Klondex Mines Ltd.

Klondex Reports Fourth Quarter and Full Year 2016 Results

Achieves Record Quarterly and Annual Revenue

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Reno, NV - March 23, 2017 - Klondex Mines Ltd. (TSX: KDX; NYSE MKT: KLDX) ("Klondex", the "Company", "we", "our", or "us" - http://www.commodity-tv.net/c/mid,3159,Site_Visits/?v=294628) is pleased to announce its operational and financial results for the fourth quarter and full year 2016. This press release should be read in conjunction with our 2016 Annual Report on Form 10-K, which includes our Consolidated Financial Statements and related Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"), which are available on our website (www.klondexmines.com), on SEDAR (www.sedar.com), and on EDGAR (www.sec.gov). All dollar amounts included in this press release are expressed in thousands of United States dollars, unless otherwise noted, and are based on our MD&A and our Consolidated Financial Statements, which were prepared in accordance with Generally Accepted Accounting Principles in the United States ("GAAP"). References to "Notes" refers to the notes contained in the full year 2016 Consolidated Financial Statements. "Nevada Operations" consists of the Fire Creek and Midas mines.
In this press release we use the non-GAAP performance measures "Production cash costs per gold equivalent ounce sold" and "All-in costs per gold ounce sold", which should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. See the Non-GAAP performance measures section of this press release for detail.

Fourth Quarter 2016 Highlights

Health, safety, and environmental - No lost-time injuries at our properties and as of December 31, 2016, had operated 1,539 days (~4.0 years) at Fire Creek, 815 days (~2.0 years) at Midas, 344 days (~0.7 years) at True North, and 89 days (~0.3 years) at Hollister and Aurora, without a lost-time injury.

  1. Hollister acquisition - On October 3, 2016, completed the acquisition of the Hollister and Aurora projects, creating synergies with our Nevada Operations and providing significant future operational and exploration potential.
  2. Ounces sold and financial results - Sold a quarterly record 47,745 gold equivalent ounces ("GEOs"), consisting of 42,405 gold ounces and 374,902 silver ounces for revenue of $56.1 million, a quarterly high. Average quarterly selling prices per gold and silver ounce were $1,175 and $16.73, respectively. Net income was $2.2 million (or $0.02 per share - basic).
  3. Nevada performance - Produced a record 51,923 GEOs, as GEO grade and tons milled continued to increase from the prior quarter and first half of the year. Average key operating metrics for our Nevada Operations were: 886 ore tons milled per day, 0.50 oz/ton gold mill head grade, 5.46 oz/ton silver mill head grade, 0.58 oz/ton GEO mill head grade. Production cash costs per gold equivalent ounce sold at Nevada was $644.
  4. True North - Produced 8,445 GEOs, an increase from the prior quarter as stockpiled ore processing began.

Full Year 2016 Highlights

  1. Growth transformation - Completed acquisitions of True North and Hollister, positioned to continue increasing future production while diversifying operations profile into Canada. Financial strength to execute organic and bolt-on growth opportunities.
  2. Financial position and liquidity - Maintained strong financial position and liquidity through completion of a CDN$129.5 million "bought deal" private placement and obtained first revolving credit facility (initially $25.0 million and increased to $35.0 million).
  3. Ounces sold and financial results - Sold a record 159,118 GEOs, an increase of 19.4% from the prior year, consisting of 138,516 gold ounces and 1,470,992 silver ounces. Revenue was an all-time high totaling $198.2 million from average selling prices per gold and silver ounce of $1,245 and $17.44, respectively. Net loss was $1.7 million (or $0.01 per share - basic).
  4. Cash flows - Ending cash balance of $47.6 million after $45.3 million of operating cash flows, $159.7 million used in investing activities, and $104.6 million provided by financing activities. Ending working capital of $33.2 million (ratio of 1.80:1).
  5. Operating performance - Produced a record 151,007 GEOs from Nevada Operations, exceeding the high end of management's expectations, and 10,199 GEOs from True North for full year production of 161,289 GEOs, an increase of 26.3% from the prior year. Nevada Operations production cash costs per gold equivalent ounce sold at was $637 and within our 2016 expected range of $600 to $650.
  6. Spending - Capital, exploration, and development spending totaled $32.5 million at Fire Creek, $27.8 million at Midas, $16.8 million at True North, $4.2 million at Hollister, $0.6 million Aurora, and $1.4 million at corporate for total capital spending of $83.4 million.

