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| UPCOMING EVENTS |
July 28-31, 2010
FSX Conference at the Ritz Carlton
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March 6-9, 2011
PDAC 2011 Conference
Toronto, Ontario
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Jul 14, 2010: News: Klondex Sets Term Sheet for $10 - $20 Million in Gold-Backed Financing... (more...)
Jul 06, 2010: News: Klondex Mines Appoints Mining Veteran Blane Wilson President and COO (more...)
Jun 22, 2010: News: Klondex and Paramount Agree to Release of Claims and Dismissal of Liti... (more...)
Lander County
Nevada
Updated: 22-Jul-10
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Klondex Mines Ltd. has either ownership or vital interest in approximately 13,008 acres—or sixteen square miles—in the prime area of northern Nevada's mining industry.
Map locations of our chief mineral properties define our strategic placement within the areas of Nevada's gold and silver deposits.
Following are descriptions of our major holdings:
Fire Creek | Maggie Creek | Hot Springs Point | Reef
Fire Creek | Maggie Creek | Hot Springs Point | Reef
Fire Creek is Klondex Mines' flagship property in North Central Nevada where the Company has discovered an NI 43-101 compliant Indicated Mineral Resource exceeding 1.6 million ounces of gold equivalent and an Inferred Mineral Reserve of over 500,000 ounces of gold. Fire Creek's updated resource is detailed in the table below (click here to link to Klondex's 43-101 Resource Update):
Fire Creek Project - Indicated and Inferred Resource
Gold Cut-off |
Classification |
Metric |
Grade |
Oz. Gold* |
Grade - GPT |
|
Tonnes |
GPT |
|
8.0 |
Indicated |
2,408,299 |
16.42 |
1,271,392 |
8.0 |
Inferred |
1,074,308 |
13.57 |
468,856 |
|
|
|
|
|
5.0 |
Indicated |
5,043,033 |
10.11 |
1,639,822 |
5.0 |
Inferred |
1,833,423 |
8.63 |
508,799 |
|
|
|
|
|
2.0 |
Indicated |
14,056,610 |
4.67 |
2,111,002 |
2.0 |
Inferred |
8,877,720 |
3.74 |
1,068,488 |
* Gold equivalent with silver at 60:1
Fire Creek is located in Lander County near the center of the Battle Mountain gold belt in Crescent Valley, approximately ten miles northwest of the massive Pipeline deposit of Barrick (7 million ounces) and five miles southeast of the Mule Canyon deposits of Newmont (3 million ounces). All of this mineralization exists in volcanics within the trend in Crescent Valley that runs south as far as Buckhorn (Barrick).
For much of its history, Fire Creek was considered to be a low-grade, high tonnage "Carlin" type open pit deposit. However geologic data in the late 1980s from the nearby Midas and Mule Canyon deposits suggested Fire Creek was more likely a deeper, higher-grade epithermal deposit.
Deep Drilling Program Finds High-Grade Gold
Klondex's five-year journey from zero to 2.1 million ounces * of gold equivalent resource was achieved through the focused effort of a streamlined management team. The resource was discovered in a very cost effective manner, with total drilling and related costs of approximately US $23.5 million as of December 31, 2009. This puts Klondex's finding costs for its 2.1 million ounces * at approximately US $10.92 per ounce. This finding cost is very attractive relative to industry costs and in light of gold prices of US $1000 per ounce and higher it represents substantial value creation for Klondex shareholders.
* Combines indicated and inferred resources with 5.0 gram per tonne cutoff.
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Aerial View of Klondex Mines' Fire Creek Property - From the South
Click For Larger Image
A selection of high-grade intercepts have been plotted on the photo. The
gold and silver grades and actual widths are reviewed in a table you can
access by clicking here. Old pit workings can be seen in the middle of
the photo, with access roads for surface drilling program surrounding. The
main entry road is in the foreground. Fire Creek runs diagonally across the
bottom left portion of the photo. |
Klondex Plans to Take its Development Underground in 2010
In addition to continuing its productive surface exploration programs at Fire Creek, Klondex plans to commence the underground development of Fire Creek with the driving of a 5,000-foot decline to efficiently access underground mineralization. The underground program has a two-fold objective of exploration and in-fill drilling as well as "bulk sampling" for metallurgical testing of material from underground. By going underground, Klondex will substantially shorten the length of drill holes, reducing both the cost and time required for exploration activity. Through in-fill drilling Klondex aims to better define its mineral resource.
The underground program will also enable Klondex to pursue bulk sampling which involves the extraction and processing of up to 120,000 short tons of mineralized material, limited to no more than 36,600 tons per year. Klondex filed for permits in March 2007 for designation as a "Small Scale Facility" as defined by Nevada regulations for milling and metallurgical testing under a bulk sampling exemption. In December 2009 the Company received its U.S. Bureau of Land Management approvals and now the Company anticipates its Nevada State approvals by the end of June 2010.
Bulk Sampling Opportunity
In its bulk sampling efforts, Klondex plans to target bonanza grade ore blocks averaging more than one ounce of gold per ton, enabling the company to produce approximately 36,000 ounces of gold per year. At current gold prices of $1000 and higher, these grades would create a very attractive profit opportunity, generating gross annual gold production approaching $40 million or more.
