-- Posted Tuesday, 10 January 2006 | Digg This Article
We’re starting off 2006 with an introduction to Klondex Mines (www.klondexmines.com).
Klondex Mines Ltd, is a company founded in British Columbia in 1974. They are primarily focusing their energies on Nevada, where they are engaged in acquiring, exploring and developing gold and silver properties. Klondex shares trade on the Canadian Venture Exchange under the symbol KDX.
Here are a few highlights before we begin:
1. Klondex as a company has been in existence for over 30 years
2. They have an experienced management team
3. They own 100% of all their Nevada properties which encompass 15 square miles
4. They own 100% of their flagship property in Nevada called Fire Creek
5. KDX has about 3.3 million Canadian dollars in the bank
6. Fully diluted they have 20,500,000 shares making the share structure very attractive
7. They are currently in Phase IV of a five stage + drill program at Fire Creek
8. At the end of Phase III: an open-ended indicated resource estimate was completed at Fire Creek which showed 1,779,196 short tons grading 0.328 oz/ton (11.24g/t) gold totaling 583,081 ounces
I’ve been speaking with Robert Eadie, who is Executive Vice President of the company. Robert has been with the company for 18 months but has an excellent understanding of its mechanics, potential, and its time lines. Mr. Eadie has excellent credentials in his own right having been involved with the mining business for many years. Along with his duties as Executive VP of Klondex, he is also CEO and a director of Starcorp International Ventures. Starcorp is another company engaged in metals exploration. Incidentally, Bill Solloway is the president of Klondex.
Contact Information
I’ve included the company contact information below for your convenience:
info@klondexmines.com
Direct: 203.227.8642
Toll-Free: 1.866.602.4935
Fax: 203.221.7659
An excellent Web site Based on Hard Earned Results
This is a very interesting story and I’d advise that you visit their web site which has been beautifully put together. Of special interest is the Business TV clip and especially their slide presentation (The big red box on the home page). I’d like to draw your attention to page four on that presentation; the one that deals with the historical timeline of the company. It gives an excellent perspective as to what has occurred at the area where the Klondex property is located since 1913 with the last 20 or so years being the most significant and the last three years being exceptionally active ones.
And for a company with this much history, dilution has been kept to a minimum due to some very well structured joint venture deals. Now with the gold market again showing signs of life in 2005-2006 after a 20 year plus bear market, KDX is in a position to benefit from all those lean years when they were able to maintain possession of the property while learning so much more about it.
Remember that pretty, well constructed web sites don’t amount to a hill of beans if the goods aren’t there to back it up. 2004 was an excellent year for the company with 21,000 feet of core drilling (29 holes) completed at Fire Creek. Excellent results were encountered including a 25 foot intercept of 2.59 ounces gold per ton (and a fantastic 5 foot intercept of 12 ounces gold per ton.) They were also able to raise $6.25 million CDN in a bought deal.
In April of 2005 KDX successfully completed their Phase 3 drilling at Fire Creek—10,873 feet (3,624 meters) of R/C and core drilling. That program returned significant intercepts from 7 of the 9 holes (21.2gpt over 7.6 meters including 87.9gpt over 1.52 meters).
Then in May of 2005 an open-ended indicated resource estimate was completed at Fire Creek which showed 1,779,196 short tons grading 0.328 oz/ton (11.24g/t) gold totaling 583,081 ounces. (Please refer to #8 above).
Currently stage four is being completed.
The Crown Jewel and a little History
The crown jewel of the Company's land bank is the 7,000 acre property at Fire Creek in Lander County which they’ve actually controlled since 1974. The Fire Creek property is located 10 miles north west of the "Pipeline" deposit of Placer-Dome [7,236,000 oz.] and five miles south east of Newmont Mining's "Mule Canyon" [3,000,000 oz.] deposit along the Mule Canyon - Fire Creek - Buckhorn volcanic formation
Back in 1999, Aurenco Partners, under contract to develop and mine the property, opted out of the deal after ten years due to adverse conditions in the gold market. They spent in the vicinity of $4.25 million on the project and when the joint venture agreement was terminated, they left behind a substantial geological data-base; a virtual treasure trove of information.
We fast forward to 2003-2004 and the company begins a five phase drill program at Firecreek proving up some very promising results.
As an aside, Lander County is also the location of Madison’s “Lewis Property” a location that has proven up to be one of Frank Lewis’s “best ever” drill holes: 0.512 over oz/t Au over 105 feet. Frank Lewis, a legend in Nevada, was in the mining business there for 50 some years, amassing what some consider to be the largest collection of patented and unpatented land claims ever assembled in Nevada. Hence, the significance is evident. I mention this only as a point in passing because Lander County could possibly prove up bonanza grade gold in the future.
Keep in mind that right next door to the Lewis Property is Newmont’s Phoenix-Fortitude Complex. Klondex is certainly in the “right” area. They are not only in Nevada, proving to be one of the world’s best and most prolific gold producing regions, they are in the “right” county in Nevada. And of course, Nevada is in the US and in the months and years ahead, I believe we are all going to discover that companies doing business in a stable country will continue to benefit from that stability.
Again, take advantage of their web site and review their past news releases. All of the roads point in the same direction: this is a company with an extensive history that is really just beginning to find its stride over the past three or four years as the gold market is heating up. This makes for excellent timing.
2-Year Chart of KDX.v
Strong T.A. support around the 50-DMA at C$1.80
Evaluating on Our Criteria
Management: An excellent team of experienced people
Projects: 15 square miles of Nevada in an area where discoveries are being made and excellent drill results are being generated.
Ability to Fund: 3.3 million in the bank
Ability to Promote: Excellent: they’ve been telling the story aggressively in an even-keeled fashion
Share Structure: Excellent: around 21M fully diluted
Ethics: Everything that I’ve seen to date tells me this group is ethical and they are:”saying what they’ll do and then doing what they say”.
Conclusion
Take a close look at Klondex. Perform your own due diligence. I enjoyed talking with Robert Eadie and found him to be well informed, transparent, and readily accessible. I can’t ask for much more than that. In this kind of gold environment, and with this kind of aggressive drill program proceeding on a 100% owned property in Nevada, the results could continue to be very impressive as we move forward.
I plan on covering this company in the future. And by all means, consider Klondex for your own portfolio of junior minding stocks.
Until Next Time:
D. Stewart Armstrong
Consulting to the Junior Mining Sector
-- Posted Tuesday, 10 January 2006 | Digg This Article