Mr. Paul Huet, President and CEO commented, "As previously announced, we had record quarterly and annual production in the fourth quarter and for the full year in 2016.  Additionally, we are pleased that we once again achieved our production and cost guidance for the year.” Mr. Huet continued, “Looking ahead, our near term strategy is focused on organic growth. We expect to produce between 210,000 and 225,000 gold equivalent ounces in 2017, an increase of approximately 36% from the prior year."

2017 full year outlook

We expect to produce between 210,000 and 225,000 gold equivalent ounces during 2017 at an expected production cash cost per GEO sold of $680 to $710 per GEO sold. This represents an increase in GEOs produced of approximately 36% from the prior year as we benefit from bulk sampling extraction at Hollister in Nevada as well as higher production from True North mine in Canada as ramp-up continues. Fire Creek and Midas’ 2017 production is expected to be in line with the prior year.
We also expect our 2017 capital expenditures to be between $57 - $62 million with an additional $3 - $5 million to be spent on exploration. The majority of capital is expected to be spent at Fire Creek as we continue underground expansion in the form of primary access development and advancement of a second portal. We also expect to spend $7 - $9 million at our newly acquired Hollister mine in Nevada as it commences a bulk sampling mining program and underground definition drilling in the Gloria zone.
Below are tables summarizing key 2017 operating guidance.

 

 

Gold Equivalent Ounces Produced(1)

 

Production Cash Costs per Gold Equivalent Ounce Sold(1)

 

Capital Expenditures (thousands)

2017 full year outlook

 

Low

 

High

 

Low

 

High

 

Low

 

High

Midas

 

42,000

 

 

45,000

 

 

$

925

 

 

$

950

 

 

$

11,000

 

 

$

12,000

 

Midas Mill

 

 

 

 

 

 

 

 

 

4,000

 

 

5,000

 

Fire Creek

 

97,000

 

 

100,000

 

 

475

 

 

500

 

 

27,000

 

 

29,000

 

Hollister(2)

 

30,000

 

 

35,000

 

 

935

 

 

960

 

 

 

 

 

Nevada Total

 

169,000

 

 

180,000

 

 

670

 

 

700

 

 

42,000

 

 

46,000

 

True North(3)

 

41,000

 

 

45,000

 

 

725

 

 

750

 

 

15,000

 

 

16,000

 

 

 

210,000

 

 

225,000

 

 

$

680

 

 

$

710

 

 

$

57,000

 

 

$

62,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Low

 

High

 

 

 

 

 

 

 

 

Corporate general and administrative (thousands)

 

$

15,000

 

 

$

17,000

 

 

 

 

 

 

 

 

 

Hollister development and project costs (thousands)

 

$

7,000

 

 

$

9,000

 

 

 

 

 

 

 

 

 

Regional exploration (thousands)

 

$

3,000

 

 

$

5,000

 

 

 

 

 

 

 

 

 

All-in costs per gold ounce sold(1)

 

$

1,070

 

 

$

1,130

 

 

 

 

 

 

 

 

 

(1) This is a non-GAAP measure; refer to the Non-GAAP Performance Measures section of this Press Release for additional detail.

(2) Hollister is an exploration stage mineral property and as such, production refers to the estimated quantities resulting from the process of extracting mineralized materials from the earth and treating that material in a mill.

(3) Based on an estimated CDN:US dollar exchange rate of 0.75:1.

