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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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British Columbia
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98-1153397
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(State or other jurisdiction of
incorporation or organization)
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(IRS Employer Identification No.)
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6110 Plumas Street Suite A Reno, Nevada
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89519
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(Address of principal executive offices)
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(Zip Code)
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Name of exchange on which registered
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Common Shares, no par value
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NYSE MKT LLC
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Securities registered pursuant to Section 12(g) of the Act: None
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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(Do not check if a smaller reporting company)
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Smaller reporting company
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•
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estimates of future mineral production, mining activities and sales;
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estimates of future production costs and other expenses for specific operations and on a consolidated basis;
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estimates of future capital expenditures, construction or production activities and other cash needs, for specific operations and on a consolidated basis, and expectations as to the funding or timing thereof;
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estimates as to the projected development of certain mineral projects, such as Hollister (as defined herein), including the timing of such development, the costs of such development and other capital costs, financing plans for these deposits and expected production commencement dates;
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estimates of mineral reserves and mineral resources, timing of updated studies and statements regarding future exploration;
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statements regarding the availability of, and, terms and costs related to, future borrowing and financing;
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estimates regarding future exploration expenditures, results and reserves;
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estimates regarding potential cost savings, productivity and operating performance;
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expectations regarding the start-up time, design, mine life, mill availability, production and costs applicable to sales and exploration potential of our mines and projects;
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statements regarding future transactions; and
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statements regarding the impacts of changes in the legal and regulatory environment in which we operate.
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the price of gold, silver and other metal prices and commodities;
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the cost of operations;
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currency fluctuations;
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inflation or deflation;
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geological and metallurgical assumptions;
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risks and uncertainties relating to the interpretation of drill results, the geology, grade and continuity of our mineral deposits;
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operating performance of equipment, processes and facilities;
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timing of receipt of necessary governmental permits or approvals;
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domestic and foreign laws or regulations, particularly relating to the environment, mining and processing;
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changes in tax laws;
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domestic and international economic and political conditions;
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our ability to obtain or maintain necessary financing;
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other risks and hazards associated with mining operations. uncertainty of estimates of capital costs, operating costs, production and economic returns;
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•
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uncertainty related to inferred mineral resources;
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labor relations and our need to attract and retain qualified management and technical personnel; and
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increased regulatory compliance costs relating to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act").
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P&E Mining Consultants Inc. has stated that with respect to the proven and probable reserves reported in the amended and restated technical report titled “Technical Report and Pre-Feasibility Study on the True North Gold Mine, Bissett, Manitoba, Canada” dated November 22, 2016, effective June 30, 2016, such proven and probable reserves are equivalent to those determined under SEC Industry Guide 7 and the study meets SEC Industry Guide 7 standards for estimating and reporting reserves;
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Practical Mining LLC has stated that the proven and probable reserves reported in the amended and restated technical report titled "Preliminary Feasibility Study for the Midas Mine, Elko County, Nevada", dated April 2, 2015, effective as of August 31, 2014 and the Mineral Reserve and Mineral Resource update for Midas effective as of May 31, 2016 are equal to the proven and probable reserves which would have been reported had the reports been prepared pursuant to SEC Industry Guide 7 standards, and in such disclosures, the procedures and definitions employed in the estimation of proven and probable reserves is also consistent with SEC Industry Guide 7 definitions; and
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Practical Mining LLC has stated that the proven and probable reserves reported in the technical report titled "Technical Report for the Fire Creek Project, Lander County, Nevada" dated March 28, 2016, effective June 30, 2015, and the Mineral Reserve and Mineral Resource update for Fire Creek effective as of June 30, 2016
are equal to the proven and probable reserves which would have been reported had the reports been prepared pursuant to SEC Industry Guide 7 standards
and in such disclosures the procedures and definitions employed in the estimation of proven and probable reserves is also consistent with SEC Industry Guide 7 definitions.
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Gold
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Silver
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||||||||||||||||||||
Year
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High
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Low
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Average
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High
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Low
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Average
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||||||||||||
2014 LBMA
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$
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1,385
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$
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1,142
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$
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1,266
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$
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22.05
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$
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15.28
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$
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19.08
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2014 Klondex Average
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1,258
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18.47
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2015 LBMA
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1,296
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1,049
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1,160
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18.23
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13.71
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15.68
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||||||
2015 Klondex Average
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1,156
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15.72
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2016 LBMA
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1,366
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1,077
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1,251
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20.71
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13.58
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17.14
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||||||
2016 Klondex Average
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1,245
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17.44
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Segment
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Employees
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Contractors
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Total
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Fire Creek
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70
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116
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186
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Midas
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138
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124
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262
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True North
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139
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135
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274
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Hollister
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8
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39
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47
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Aurora
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5
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—
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5
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Corporate and other
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40
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—
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40
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Total
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400
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414
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814
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•
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the rates of global economic growth;
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industrial and retail demand, including worldwide demand for products containing gold and silver;
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short-term changes in supply and demand because of speculative hedging activities;
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worldwide supply of these metals including the expected near-term supply from new mine sources;
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the availability and cost of substitute materials;
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inventory levels;
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the industry production cost curve and the expected cost to develop new sources of supply;
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expectations with respect to the rate of inflation;
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the relative strength of the US dollar (the currency in which the prices of gold and silver are generally quoted), the Canadian dollar and certain other currencies;
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interest rates;
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global or regional political conditions, including terrorism and war;
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global or regional economic conditions, including interest rates, central bank lending and currency values; and
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sales by central banks and other holders, speculators and producers in response to any of the above factors.
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cause us to revise our operating plans, resulting in reduced output, the placement of our mines on care and maintenance or closure of one or more of our mines or other facilities;
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further reduce revenues through production declines due to cessation of mining of deposits that have become uneconomic;
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reduce funds available for capital expenditures;
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•
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delay or prevent our ability to make accretive acquisitions or conduct exploration work;
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reduce existing reserves due to economic viability; and
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cause us to write down assets and accelerate depletion, reclamation and closure charges.
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credit risk - the risk of an unexpected loss arising if a counterparty with which we have entered into transactions fails to meet its contractual obligations;
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market liquidity risk - the risk that we have entered into a derivative position that cannot be closed out quickly, by either liquidating such derivative instrument or by establishing an offsetting position; and
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unrealized mark-to-market risk - the risk that, in respect of certain derivative products, an adverse change in market prices for commodities, currencies or interest rates will result in our incurring an unrealized mark-to-market loss in respect of such derivative products.
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unanticipated ground and water conditions;
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adverse claims to water rights and shortages of water to which we have rights;
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•
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adjacent or adverse land or mineral ownership that results in constraints on current or future mine operations;
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•
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geological problems, including seismic activity, earthquakes and other natural disasters;
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•
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metallurgical and other processing problems;
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•
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unusual or unexpected mineralogy or rock formations;
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•
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ground or slope failures;
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•
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tailings design or operational issues, including dam breaches or failures;
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structural cave-ins, wall failures or rock-slides;
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•
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flooding or fires;
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•
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equipment failures;
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•
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periodic interruptions due to inclement or hazardous weather conditions or operating conditions and other force majeure events;
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•
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lower than expected ore grades or recovery rates;
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•
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accidents;
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•
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delays in the receipt of or failure to receive necessary government permits;
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•
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the results of litigation, including appeals of agency decisions;
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•
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delays in transportation;
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•
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interruption of energy supply;
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•
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labor disputes;
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•
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inability to obtain satisfactory insurance coverage;
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•
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the availability of drilling and related equipment in the area where mining operations will be conducted; and
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•
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the failure of equipment or processes to operate in accordance with specifications or expectations.
