Mr. Paul Huet reports
KLONDEX ANNOUNCES A REDUCTION IN UNDERGROUND OPERATIONS AND WORKFORCE AT TRUE NORTH AND EXECUTIVE MANAGEMENT CHANGE
Klondex Mines Ltd. has made a change in operations in Canada, which includes the immediate reduction of underground mining operations and work force at its True North mine in Manitoba, Canada.
Following an extensive review of recent operational performance at True North, the company has decided to limit underground mining to areas already developed. Once these areas are depleted, underground mining will be suspended. The decision was largely based on the site's inability to achieve planned operating and cash flow metrics in 2017. Preliminary full-year 2017 gold ounce production from True North is estimated to be approximately 24,000 to 27,000 ounces, which is less than the 35,000-to-45,000-ounce range of the company's guidance.
The mine will be placed on care-and-maintenance status after the developed areas are mined to review strategic options and to provide optionality at higher metal prices. The company will continue to process tailings, as contained in its reserve estimate, through the mill for the foreseeable future in order to maximize cash flow, and offset expected care-and-maintenance costs.Going forward, Klondex projects annual site free cash flow of $2-million to $4-million at current metal price levels assuming a processing rate of approximately 1,400 tonnes per day from tailings grading 0.035 ounce Au per ton (1.2 grams per tonne Au) from April through October, weather dependent. The average tailings grade processed in 2017 was approximately 0.05 oz/t Au (1.71 g/t Au). Additional information regarding True North and Ogama-Rockland will be discussed at the company's Feb. 7, 2018, Investor Day in Toronto.
The company is encouraged by certain positive operational improvements made, and additional understanding of the vein structures and mining methods gained during the past year. This information will help Klondex better define future alternatives.Infrastructure has been identified that needs upgrading, such as the chutes, automating the loading pocket and the need to advance development. At the True North mine, the company had a successful drilling campaign in 2017 and expects to release a new resource estimate in the first quarter of 2018. In addition, the Ogama-Rockland property, recently acquired through the Bison Gold Resources acquisition, is approximately 30 kilometres from the mine and has an inferred resource of 337,000 gold equivalent ounces. As the company moves forward, it will assess the potential of processing ore from both the True North mine and the Ogama-Rockland property through the True North mill to improve the economics for the company's properties in the region.
Paul Huet, president and chief executive officer, commented: "Klondex is committed to creating shareholder value.Following the True North acquisition, the company implemented an aggressive plan to start up production. We have extensively evaluated our progress to date, and have determined that it is in the best interest of the company and our shareholders to revise our plans for the True North mine." Mr. Huet continued: "We regret the implications these actions will have on our work force and other stakeholders, but must ensure the long-term sustainability of the company. True North and the recently acquired Bison Gold Resource properties continue to be valuable assets, and we are taking the necessary steps to build the foundation for their long-term success within the Klondex portfolio."
Executive management change
Klondex announced today that John Seaberg, former senior vice-president, strategic relations, has left the company. Mr. Huet commented: "John has been an important part in the development and growth of the company. On behalf of everyone at Klondex, I thank John for his contributions and wish him the best in his new endeavours."
About Klondex Mines Ltd.
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-per-cent 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, United States, and the True North mine and mill in Manitoba, Canada. The company also has a 100-per-cent interest in the Aurora mine and ore milling facility, also located in Nevada, U.S.
We seek Safe Harbor.
© 2018 Canjex Publishing Ltd. All rights reserved.