Klondex has not reconciled forward-looking 2017 full year non-GAAP performance measures contained in this press release to their most directly comparable GAAP measures, as permitted by Item 10(e)(1)(i)(B) of Regulation S-K. Such reconciliations would require unreasonable efforts at this time to estimate and quantify with a reasonable degree of certainty various necessary GAAP components, including for example those related to future production costs, realized sales prices and the timing of such sales, timing and amounts of capital expenditures, metal recoveries, and corporate general and administrative amounts and timing, or others that may arise during the year. These components and other factors could materially impact the amount of the future directly comparable GAAP measures, which may differ significantly from their non-GAAP counterparts.

Consolidated Financial Results of Operations

 

Three months ended December 31,

 

Year ended December 31,

 

2016

 

2016

Revenues

$

56,100

 

 

$

198,175

 

Cost of sales

 

 

 

Production costs

35,708

 

 

106,389

 

Depreciation and depletion

9,128

 

 

28,242

 

Write-down of production inventories

2,869

 

 

2,869

 

 

8,395

 

 

60,675

 

Other operating expenses

 

 

 

General and administrative

4,368

 

 

15,804

 

Exploration

4,502

 

 

12,765

 

Development and projects costs

3,423

 

 

8,953

 

Asset retirement and accretion

1,898

 

 

2,653

 

Business acquisition costs

383

 

 

2,253

 

Provision for legal settlement

751

 

 

3,000

 

Loss on equipment disposal

17

 

 

126

 

Income from operations

(6,947

)

 

15,121

 

Other income (expense)

 

 

 

(Loss) gain on derivatives, net

7,932

 

 

(7,646

)

Interest expense, net

(1,390

)

 

(5,339

)

Foreign currency gain, net

2,873

 

 

651

 

Loss on debt extinguishment

(519

)

 

(519

)

Interest income and other, net

(301

)

 

(244

)

Income before tax

1,648

 

 

2,024

 

Income tax (expense)/benefit

530

 

 

(3,724

)

Net (loss) income

$

2,178

 

 

$

(1,700

)

 

 

 

 

Net (loss) income per share

 

 

 

Basic

$

0.02

 

 

$

(0.01

)

Fourth quarter 2016
Fourth quarter Revenues reflect a quarterly high in terms of ounces sold, primarily due to higher tons mined at Fire Creek and Midas and commencing production at True North. Production costs and Depreciation and depletion also increased in the fourth quarter due to an increase in sales volumes. Write-down of production inventories in 2016 were recorded in the fourth quarter at Midas and True North due to lower period-end metal price levels and increases in production costs. Business acquisition costs were associated with the Hollister acquisition and Provision for legal settlement is related to litigation with a former employee.

Full year 2016
When compared to the prior year, 2016 Revenues increased as a result of increases in the number of gold ounces sold from higher tons mined at Fire Creek and Midas and commencing production at True North during the second half of 2016, the volumes of which were impacted by changes in average realized prices. Production costs and Depreciation and depletion increased from the prior period due primarily to an increase in sales volumes. General and administrative increased in 2016 due to increased staff levels at the corporate office, severance payments, and costs associated with our deferred share unit plan. Exploration spending was at Fire Creek and Midas while Development and projects costs were attributable to True North and Hollister.

Liquidity and Capital Resources

 

 

Three months ended December 31, 2016

 

Year ended December 31, 2016

Net (loss) income

 

$

2,178

 

 

$

(1,700

)

Net non-cash adjustments

 

5,257

 

 

36,003

 

Net change in non-cash working capital

 

7,202

 

 

10,967

 

Net cash provided by operating activities

 

14,637

 

 

45,270

 

Net cash used in investing activities

 

(98,061

)

 

(159,693

)

Net cash provided by financing activities

 

2,182

 

 

104,608

 

Effect of foreign exchange on cash balances

 

(2,263

)

 

(1,646

)

Net decrease in cash

 

(83,505

)

 

(11,461

)

Cash, beginning of period

 

131,141

 

 

59,097

 

Cash, end of period

 

$

47,636

 

 

$

47,636

 

Fourth quarter 2016
Fourth quarter 2016 operating cash flows benefited from increases in ounce sales which were offset by lower average realized prices. The $98.1 million used in investing activities reflects the $80.0 million cash payment to complete the Hollister acquisition. Financing cash flows include the refinancing of the $12.0 million secured promissory note with a corresponding draw on the Revolver.

