Three Mining Companies Reaping The Rewards Of Large Financings

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It takes money to make money; mining companies need capital to make acquisitions and conduct exploration. Brien Lundin of Gold Newsletter profiles three companies making the most of recent financings.

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Klondex Mines Ltd. (KDX:TSX; KLDX:NYSE.MKT) took a giant step toward completing the acquisition of the Hollister and Esmeralda mines in Nevada. It did so by completing a CA$129.5 million subscription receipt offering.

Expanded from an initial CA$100 million offering, the bought-deal private placement issued 25.9 million subscription receipts priced at CA$5.00 per subscription receipt. Gross proceeds from the offering have been placed in escrow and will be released once all conditions of the Hollister and Esmeralda acquisitions have been satisfied. Should that not happen by November 16, 2016, the funds raised will be returned to the receipt holders.

Once the deal conditions for the mines have been satisfied, receipt holders will need to exercise their receipts (each good for one common share of Klondex). The shares issued from this transaction are subject to a four-month-plus-one-day hold. In addition to paying for the acquisition, Klondex will use the funds raised for exploration at Hollister and Esmeralda and for development at Hollister.

The acquisition will allow the company to grow through both production and exploration and to build on the impressive results from its active Fire Creek and Midas mines, which are also in Nevada.

Those mines delivered a strong Q2/16 to Klondex. The company achieved revenue of $48 million from sales of gold and silver that averaged, respectively, $1,266 per ounce and $16.78 per ounce. Production at the two mines hit a record 41,436 gold equivalent ounces (GEOs), based on 0.44 ounce/ton gold head grades and 5.72 ounce/ton silver head grades.

Management continues to expect production to increase in the back half of 2016 and is maintaining its guidance for Fire Creek and Midas of 145,000–150,000 GEOs for the full year.

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