Klondex Mines (KDX.TO) has announced an updated resource estimate (after completing an additional 272 drill holes) at Fire Creek which should underpin its longer than expected mine life. Using a gold price of $1200/oz and a silver price of $19/oz, the project now contains approximately 775,000 ounces of gold and 645,000 ounces of silver at an average grade of in excess of one ounce of gold per tonne of rock in the measured and indicated categories and half an ounce of gold per tonne of rock in the inferred category.
This is already excellent, and if one would apply a more conservative scenario using a gold price of $800/oz and a silver price of $12.67/oz, the Fire Creek project would still contain 700,000 gold-equivalent ounces of which 400,000 ounces are located in the measured and indicated resources at an average grade of 1.5 gold-equivalent ounces per tonne of rock.
It does seem like Klondex’ acquisition of the Fire Creek project was a golden move and its shareholders could benefit tremendously as the economics of Fire Creek are very robust.
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Disclosure: The author holds no position in Klondex Mines. Please see our disclaimer for current positions.