Full year 2016
During 2016 we generated $45.3 million of net operating cash flows which were positively impacted by higher production levels which increased the total cash margin from operations, offset by higher General and administrative, Exploration, and Development and projects costs. Cash used in investing activities included $100.0 million for acquisitions and $61.7 million for expenditures on mineral properties, plant and equipment. The issuance of share capital, which included a $95.7 million bought deal financing and option and warrant exercises, benefited our cash balances by $105.9 million and were slightly reduced for net debt borrowings and repayments.

Working capital and liquidity
We maintained our strong financial position and as of December 31, 2016, had total liquidity of $56.2 million, consisting of $33.2 million in working capital and $23.0 million of borrowing availability under our Revolver.

Fourth Quarter and Year To Date 2016 Summary Operational Results

 

 

Three months ended December 31, 2016

Mine operations

 

Fire Creek

 

Midas

 

Nevada Total(1)

 

True North

 

Total

Ore tons milled

 

27,721

 

 

53,809

 

 

81,530

 

 

63,962

 

 

145,492

 

Average gold equivalent mill head grade (oz/ton)(2)

 

1.07

 

 

0.32

 

 

0.58

 

 

0.14

 

 

0.38

 

Average gold mill head grade (oz/ton)

 

1.06

 

 

0.21

 

 

0.50

 

 

0.14

 

 

0.34

 

Average silver mill head grade (oz/ton)

 

0.80

 

 

7.87

 

 

5.46

 

 

 

(4)

3.06

 

Average gold recovery rate (%)

 

93.8

%

 

93.5

%

 

93.7

%

 

93.4

%

 

93.6

%

Average silver recovery rate (%)

 

84.4

%

 

83.9

%

 

84.0

%

 

%

(4)

84.0

%

Gold equivalent produced (oz)(2)

 

27,878

 

 

15,549

 

 

43,441

 

 

8,445

 

 

51,923

 

Gold produced (oz)

 

27,613

 

 

10,537

 

 

38,150

 

 

8,433

 

 

46,583

 

Silver produced (oz)

 

18,729

 

 

355,317

 

 

374,046

 

 

853

 

 

374,899

 

Gold equivalent sold (oz)(2)(3)

 

27,347

 

 

13,318

 

 

40,680

 

 

7,028

 

 

47,745

 

Gold sold (oz)

 

27,035

 

 

8,354

 

 

35,389

 

 

7,016

 

 

42,405

 

Silver sold (oz)

 

22,103

 

 

351,946

 

 

374,049

 

 

853

 

 

374,902

 

Revenues and realized prices

 

 

 

 

 

 

 

 

 

 

Gold revenue (000s)

 

$

31,933

 

 

$

9,903

 

 

$

41,836

 

 

$

7,993

 

 

$

49,829

 

Silver revenue (000s)

 

369

 

 

5,888

 

 

6,257

 

 

14

 

 

6,271

 

Total revenues (000s)

 

$

32,302

 

 

$

15,791

 

 

$

48,093

 

 

$

8,007

 

 

$

56,100

 

Average realized gold price ($/oz)

 

$

1,181

 

 

$

1,185

 

 

$

1,182

 

 

$

1,139

 

 

$

1,175

 

Average realized silver price ($/oz)

 

$

16.69

 

 

$

16.73

 

 

$

16.73

 

 

$

16.41

 

 

$

16.73

 

Non-GAAP Measures

 

 

 

 

 

 

 

 

 

 

Production cash costs per GEO sold(2)(3)

 

$

474

 

 

$

993

 

 

$

644

 

 

$

1,686

 

 

$

797

 

All-in costs per gold ounce sold(3)

 

n/a

 

n/a

 

n/a

 

n/a

 

$

1,458

 

(1) Nevada Total includes Fire Creek and Midas.

(2) Gold equivalent measures are the gold measure plus the silver measure divided by a GEO ratio. GEO ratios are computed by dividing the average realized gold price per ounce by the average realized silver price per ounce received by us in the respective period and match the ratios used to determine the production cash costs per GEO sold. Refer to the Non-GAAP Performance Measures section of this Press Release for additional detail.

