- Klondex Mines completed a 7,300 ton bulk sampling of its Karen Vein at its Fire Creek Project that yielded 31.5 gpt.
- I have suggested in the past that I believe the Fire Creek Project has incredible exploration potential given the existing high grade resource.
- This news furthers my contention that Klondex Mines remains a compelling gold speculation stock.
Recently Klondex Mines (OTCQX:KLNDF) released the results of its bulk sampling of the Karen Vein at its Fire Creek Project. The project already has one of the highest grade ore deposits in the industry with over 20 grams per ton of gold. The bulk sampling analyzed 7,300 tons of ore taken from the Karen Vein. It yielded incredible results of 31.5 gpt. of gold.
While you can never predict a mineral discovery with certainty I did suggest that one of the reasons to own shares in Klondex Mines is its exploration potential. The company is currently developing its high grade Fire Creek deposit, which isn't very large on a per-ounce basis given the company's $223 million valuation. However it is incredibly high grade at over 20 grams per ton of gold, which is multiples of your typical underground gold mine, suggesting that production costs will be low. The company's recent preliminary economic assessment confirms this.
While the Karen Vein is not included in this assessment, and while it is still in the exploration stage, the bulk sampling news indicates that it is potentially another source of high grade production in the company's future. Furthermore, now that the company has cash-flow it will be able to finance its own exploration. This has the potential to be extremely accretive given that gold tends to be discovered near existing gold deposits, and the fact that Klondex has already discovered, and continues to discover high grade gold improves the probability that this will continue, making it a compelling speculation stock.
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