2. FORWARD-LOOKING STATEMENTS
Forward-Looking Statements
This presentation may include certain statements that may be deemed “forward-looking statements." All statements in
this presentation or those made by Klondex management or representatives, other than statements of historical facts,
including the likelihood that bulk sampling will generate significant revenues and the possible results of future exploration
are forward-looking statements. Although the Company believes the expectations expressed in such forward-looking
statements are based on reasonable assumptions, such statements are not guarantees of future performance and
actual results or developments may differ materially from those in the forward-looking statements. Factors that could
cause actual results to differ materially from those in forward-looking statements include unsuccessful exploration results,
inability to obtain necessary permits and regulatory approvals, changes in metals prices, currency fluctuations, changes
in the availability of funding for mineral exploration, unanticipated changes in key management personnel, unavailability
of necessary equipment and contractors, and general economic conditions. Mining is an inherently risky business.
There is no guarantee that the Company will be able to carry out their work programs or that the results of those work
programs will be successful. Accordingly, the actual results may differ materially from those projected in the forwardlooking statements. For more information on the Company and the risks and challenges of their businesses, investors
should review the Company filings available at www.sedar.com and www.klondexmines.com.
CAUTIONARY NOTE TO U.S. INVESTOR CONCERNING RESOURCES
This presentation uses the terms “Indicated and Inferred” resources as defined in accordance with National Instrument
43-101. While such terms are recognized and required by Canadian Securities laws, the United States Securities and
Exchange Commission does not recognize them. Under the United States standards, mineralization may not be
classified as a “reserve” unless the determination has been made that the mineralization could be economically and
legally produced or extracted at the time the reserve calculation is made. “Inferred Resources” have a great amount of
uncertainty as to their economic and legal feasibility and readers are cautioned not to assume that all or any part of the
inferred resources exists or is economically mineable.
2
3. •
26 years of accounting experience in mining, construction and
manufacturing. Served 4 yrs as CFO of Argonaut Gold during its
growth to a 100,000+ ounce per year producer.
S
•
•
E
Rodney Cooper, P.Eng., Labrador Iron Mines
•
M
17-yrs experience developing exploration programs for
development and production of u/g narrow vein systems; 10
years at the Midas Mine, in Nevada
R
William Matlack, B.Geo., Scarsdale Equities
•
Sid Tolbert – Mine Superintendent
•
20+ years of mining experience with extensive knowledge in the
extraction of narrow, high-grade gold vein systems in Nevada
•
18 years of environmental experience and has been instrumental
in the success of several mining and environmental projects
across North America, primarily within Nevada
Bryan Ouellette - Safety and Projects Foreman
•
•
30+ years of mining experience across North America.
Certified in Lean Six Sigma Black Belt process at Carlin
Alison Tullis – Manager, Investor Relations
•
Nine years designing and managing IR programs for public
mining companies
Specializes in metals and mining investment banking with Scarsdale Equities
LLC; has 14 years prior experience in metals and mining equities
Ritch J. Hall, Special Advisor to the Board
Lucy Downer – Environmental Manager
•
Financial and operational executive with over 20 years of experience ranging
from strategic planning to M&A transactions to managing diverse businesses
day-to-day
D
A
John Marma – Chief Geologist
•
30 years in mining; broad experience in technical services, operations, project
management, investment evaluation and finance
Jamie Haggarty, CA, JELL Advisors
•
I
17-yrs designing projects, specializing in narrow vein u/g mine
design, planning and ground and cost controls in Nevada
N
A
Dr. Shuai Chen – Chief Engineer
•
Chief Operating Officer of Primero Mining, responsible for the operations and
organic growth of the company in addition to its operations in Mexico
He previously held mining positions with major operating mines for IAMGOLD
Corporation and Breakwater Resources, among others
C
E
G
25+ years with extensive experience in metallurgy, design and
permitting of narrow vein mining projects
Over 11 years of experience evaluating M&A transactions in the mining space, is
a Vice President and Head of Special Situation Analytics, Portfolio Management
& Trading at K2 & Associates Investment Management Inc. in Toronto
Renaud Adams, P.Eng., Primero Mining Corp.