(3) This is a non-GAAP measure; refer to the Non-GAAP Performance Measures section of this Press Release for additional detail.

(4) The Company does not track this silver statistic at True North due to silver being immaterial to that operation.

 

 

Year ended December 31, 2016

Mine Operations

 

Fire Creek

 

Midas

 

Nevada Total(1)

 

True North

 

Total

Ore tons milled

 

120,553

 

 

190,982

 

 

311,535

 

 

95,710

 

 

407,245

 

Average gold equivalent mill head grade (oz/ton)(2)

 

0.91

 

 

0.28

 

 

0.52

 

 

0.11

 

 

0.43

 

Average gold mill head grade (oz/ton)

 

0.90

 

 

0.17

 

 

0.45

 

 

0.11

 

 

0.37

 

Average silver mill head grade (oz/ton)

 

0.77

 

 

8.13

 

 

5.28

 

 

 

(4)

4.04

 

Average gold recovery rate (%)

 

93.6

%

 

93.9

%

 

93.7

%

 

92.7

%

 

93.6

%

Average silver recovery rate (%)

 

86.6

%

 

86.7

%

 

86.7

%

 

%

(4)

86.7

%

Gold equivalent produced (oz)(2)

 

102,383

 

 

48,623

 

 

151,007

 

 

10,199

 

 

161,289

 

Gold produced (oz)

 

101,286

 

 

29,824

 

 

131,110

 

 

10,187

 

 

141,297

 

Silver produced (oz)

 

80,593

 

 

1,345,989

 

 

1,426,582

 

 

853

 

 

1,427,435

 

Gold equivalent sold (oz)(2)(3)

 

100,022

 

 

50,977

 

 

151,004

 

 

8,028

 

 

159,118

 

Gold sold (oz)

 

98,723

 

 

31,777

 

 

130,500

 

 

8,016

 

 

138,516

 

Silver sold (oz)

 

95,454

 

 

1,374,685

 

 

1,470,139

 

 

853

 

 

1,470,992

 

Revenues and realized prices

 

 

 

 

 

 

 

 

 

 

Gold revenue (000s)

 

$

123,403

 

 

$

39,783

 

 

$

163,186

 

 

$

9,329

 

 

$

172,515

 

Silver revenue (000s)

 

1,623

 

 

24,023

 

 

25,646

 

 

14

 

 

25,660

 

Total revenues (000s)

 

$

125,026

 

 

$

63,806

 

 

$

188,832

 

 

$

9,343

 

 

$

198,175

 

Average realized gold price ($/oz)

 

$

1,250

 

 

$

1,252

 

 

$

1,250

 

 

$

1,164

 

 

$

1,245

 

Average realized silver price ($/oz)

 

$

17.00

 

 

$

17.48

 

 

$

17.44

 

 

$

16.41

 

 

$

17.44

 

Non-GAAP Measures

 

 

 

 

 

 

 

 

 

 

Production cash costs per GEO sold(2)(3)

 

$

462

 

 

$

981

 

 

$

637

 

 

$

1,552

 

 

$

683

 

All-in costs per gold ounce sold(3)

 

n/a

 

n/a

 

n/a

 

n/a

 

$

1,335

 

(1) Nevada Total includes Fire Creek and Midas.

(2) Gold equivalent measures are the gold measure plus the silver measure divided by a GEO ratio. GEO ratios are computed by dividing the average realized gold price per ounce by the average realized silver price per ounce received by us in the respective period and match the ratios used to determine the production cash costs per GEO sold. Refer to the Non-GAAP Performance Measures section of this Press Release for additional detail.

(3) This is a non-GAAP measure; refer to the Non-GAAP Performance Measures section of this Press Release for additional detail.

(4) The Company does not track this silver statistic at True North due to silver being immaterial to that operation.

