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Monday, 30 September 2013
Klondex Mines to raise $15 mln via special warrant financing
Klondex Mines (TSE:KDX) will raise $15 million through a special warrant financing, the Nevada-focused gold development company announced Monday, putting the company on a closer track to production.
The news comes just hours after the company provided investors with an update on its underground development and toll milling programs --from which it yielded almost $2 million so far -- as well as the results of the metallurgical test work from its Fire Creek project in Nevada as the company prepares for initial production.
The private placement of special warrants has been agreed upon with GMP Securities, said Klondex, with the offering to be made on a "best efforts basis", by a syndicate of agents led by GMP.
Every special warrant will entitle the holder to receive one common share of the company, for no additional consideration.
The new funds are to be used for the development of Fire Creek, as well as to repay debt and for general working capital. The financing is expected to close in mid-October, subject to regulatory approvals.
As a first step to unlocking value, Klondex has been undertaking an underground development program at the Joyce and Vonnie structures on the Fire Creek property as a way to monetize its high grades, with Klondex having toll milling agreements in place with both Newmont Mining (NYSE:NEM) and Veris Gold (TSE:VG) to treat the material.
In the earlier release on Monday, Klondex said that toll milling of the property's first lot is complete, with final receivables totaling $1.97 million, sold at an average gold spot price of US$1,332 an ounce. Milling of the second lot, which is comprised of 1,812 tonnes, started earlier this month.
"Continuing to toll mill and treat our second lot of material from the Fire Creek project is an important step moving forward," said CEO Paul Huet in the first statement released this morning. "Through toll milling, we are able to better understand the metallurgical characteristics of the Fire Creek material, and the proceeds can be applied towards future exploration and development."
The company also announced metallurgy results, with gold and silver recoveries coming in at 94.8 per cent and 82.4 per cent, respectively. Additional test-work is scheduled to be conducted throughout 2013.
The latest resource estimate from the site consists of 295,900 ounces of gold at a grade of 44.7 g/t in the measured and indicated category, and 421,400 ounces of gold at a grade of 19.2 g/t, applying a 7 g/t gold cut off.