Loading ...Klondex Announces a Reduction in Underground Operations and Workforce at True North and Executive Management Change
Vancouver, BC – January 9, 2018 – Klondex Mines Ltd. (TSX: KDX; NYSE American: KLDX) (“Klondex” or the “Company”) today announced a change in operations in Canada, which includes the immediate reduction of underground mining operations and workforce at its True North mine in Manitoba, Canada.
Following an extensive review of recent operational performance at True North, the Company has decided to limit underground mining to areas already developed. Once these areas are depleted, underground mining will be suspended. The decision was largely based on the site’s inability to achieve planned operating and cash flow metrics in 2017. Preliminary full-year 2017 gold ounce production from True North is estimated to be approximately 24,000 – 27,000 ounces, which is less than the 35,000 – 45,000 ounce range of the Company’s guidance.
The mine will be placed on care and maintenance status after the developed areas are mined to review strategic options and to provide optionality at higher metal prices. The Company will continue to process tailings, as contained in its reserve estimate, through the mill for the foreseeable future in order to maximize cash flow and offset expected care and maintenance costs. Going forward, Klondex projects annual site free cash flow of $2 to $4 million at current metal price levels assuming a processing rate of approximately 1,400 tpd from tailings grading 0.035 Au/opt (1.20 Au/gpt) from April through October, weather dependent. The average tailings grade processed in 2017 was approximately 0.05 Au/opt (1.71 Au/gpt). Additional information regarding True North and Ogama-Rockland will be discussed at the Company’s February 7, 2018 Investor Day in Toronto.