In a Sept. 19 report, Philip Ker, an analyst with PI Financial, wrote that the visit to Klondex Mines Ltd.'s (KDX:TSX; KLDX:NYSE.MKT) Hollister and Fire Creek left a good impression and provided a "vision of [the] future" for the company in Nevada.
Regarding Hollister specifically, Ker noted that "it demonstrated considerable upside with an expected increase in head grades, declining costs as a result of successful long-hole stoping and exploration potential at Hatter Graben." He added, "Positive takeaways have led us to have a more favorable long-term view of Hollister and resulted in improved valuation metrics for the company."
As for Fire Creek and Midas, Klondex "continue[s] to expand the resource footprints at those operations," the analyst noted. Specifically at Fire Creek, "it appeared a considerable updip extension of the Karen vein was discovered ~300 feet above the existing resource," though assays remain pending. Expansion of known mineralized zones, "along with other efforts across Fire Creek and Midas continue to demonstrate further mine life extension."
As a result, PI Financial revised it model on Klondex to "incorporate upside from Hatter Graben and reducing costs at Hollister," explained Ker, noting that a key catalyst for the company will be demonstrating exploration success at Hatter Graben. ''We are increasing our rating to Buy from Neutral and our target price to $4.85 per share from $4.15 per share." This compares to CA$4.38, where Klondex's stock is currently trading.
In the near term, however, it will be "a challenge" for the miner to meet its stated consolidated 2017 guidance of 213–230 Koz of gold equivalent due to "an unplanned delay in processing Hollister ore," Ker said. "Operations elsewhere will need to pick up the slack."
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1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: Klondex Mines Ltd. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
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Disclosures from PI Financial, Klondex Mines Ltd., Corporate Update, Sept. 19, 2017
I, Philip Ker, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly related to the specific recommendations or views expressed in this report. I am the research analyst primarily responsible for preparing this report.
1) PI Financial Corp. and its affiliates’ holdings in the subject company’s securities, in aggregate exceeds 1% of each company’s issued and outstanding securities. No
2) The analyst(s) responsible for the report or recommendation on the subject company, a member of the research analyst’s household, and associate of the research analyst, or any individual directly involved in the preparation of this report, have a financial interest in, or exercises investment discretion or control over, securities issued by the following companies. No
3) PI Financial Corp. and/or its affiliates have received compensation for investment banking services for the subject company over the preceding 12-month period. No
4) PI Financial Corp. and/or its affiliates expect to receive or intend to seek compensation for investment banking services from the subject company. Yes
5) PI Financial Corp. and/or its affiliates have managed or co-managed a public offering of securities for the subject company in the past 12 months. No
6) The following director(s), officer(s) or employee(s) of PI Financial Corp. is a director of the subject company in which PI provides research coverage. No
7) A member of the research analyst’s household serves as an officer, director or advisory board member of the subject company. No
8) PI Financial Corp. and/or its affiliates make a market in the securities of the subject company. No
9) Company has partially funded previous analyst visits to its projects. Yes
10) Additional disclosure: No
Analysts are compensated through a combined base salary and bonus payout system. The bonus payout is amongst other factors determined by revenue generated directly or indirectly from various departments including Investment Banking. Evaluation is largely on an activity-based system that includes some of the following criteria: reports generated, timeliness, performance of recommendations, knowledge of industry, quality of research and investment guidance, and client feedback. Analysts and all other Research staff are not directly compensated for specific Investment Banking transactions.