Nevada producer has one of the highest-grade gold projects in the industry
SmallCapPower | May 20, 2016: Goldcorp Inc.’s (TSE:G) pending C$520 million acquisition of Yukon gold project developer Kaminak Gold Corporation (CVE:KAM) could spark even more M&A activity in the gold sector in 2016, as a rising gold price may prompt producers to try and buy the best projects still available on the market. One company that fits this bill has two operating gold mines in North America, and another one in development.
Klondex Mines Ltd. (TSE:KDX) owns the Fire Creek and Midas mines in Nevada, as well as an advanced-staged development project in Manitoba (Rice Lake mine and mill), in which the Company expects to make a production decision in the second half of 2016. 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, with a 16% output boost expected in 2016.
The Company reported record revenue of US$155.2 million in 2015, while its earnings per share rose to $0.17 from $0.14. Its cash balance at the end of the year, meanwhile, jumped 30% to US$59.1 million.
In a recent interview with SmallCapPower.com, U.S. Global Investors CEO 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 thinks Klondex could be acquired at price of C$6 to $9 per share.