With a whopping 21% return to the shareholders, Klondex Mines (KLNDF, Financial) reported solid results in the fourth quarter. The company soared on the back of solid operations and some successful strategic initiatives including some acquisitions in the past. The management of the company is confident of an outperformance in 2015 as well.
If we look at the stock's performance, the stock is performing really well; it has also grown well after its IPO. This can be an added advantage for the company as this can attract many long-term investors, helping it to gain much market share in the future. Let us have a closer look at the overall business of Klondex Mines.
Positive signs to watch
There are many positive signs supporting Klondex’ growth story. It is now focusing on various other initiatives, too, to improve its profitability. In fact, it took some wise decisions in the past which are paying off for it now. The company is optimistic about the synergies it is getting through the acquisition and swift integration of Midas Mines in to its operations. This will benefit Klondex in a long run as well. This will help the company to reduce its operating and capital costs.
Moving on, the company also acquired Fire Creek which is also a wise decision by Klondex. With this acquisition, Klondex now has access to Fire Creek’s bulk sample, and it is now putting efforts to monetize this into meaningful returns. Besides these moves, Klondex is aggressively exploring near the mine working in previously identified potential zones in the West and South which includes the Rico, The Midas trend in the West Zone and Queen and SR in the South zone.
Ramping up production
The company is now largely focusing on ramping up the production. For this it is focusing mainly on drilling activities. Fire Creek should prove a profitable venture for it. It is interesting to know that Klondex started the year with 720,000 ounces in total resources, and it ended the year with 800,000 ounces; this is quite typical, and Klondex is now seeing a complete replacement of mine ounces while focusing well on additional ounces.
Considering the benefits that Klondex is seeing from Fire Creek, the company is now planning to expand its Fire Creek footprint by approximately 1,000 feet laterally to the North and 1,450 feet to the South. This expansion will give Klondex extended working space. With this Fire Creek will continue to grow generating ounces which will raise money for it in the upcoming quarters. In 2015, Klondex is targeting to recover between 120,000 to 125,000 gold equivalent ounces.
In addition, the company also has aggressive investment plans mainly for uplifting its operations. The company will use additional funds to bring more underground development in both sites including exploration drilling which will also help its mineral resource and reserve to grow.
Conclusion
Now moving to the fundamentals, the company’s valuation looks strong. The track record as well as stock performance in the recent years is also strong. This can help it to gain good market share in future. More investors can get attracted towards as it stands impressive with a solid profit margin of 15.04%. All these valuation levels indicates that Klondex Mines is definitely a good pick as of now.