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•
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the identification of potential gold mineralization;
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•
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the availability of government-granted exploration permits;
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•
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the quality of management and geological and technical expertise; and
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•
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the capital available for exploration.
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•
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increases in production or capital costs or lower gold and silver prices;
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•
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changes in financial estimates by us or by any securities analysts who might cover our stock;
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•
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speculation about our business in the press or the investment community;
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•
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conditions or trends in our industry, the market or the economy generally;
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•
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changes in the prices of gold or silver;
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•
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stock market price and volume fluctuations of other publicly traded companies and, in particular, those that are in the mining industry;
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•
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the inability to service or restructure our debt;
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•
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changes in our credit rating or future prospects;
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•
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announcements by us or our competitors of significant acquisitions, strategic partnerships or divestitures;
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•
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capital commitments;
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•
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failure to meet the conditions necessary to remain listed for trading on the TSX, NYSE MKT, or other similar markets;
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•
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additions or departures of key personnel;
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•
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changes in accounting standards, policies, guidance, interpretations or principles, or the failure to comply with accounting standards applicable to us or to maintain effective internal control over financial reporting; and
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•
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sales of our common stock, including sales by our directors, officers or significant stockholders.
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January 1,
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December 31,
|
||||||||||||||||||||
|
2012
|
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2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
||||||||||||
Klondex Mines Ltd.
|
$
|
100.00
|
|
|
$
|
56.76
|
|
|
$
|
68.02
|
|
|
$
|
75.68
|
|
|
$
|
91.89
|
|
|
$
|
209.91
|
|
S&P 500
|
100.00
|
|
|
115.82
|
|
|
153.05
|
|
|
173.75
|
|
|
176.13
|
|
|
196.80
|
|
||||||
GDXJ Junior Gold Miners ETF
|
100.00
|
|
|
86.20
|
|
|
33.81
|
|
|
26.43
|
|
|
21.51
|
|
|
38.71
|
|
|
|
Years ended December 31,
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||||||||||||||||||
Results of operations
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2016
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2015
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2014
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2013
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|
2012
|
||||||||||
Revenue
|
|
$
|
198,175
|
|
|
$
|
154,081
|
|
|
$
|
112,622
|
|
|
$
|
—
|
|
|
$
|
—
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|
Total cost of sales
|
|
137,500
|
|
|
106,971
|
|
|
61,236
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|
|
—
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|
|
—
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|
|||||
Net (loss) income
|
|
(1,700
|
)
|
|
44,253
|
|
|
26,884
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|
|
(25,089
|
)
|
|
(28,443
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)
|
|||||
Basic net (loss) income per share
|
|
(0.01
|
)
|
|
0.33
|
|
|
0.23
|
|
|
(0.38
|
)
|
|
(0.58
|
)
|
|
|
December 31,
|
||||||||||||||||||
Financial position
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|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Cash and cash equivalents
|
|
$
|
47,636
|
|
|
$
|
59,097
|
|
|
$
|
45,488
|
|
|
$
|
12,127
|
|
|
$
|
18,142
|
|
Inventories
|
|
21,310
|
|
|
16,070
|
|
|
18,601
|
|
|
—
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|
—
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|
|||||
Mineral properties, plant and equipment, net
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|
276,223
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|
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86,582
|
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71,307
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|
|
2,459
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|
|
1,491
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|
|||||
Total assets
|
|
379,978
|
|
|
202,823
|
|
|
165,251
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|
|
15,350
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|
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21,445
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|
|||||
Debt, current
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|
8,502
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6,930
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7,290
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6,447
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8,977
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|
|||||
Debt, non-current
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21,689
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18,887
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41,131
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—
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3,276
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|
|||||
Asset retirement obligation
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25,436
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12,387
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12,032
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1,010
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529
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|
|||||
Total liabilities
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101,924
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59,717
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|
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79,366
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15,510
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10,913
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|
|||||
Total shareholders' equity
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278,054
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143,106
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85,885
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(160
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)
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|
10,532
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•
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Introduction and strategy
which provides a brief discussion of our current operations and business strategies and goals;
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•
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Executive summary
which lists significant matters related to 2016;
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•
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Corporate developments
provides details on 2016 acquisitions and equity offerings.
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•
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2017 full year outlook
which summarizes our estimates for 2017 production volumes, costs, and capital, development, and exploration spending.
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•
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Critical accounting estimates
which provides a discussion of accounting estimates that we believe are critical in understanding and evaluating our reported financial results because they affect reported amounts and require significant management judgment and assumptions about highly uncertain matters;
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Results of operations
which provides a discussion and analysis of our operating results for the last three years.
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•
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Mining operations review
which provides a discussion of our mine operations and production statistics for the last three years.
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•
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Hollister and Aurora updates
which provides a discussion of our two most significant exploration and development projects.
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•
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Financial position, liquidity, and capital resources
which provides a discussion of our cash flows (last three years), liquidity, available sources of liquidity, capital requirements, and debt covenants; and
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•
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Non-GAAP performance measures
which includes a description of our three non-GAAP financial measures: production cash costs per gold equivalent ounce ("GEO") sold and all-in costs per gold ounce sold, the reasons for our use of such measures, and a three year reconciliation to our nearest GAAP measures.
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•
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Health, safety, and environmental
- We remained committed to our most important core values by operating in an environmentally-responsible manner while protecting the health and safety of our employees and contractors. No lost-time injuries at our properties and as of
December 31, 2016
, had operated 1,539 days (~4.0 years) at Fire Creek, 815 days (~2.0 years) at Midas, 344 days (~0.9 years) at True North, and 89 days (~0.3 years) at Hollister and Aurora, without a lost-time injury.
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•
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Hollister acquisition and private placement
- On October 3, 2016, we completed the acquisition of the Hollister and Aurora projects, located in Nevada, USA, using the proceeds received from a CDN$129.5 million "bought deal" private placement. We believe the Hollister and Aurora projects create synergies with our Nevada Operations and provide significant future operational and exploration potential. During 2017, we expect to produce
30,000
-
35,000
GEOs from bulk sampling mineralized material during Hollister's exploration and development activities.
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•
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True North
- Following its
January 22, 2016
acquisition, we made a positive production decision at True North, which represents our third producing property. We poured our first gold during the year and produced a total of
10,199
GEOs. During 2017, we expect to produce
41,000
-
45,000
GEOs at True North.
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•
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Ounces sold and financial results
- We sold a record
159,118
gold equivalent ounces ("GEOs"), consisting of
138,516
gold ounces and
1,470,992
silver ounces. Revenue was an all-time high totaling
$198.2 million
from average selling prices per gold and silver ounce of
$1,245
and
$17.44
, respectively. Net loss was
$1.7 million
(or
$0.01
per share - basic).
|
•
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Cash flows and liquidity
- Maintained our strong financial position and liquidity. Our ending cash balance was
$47.6 million
after
$45.3 million
of operating cash flows,
$159.7 million
used in investing activities, and
$104.6 million
provided by financing activities. Ending working capital was
$33.2 million
(ratio of
1.80
:1) and total liquidity was
$56.2 million
when including the $23.0 million of Revolver availability.
