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Klondex Mines: "Must Be Doing Something Right", Says Ralph Aldis

Jul. 25, 2013 4:58 PM ETKLDX
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Klondex Mines (TSE:KDX) (OTCBB:KLNDF) was recently lauded by senior mining analyst with U.S. Global Investors, Ralph Aldis, in an interview with The Gold Report, where he offers a few junior mining stocks that could provide greater leverage to a gold price recovery.

"Klondex Mines Ltd.'s stock is up 25% over the last three months, and the average stock in the exploration and development space is down 25%. The company must be doing something right," said Aldis in the interview. "I feel that some of the smart money right now is already onto the high-grade stories."

Klondex is working hard at having the next new producing asset in Nevada, with the company having the advantage of grade on its side, according to CEO Paul Huet, who made the assurance to investors at the company's annual general meeting in June.

"Klondex recently put out a news release indicating that its resource, an underground drift at its Fire Creek project in Nevada, is basically 132.8 grams per ton (132.8 g/t) over 144.2 meter strike. It already has 2 million ounces (2 Moz) at 9.95 g/t. It is high quality and high grade and in the politically safe jurisdiction of Nevada. We're the third largest shareholder. None of the top three shareholders has to raise any cash to meet redemptions," said Aldis.

"That stock won't have any selling pressure, but you can still buy it for $70M. I don't know where you can buy 2 Moz at 9.95 g/t for $70M."

The Fire Creek project is situated at the intersection of the Battle Mountain trend and Northern Nevada Rift, which also hosts the Midas and Hollister narrow-vein epithermal gold deposits. The company is planning to start initial production from bulk sampling later this year, with an updated resource from drilling due this summer, to be followed by a new and comprehensive mine plan.

"The advantage is that the deposit is not homogenous, and in the case where gold is declining, we have the opportunity to increase the gold cutoff grade. Costs remain the same but we can get a lot more from the revenue end, giving us the opportunity to survive at different metal prices," assured the chief executive at the AGM last month.

Aside from being surrounded by major producers, the property is as expected also proximate to power, transportation, infrastructure and a milling facility in the heart of the U.S. state's gold trend. Apart from the Rapid Infiltration Basin permit, which has been submitted and is on track for the third quarter, most other major permitting is in place.

To read the interview from The Gold Report in full, please click here.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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