Nevada operations
We achieved the full-year 2016 plan which entailed production growing from the first half to the second half of the year, as planned sequencing and ore development activities performed throughout the year contributed to quarter over quarter grade increases. As a result, consolidated gold equivalent mill head grades increased quarter over quarter in 2016 and were: 0.44 oz/ton in the first, 0.52 oz/ton in the second, 0.55 oz/ton in the third, and 0.57 oz/ton in the fourth. Production increased in 2016 to a record 151,007 GEOs. Full-year gold equivalent grades of 0.52 oz/ton in 2016 contributed to consistently low production cash costs per GEO of $637, resulting in a margin of $613 (or 49.0%) per ounce using average realized gold prices in 2016.

Canadian operations
We achieved True North's full-year 2016 plan which entailed production commencing in the third quarter from reprocessing tailings and increasing in the fourth quarter when stockpiled ore processing began. Actual production of 10,187 gold ounces was in the middle of our expected range of 8,000 - 12,000 gold ounces.

Webcast and Conference Call

Klondex will report its 2016 financial results after market close on Thursday, March 23, 2017. A conference call and webcast will be held the following morning on Friday, March 24, 2017 at 10:30 am ET/7:30 am PT. The conference call telephone numbers are listed below:

Canada & USA Toll Free Dial In: 1-800-319-4610
Toronto: +1 1-416-915-3239
International: +1-604-638-5340

Callers should dial in 5 to 10 minutes prior to the scheduled start time and ask to join the Klondex call. The presentation materials will be available on the Company's website and by webcast by clicking: services.choruscall.ca/links/klondex20170316.html.

About Klondex Mines Ltd. (www.klondexmines.com)

Klondex Mines Ltd. is a well–capitalized, junior–tier gold and silver mining company focused on mining, exploration, development, and production in a safe, environmentally responsible, and cost–effective manner. As of December 31, 2016, Klondex Mines Ltd. had 100% interests in three producing mines: (1) the Fire Creek mine and (2) the Midas mine and ore milling facility, both of which are located in the state of Nevada, USA, and (3) the True North gold mine and mill in Manitoba, Canada. The Company also has 100% interests in two recently acquired projects: (1) the Hollister mine and (2) the Aurora mine and ore milling facility, both of which are also located in Nevada, USA. During 2017 we expect our production to come from Fire Creek, Midas, and True North, and extracted from the Hollister Project under a bulk sampling program.

For More Information Contact:

John Seaberg
Senior Vice President, Investor Relations and Corporate Development
O: 775-284-5757
M: 303-668-7991
jseaberg@klondexmines.com

In Europe:
Swiss Resource Capital AG
Jochen Staiger
info@resource-capital.ch

Cautionary Note Regarding Forward-looking Information

This news release contains certain information that may constitute forward-looking information or forward-looking statements under applicable Canadian and United States securities legislation (collectively, “forward-looking information”), including but not limited to the Company’s achievement of the full-year projections for ounce production and production costs, the Company’s ability to meet annual operations estimates, and the Company’s capital addition expenditures. This forward-looking information entails various risks and uncertainties that are based on current expectations, and actual results may differ materially from those contained in such information. These uncertainties and risks include, but are not limited to, the strength of the global economy; the price of gold; operational, funding and liquidity risks; the degree to which mineral resource estimates are reflective of actual mineral resources; the degree to which mineral reserve estimates are reflective of actual mineral reserves; the degree to which factors which would make a mineral deposit commercially viable are present; the risks and hazards associated with underground operations; and the ability of Klondex to fund its substantial capital requirements and operations. Risks and uncertainties about the Company’s business are more fully discussed in the Company’s disclosure materials filed with the securities regulatory authorities in Canada and United States available at www.sedar.com and www.sec.gov, respectively. Readers are urged to read these materials. Klondex assumes no obligation to update any forward-looking information or to update the reasons why actual results could differ from such information unless required by law.