•
Mike Doolin – General Manager
•
Blair Schultz, B.Math, Chairman, K2 and Associates
R
N
Barry Dahl– Chief Financial Officer
M
E
26+ years high-grade mining experience, particularly in narrow
vein gold mining in Nevada
O
Paul Huet – President, CEO and Director
•
T
T
LEADERSHIP TEAM WITH PROVEN TRACK RECORD
3
Seasoned mining executive, specializing in building North and Central American
gold mining companies; led the growth of Northgate Minerals, Grayd Resource
and Metallica Resources, all prior to being acquired or merged to become major
mining companies.
4. WHY KLONDEX?
• The next gold producer in Nevada
• Definitive Agreement signed with
Newmont for transformative
transaction to acquire Newmont’s
Midas Mine and Mill,
expected to close in February
2014
• High-grade gold property in a premier
mining district
• Heart of the Nevada gold belt,
neighbours include:
Barrick’s:
Cortez (1,090k oz Au prod.
to Q3 2013)
Goldstrike (650k oz Au prod. to Q3 2013)
Bald Mountain (80k oz Au prod. to Q3 2013)
Newmont’s Midas and Mule Canyon
• Exploration potential on 93% of the underexplored
Fire Creek project
• Strong leadership team with a proven track record
• +180 yrs experience in Nevada building underground
narrow-vein mines (Newmont, Barrick, Kinross)
4
4
JERRITT CANYON
MILL
6. FIRE CREEK –
DEVELOPMENT AND BULK SAMPLING
FIRE CREEK OVERVIEW
Location
Lander County, NV
Deposit
High-grade, epithermal vein system
Ownership
100% Klondex
Mining Method
PEA to determine, likely a combo of
Cut and Fill, Long Hole, Shrinkage
LOM
TBD from PEA
HIGH-GRADE EPITHERMAL GOLD DEPOSIT
Current Mill
Midas Mill (112 miles north)
LOCATED IN A PREMIER MINING DISTRICT
Recoveries
Expected to be 90% to >95%
INFRASTRUCTURE IN PLACE
RESOURCES (Au cut-off at 7.0 g/t)
OVERVIEW: FIRE CREEK
Measured(1)
57,200 oz @ 237.7 g/t Au
PEA Expected Q1 2014
Indicated(1)
238.700 oz @ 37.4 g/t Au
Continuation of bulk sampling program
Inferred(1)(2)
421,400 oz @ 19.2 g/t Au
Exploration and infill drilling to expand current
mineral resources on high quality targets, near
existing infrastructure
PRODUCTION COSTS
2014 PLAN
•
•
•
Est. Cash Costs TBD from PEA
Source: Technical Report (Amended) Fire Creek Exploration Project, by Practical Mining, filed November 14, 2013, and Management estimates
(1) Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal,
title, socio-political, marketing, or other relevant issues.
(2) The quantity and grade of reported inferred mineral resources in this estimation are uncertain in nature and there has been insufficient exploration to define these inferred mineral resources as an
indicated or measured mineral resource and it is uncertain if further exploration will result in upgrading them to an indicated or measured mineral resource category.
6
7. HIGH GOLD GRADE AND DEFINED CONTINUITY
NI 43-101 Resource Estimate
September 2013
Gold
Cutoff
(g/t)
Category
Short Tons
Grade
(g/t)
Gold (oz)
7.0
Meas & Ind
227,000
44.7
295,900
7.0
Inferred
683,000
19.2
421,400
Using ID3 methodology, wire frames on 0.5m constraints
Significant resource growth potential beyond
resource envelope
Joyce
Vein
- High-grade
resource estimate
- Additional drill
targets near the
ramp
Joyce
Vein
Vonnie
Vein
Vonnie
Vein
Source: Technical Report Data, authored by Practical Mining, LLC. Effective date August 31, 2013.
