The Project is located primarily in Lander County, Nevada, approximately 63 miles west of Elko, Nevada, overlooking Crescent Valley. The Project comprises private fee lands (both leased and owned) and unpatented lode mining claims. The land position includes approximately 15,420 acres of unpatented federal lode mining claims, 1,110 acres of private fee land and 230 acres of mineral leases. Overall, the Fire Creek land package is approximately 17,000 acres
The Project is a modern, mechanized narrow vein mine. Only the mineralized veins accessible from main development have been defined to a sufficient level of detail to categorize as reserves. In the opinion of the authors of the Pre-Feasibility Report (link to pre-feas) dated March 16, 2015, additional potential exists to extend reserves along strike in both directions as underground access is developed. As the footprint of the mine grows and the number of available mining areas grows with it, the mining rate can be increased, and cost reductions realized through economies of scale.
Capital requirements for the Project are minimal. Ongoing mine development comprises the majority of capital costs, and the ability to access multiple veins from common development greatly reduces the unit cost per ounce. In the opinion of the authors of the above Pre-Feasibility report, the high grade reserves in the mine plan provide a high return and will sustain profitable operations with up to 40% adverse variations in metal prices, operating or capital costs. The total cost per ounce, including capital expenditures and net of byproduct sales, is less than $500 per ounce.
The grade value of the resources and the low capital requirements facilitated with the addition of the Midas Mine and Mill to Klondex’s project portfolio, combine to produce a short 0.5 year capital payback period and a relatively high 5.0 profitability index (PI) calculated at a 10% discount rate.