Klondex Mines and Newmont Mining announced an agreement on December 4, whereby Klondex will acquire Newmont’s Midas mine and related ore milling facility in north-central Nevada for approximately $83 million. Klondex’s flagship Fire Creek gold development project is located 112 miles south of Midas, and Klondex plans to process Fire Creek ore at the Midas mill.
|Drilling activity continues at Klondex Mines’ Fire Creek gold project in Nevada. Klondex purchased Newmont Mining’s Midas mine and mill to process Fire Creek ore once development is completed.|
The purchase price includes approximately $55 million in cash and the replacement of Newmont surety arrangements with Nevada and federal regulatory authorities in the amount of approximately $28 million. The companies expect the transaction to close in early 2014.
In addition, Klondex will issue to Newmont 5 million common share purchase warrants with a 15-year term, subject to acceleration in certain circumstances and an exercise price to be specified on the closing date of the acquisition.
Midas is an underground mine, with limited reserves. The mill has a design capacity of 1,200 metric tons per day (mt/d), but Klondex is targeting throughput during 2014 in the range of 500 to 800 mt/d. The mill is based on a traditional Merrill Crowe processing circuit with high gold and silver recoveries.
Klondex expects to commit $3 million to $5 million to exploration of the Midas land package in 2014 in an effort to provide future feed to the mill.
Klondex’s Fire Creek project has current measured and indicated resources totaling 295,900 oz of gold at a grade of 44.7 g/mt and inferred resources of 421,400 oz at a grade of 19.2 g/mt, at cut-off grades of 7 g/mt.