U.S. Global Investors CEO believes his top gold stock pick will likely be acquired
SmallCapPower | November 11, 2016: Gold stocks may have cooled over the past few months but U.S. Global Investors CEO Frank Holmes’ top gold stock pick from six months ago has remained hot. In an interview with SmallCapPower at the end of April, Mr. Holmes considered one gold junior in particular to be a likely takeover candidate.
Klondex Mines Ltd. (TSE:KDX) owns the Fire Creek and Midas mines in Nevada, and the True North Gold Mine and mill in Manitoba, which it placed in production during the third quarter of this year. The Company expects initial annual production of 45,000 to 65,000 gold ounces at True North at average All-in Sustaining Costs of C$950 to C$1,050 per ounce.
The Company also recently closed its acquisition of the Hollister and Aurora projects, also located in Nevada. Klondex called Hollister a high-grade, fully permitted (EIS in hand) underground gold mine approximately 19 miles from its Midas mill. The Company expects many synergies with the acquisition of these two projects that are located so close to its existing Nevada operations.
Klondex increased its gold equivalent production by 21% in 2015 to 127,527 ounces, at All-in Sustaining Costs of US$786 per gold ounce sold.
In his interview, Frank Holmes asserted that Klondex Mines has grades of 12 gram per tonne (g/t) gold, as compared with the global average of 1 g/t, and a high free cash flow compound annual growth rate. He thought Klondex could be acquired at price of C$6 to $9 per share.
On November 3, 2016, Klondex reported record third-quarter revenue of $53.0 million and net income of $7.2 million. The Company also had $131.1 million in cash on its books.