Non-GAAP performance measures

We have included the non-GAAP measures "Production cash costs per gold equivalent ounce sold" and "All-in costs per gold ounce sold" in this press release (collectively, the "Non-GAAP Measures"). These Non-GAAP Measures are used internally to assess our operating and economic performance and to provide key performance information to management. We believe that these Non-GAAP Measures, in addition to conventional measures prepared in accordance with GAAP, provide investors with an improved ability to evaluate our performance and ability to generate cash flows required to fund our business. These Non-GAAP Measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. These Non-GAAP Measures do not have any standardized meaning prescribed under GAAP, and therefore may not be comparable to or consistent with measures used by other issuers or with amounts presented in our financial statements.
Our primary business is gold production and our future development and current operations primarily focus on maximizing returns from such gold production. As a result, our Non-GAAP Measures are calculated and disclosed on a per gold or gold equivalent ounce basis.

Production cash costs per gold equivalent ounce sold

Production cash costs per gold equivalent ounce sold presents our cash costs associated with the production of gold equivalent ounces and, as such, non-cash depreciation and depletion charges are excluded. Production cash costs per gold equivalent ounce sold is calculated on a per gold equivalent ounce sold basis, and includes all direct and indirect operating costs related to the physical activities of producing gold, including mining, processing, third-party refining expenses, on-site administrative and support costs, royalties, and cash portions of net realizable value write-downs on production-related inventories (State of Nevada net proceeds and other such taxes are excluded). We believe that converting the benefits from selling silver ounces into gold ounces is helpful to analysts and investors as it best represents the way we operate, which is to maximize returns from gold production. Gold equivalent ounces are computed as the number of silver ounces required to generate the revenue derived from the sale of one gold ounce, using average realized selling prices (in thousands, except ounces sold and per ounce amounts):

 

 

Three months ended December 31, 2016

 

 

Fire Creek

 

Midas

 

Nevada Total

 

True North

 

Total

Average realized price per gold ounce sold

 

$

1,181

 

 

$

1,185

 

 

$

1,182

 

 

$

1,139

 

 

$

1,175

 

Average realized price per silver ounce sold

 

$

16.69

 

 

$

16.73

 

 

$

16.73

 

 

$

16.41

 

 

$

16.73

 

Silver ounces equivalent to revenue from one gold ounce

 

70.8

 

70.9

 

70.7

 

69.4

 

70.2

Silver ounces sold

 

22,103

 

 

351,946

 

 

374,049

 

 

853

 

 

374,902

 

GEOs from silver ounces sold

 

312

 

 

4,964

 

 

5,291

 

 

12

 

 

5,340

 

Gold ounces sold

 

27,035

 

 

8,354

 

 

35,389

 

 

7,016

 

 

42,405

 

Gold equivalent ounces

 

27,347

 

 

13,318

 

 

40,680

 

 

7,028

 

 

47,745

 

Production costs

 

$

12,961

 

 

$

12,815

 

 

$

25,776

 

 

$

9,932

 

 

$

35,708

 

Add: Write-down of production inventories (cash portion)

 

 

 

405

 

 

405

 

 

1,918

 

 

2,323

 

 

 

$

12,961

 

 

$

13,220

 

 

$

26,181

 

 

$

11,850

 

 

$

38,031

 

Production cash costs per GEO sold

 

$

474

 

 

$

993

 

 

$

644

 

 

$

1,686

 

 

$

797

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31, 2016

 

 

Fire Creek

 

Midas

 

Nevada Total(1)

 

True North

 

Total

Average realized price per gold ounce sold

 

$

1,250

 

 

$

1,252

 

 

$

1,250

 

 

$

1,164

 

 

$

1,245

 

Average realized price per silver ounce sold

 

$

17.00

 

 

$

17.48

 

 

$

17.44

 

 

$

16.41

 

 

$

17.44

 

Silver ounces equivalent to revenue from one gold ounce

 

73.5

 

71.6

 

71.7

 

70.9

 

71.4

Silver ounces sold

 

95,454

 

 

1,374,685

 

 

1,470,139

 

 

853

 

 

1,470,992

 

GEOs from silver ounces sold

 

1,299

 

 

19,200

 

 

20,504

 

 

12

 

 

20,602

 

Gold ounces sold

 

98,723

 

 

31,777

 

 

130,500

 

 

8,016

 

 