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•
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Nevada performance
- We produced a record
151,007
GEOs, in-line with management expectations which saw GEO production and grades progressively increasing from the first half of the year to the second half of the year. Average key operating metrics for our Nevada Operations were:
854
ore tons milled per day,
0.45
oz/ton gold mill head grade,
5.28
oz/ton silver mill head grade,
0.52
oz/ton GEO mill head grade. Production cash costs per gold equivalent ounce sold at Nevada was
$637
and within our 2016 expected range of $600 to $650.
|
•
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Spending
- Capital, exploration, and development spending totaled
$32.5 million
at Fire Creek,
$27.8 million
at Midas,
$16.8 million
at True North,
$4.2 million
at Hollister,
$0.6 million
Aurora, and
$1.4 million
at corporate for total capital spending of
$83.4 million
.
|
Revenues
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||
Gold revenue
|
|
|
|
|
|
|
|
|
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|
||||||||||
Fire Creek
|
|
$
|
123,403
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|
|
$
|
93,739
|
|
|
$
|
74,864
|
|
|
$
|
29,664
|
|
|
$
|
18,875
|
|
Midas
|
|
39,783
|
|
|
33,492
|
|
|
17,119
|
|
|
6,291
|
|
|
16,373
|
|
|||||
True North
|
|
9,329
|
|
|
—
|
|
|
—
|
|
|
9,329
|
|
|
—
|
|
|||||
|
|
172,515
|
|
|
127,231
|
|
|
91,983
|
|
|
45,284
|
|
|
35,248
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Silver revenue
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fire Creek
|
|
1,623
|
|
|
1,284
|
|
|
1,026
|
|
|
339
|
|
|
258
|
|
|||||
Midas
|
|
24,023
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|
|
25,566
|
|
|
19,613
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|
|
(1,543
|
)
|
|
5,953
|
|
|||||
True North
|
|
14
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|||||
|
|
25,660
|
|
|
26,850
|
|
|
20,639
|
|
|
(1,190
|
)
|
|
6,211
|
|
|||||
|
|
$
|
198,175
|
|
|
$
|
154,081
|
|
|
$
|
112,622
|
|
|
$
|
44,094
|
|
|
$
|
41,459
|
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Total gold revenue (thousands)
|
|
$
|
172,515
|
|
|
$
|
127,231
|
|
|
$
|
91,983
|
|
Gold ounces sold
|
|
138,516
|
|
|
110,058
|
|
|
73,100
|
|
|||
Average realized price (per ounce)
|
|
$
|
1,245
|
|
|
$
|
1,156
|
|
|
$
|
1,258
|
|
|
|
|
|
|
|
|
||||||
The change in gold revenue was attributable to:
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
|
|
||||||
Increase in ounces sold
|
|
$
|
32,956
|
|
|
$
|
46,474
|
|
|
|
||
Change in average realized price
|
|
9,795
|
|
|
(7,456
|
)
|
|
|
||||
Effect of average realized price change on ounces sold increase
|
|
2,533
|
|
|
(3,770
|
)
|
|
|
||||
|
|
$
|
45,284
|
|
|
$
|
35,248
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Total silver revenue (thousands)
|
|
$
|
25,660
|
|
|
$
|
26,850
|
|
|
$
|
20,639
|
|
Silver ounces sold
|
|
1,470,992
|
|
|
1,708,548
|
|
|
1,117,288
|
|
|||
Average realized price (per ounce)
|
|
17.44
|
|
|
$
|
15.72
|
|
|
$
|
18.47
|
|
|
|
|
|
|
|
|
|
||||||
The change in silver revenue was attributable to:
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
|
|
||||||
Change in ounces sold
|
|
$
|
(3,720
|
)
|
|
$
|
10,910
|
|
|
|
||
Change in average realized price
|
|
2,939
|
|
|
(3,073
|
)
|
|
|
||||
Effect of average realized price change on ounces sold change
|
|
(409
|
)
|
|
(1,626
|
)
|
|
|
||||
|
|
$
|
(1,190
|
)
|
|
$
|
6,211
|
|
|
|
Cost of sales
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||
Production costs
|
|
$
|
106,389
|
|
|
$
|
83,318
|
|
|
$
|
54,430
|
|
|
$
|
23,071
|
|
|
$
|
28,888
|
|
Depreciation and depletion
|
|
28,242
|
|
|
22,452
|
|
|
6,806
|
|
|
5,790
|
|
|
15,646
|
|
|||||
Write-down of production inventories
|
|
2,869
|
|
|
1,201
|
|
|
—
|
|
|
1,668
|
|
|
1,201
|
|
|||||
|
|
$
|
137,500
|
|
|
$
|
106,971
|
|
|
$
|
61,236
|
|
|
$
|
30,529
|
|
|
$
|
45,735
|
|
Cost of sales by mine
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fire Creek
|
|
$
|
57,858
|
|
|
$
|
45,218
|
|
|
$
|
27,716
|
|
|
$
|
12,640
|
|
|
$
|
17,502
|
|
Midas
|
|
63,345
|
|
|
61,753
|
|
|
33,520
|
|
|
1,592
|
|
|
28,233
|
|
|||||
True North
|
|
16,297
|
|
|
—
|
|
|
—
|
|
|
16,297
|
|
|
—
|
|
|||||
|
|
$
|
137,500
|
|
|
$
|
106,971
|
|
|
$
|
61,236
|
|
|
$
|
30,529
|
|
|
$
|
45,735
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||
General and administrative
|
|
$
|
15,804
|
|
|
$
|
12,375
|
|
|
$
|
8,818
|
|
|
$
|
3,429
|
|
|
$
|
3,557
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||
Exploration
|
|
$
|
12,765
|
|
|
$
|
9,813
|
|
|
$
|
3,415
|
|
|
$
|
2,952
|
|
|
$
|
6,398
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||
Development and projects costs
|
|
$
|
8,953
|
|
|
$
|
—
|
|
|
$
|
15,467
|
|
|
$
|
8,953
|
|
|
$
|
(15,467
|
)
|
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||
Asset retirement and accretion
|
|
$
|
2,653
|
|
|
$
|
871
|
|
|
$
|
628
|
|
|
$
|
1,782
|
|
|
$
|
243
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||
Business acquisition costs
|
|
$
|
2,253
|
|
|
$
|
328
|
|
|
$
|
2,042
|
|
|
$
|
1,925
|
|
|
$
|
(1,714
|
)
|
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||
Provision for legal settlement
|
|
$
|
3,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,000
|
|
|
$
|
—
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||
(Loss) gain on derivatives, net
|
|
$
|
(7,646
|
)
|
|
$
|
3,367
|
|
|
$
|
7,088
|
|
|
$
|
(11,013
|
)
|
|
$
|
(3,721
|
)
|
