Klondex Mines

Klondex Mines was a North American gold-mining company focused on the exploration, development, and operation of underground gold properties. The company was based in Reno, Nevada, and Vancouver, British Columbia, and its principal operating footprint extended across Nevada in the United States and Manitoba in Canada. The company originated in 1975 through the spinoff of the Fire Creek Project in Nevada from Placer Development. For much of its earlier existence, Klondex remained primarily an exploration company. The Fire Creek property proved difficult to sell during the 2000s, when the company approached several potential buyers without completing a transaction. This left Klondex financially constrained and without the operating scale associated with a producing mining company. A major governance change occurred in 2011, when a dissident shareholder group successfully secured a new board of directors. Another proxy contest in 2012 resulted in Paul Huet taking control as chief executive. Huet had prior knowledge of Klondex and its Fire Creek project, including experience from earlier teams that had evaluated a possible acquisition of the property. Under his leadership, Klondex shifted from a largely exploration-oriented business toward an operating gold producer and pursued acquisitions of established mines and processing infrastructure. The transformation accelerated in 2014, when Klondex acquired the Midas mine and mill in Nevada from Newmont Mining for US$83 million. Midas gave the company a producing operation and milling capacity, while Huet brought direct familiarity with the property from his earlier career as its mine manager. In January 2016, Klondex acquired the Rice Lake gold mine, also known as the True North mine, in Manitoba from creditors for US$32 million. Later that year it acquired the Hollister mine in Nevada for US$80 million. Together with Fire Creek and Midas, these assets formed a four-mine operating portfolio. Klondex reported approximately 220,000 gold-equivalent ounces of production from its four mines in 2017. The company’s operations were concentrated in relatively high-grade underground gold deposits, with Fire Creek, Midas, and Hollister located in Nevada and True North located in Manitoba. Performance at True North was weaker than expected in 2017: production was approximately 25,000 ounces compared with an expected 50,000 ounces. In 2018, the company laid off 90 employees at the operation in response to the disappointing production result. Klondex’s independent existence ended in March 2018, when Hecla Mining acquired the company for US$462 million. At the same time, Klondex’s Canadian assets, principally the True North mine, were separated into a new entity called Klondex Canada, which was listed on the TSX Venture Exchange. Klondex Mines therefore ceased to operate as an independent publicly traded mining company, while parts of its former asset portfolio continued under Hecla and the separately established Canadian entity.

Klondex Mines began in 1975 when the Fire Creek Project in Nevada was spun off from Placer Development. The company spent much of its early history as an exploration business centered on Fire Creek. During the 2000s, it attempted to sell the project to several potential buyers but did not complete a sale. The absence of a producing asset contributed to financial pressure and limited the company's scale. Corporate governance became a turning point in 2011, when a dissident shareholder group successfully proposed a new board of directors. In 2012, a further proxy contest led to Paul Huet taking control as chief executive. Huet had previously participated in teams that examined the possible purchase of Fire Creek and had also served as manager of the Midas mine, giving him operational familiarity with assets that later became central to Klondex's strategy. The company's business model changed materially in February 2014, when Klondex acquired the Midas mine and mill in Nevada from Newmont Mining for US$83 million. The transaction provided a producing mine and processing infrastructure. Klondex continued to build its portfolio through acquisitions in 2016. In January of that year, it purchased the Rice Lake operation in Manitoba, also known as the True North mine, from creditors for US$32 million. It subsequently acquired the Hollister mine in Nevada for US$80 million. With Fire Creek, Midas, Hollister, and True North, Klondex operated four mines across Nevada and Manitoba. Its portfolio was focused on underground gold production, and the company reported total 2017 production of approximately 220,000 gold-equivalent ounces. Not all operations met their expectations. True North produced roughly 25,000 ounces in 2017, compared with an anticipated 50,000 ounces, and the company laid off 90 employees at the operation in 2018. Klondex was acquired by Hecla Mining in March 2018 for US$462 million. The transaction ended Klondex's existence as an independent company. Klondex's Canadian assets, principally True North, were spun out into Klondex Canada, a new entity listed on the TSX Venture Exchange. The remaining Klondex assets and operating history became part of the broader Hecla Mining portfolio.

• 2018

  Acquired by Hecla Mining

  [1]Klondex Minesen.wikipedia.org

  Hecla Mining acquired Klondex for US$462 million, while the company's Canadian assets were spun out into Klondex Canada.

