🕐10.03.10 - 22:08 Uhr
KDX Reports Permitting Progress and Reviews its Strategic Significance
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Re: News - Wednesday, March 10, 2010
KDX Reports Permitting Progress and Reviews its Strategic
Significance
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A personal letter from the president of Klondex Mines Ltd.
on
Permitting, a Key Strategic Asset of the CompanyDear KDX Investor,
I wanted to take a moment to give you a personal update on the
incredibly positive and significant changes occurring at Klondex.
We
are making huge strides forward on our deliverables and big additions
to both management and marketing.
Please look to future news releases
as we advance through 2010.
The primary purpose of this letter is to
explain in some detail the importance of our accomplishments and our
underground permitting successes to date.
In late December 2009, Klondex successfully secured permits from the
U.S.
Bureau of Land Management (BLM) for our underground confirmation
program at Fire Creek.
This in itself is a mighty accomplishment for
Klondex as it clearly underscores our transition from an exploration
company with proven resources in the ground into a hybrid company
focused on underground production AND continued exploration.
We feel
the importance of this distinction will be graphically demonstrated
over the next 12 months as previously uninterested investors begin to
position themselves into the Klondex shareholder base.
The BLM
approvals also pave the way for Klondex to extend to the south its Main
Zone surface exploration program.
This is very good news as it gives us
the opportunity to build upon our already substantial 1.64 million
ounce NI 43-101 compliant indicated gold resource and our 0.5 million
ounces of inferred gold resource.
To ensure the timely completion of the permitting process, Klondex has
posted the required $1.4 million reclamation bond, and we have executed
a $258,000 contract with Western Cultural Resource Management to
complete a required Archeological Site Study which, weather permitting,
should begin in the next few weeks.
Klondex must also secure final
state approvals, including approval from the Nevada Department of
Environmental Protection.
The Nevada state permit is expected to enter
the public comment stage in the next few weeks, and we are excited to
report that we continue to anticipate receipt of final permits between
April and June 2010.
The permits will enable Klondex to pursue bulk sampling and processing
of 120,000 tons of high-grade ore (limited to 36,500 tons per year).
Given a target grade of one ounce per ton, the bulk sampling initiative
could enable Klondex to produce approximately 120,000 ounces of gold
with a current market value before production costs of over $120
million.
With approximately 36.2 million diluted shares outstanding,
this represents an enormous opportunity for our Company.
To initiate
the underground program, the permits will allow Klondex to drive 3,000
meters of decline tunneling to access our Main Zone mineralization.
This access will facilitate more cost effective exploratory and in-fill
drilling of KDXs resource to expand and improve the geologic model of
Main Zone gold mineralization.
This should support our efforts to build
our NI 43-101-compliant resource and give us the ability to initiate
appropriate underground mine planning.
After careful consideration and concerted negotiation, Klondex has
chosen to proceed with Small Mine Development Co.
(SMD) of Boise, Idaho
to engineer and perform the underground development and bulk sampling
work.
SMD is a highly respected underground mining contractor with
substantial high-grade gold mining experience and in-depth knowledge.
Their understanding of our project and the local geology will ensure we
extract the ore and produce gold at the lowest possible cost.
The
excellent and very convenient location of our high-grade deposit at
Fire Creek gives Klondex a number of choices for processing the
approximately one ounce per ton ore we will target.
Currently we are
reviewing several regional mills where after a short truck ride our ore
could be milled on a contract basis.
Klondex is very sensitive to our
shareholders and to limiting dilution, so we are focused on financing
future requirements for this program with the least dilution possible.
In summary, we believe KDXs permitting program is creating substantial
value for our shareholders.
If you would like a more detailed and
personal review please feel free to contact me or my team to set up a
time convenient for you.
We are also available to meet with you today,
the final day of the PDAC show in Toronto.
Our booth number is 2835.
Finally, for a window on the true scope and effort behind the
permitting process, we have provided some additional background below.
Kindest regards,
William J.
Solloway
President
Klondex Mines Ltd.
Background on Scope of Permitting Process
Years expended to date: Approximately 3 years; initial permits filed
March 2007
Permits received to date: BLM Environmental Assessment.
Amended Plan of Operations.
Permit for Reclamation and Surface and Underground Exploration
Contractors utilized:
Enviroscientists, Inc -- leading environmental consulting firm focused
on resource permitting.
www.enviroincus.com
Knight Pisold -- leading global consulting engineers and environmental
scientists.
www.knightpiesold.com
SRK - international consulting practice in earth and water resource
industries.
www.SRK.com
Western Cultural Resource Management .
is a full service cultural
resource consulting firm.
www.wcrminc.com
Regulatory bodies involved: U.S.
Bureau of Land Management (BLM)
Nevada Department of Environmental Protection (NDEP)
Consultant fees to date: $586,000
Estimated KDX man-hours to date 2,300 hours across 3 professionals
Estimated # of regulatory meetings 20
Klondex Reports Progress on Permitting for Its Underground Program
Vancouver, British Columbia -- March 10, 2010 - Klondex Mines Ltd.
(TSX: KDX) announced today an update on permitting for its underground
development program focused on bulk sampling and exploration drilling.
KDX has posted a U.S.
$1.4 reclamation bond required pursuant to the
Companys U.S.
Bureau of Land Management permits (BLM) issued in late
December 2009.
To fund the bond without issuing common stock at
current levels, Klondex has secured a U.S.
$1.4 million loan facility
bearing interest at 6% per year.
KDX has also executed a contract with
Western Cultural Resource Management (WCRM) to perform archeological
site work also required pursuant to KDXs BLM permits.
The WCRM work
will commence in the next few weeks, assuming suitable weather, and
should be completed within six weeks thereafter.
Klondex continues to
anticipate the receipt of remaining state permits for its underground
program between April and June 2010.
William Solloway, Klondexs President, commented, "We believe investors
have yet to realize the significant accomplishment and value being
created through our permitting process.
Permitting is amongst the most
difficult hurdles faced by mining companies.
Once completed, it will
enable KDX to graduate from a focus solely on exploration to a dual
focus on exploration and production/cash generation, via bulk sampling.
Our progress in permitting clearly demonstrates to investors that we
are delivering on our commitments and entering an exciting new stage in
our corporate development.
With our recent management appointments, we
are very well positioned to execute on our underground program during
2010 and to secure greater investor awareness and appreciation for the
value and potential of our high-grade gold resource at Fire Creek."
About Klondex Mines (www.klondexmines.com):
Klondex Mines Ltd.
is focused on bringing into production, via bulk
sampling, its 100% owned high-grade Fire Creek gold deposit in North
central Nevada.
Fire Creek is centrally located near power and
transportation and represents a compelling mining prospect.
Klondex
has identified the following NI 43-101 compliant resource:
* Fire Creek has a gold-to-silver ratio of approximately 1:1,
indicating the resource is approximately 98.3% gold and 1.7% silver.
Reflects a cutoff grade of 5 grams per tonne and 60 units of silver
equivalent to one unit of gold.
ON BEHALF OF KLONDEX MINES LTD.
"William Solloway" President
Investor Contacts:
Bryson Goodwin
Klondex Mines Ltd.
(604) 341-1531
David Collins
Jaffoni & Collins
(212) 835-8500
View News Release in PDF Format:
Associated File:
http://www.klondexmines.com/i/pdf/KDX-nr-3-10-10.pdf
23 KB in size, approx.
5 seconds to download at 56.6Kbps
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Copyright (c) 2010 KLONDEX MINES LIMITED (KDX) All rights reserved.
For more information visit our website at http://www.klondexmines.com/
or send mailto:
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