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||
Interest expense, net
|
|
$
|
5,339
|
|
|
$
|
7,298
|
|
|
$
|
8,344
|
|
|
$
|
(1,959
|
)
|
|
$
|
(1,046
|
)
|
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||
Foreign currency gain, net
|
|
$
|
651
|
|
|
$
|
15,059
|
|
|
$
|
10,874
|
|
|
$
|
(14,408
|
)
|
|
$
|
4,185
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||
Loss on debt extinguishment
|
|
$
|
519
|
|
|
$
|
2,103
|
|
|
$
|
—
|
|
|
$
|
(1,584
|
)
|
|
$
|
2,103
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||
Income tax (expense)/benefit
|
|
$
|
(3,724
|
)
|
|
$
|
11,738
|
|
|
$
|
(2,955
|
)
|
|
$
|
(15,462
|
)
|
|
$
|
14,693
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||
Net (loss) income
|
|
$
|
(1,700
|
)
|
|
$
|
44,253
|
|
|
$
|
26,884
|
|
|
$
|
(45,953
|
)
|
|
$
|
17,369
|
|
|
|
Years ended December 31,
|
|
|
|
|
||||||||||||||
Mine Operations - Fire Creek
|
|
2016
|
|
2015
|
|
2014
|
|
2016 vs. 2015
|
|
2015 vs. 2014
|
||||||||||
Ore tons milled
|
|
120,553
|
|
|
86,574
|
|
|
54,955
|
|
|
33,979
|
|
|
31,619
|
|
|||||
Average gold equivalent mill head grade (oz/ton)
(1)
|
|
0.91
|
|
|
0.97
|
|
|
1.27
|
|
|
(0.06
|
)
|
|
(0.30
|
)
|
|||||
Average gold mill head grade (oz/ton)
|
|
0.90
|
|
|
0.95
|
|
|
1.25
|
|
|
(0.05
|
)
|
|
(0.30
|
)
|
|||||
Average silver mill head grade (oz/ton)
|
|
0.77
|
|
|
1.16
|
|
|
1.21
|
|
|
(0.39
|
)
|
|
(0.05
|
)
|
|||||
Average gold recovery rate (%)
|
|
93.6
|
%
|
|
93.5
|
%
|
|
94.1
|
%
|
|
0.1
|
%
|
|
(0.6
|
)%
|
|||||
Average silver recovery rate (%)
|
|
86.6
|
%
|
|
92.0
|
%
|
|
95.4
|
%
|
|
(5.4
|
)%
|
|
(3.4
|
)%
|
|||||
Gold equivalent produced
(oz)
(1)
|
|
102,383
|
|
|
78,312
|
|
|
68,106
|
|
|
24,071
|
|
|
10,206
|
|
|||||
Gold produced (oz)
|
|
101,286
|
|
|
77,055
|
|
|
67,181
|
|
|
24,231
|
|
|
9,874
|
|
|||||
Silver produced (oz)
|
|
80,593
|
|
|
92,114
|
|
|
63,656
|
|
|
(11,521
|
)
|
|
28,458
|
|
|||||
Gold equivalent sold
(oz)
(1)(2)
|
|
100,022
|
|
|
82,191
|
|
|
60,166
|
|
|
17,831
|
|
|
22,025
|
|
|||||
Gold sold (oz)
|
|
98,723
|
|
|
81,080
|
|
|
59,352
|
|
|
17,643
|
|
|
21,728
|
|
|||||
Silver sold (oz)
|
|
95,454
|
|
|
81,441
|
|
|
56,015
|
|
|
14,013
|
|
|
25,426
|
|
|||||
Revenues and realized prices
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gold revenue (000s)
|
|
$
|
123,403
|
|
|
$
|
93,739
|
|
|
$
|
74,864
|
|
|
$
|
29,664
|
|
|
$
|
18,875
|
|
Silver revenue (000s)
|
|
1,623
|
|
|
1,284
|
|
|
1,026
|
|
|
339
|
|
|
258
|
|
|||||
Total revenues (000s)
|
|
$
|
125,026
|
|
|
$
|
95,023
|
|
|
$
|
75,890
|
|
|
$
|
30,003
|
|
|
$
|
19,133
|
|
Average realized gold price ($/oz)
|
|
$
|
1,250
|
|
|
$
|
1,156
|
|
|
$
|
1,261
|
|
|
$
|
94
|
|
|
$
|
(105
|
)
|
Average realized silver price ($/oz)
|
|
$
|
17.00
|
|
|
$
|
15.77
|
|
|
$
|
18.32
|
|
|
$
|
1.23
|
|
|
$
|
(2.55
|
)
|
Non-GAAP Measures
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Production cash costs per GEO sold
(1)(2)
|
|
$
|
462
|
|
|
$
|
455
|
|
|
$
|
418
|
|
|
$
|
7
|
|
|
$
|
37
|
|
(1)
Gold equivalent measures are the gold measure plus the silver measure divided by a GEO ratio. GEO ratios are computed by dividing the average realized gold price per ounce by the average realized silver price per ounce received by us in the respective period and match the ratios used to determine the production cash costs per GEO sold. Refer to the
Non-GAAP Performance Measure
s section of this MD&A for additional detail.
|
||||||||||||||||||||
(2)
This is a non-GAAP measure; refer to the
Non-GAAP Performance Measures
section of this MD&A for additional detail.
|
•
|
Gloria vein system bulk sampling
- During the fourth quarter of 2016 we commenced a small-scale, selective exploration campaign to improve our understanding of mineralization in the Gloria vein system. Using drill results from the prior owner together with our fourth quarter work, we created a 2017 plan which we believe may result in the extraction from mineralized material of
30,000
-
35,000
GEOs under a bulk sampling program, as Hollister is an exploration and development stage property.
|
•
|
Hatter Graben
- A historic drilling program was conducted in 2008 by a prior owner which discovered the Hatter Graben vein system, an east-west trending structural zone containing several sub-parallel high grade veins. Results of this program indicate the system is approximately 1,800 ft (~550 m) in strike and approximately 1,200 ft (365 m) vertical extent and open in all directions. Beginning in mid-2017, we intend to commence infilling the widely spaced drill holes from surface in high-priority exploration targets (Hatter Graben vein system). No new drilling occurred in the Hatter Graben during the fourth quarter of 2016 due to additional time required to design the exploration plan.
|
•
|
Mineralization update
- We expect to be able to provide an update on the 2017 drilling program and exploration work during the second half of 2017.
|
•
|
Site infrastructure and equipment
- Following an assessment of site facilities, infrastructure, and underground workings,
2016
spending was
$0.8 million
for capital and
$3.4 million
for development and project costs (total of
$4.2 million
) and was lower than the fourth quarter expectation of $7.5 - 9.5 million due to no drilling occurring in the Hatter Graben and lower than planned underground development. For details of capital expenditures and the classification between sustaining and non-sustaining (growth) refer to the
Investing cash flows
part of the
Financial position, liquidity, and capital resources
section of this MD&A.
