Klondex Sets Term Sheet for $10 - $20 Million in Gold-Backed Financing to Fund Its Underground Program in Nevada
Klondex Mines Ltd. (TSX: KDX) is pleased to announce the execution of a
financing Term Sheet with a New York based private investment firm
whereby KDX will be entitled to draw down on a loan, at its option, a
minimum of US$ 10 million to a maximum of US$ 20 million, for use in
development of the Fire Creek property. This financing provides KDX the
financial and operational flexibility to fund the development of its
high grade Fire Creek property, without restrictions on operations. The
financing is expected to close on or before August 31, 2010, subject to
definitive documentation.
William J. Solloway states;
'We are very pleased with our new
financial associates and the results of our negotiations. Our continued
efforts to protect shareholder value with minimum dilution are
represented in this term sheet. This varied transaction confirms the
financing to further develop Fire Creek at a one-time cost of a small
percentage of our start up gold recovery from the bulk sampling
shipments.?
Corporate funding has been secured at an interest rate of Prime + 3%.
The funding will take the form of a gold loan and associated gold sales
agreement. The loan will be repaid through the delivery of gold at
US$825 from KDX′s anticipated gold recovery of its Underground
Exploration and Bulk Sampling program. We anticipate that the ounces at
$825 will apply to only 11% of gold recovered from KDX′s planned bulk
sampling program and will amount to monthly payments of 433 ounces of
gold (12,121 ounces total over the 36-month term of the loan). The US
$10 million gold loan commitment representing 12,121 ounces is less than
1% of KDX"s 43-101 compliant indicated and inferred resource of 2.1
million ounces at an average grade of approximately 10 g / ton.
The 3 year repayment schedule begins concurrently with the anticipated
extraction of our first blocks of high grade ore and will be fully paid
through our 120,000 ton (EST. 107,000 oz′s) permitted bulk sample
program at KDX′s Fire Creek property southwest of Elko, Nevada.
Under the gold sales agreement, the investor has been granted the right
to purchase KDX′s gold production at a 3% discount to Spot Price for a
period of three years after repayment of the US $10 million gold loan.
KDX will grant the investor 1 million 4-year purchase warrants at $3.00
per share (at US $20 million loan amount KDX will grant 2 million 4-year
purchase warrants at $3.00 per share) and pay a 1.5 % cash fee at
closing. The term sheet provides the investor with a 45-day exclusive
right to provide KDX with financing of this nature. KDX′s obligations
under the gold loan and the gold sales agreement will be secured by a
charge over all of the company′s assets.
About Klondex Mines (http://www.klondexmines.com):
Klondex
Mines Ltd. is focused on exploration and development of its 100% owned
high-grade Fire Creek gold deposit in North Central Nevada. Fire Creek
is a compelling low CapEx mining prospect that is well located near
power, transportation, mining infrastructure and several milling
facilities.
ON BEHALF OF KLONDEX MINES LTD.
'William J. Solloway? Chairman and CEO
'Blane Wilson? President and COO
Tel: 775-388-3885
Klondex Mines Ltd.
William J. Solloway, Chairman and CEO
Blane
Wilson, President and COO
775-388-3885