See Klondex press releases dated September 16, 2013, and November 14, 2013 for further details; on SEDAR, or on the Klondex website.
7
8. UNDERGROUND EXPLORATION AND INFILL DRILLING
FC-04-017S – Surf. Hole
1) 0.40 oz/st Au over 10 ft
0.33 oz/st Au over 10 ft
2) 0.74 oz/st Au over 10 ft
11.99 oz/st Au over 5 ft
0.38 oz/st Au over 10 ft
FC-04-025S – Surf. Hole
0.16 oz/st Au over 20 ft
INFILL:
To better understand the Joyce and Vonnie veins, and stay ahead of
the bulk sampling
2
EXPLORATION:
1
Joyce and Vonnie open at Depth, North, and
South, within 7% of the land package
Drill targets North, East, South and West:
• Project is 93% unexplored
• Follow-up on high-priority targets
FC-11-030S – Surf. Hole
0.22 oz/st Au over 10 ft,
0.20 oz/st Au over 10 ft
MB5
3
FC-13-120U – UG Hole
1) 0.83 oz/st Au over 3 ft
2) 0.43 oz/st Au over 7.2 ft
3) 2.08 oz/st Au over 1.8 ft
0.338 oz/st Au over 1 ft
2
1
Rib sample 0.12
oz/st Au over 5 ft.
N
FC-12-022S - Surface Vent Raise Geotech hole
3.62 oz/st Au over 5 ft
100 ft
FC-11-064U – UG Hole
1.01 oz/st Au over 1 ft
0.27 oz/st Au over 1.3 ft
FC-11-067U – UG Hole
0.32 oz/st Au over 6.7 ft
8
Rib sample 0.37
oz/st Au over 3 ft.
9. FIRE CREEK PERMITS –
FULLY-PERMITTED FOR BULK SAMPLE
● Issued Permits
Easements to bring power on site: August 2013
BLM permit # N-56088 Amendment allowing NV Energy to connect to offsite substation: Dec 2012
Class II Air Quality Operating Permit #AP1041-2774 (State): Mar 2011 & July 2012
Water Pollution Control Permit #NEV2007104 (State): Mar 2011, Nov 2011 & Jun 2012
BLM Notice to Proceed (Fed): Sept 2010
● Future Permits
Rapid Infiltration Basin (RIB) Permit – initiated (Q1 2014)
Revised Plan of Operations (BLM) and Water Pollution Control Permit (State) – in process
NEPA (environmental) documentation to expand to full production – initiated (H1 2015)
Fire Creek Offices and Warehouses
9
10. PROPOSED ACQUISITION OF MIDAS
Proposed acquisition of the operating Midas Mine and Mill from Newmont
announced Dec. 2013
Expected close in February 2014
Highlights
Midas located 110 mi north of Fire Creek
Toll treated Fire Creek material from August – December
2013, recoveries >95%
Transformational acquisition adds a high-quality operating
mill, high-grade gold mine and substantial upside potential
Ability to leverage core management team’s experience at Midas
Substantial synergies via shared equipment, employees and enhanced
efficiencies
Milling facilities are all on private land
Acquisition Structure:
$55mm to Newmont
$28mm replaces reclamation bond
+5 mm warrants
Financed by:
Equity: C$42.6 mm (complete; in escrow)
Debt: C$25 mm (underway)
Franco-Nevada Gold Loan: US$35 mm (underway)
10
11. MIDAS COMPLEX
MINE PRODUCTION, PROCESSING FACILITY
MIDAS MINE AND MILL COMPLEX OVERVIEW
Location
Deposit
Cut and Fill, Long Hole, Shrinkage
Milling Cap
MILL OPERATES AS TRADITIONAL MERRILL CROWE
PROCESSING CIRCUIT WITH HIGH GOLD AND