|
|
|
December 31, 2016
|
||||||||||
|
|
Gold
|
|
Silver
|
|
Total
|
||||||
Estimated ounces in
Inventories
|
|
20,729
|
|
|
136,132
|
|
|
|
||||
Period-end prices
|
|
$
|
1,159
|
|
|
$
|
16.24
|
|
|
|
||
|
|
$
|
24,025
|
|
|
$
|
2,211
|
|
|
$
|
26,236
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net (loss) income
|
|
$
|
(1,700
|
)
|
|
$
|
44,253
|
|
|
$
|
26,884
|
|
Net non-cash adjustments
|
|
36,003
|
|
|
(10,312
|
)
|
|
(8,576
|
)
|
|||
Net change in non-cash working capital
|
|
10,967
|
|
|
7,306
|
|
|
(13,919
|
)
|
|||
Net cash provided by operating activities
|
|
45,270
|
|
|
41,247
|
|
|
4,389
|
|
|||
Net cash used in investing activities
|
|
(159,693
|
)
|
|
(29,878
|
)
|
|
(84,010
|
)
|
|||
Net cash provided by financing activities
|
|
104,608
|
|
|
5,272
|
|
|
113,394
|
|
|||
Effect of foreign exchange on cash balances
|
|
(1,646
|
)
|
|
(3,032
|
)
|
|
(986
|
)
|
|||
Net (decrease) increase in cash
|
|
(11,461
|
)
|
|
13,609
|
|
|
32,787
|
|
|||
Cash, beginning of period
|
|
59,097
|
|
|
45,488
|
|
|
12,701
|
|
|||
Cash, end of period
|
|
$
|
47,636
|
|
|
$
|
59,097
|
|
|
$
|
45,488
|
|
|
Year ended December 31, 2016
|
||||||||||||||||||||||||||
|
Fire Creek
|
|
Midas
|
|
True North
|
|
Hollister
|
|
Aurora
|
|
Corporate and other
|
|
Total
|
||||||||||||||
Mineral properties
|
$
|
777
|
|
|
$
|
99
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
876
|
|
Land
|
451
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
498
|
|
|||||||
Facilities and equipment
|
1,304
|
|
|
4,888
|
|
|
5,581
|
|
|
808
|
|
|
615
|
|
|
1,433
|
|
|
14,629
|
|
|||||||
Mine development
|
21,247
|
|
|
18,848
|
|
|
5,618
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45,713
|
|
|||||||
|
$
|
23,779
|
|
|
$
|
23,835
|
|
|
$
|
11,246
|
|
|
$
|
808
|
|
|
$
|
615
|
|
|
$
|
1,433
|
|
|
$
|
61,716
|
|
|
|
Years ended December 31,
|
||||||||||||||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||||||||||||||||||||||||||
Nevada Total
|
|
Fire Creek
|
|
Midas
|
|
Nevada Total
(1)
|
|
Fire Creek
|
|
Midas
|
|
Nevada Total
(1)
|
|
Fire Creek
|
|
Midas
|
|
Nevada Total
(1)
|
||||||||||||||||||
Average realized price per gold ounce sold
|
|
$
|
1,250
|
|
|
$
|
1,252
|
|
|
$
|
1,250
|
|
|
$
|
1,156
|
|
|
$
|
1,156
|
|
|
$
|
1,156
|
|
|
$
|
1,261
|
|
|
$
|
1,245
|
|
|
$
|
1,258
|
|
Average realized price per silver ounce sold
|
|
$
|
17.00
|
|
|
$
|
17.48
|
|
|
$
|
17.44
|
|
|
$
|
15.77
|
|
|
$
|
15.71
|
|
|
$
|
15.72
|
|
|
$
|
18.32
|
|
|
$
|
18.48
|
|
|
$
|
18.47
|
|
Silver ounces equivalent to revenue from one gold ounce
|
|
73.5
|
|
|
71.6
|
|
|
71.7
|
|
|
73.3
|
|
|
73.6
|
|
|
73.6
|
|
|
68.8
|
|
|
67.4
|
|
|
68.1
|
|
|||||||||
Silver ounces sold
|
|
95,454
|
|
|
1,374,685
|
|
|
1,470,139
|
|
|
81,441
|
|
|
1,627,107
|
|
|
1,708,548
|
|
|
56,015
|
|
|
1,061,273
|
|
|
1,117,288
|
|
|||||||||
GEOs from silver ounces sold
|
|
1,299
|
|
|
19,200
|
|
|
20,504
|
|
|
1,111
|
|
|
22,107
|
|
|
23,214
|
|
|
814
|
|
|
15,746
|
|
|
16,407
|
|
|||||||||
Gold ounces sold
|
|
98,723
|
|
|
31,777
|
|
|
130,500
|
|
|
81,080
|
|
|
28,978
|
|
|
110,058
|
|
|
59,352
|
|
|
13,748
|
|
|
73,100
|
|
|||||||||
Gold equivalent ounces
|
|
$
|
100,022
|
|
|
$
|
50,977
|
|
|
$
|
151,004
|
|
|
$
|
82,191
|
|
|
$
|
51,085
|
|
|
$
|
133,272
|
|
|
$
|
60,166
|
|
|
$
|
29,494
|
|
|
$
|
89,507
|
|
Production costs
|
|
$
|
46,246
|
|
|
$
|
49,599
|
|
|
$
|
95,845
|
|
|
$
|
37,394
|
|
|
$
|
45,924
|
|
|
$
|
83,318
|
|
|
$
|
25,156
|
|
|
$
|
29,274
|
|
|
$
|
54,430
|
|
Add: Write-down of production inventories (cash portion) (see
Note 5 - Inventories
)
|
|
—
|
|
|
405
|
|
|
405
|
|
|
—
|
|
|
1,016
|
|
|
1,016
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
|
|
$
|
46,246
|
|
|
$
|
50,004
|
|
|
$
|
96,250
|
|
|
$
|
37,394
|
|
|
$
|
46,940
|
|
|
$
|
84,334
|
|
|
$
|
25,156
|
|
|
$
|
29,274
|
|
|
$
|
54,430
|
|
Production cash costs per GEO sold
|
|
$
|
462
|
|
|
$
|
981
|
|
|
$
|
637
|
|
|
$
|
455
|
|
|
$
|
919
|
|
|
$
|
633
|
|
|
$
|
418
|
|
|
$
|
993
|
|
|
$
|
608
|
|
Consolidated Financial Statements:
|
Page
|
Report of Independent Registered Public Accounting Firm
|
|
Management’s Report on Internal Control over Financial Reporting
|
|
Consolidated Balance Sheets at December 31, 2016 and 2015
|
|
Consolidated Statements of (Loss) Income for the Years Ended December 31, 2016, 2015, and 2014
|
|
Consolidated Statements of Comprehensive (Loss) Income for the Years Ended December 31, 2016, 2015, and 2014
|
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2016, 2015, and 2014
|
|
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2016, 2015, and 2014
|
|
Notes to Consolidated Financial Statements
|
/s/ Paul Andre Huet
|
|
/s/ Barry Dahl
|
Paul Andre Huet
|
|
Barry Dahl
|
President and Chief Executive Officer (Principal Executive Officer)
|
|
Chief Financial Officer (Principal Financial Officer)
|
KLONDEX MINES LTD.
