Klondex Mines Ltd. was formed in 1975, after acquiring the Fire Creek Project from Placer Development Ltd. From 1975-1994, Klondex conducted exploration on the project through various leases and joint ventures with the intent to develop a near surface resource amenable to open pit mining.
In the early 1980’s a small test heap leach operation was set up to remove the identified silicious cap above the now identified high-grade Fire Creek deposit. The joint venture determined not to continue with the operation and work on Fire Creek ceased in 1994, until 2004.
In 2004, Klondex drilled below the silicious cap and discovered the high gold grades commonly identified in our updated mineral resources. The exploration focus then shifted to build a deeper mineral resource from 300 feet to 600 feet below surface which is still open in all directions today.
Throughout the 2000’s, several companies conducted due diligence’s to acquire the Fire Creek project, including several of Klondex’s current management team, while operating other Nevada-based mines. The major red-flag always being the mineral resource estimate.
Successful proxy contests, in 2011 and again in 2012, aimed to replace the board of directors and shake up the management teams. Folllowing the 2012 proxy contest, the new Klondex board of directors recruited narrow vein expert, Paul Huet as President and CEO.Mr. Huet began building the operational team that could build Fire Creek into a cash flow positive producing asset. He started with Hollister Metallurgist Mike Doolin, now Chief Operating Officer. Many other team members joined from neighbouring mines, Midas and Hollister, including Klondex executive Brian Morris, Vice President Exploration who joined in late 2014.
The new team’s first initiative in 2012 was to remodel the Fire Creek core and rectify the concerns associated with it. A complete remodel of the core and geotechnical work on the mineral resource was finally completed in early 2013 and the new mineral resource update was released in August 2013. The update detailed narrower widths, and but exposed some of the highest gold grades in North America, that has become some of the highest gold grades in operation today.
Based on the results of the technical report, Klondex continued the development of the project, and with bulk sampling in 2013. In late 2013, Klondex started toll milling the Fire Creek material at the Midas Mill, 100 miles to the north.
In February 2014, Klondex acquired the Midas mine and milling facilities from Newmont USA. Klondex was catapulted from developer into junior producer status. The acquisition saved Klondex approximately $30 million per year in toll milling costs at Fire Creek, among other synergistic benefits, such as the sharing of personnel and blending of the Midas and Fire Creek mineralized materials for higher recoveries. In 2014, the company’s first year of operations, Klondex outperformed its original guidance of 70,000-85,000 gold equivalent ounces, and produced 107,861 gold equivalent ounces and ended the year with $53 million in cash.
Klondex is operating two of the highest grade gold mines in operation today.
Looking forward, Klondex is building a leading, integrated mid-tier mining company in North America. Klondex is focuses on earning free cash flow that can be used to build value for its shareholders.