Fire Creek Exploration Project Results Reported
VANCOUVER - Klondex Mines Ltd. reported results of an independent Preliminary Economic Assessment (PEA) for its wholly-owned Fire Creek Exploration Project near Elko, Nevada. The PEA was prepared by Practical Mining, LLC (PM). All figures are quoted in US dollars.
Fire Creek Project Estimates Highlights at $1250/oz Gold: All-in sustaining (including Ag by-product)$636/oz; Cash costs (including Ag by-product) $459/oz; LOM estimate 5 yrs; Average LOM gold grade 0.68 opt Au; 23.3 g/t Au; Average LOM silver grade 0.34 opt Ag; 11.7 g/t Ag; Total production 280k ozs Au; 139k oz Ag; Capital costs $49.6 mm; Pay-back period 0.5 yrs; After-tax cash flow $157.3 mm; After-tax 5% NPV $141.5 mm.
Paul Huet, Klondex President and CEO stated, "The Fire Creek PEA represents a significant and encouraging milestone for Klondex. The PEA details an initial mine plan with immediate positive cash flows that have the potential to remain economic in low gold price environments. We believe Fire Creek is a unique project, and what sets it apart is the gold grades, short path to production, and the substantial exploration upside. The PEA establishes that our mining operation has the potential to be the cornerstone for our growth for many years. Drilling in the past few years has been constrained to surface and infill drilling for definition, within 7% of our land package. This year, we have allocated $9mm for waste development and new drilling platforms to test new extensions of our current veins and the potential for new discoveries, particularly to the West and North Zones."
The PEA is based on a mineral resource estimate with an effective date of December 31, 2013. The Fire Creek database used for the mineral resource estimate includes 408 drill holes totaling over 133,000 m (437,000 ft) and 1,120 channel and face samples and is reflective of underground development work at Fire Creek during 2013 resulting in the processing of 8,007 tons of mineralized material.
The Fire Creek PEA mine plan only includes mineral resources within the veins, which can be readily accessed from the existing development platform. The majority of mineral resources in the North Zone and all of the mineral resources in the Far North Zone were not considered in the current mine plan due to the mine development requirements for these zones. As additional exploration information is gained, the mine plan may be extended to the north to include these mineral resources.
Additionally, some of the mineral resources near the current development platform are contained in veins of insufficient width to meet cut-off grades when minimum mining widths are applied. Alternative mining methods, which reduce dilution and/or development requirements, should be investigated for the extraction of these mineral resources.
The proposed mining methods for Fire Creek will be any one or more of the following: end slice stopping with delayed backfill, also referred to as long hole stopping; cut and fill stopping; and shrinkage stopping. The final choice of mining method will depend upon the geometry of the stope block, proximity to main access ramps, ventilation and escape routes, the relative strength or weakness of the mineral resources and adjacent wall rock, and finally the value or grade of the mineral resources. The choice of mining method for individual stoping areas will not be made until stope delineation and definition drilling is completed.
Mined material from Fire Creek will be shipped to Klondex's Midas Mill for processing. The Fire Creek material will be blended with the Midas material prior to milling.
The Midas Mill was constructed in 1997 and has a nameplate capacity of 1,200 short tons per day. The mill uses conventional leach technology with counter current decantation followed by Merrill Crowe precipitation. DorÄ is further refined at Johnson Matthey refineries in Utah. Process toll milling has been performed periodically since 2008. Historically, the gold recovery has ranged from 92% to 97%, and silver recovery from 87% to 93%, depending upon processing rates and ore types. Mill availability for the life of the project is estimated at 95%.
Klondex is currently waiting for approval to an amendment to the Plan of Operations and Reclamation permits (NVN-07976 and reclamation permit 0028); this amendment will allow Klondex to construct and operate two Rapid Infiltration Basins (RIBs) at Fire Creek. Klondex received approval for the Water Pollution Permit for construction and operations of the RIBs (WPCP2013102) in February 2014. Also, Klondex does not anticipate any delays or permitting issues associated with acquiring the required permits for Fire Creek full production. Klondex has initiated a baseline data collection program to as part of anticipated future permitting necessities.