CONSOLIDATED BALANCE SHEETS
(US dollars in thousands)
|
|
|
|
|
December 31,
|
||||||
|
|
Note
|
|
2016
|
|
2015
|
||||
Assets
|
|
|
|
|
|
|
||||
Current assets
|
|
|
|
|
|
|
||||
Cash and cash equivalents
|
|
|
|
$
|
47,636
|
|
|
$
|
59,097
|
|
Trade receivables
|
|
|
|
—
|
|
|
37
|
|
||
Inventories
|
|
5
|
|
21,310
|
|
|
16,070
|
|
||
Prepaid expenses and other
|
|
6
|
|
4,678
|
|
|
7,055
|
|
||
Derivative assets
|
|
11
|
|
1,247
|
|
|
1,466
|
|
||
Total current assets
|
|
|
|
74,871
|
|
|
83,725
|
|
||
Mineral properties, plant and equipment, net
|
|
7
|
|
276,223
|
|
|
86,582
|
|
||
Derivative assets
|
|
11
|
|
1,545
|
|
|
4,048
|
|
||
Restricted cash
|
|
9
|
|
10,055
|
|
|
12,078
|
|
||
Deferred tax assets
|
|
17
|
|
17,284
|
|
|
16,390
|
|
||
Total assets
|
|
|
|
$
|
379,978
|
|
|
$
|
202,823
|
|
Liabilities
|
|
|
|
|
|
|
||||
Current liabilities
|
|
|
|
|
|
|
||||
Accounts payable
|
|
|
|
$
|
23,774
|
|
|
$
|
12,635
|
|
Accrued compensation and benefits
|
|
|
|
4,672
|
|
|
2,508
|
|
||
Derivative liabilities
|
|
11
|
|
1,721
|
|
|
1,176
|
|
||
Debt
|
|
8
|
|
8,502
|
|
|
6,930
|
|
||
Interest payable
|
|
|
|
23
|
|
|
—
|
|
||
Provision for legal settlement
|
|
24
|
|
3,000
|
|
|
—
|
|
||
Income taxes payable
|
|
|
|
—
|
|
|
15
|
|
||
Total current liabilities
|
|
|
|
41,692
|
|
|
23,264
|
|
||
Derivative liabilities
|
|
11
|
|
331
|
|
|
1,599
|
|
||
Debt
|
|
8
|
|
21,689
|
|
|
18,887
|
|
||
Deferred share units liability
|
|
10
|
|
812
|
|
|
—
|
|
||
Asset retirement obligation
|
|
9
|
|
25,436
|
|
|
12,387
|
|
||
Deferred tax liabilities
|
|
17
|
|
11,964
|
|
|
3,580
|
|
||
Total liabilities
|
|
|
|
101,924
|
|
|
59,717
|
|
||
Shareholders' Equity
|
|
|
|
|
|
|
||||
Unlimited common shares authorized, no par value; 175,251,538 and 139,440,413 issued and outstanding at December 31, 2016 and 2015, respectively
|
|
|
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
|
|
|
363,899
|
|
|
225,763
|
|
||
Accumulated deficit
|
|
|
|
(58,280
|
)
|
|
(56,580
|
)
|
||
Accumulated other comprehensive loss
|
|
|
|
(27,565
|
)
|
|
(26,077
|
)
|
||
Total shareholders' equity
|
|
|
|
278,054
|
|
|
143,106
|
|
||
Total liabilities and shareholders' equity
|
|
|
|
$
|
379,978
|
|
|
$
|
202,823
|
|
KLONDEX MINES LTD.
CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(US dollars in thousands, except per share amounts)
|
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
Note
|
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues
|
|
15
|
|
$
|
198,175
|
|
|
$
|
154,081
|
|
|
$
|
112,622
|
|
Cost of sales
|
|
|
|
|
|
|
|
|
||||||
Production costs
|
|
|
|
106,389
|
|
|
83,318
|
|
|
54,430
|
|
|||
Depreciation and depletion
|
|
|
|
28,242
|
|
|
22,452
|
|
|
6,806
|
|
|||
Write-down of production inventories
|
|
5
|
|
2,869
|
|
|
1,201
|
|
|
—
|
|
|||
|
|
|
|
60,675
|
|
|
47,110
|
|
|
51,386
|
|
|||
Other operating expenses
|
|
|
|
|
|
|
|
|
||||||
General and administrative
|
|
|
|
15,804
|
|
|
12,375
|
|
|
8,818
|
|
|||
Exploration
|
|
|
|
12,765
|
|
|
9,813
|
|
|
3,415
|
|
|||
Development and projects costs
|
|
|
|
8,953
|
|
|
—
|
|
|
15,467
|
|
|||
Asset retirement and accretion
|
|
|
|
2,653
|
|
|
871
|
|
|
628
|
|
|||
Business acquisition costs
|
|
4
|
|
2,253
|
|
|
328
|
|
|
2,042
|
|
|||
Provision for legal settlement
|
|
24
|
|
3,000
|
|
|
—
|
|
|
—
|
|
|||
Loss on equipment disposal
|
|
|
|
126
|
|
|
352
|
|
|
—
|
|
|||
Income from operations
|
|
|
|
15,121
|
|
|
23,371
|
|
|
21,016
|
|
|||
Other income (expense)
|
|
|
|
|
|
|
|
|
||||||
(Loss) gain on derivatives, net
|
|
11
|
|
(7,646
|
)
|
|
3,367
|
|
|
7,088
|
|
|||
Interest expense, net
|
|
8
|
|
(5,339
|
)
|
|
(7,298
|
)
|
|
(8,344
|
)
|
|||
Foreign currency gain, net
|
|
|
|
651
|
|
|
15,059
|
|
|
10,874
|
|
|||
Loss on debt extinguishment
|
|
8
|
|
(519
|
)
|
|
(2,103
|
)
|
|
—
|
|
|||
Interest income and other, net
|
|
16
|
|
(244
|
)
|
|
119
|
|
|
(795
|
)
|
|||
Income before tax
|
|
|
|
2,024
|
|
|
32,515
|
|
|
29,839
|
|
|||
Income tax (expense)/benefit
|
|
17
|
|
(3,724
|
)
|
|
11,738
|
|
|
(2,955
|
)
|
|||
Net (loss) income
|
|
|
|
$
|
(1,700
|
)
|
|
$
|
44,253
|
|
|
$
|
26,884
|
|
|
|
|
|
|
|
|
|
|
||||||
Net (loss) income per share
|
|
|
|
|
|
|
|
|
||||||
Basic
|
|
18
|
|
$
|
(0.01
|
)
|
|
$
|
0.33
|
|
|
$
|
0.23
|
|
Diluted
|
|
18
|
|
$
|
(0.01
|
)
|
|
$
|
0.32
|
|
|
$
|
0.23
|
|
