up to May 3, 2013
KDX: Ind. 1.6M oz Au; Inf. 0.4M oz Au.
Source: FactSet, Bloomberg, equity research and corporate
disclosure
Note: Gold equivalent resources and production shown on a
precious metals basis only; enterprise value adjusted to exclude
minority interest when calculating resource and production
valuation multiples
CONTACT INFORMATION
KDX:TSX KLNDF:OTCQX
Klondex Mines Ltd.
Suite 600, 595 Howe Street
Vancouver, British Columbia
V6C 2T5
www.klondexmines.com
Paul Huet, President & CEO
807-939-2841
[email protected]
Alison Tullis, Manager, IR
647-233-4348
[email protected]
Investors & Media:
David Collins, Toni Trigiani
Catalyst Global LLC
212-924-9800
[email protected]
Fire Creek worker/contractor mine safety board
16

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