SILVER RECOVERIES
100% Newmont 100% Klondex
Mining Method
A PRODUCER OF GOLD AND SILVER SINCE 1998
High-grade, epithermal vein
system
Ownership
OVERVIEW: MIDAS MINE AND MILL COMPLEX
Elko County, NV
1,200 tpd (target 500-800 tpd)
Processing
Merrill Crowe (gravity and cyanide)
GOLD RESERVES
Proven
30,000 oz @ 6.6 g/t Au
Probable
20,000 oz @ 1.9 g/t Au
~US$30 MM WORTH OF EQUIPMENT AT MIDAS
SILVER RESERVES
THE BEST PLACE TO FIND GOLD IS NEAR EXISTING
GOLD MINES
Proven
510,000 oz @ 105.2 g/t Ag
Probable
3,900,000 oz @ 333.6 g/t Ag
2014 PLAN
•
•
Klondex intends to run Midas Mill at ~50% capacity
or greater long term
Klondex will explore options and opportunities to toll
mill ores and ore concentrate
Source: Newmont Annual Report 2012 and management analysis
(1) Mineral resources which are not mineral reserves do not have demonstrated economic viability. The
estimate of mineral resources may be materially affected by environmental, permitting, legal, title, sociopolitical, marketing, or other relevant issues.
(2) The quantity and grade of reported inferred mineral resources in this estimation are uncertain in nature
and there has been insufficient exploration to define these inferred mineral resources as an indicated or
measured mineral resource and it is uncertain if further exploration will result in upgrading them to an
indicated or measured mineral resource category.
GOLD EQUIVALENT RESOURCES (inc. Reserves)
Indicated
170,013 oz @ 11.3 g/t AuEq
Inferred
112,766 oz @ 9.3 g/t AuEq
PEM
178,888 oz @ 9.3 g/t AuEq
MIV
86,383 oz @ 15.1 g/t AuEq
11
12. MIDAS IS A HIGHLY COMPLIMENTARY ASSET
KLONDEX
•
Focused on establishing a high
grade gold project in Nevada
MIDAS
•
Objective to target sustainable
revenues and cash flows in
2014 and beyond
Midas has a long-history of high-grade gold production
Located in North-Central Nevada, within close proximity to mining
towns and Fire Creek (112 miles south)
Excellent infrastructure in place, situated on private land
Similar operation, narrow vein high-grade epithermal gold deposit
Midas adds an operating mine to Klondex’s asset portfolio
Midas has the potential to extend the life of mine, with different
mining methods and continued exploration success
Tested Fire Creek ore, with recoveries >93%
•
Secure long-term milling solution
Midas Mill secures processing and enhances potential cash flows
Midas Mill, built 1998, is a “Cadillac” mill and is well-maintained
with capacity to process material from both operations and others
•
Ability to leverage current
management team with the goal
to unlock significant value
Klondex’s core team positioned to unlock value in combined entity
− Several members of the senior management team previously
operated Midas
− Avg. 15 yrs+ experience operating in similar Nevada deposits
•
Exploration upside remains
Several near mine exploration targets have been identified
Best place to find gold, is near existing gold mines!