KLONDEX MINES LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(US dollars in thousands)
|
|
|
Years ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net (loss) income
|
|
$
|
(1,700
|
)
|
|
$
|
44,253
|
|
|
$
|
26,884
|
|
Other comprehensive (loss) income, net of tax
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustments, net of tax benefits of $523, $5,129, and $2,826 for the years ended December 31, 2016, 2015, and 2014, respectively
|
|
(1,488
|
)
|
|
(14,598
|
)
|
|
(8,044
|
)
|
|||
Comprehensive (loss) income
|
|
$
|
(3,188
|
)
|
|
$
|
29,655
|
|
|
$
|
18,840
|
|
KLONDEX MINES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(US dollars in thousands)
|
|
|
|
|
Years ended December 31,
|
||||||||||
|
Note
|
|
2016
|
|
2015
|
|
2014
|
|||||||
Operating activities
|
|
|
|
|
|
|
|
|
||||||
Net (loss) income
|
|
|
|
$
|
(1,700
|
)
|
|
$
|
44,253
|
|
|
$
|
26,884
|
|
Significant items not involving cash
|
|
|
|
|
|
|
|
|
||||||
Depreciation and depletion
|
|
|
|
28,909
|
|
|
20,350
|
|
|
9,264
|
|
|||
Asset retirement and accretion
|
|
|
|
2,653
|
|
|
871
|
|
|
628
|
|
|||
Derivative fair value adjustments
|
|
|
|
2,155
|
|
|
(4,427
|
)
|
|
(7,420
|
)
|
|||
Write-down of production inventories
|
|
5
|
|
546
|
|
|
185
|
|
|
—
|
|
|||
Foreign exchange, net
|
|
|
|
(18
|
)
|
|
(13,617
|
)
|
|
(11,753
|
)
|
|||
Deferred tax expense (benefit)
|
|
17
|
|
251
|
|
|
(14,905
|
)
|
|
900
|
|
|||
Share-based compensation
|
|
14
|
|
2,678
|
|
|
3,098
|
|
|
2,830
|
|
|||
Deliveries under Gold Purchase Agreement
(1)
|
|
|
|
(5,992
|
)
|
|
(3,752
|
)
|
|
(3,025
|
)
|
|||
Loss on equipment disposal
|
|
|
|
126
|
|
|
352
|
|
|
—
|
|
|||
Write-off of unamortized debt issuance costs
|
|
|
|
519
|
|
|
1,533
|
|
|
—
|
|
|||
Deferred share unit expense
|
|
10
|
|
839
|
|
|
—
|
|
|
—
|
|
|||
Non-cash interest expense
|
|
|
|
337
|
|
|
—
|
|
|
—
|
|
|||
Provision for legal settlement
|
|
24
|
|
3,000
|
|
|
—
|
|
|
—
|
|
|||
|
|
|
|
34,303
|
|
|
33,941
|
|
|
18,308
|
|
|||
Changes in non-cash working capital
|
|
|
|
|
|
|
|
|
||||||
Trade receivables
|
|
|
|
37
|
|
|
(37
|
)
|
|
—
|
|
|||
Inventories
|
|
|
|
(5,419
|
)
|
|
3,822
|
|
|
(16,191
|
)
|
|||
Prepaid expenses and other
|
|
|
|
3,006
|
|
|
26
|
|
|
(4,052
|
)
|
|||
Accounts payable
|
|
|
|
11,152
|
|
|
2,703
|
|
|
5,210
|
|
|||
Accrued compensation and benefits
|
|
|
|
2,183
|
|
|
792
|
|
|
1,114
|
|
|||
Interest payable
|
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|||
Income taxes payable
|
|
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash provided by operating activities
|
|
|
|
45,270
|
|
|
41,247
|
|
|
4,389
|
|
|||
Investing activities
|
|
|
|
|
|
|
|
|
||||||
Expenditures on mineral properties, plant and equipment
|
|
|
|
(61,716
|
)
|
|
(36,598
|
)
|
|
(7,882
|
)
|
|||
Change in restricted cash, net
|
|
|
|
2,023
|
|
|
6,720
|
|
|
(18,379
|
)
|
|||
Cash paid for acquisitions
|
|
4
|
|
(100,000
|
)
|
|
—
|
|
|
(57,749
|
)
|
|||
Net cash used in investing activities
|
|
|
|
(159,693
|
)
|
|
(29,878
|
)
|
|
(84,010
|
)
|
|||
Financing activities
|
|
|
|
|
|
|
|
|
||||||
Issuance of share capital, net of costs
|
|
13
|
|
105,890
|
|
|
24,468
|
|
|
64,973
|
|
|||
Proceeds from Revolver draw
|
|
8
|
|
12,000
|
|
|
—
|
|
|
—
|
|
|||
Repayment of Secured Promissory Note
|
|
8
|
|
(12,000
|
)
|
|
—
|
|
|
—
|
|
|||
Repayment of capital lease obligations
|
|
|
|
(450
|
)
|
|
—
|
|
|
—
|
|
|||
Payment of debt issuance costs
|
|
|
|
(832
|
)
|
|
—
|
|
|
(1,713
|
)
|
|||
Repayment of Senior Notes
|
|
|
|
—
|
|
|
(19,196
|
)
|
|
—
|
|
|||
Proceeds from Gold Purchase Agreement
|
|
|
|
—
|
|
|
—
|
|
|
32,592
|
|
|||
Proceeds from Senior Notes
|
|
|
|
—
|
|
|
—
|
|
|
22,645
|
|
|||
Proceeds from gold royalty advance
|
|
|
|
—
|
|
|
—
|
|
|
1,238
|
|
|||
Repayment of other debt
|
|
|
|
—
|
|
|
—
|
|
|
(6,341
|
)
|
|||
Net cash provided by financing activities
|
|
|
|
104,608
|
|
|
5,272
|
|
|
113,394
|
|
|||
Effect of foreign exchange on cash balances
|
|
|
|
(1,646
|
)
|
|
(3,032
|
)
|
|
(986
|
)
|
|||
Net (decrease) increase in cash
|
|
|
|
(11,461
|
)
|
|
13,609
|
|
|
32,787
|
|
|||
Cash, beginning of period
|
|
|
|
59,097
|
|
|
45,488
|
|
|
12,701
|
|
|||
Cash, end of period
|
|
|
|
$
|
47,636
|
|
|
$
|
59,097
|
|
|
$
|
45,488
|
|
(1)
Represents
Revenue
less
Interest Expense
attributable to the Gold Purchase Agreement.
