🕐11.02.11 - 23:27 Uhr

Klondex Mines Ltd.: The Desert Comes Alive by Mackie Research



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Klondex Mines Ltd.: The Desert Comes Alive

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Financial Metrics (C$) Share Price $2.55 Market Cap (mm): $93 52 Wk. High: $2.85 Basic Sh O/S (mm) 36.5 52 Wk. Low: $1.15 FD shares (mm) 41.5 Target Price $8.60 NAV/sh $17.10 Return 237.3% Div/sh N/A FY Dec 31 (US$) 2011E 2012E 2013E 2014E Prodn (koz) 5.1 33.6 192.7 143.3 Op.Cash flow ($mm) $6.73 $41.29 $236.90 $162.67 EPS $0.13 $0.82 $4.73 $3.21 P/EPS 19.2x 3.0x 0.5x 0.8x CFPS $0.14 $0.86 $5.01 $3.44 P/CFPS 17.9x 2.9x 0.5x 0.7x 2011 Q1E Q2E Q3E Q4E EPS $0.00 $0.00 $0.00 $0.13 CFPS $0.00 $0.00 $0.00 $0.14 Target Valuation Parameter 0.5x NAVPS @ 14% dcf

KDX - TSX: $2 .54 BUY/TARGET: $8 .60

Initiate with a BUY: We are initiating coverage on Klondex
Mines Ltd. with a BUY recommendation and initial
12-month target price of C$8.60 per share (0.5x NAV). Undervalued on all measures: As an early-stage
exploration company, Klondex remains under-valued
compared with either similar exploration or junior
producing companies. Klondex currently trades at 0.15x
on a P/NAVPS basis and $43/oz on an in-situ basis,
compared with a peer group of similar development
companies trading at 0.58x and $118/oz, and similar
producing companies trading at 0.89x and $261/oz,
respectively. New high-grade resource: In an area known for near surface,
low-grade bulk tonnage deposits, Klondex has followed
the mineralization to depth and has discovered several
high-grade veins, resulting in a 43-101 indicated
resource grading 10.11 g/t, and a 43-101 inferred
resource grading 8.63 g/t. New management and strategic focus: With
management additions, including Blane Wilson who
is now President and COO, significant experience
has been added to move the Fire Creek property forward
through the exploration stage. Right mining address: Klondex�s Fire Creek property is
located in a well-known region of Nevada along the Eureka
trend next to Battle Mountain, Mule Canyon, and Cortez Hill deposits, just south of the Carlin trend where Newmont Mining and Barrick Gold Corp. operate significant gold mines. Ideal infrastructure: Fire Creek is easily accessible, near the town of Crescent Valley, NV. Potential groundwater resources are available on site, a rail station is 15 miles away by road, and regional power lines are less than two miles east of the property. Within the region there are an number of operating gold mills with surplus capacity.

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Information about Mackie Research Capital Corporation�s Rating System, the distribution of our research to clients, and the percentage of recommendations that are in each of our rating categories is avai lable on our web site at

The information contained in this report has been drawn from sources believed to be reliable but its accuracy or completeness is not guaranteed, nor in providing it does Mackie Research Capital Corporation assume any responsibility or liability. Mackie Research Capital Corporation, its directors, officers, and other employees may, from time to time, have positions in the securities mentioned herein. Contents of this report cannot be reproduced in whole or in part without the expressed permission of Mackie Research Capital Corporation. (US Institutional Clients � Research Capital USA Inc. (a wholly owned subsidiary of Mackie Research Capital Corporation) accepts responsibility for the contents of this report subject to the terms & limitations set out above. Firms or institutions receiving this report should effect transactions in securities discussed in the report through Research Capital USA Inc., a Broker-Dealer Registered with the United States Securities and Exchange Commission).

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