Precious Metals

NYSE:MKT

The numbers are “very encouraging,” and the company expects to produce 30,000 to 35,000 ounces of gold at Hollister this year.

Gold junior Klondex Mines (TSX:KDX,NYSEMKT:KLDX) published a maiden resource estimate for its Hollister project in Nevada on Wednesday (June 21), and the company says the numbers are “very encouraging.”
The resource estimate is based on historic drill results and data generated from additional drilling done by Klondex after acquiring the property in August last year.
“Approximately 74 percent of the total mineral resource estimate is in the measured and indicated category and sits within both the newly discovered Gloria system, that remains completely open to the West, and in the Hollister main zone,” Klondex President and CEO Paul Huet said in a statement.
The property has a measured and indicated resource of 428,600 tons grading 17.4 g/t gold equivalent, or 217,500 gold equivalent ounces. Its inferred resource stands at 176,000 tons grading 15.3 g/t gold equivalent, or 78,300 gold equivalent ounces.


The results do not include any drill results from the Hatter Graben zone, which the company will begin work at this week. Even so, the start of gold mining at Hollister is now a step closer.
“This new resource provides us a platform and several select areas to begin our mining at Hollister,” Huet said. He also noted that the ramp up of operations is on track, and the first stockpiled tons will be processed by the nearby Midas mill during the third quarter of this year.
“Production from bulk sampling is expected to continue to progressively increase over the second half of the year, and we continue to expect to meet our annual operational guidance,” Huet added.

The company plans to produce a total of 30,000 to 35,000 ounces of gold from Hollister by the end of the year. Klondex has three other producing properties as well: the Fire Creek and Midas mines in Nevada, and the True North mine in Manitoba. Huet speaks about those operations in the video below:


While Klondex gained 1.44 percent pm the TSX on Wednesday after the resource estimate came out, some analysts said they expected more from the report. BMO said in a note that the results are “somewhat disappointing” and lowered its target price for Klondex to C$5.25 from C$5.75.
As of Thursday (June 22) at 1:30 p.m. EST, Klondex shares were trading hands at C$4.66 on the TSX. The company is down 26.88 year-to-date, partially due to the GDXJ rebalancing, and Frank Holmes of US Global Investors (NASDAQ:GROW) has said now is a good time for investors to buy on the cheap.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

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