• 2017

  Four-mine production platform reaches approximately 220,000 gold-equivalent ounces

  [1]Klondex Minesen.wikipedia.org

  Klondex's four operating mines collectively produced about 220,000 gold-equivalent ounces during 2017.

• 2016

  True North and Hollister added to portfolio

  [1]Klondex Minesen.wikipedia.org

  Klondex acquired the Rice Lake or True North mine in Manitoba for US$32 million and the Hollister mine in Nevada for US$80 million.

• 2014

  Midas mine and mill acquired

  [1]Klondex Minesen.wikipedia.org

  Klondex acquired the Midas mine and mill in Nevada from Newmont Mining for US$83 million.

• 2012

  Paul Huet takes control after proxy contest

  [1]Klondex Minesen.wikipedia.org

  Paul Huet became chief executive after another proxy battle and began steering Klondex toward mine operations and acquisitions.

• 2011

  Shareholder-led board change

  [1]Klondex Minesen.wikipedia.org

  A dissident shareholder group successfully proposed a new board of directors, beginning a period of significant corporate change.

• 1975

  Fire Creek Project spun off from Placer Development

  [1]Klondex Minesen.wikipedia.org

  Klondex Mines was established through the spinoff of the Fire Creek Project in Nevada from Placer Development.

A North American precious-metals producer built through the transition from exploration of the Fire Creek project to the acquisition and operation of high-grade underground gold mines in Nevada and Manitoba.

• Gold mine · 1975

  Fire Creek mine

  The Fire Creek Project in Nevada was the asset from which Klondex originated in 1975. It remained the company's central exploration property during its earlier years and later became one of the four mines in Klondex's operating portfolio. The company's long-term transformation was closely associated with moving Fire Creek from an exploration-led asset into part of a broader underground gold-mining platform.

• Gold mine and processing facility · 2014

  Midas mine and mill

  Located in Nevada, Midas was acquired from Newmont Mining in 2014 for US$83 million. The mine and its mill were strategically important because they gave Klondex an operating gold asset and processing capacity. Paul Huet had previously worked as Midas's mine manager, providing relevant operational experience before the acquisition.

• Gold mine · 2016

  True North mine

  The True North mine, also called the Rice Lake mine, is located in Manitoba. Klondex acquired it from creditors in January 2016 for US$32 million. It formed the company's principal Canadian operating asset, although production in 2017 was below expectations and the operation was associated with a workforce reduction in 2018.

• Gold mine · 2016

  Hollister mine

  Hollister is a Nevada gold mine that Klondex acquired in 2016 for US$80 million. It became one of the company's four operating mines alongside Fire Creek, Midas, and True North, reinforcing Klondex's concentration on underground gold operations in Nevada and Manitoba.

• 2018

  Accept acquisition by Hecla MiningM&A

  Background

  Klondex had developed a multi-mine gold portfolio but faced weaker-than-expected performance at True North before the transaction.

  Action taken

  Hecla Mining acquired Klondex for US$462 million. Klondex's Canadian assets were separated into Klondex Canada.

  Aftermath

  Klondex ceased to exist as an independent publicly traded company, while its Canadian assets continued through Klondex Canada and the broader transaction involved Hecla Mining.

  Acquisition value. US$462 million (March 2018)

  Source

• 2016

  Build a four-mine operating portfolioM&A

  Background

  Following the Midas acquisition, Klondex continued expanding its production base geographically across Canada and the United States.

  Action taken

  Klondex acquired the True North mine in Manitoba for US$32 million and the Hollister mine in Nevada for US$80 million.

  Aftermath

  The acquisitions gave Klondex four operating mines: Fire Creek, Midas, Hollister, and True North.

  Combined stated acquisition prices. US$112 million (2016)

  Source

• 2014

  Acquire Midas mine and millM&A

  Background

  Klondex needed to move beyond its historically exploration-focused Fire Creek business and establish a producing operating base.

  Action taken

  The company purchased Midas and its mill from Newmont Mining for US$83 million.

  Aftermath

  The transaction gave Klondex a producing Nevada mine and processing infrastructure and supported its broader operating-company strategy.

  Acquisition price. US$83 million (February 2014)

  Source

1. 1Klondex Minesen.wikipedia.org