It is believed that profits from the bulk-sampling program could potentially support all of the operations of the company while also building a cash reserve for further exploration and the pursuit of full-scale mining permits. Site preparation and tunneling of the initial decline are expected to take approximately six-eight months, at which point the company would be in a position to begin to take the first bulk sample.
Klondex has been conducting a range of dialogues with potential financial and industry partners in an effort to secure capital for the underground program on suitable terms. Klondex is actively reviewing all possible options - including debt-oriented funding, gold-backed debt structures and even equity - with both financial and industry targets. Growing interest in the Company, including two takeover bids in the summer of 2009, have helped to focus investors and industry personnel on the Fire Creek opportunity, and should help the Company in securing project funding on the best possible terms.
Fire Creek Exploration History:
Gold was first produced at Fire Creek from a 2,000-ton leach pad test conducted by Klondex in 1981. Sixty-seven ounces of gold were recovered over a thirty days with a recovery rate of 80%. Having proven the leach-ability of the ore without crushing or agglomeration, a joint leasing and production agreement was signed with Minex Resources from Riverton, WY. Though undercapitalized, they managed to produce a total of about 1,000 ounces @ $300 per ounce before equipment problems and a declining gold price forced them to abandon their plans in late 1983.
When Klondex undertook the search for gold in Nevada thirty years ago, its organizing concept was to grow as a strategic land bank and its motivating force was the work of Dr. Ralph Roberts who pioneered the concept of sub-microscopic gold deposits. His most famous paper was published in 1960 and entitled "Alignment of Mining Districts in North-Central Nevada." It was the catalyst for all subsequent development in the parallel Carlin and Battle Mountain Trends and the evolution of the 'Heap-leach' method of gold extraction. All the great deposits being worked by Newmont, Barrick, Anglo and Placer-Dome were realized as a result of his geological interpretation.
The next joint venture partner was Alma-American, a unit of Coors Brewing Company. They conducted an aggressive exploration and development drilling program with aerial and electro-magnetic surveys. They dropped the project after six months, even with encouraging results, because Klondex refused to renegotiate the terms of the production and royalty schedule in the lease agreement. Klondex's strong position has been vindicated by the position in which it now finds itself.
In 1988, Klondex entered into a lease agreement with Aurenco Partners to drill and eventually mine the property. Aurenco Partners was formed specifically for the project by Black Beauty Resources and Covenanter Mining from Evansville, IN. Under the terms of the lease, Klondex received an advance minimum royalty of $10,000 per month and all advance royalty payments were to have been recoverable by the lessee out of net smelter royalty production (NSR). As of April 30th, 1999 a total of $1,215,000 had been paid to Klondex.
After a great amount of exploration and test drilling, Aurenco expanded the original Klondex acreage of 2,155 with an additional 4,995 acres, bringing the total land package to 7,150 acres. The program was undertaken to establish the parameters of the ore body and to enable their management to make an informed production decision when market conditions turned favorable.
No drilling below 500 feet was undertaken on Klondex ground where the Company had the right to participate up to a 25% working interest below that depth by contributing its share of production costs. Alternatively Klondex could have had elected to take a 6% NSR interest. As a result, the property remained unexplored at depth where all the great deposits in Nevada have shown improving grade below 1,000 feet.
The joint-venture agreement with Aurenco was terminated in 1999 due to adverse conditions in the gold market. The project and all improvements reverted to Klondex.
Since that time Klondex has self-funded all development of the Fire Creek property and today the Fire Creek land position has been expanded to 11,108 acres as of 12/31/09.
Page updated April 2010
Fire Creek | Maggie Creek | Hot Springs Point | Reef
Klondex holds a 66.66% interest in 48 claims in the Schroeder Mountain quadrangle. The property is on three separate sections miles located about three miles northeast of Newmont's Gold Quarry mine and 1.5 miles east of the old Queen Anne mine in the heart of the Carlin Trend. The mine and mill complex at Gold Quarry was built at an estimated cost of U.S. $200,000,000, and is considered to be Newmont's crowning financial and mining achievement. Gold Quarry produced 1.6 million ounces of gold in 1996. Numerous small pits can be found throughout the property which have been dug on mineralized surface outcrops. (Updated June 2009)
Fire Creek | Maggie Creek | Hot Springs Point | Reef
Klondex has 42 claims at Hot Springs Point, about six miles east of the town of Crescent Valley. The claims are in a basalt-andesite geological setting close to a sulfur deposit. The original claims were staked in 1993 and were reduced by "checker boarding" in 2003 to lower filing costs while retaining the land position. (Updated June 2009)
Fire Creek | Maggie Creek | Hot Springs Point | Reef
The 8 Reef claims in the Fairchild district of Churchill County are in the heart of an old silver mining district with production dating back to the late 19th century. The geologic formation is volcanic. Anomalous gold and silver have been detected along a siliceous reef which runs about half a mile. The claims were staked in 1986 and cover much of the exposed mineralized zone which shows evidence of pits, shallow shafts and trench work from prior examinations. The claims are surrounded on all sides with land staked by a major mining conglomerate. (Updated June 2009)
 John
Livermore ( white shirt) states "Drill right here"
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