138,516

 

Gold equivalent ounces

 

100,022

 

 

50,977

 

 

151,004

 

 

8,028

 

 

159,118

 

Production costs

 

$

46,246

 

 

$

49,599

 

 

$

95,845

 

 

$

10,544

 

 

$

106,389

 

Add: Write-down of production inventories (cash portion)

 

 

 

405

 

 

405

 

 

1,918

 

 

2,323

 

 

 

$

46,246

 

 

$

50,004

 

 

$

96,250

 

 

$

12,462

 

 

$

108,712

 

Production cash costs per GEO sold

 

$

462

 

 

$

981

 

 

$

637

 

 

$

1,552

 

 

$

683

 

(1) Nevada Total includes Fire Creek and Midas.

All-in costs per gold ounce sold
Our calculation of all-in costs per gold ounce sold is consistent with the June 2013 guidance released by the World Gold Council, a non-regulatory, non-profit market development organization for the gold industry. All-in costs per gold ounce sold reflect the varying costs of producing gold over the life-cycle of a mine or project, including costs required to discover and develop new sources of production; therefore, capital amounts related to expansion and growth projects are included.
All-in costs per gold ounce sold includes all: (1) direct and indirect operating cash costs related to the physical activities of producing gold, including mining, processing, third-party refining expenses, on-site administrative and support costs, royalties, and cash portions of net realizable value write-downs on production-related inventories (2) general and administrative expenses, (3) asset retirement and accretion expenses, and (4) capital expenditures, the total of which is reduced for revenues earned from silver sales. Certain cash expenditures, including State of Nevada net proceeds and other related taxes, federal tax payments, and financing costs are excluded (in thousands, except ounces sold and per ounce amounts):

 

Three months ended December 31, 2016

 

Nevada Total(1)

 

True North

 

Hollister, Aurora, and Corporate

 

Total

Production costs

$

25,776

 

 

$

9,932

 

 

$

 

 

$

35,708

 

Add: Write-down of production inventories (cash portion)

405

 

 

1,918

 

 

 

 

2,323

 

 

26,181

 

 

11,850

 

 

 

 

38,031

 

General and administrative

 

 

 

 

 

 

4,368

 

Exploration

 

 

 

 

 

 

4,502

 

Development and projects costs

 

 

 

 

 

 

3,423

 

Asset retirement and accretion

 

 

 

 

 

 

1,898

 

Expenditures on mineral properties, plant and equipment

 

 

 

 

 

 

15,874

 

Less: silver revenue

 

 

 

 

 

 

(6,271

)

All-in costs

 

 

 

 

 

 

61,825

 

Gold ounces sold

35,389

 

 

7,016

 

 

 

 

42,405

 

All-in costs per gold ounce sold

 

 

 

 

 

 

$

1,458

 

(1) Nevada Total includes Fire Creek and Midas.

 

 

 

 

 

 

 

 

 

Year ended December 31, 2016

 

Nevada Total(1)

 

True North

 

Hollister, Aurora, and Corporate

 

Total

Production costs

$

95,845

 

 

$

10,544

 

 

$

 

 

$

106,389

 

Add: Write-down of production inventories (cash portion)

405

 

 

1,918

 

 

 

 

2,323

 

 

96,250

 

 

12,462

 

 

 

 

108,712

 

General and administrative

 

 

 

 

 

 

15,804

 

Exploration

 

 

 

 

 

 

12,765

 

Development and projects costs

 

 

 

 

 

 

8,953

 

Asset retirement and accretion

 

 

 

 

 

 

2,653

 

Expenditures on mineral properties, plant and equipment

 

 

 

 

 

 

61,716

 

Less: silver revenue

 

 

 

 

 

 

(25,660

)

All-in costs

 

 

 

 

 

 

184,943

 

Gold ounces sold

130,500

 

 

8,016

 

 

 

 

138,516

 

All-in costs per gold ounce sold

 

 

 

 

 

 

$

1,335

 

(1) Nevada Total includes Fire Creek and Midas.

 

 

 



New Videos Klondex Mines Ltd.


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