12
13. ROAD MAP
DELIVERING AND ACHIEVING RESULTS
Q1
2013
Q2 Q3
Q4
Q1
2014
Q2 Q3
2015
Q4
Drilling (2 drills) Infill and Exploration at Fire Creek
✔
Prepare new resource at Fire Creek
✔
Prepare Preliminary Economic Assessment at Fire Creek
Vent raise construction and commissioning
✔
Power line installation and commissioning
Drifting underground
Water management (RIB)
Initiate Bulk Sample: up to 120,000t over three years
✔
Revenue and cash flow from gold shipments
Proposed Midas Mine and Milling Facilities Acquisition
Pending completed EA, full production anticipated
Total Estimated Costs at Fire Creek
Total Cost to Acquire Midas
$15.0
$55m+$28m
13
✔
H1
H2
14. KLONDEX CAPITALIZATION AND SPONSORSHIP
Well Positioned for Future Growth with Strong Partners
Symbol
52 Week High/Low
Average Volume (3 Mos)
Ownership (%)
TSX: KDX OTCQX: KLNDF
Retail
C$1.78 - C$0.91
Institutional
179 k
Shares Issued and Out*
109 mm
Fully Diluted*
135 mm
Market Capitalization*
C$194 mm
Enterprise Value*
C$247 mm
Cash
C$15 mm
Debt*
Mgmt/
Insiders
C$62 mm
Ownership of FD Shares # (mm)
Management & Insiders
10.2
Paul Huet
1.7
Bill Matlack
1.7
Brendan Donohoe
1.1
Blair Schultz
1.0
Institutional:
84.3
K2 Principal Fund
18.1
Sun Valley Gold
15.3
US Global Investors
11.6
Glenn Pountney
7.2
Newmont Mining Corp
7.0
NGIC
6.9
Sentry Investments
6.4
Van Eck
5.0
Investors Group
3.9
PSP
3.0
Equity Research
GMP Securities, Oliver Turner
Mackie Research Capital, Barry Allan
MGI Securities, Marc Pais
MPartners, Derek Macpherson
PI Financial, Phil Ker
14
* Post transaction to acquire the Midas
Mine and Mill. US$35mm Gold Loan,
C$25mm debt, recent equity financing of
C$42.6mm
15. RELATIVE PERFORMANCE –
KLONDEX OUTPERFORMS
Klondex outperformed the broad peer gold group over the last 12 months
Klondex
38%
Brigus
3%
Polyus
(3%)
Top Performers
Robex
(6%)
Nevsun
(8%)
Alamos
Klondex holds significant additional
upside potential based on:
(10%)
Primero
(16%)
Centamin
1.
(19%)
Beadell
(23%)
Sulliden
2.
(25%)
Gold (NYMEX)
(26%)
Petaquilla
3.
(38%)
Guyana Goldfields
(42%)
Intermediate Producers
(48%)
Senior Producers
Mid-Tier Producers
4.
5.
(49%)
(50%)
Junior Producers
(59%)
Developers
Near-term production and
revenues from bulk sample
Impressive high-grade
allows resource flexibility
and upside potential
Great mining friendly
location and access to
infrastructure
Funding in place
Dedicated and proven
management & Board
(60%)
Based on prices as of January 15, 2014 market close
Source: FactSet
Senior Producers: AngloGold Ashanti, Barrick, Gold Fields, Goldcorp, Kinross, Newcrest, Newmont
Intermediate Producers: African Barrick, Agnico-Eagle, Centerra, Eldorado, Harmony, IAMGOLD, New Gold, Randgold, Yamana
Mid-Tier Producers: Alacer, Alamos, Allied Nevada, Aura, AuRico, Golden Star, Jaguar, Lake Shore, SEMAFO
Junior Producers: Argonaut, B2Gold, Claude, Crocodile, Endeavour Mining, Gran Colombia, Kirkland Lake, Richmont, Rio Alto, San Gold, St Andrew, Teranga, Timmins
Developers: Atacama Pacific, Chesapeake, Colossus, Continental, Detour, Exeter, McEwen, NovaGold, Orezone, Pretium, Romarco, Rubicon, Torex
15
16. CONTACT INFORMATION
Klondex Mines Ltd.
Suite 600, 595 Howe Street
Vancouver, British Columbia
V6C 2T5
www.klondexmines.com
KDX:TSX KLNDF:OTCQX
Paul Huet
President & CEO
775-284-5757
investors@klondexmines.com
Alison Tullis
Manager, Investor Relations
647-233-4348
atullis@klondexmines.com
Fire Creek worker/contractor mine safety board
16