|
KLONDEX MINES LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(US dollars in thousands, except shares)
|
|
|
Note
|
|
Common shares
|
|
Additional paid-in capital
|
|
Accumulated deficit
|
|
Accumulated other comprehensive loss
|
|
Total
|
|||||||||
Balance at January 1, 2014
|
|
|
|
79,746,291
|
|
|
$
|
122,448
|
|
|
$
|
(127,717
|
)
|
|
$
|
(3,435
|
)
|
|
$
|
(8,704
|
)
|
Share-based compensation expense
|
|
14
|
|
—
|
|
|
2,830
|
|
|
—
|
|
|
—
|
|
|
2,830
|
|
||||
Option exercises
|
|
|
|
525,768
|
|
|
592
|
|
|
—
|
|
|
—
|
|
|
592
|
|
||||
Warrant exercises
|
|
13
|
|
9,124,116
|
|
|
13,984
|
|
|
—
|
|
|
—
|
|
|
13,984
|
|
||||
Common share awards granted
|
|
|
|
483,025
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Warrants issued in Midas Acquisition
|
|
|
|
—
|
|
|
5,896
|
|
|
—
|
|
|
—
|
|
|
5,896
|
|
||||
Warrants issued with Senior Notes
|
|
|
|
—
|
|
|
2,050
|
|
|
—
|
|
|
—
|
|
|
2,050
|
|
||||
Common shares issued net of issuance costs
|
|
13
|
|
37,450,000
|
|
|
50,397
|
|
|
—
|
|
|
—
|
|
|
50,397
|
|
||||
Net income
|
|
|
|
—
|
|
|
—
|
|
|
26,884
|
|
|
—
|
|
|
26,884
|
|
||||
Foreign currency translation adjustments
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,044
|
)
|
|
(8,044
|
)
|
||||
Balance at December 31, 2014
|
|
|
|
127,329,200
|
|
|
$
|
198,197
|
|
|
$
|
(100,833
|
)
|
|
$
|
(11,479
|
)
|
|
$
|
85,885
|
|
Share-based compensation expense
|
|
14
|
|
—
|
|
|
3,098
|
|
|
—
|
|
|
—
|
|
|
3,098
|
|
||||
Option exercises
|
|
|
|
2,707,703
|
|
|
3,173
|
|
|
—
|
|
|
—
|
|
|
3,173
|
|
||||
Warrant exercises
|
|
13
|
|
1,990,760
|
|
|
2,656
|
|
|
—
|
|
|
—
|
|
|
2,656
|
|
||||
Restricted share unit vestings
|
|
|
|
12,750
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Common shares issued net of issuance costs
|
|
13
|
|
7,400,000
|
|
|
18,639
|
|
|
—
|
|
|
—
|
|
|
18,639
|
|
||||
Net income
|
|
|
|
—
|
|
|
—
|
|
|
44,253
|
|
|
—
|
|
|
44,253
|
|
||||
Foreign currency translation adjustments
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,598
|
)
|
|
(14,598
|
)
|
||||
Balance at December 31, 2015
|
|
|
|
139,440,413
|
|
|
$
|
225,763
|
|
|
$
|
(56,580
|
)
|
|
$
|
(26,077
|
)
|
|
$
|
143,106
|
|
Share-based compensation expense
|
|
14
|
|
—
|
|
|
2,678
|
|
|
—
|
|
|
—
|
|
|
2,678
|
|
||||
Option exercises
|
|
14
|
|
5,037,369
|
|
|
6,840
|
|
|
—
|
|
|
—
|
|
|
6,840
|
|
||||
Warrant exercises
|
|
13
|
|
2,223,566
|
|
|
3,328
|
|
|
—
|
|
|
—
|
|
|
3,328
|
|
||||
Common share awards forfeited
|
|
14
|
|
(62,499
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Restricted share unit vestings
|
|
14
|
|
112,689
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Common shares issued net of issuance costs
|
|
13
|
|
25,900,000
|
|
|
95,722
|
|
|
—
|
|
|
—
|
|
|
95,722
|
|
||||
Common shares and warrants issued in Hollister Acquisition
|
|
13
|
|
2,600,000
|
|
|
29,568
|
|
|
—
|
|
|
—
|
|
|
29,568
|
|
||||
Net (loss)
|
|
|
|
—
|
|
|
—
|
|
|
(1,700
|
)
|
|
—
|
|
|
(1,700
|
)
|
||||
Foreign currency translation adjustments
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,488
|
)
|
|
(1,488
|
)
|
||||
Balance at December 31, 2016
|
|
|
|
175,251,538
|
|
|
$
|
363,899
|
|
|
$
|
(58,280
|
)
|
|
$
|
(27,565
|
)
|
|
$
|
278,054
|
|
•
|
Stockpiles
represent ore that has been brought to the surface from underground which requires further processing through a mill. Costs are transferred from
Stockpiles
to
In-process
at an average cost per unit.
|
•
|
In-process
inventory consists of ore being processed through the milling circuit in preparation for refining. Costs are transferred from
In-process
to
Doré finished goods
at an average cost per unit.
|
•
|
Doré finished goods
inventory consists of gold and silver bullion held at the refiner as well as Doré bars awaiting shipment to the refiner. Refined bullion meets the required market standards of 99.95% pure gold and 99.90% pure silver. Costs are transferred from
Doré finished goods
to
Cost of sales
at an average cost per unit as gold and silver is sold to customers.
|
•
|
Supplies
inventory consists of supplies and commodity consumables used in the mining, milling, and refining processes.
|
•
|
Facilities and equipment
expenditures are capitalized and recorded at cost. Such costs are depreciated using either the straight-line method over the estimated productive lives of such assets or using the units-of-production method at rates sufficient to depreciate such costs over the estimated proven and probable reserves as gold and silver ounces are recovered.
|
•
|
Mine development
includes costs to build or construct shafts, drifts, and ramps which enable the Company to physically access ore, as well as drilling, engineering, metallurgical, and other related costs incurred to delineate or expand existing proven and probable reserves. Activities which are directed at converting non-reserve mineralization to proven and probable reserves, obtaining additional information on an ore body, or for infrastructure planning or condemnation activities are capitalized to mine development. Any of the above costs incurred at properties before mineralization is classified as proven and probable reserves are expensed as incurred to
Development and projects costs
. Drilling costs, such as exploration drilling, which do not occur within, or proximal to, an ore body where proven and probable reserves exist or support the metal production process are expensed as incurred to
Exploration
.
|
•
|
Mineral properties
are recorded at cost and include payments related to the acquisition of mineral interests and the rights to extract minerals from properties, which are offset by any royalty obligations associated with the mineral property. Depending on the nature of the agreement, recurring cash royalty payments are expensed as incurred or recorded as prepaid or advanced minimum royalty payments. Mineral properties are generally the result of an acquisition or business combination and include
value beyond proven and probable reserves
, which represents the economic value that exists in a mining asset beyond the value attributable to proven and probable reserves. Mineral property costs associated with producing ore bodies are depleted using the units-of-production method based upon the estimated recoverable gold and silver ounces in such ore body's proven and probable reserves. In accordance with the Company's impairment policy, if a mineable ore body is not discovered or an ore body cannot be economically or legally developed, such capitalized costs are written off in the period in which it is determined the property has no future economic value.
|
•
|
Asset retirement cost assets
are the result of asset retirement obligations and are capitalized where mineralization is classified as proven and probable reserves and amortized or depleted on the same basis as the asset to which it relates.
|
•
|
Construction in progress
expenditures are capitalized and recorded at cost. Such assets are not depreciated or depleted until they are placed into service.
|
Purchase price:
|
|
Note
|
|
Amount
|
||
Cash
|
|
|
|
$
|
57,749
|
|
Warrants
|
|
13
|
|
5,896
|
|
|
|
|
|
|
$
|
63,645
|
|
Net assets acquired:
|
|
|
|
|
||
Facilities and equipment
|
|
|
|
$
|
47,546
|
|
Mineral properties
|
|
|
|
23,151
|
|
|
Prepaid expenses and other
|
|
|
|
2,743
|
|
|
Supplies inventories
|
|
|
|
1,941
|
|
|
Asset retirement obligation
|
|
|
|
(10,541
|
)
|
|
Deferred tax liability
|
|
|
|
(1,195
|
)
|
|
|
|
|
|
$
|
63,645
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues
|
|
$
|
198,175
|
|
|
$
|
154,081
|
|
|
$
|
112,622
|
|
Pro-forma adjustments:
|
|
|
|
|
|
|
||||||
Hollister Acquisition
|
|
—
|
|
|
—
|
|
|
2,995
|
|
|||
True North Acquisition
|
|
—
|
|
|
11,345
|
|
|
53,466
|
|
|||
Midas Acquisition
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
|
$
|
198,175
|
|
|
$
|
165,426
|
|
|
$
|
169,083
|
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Supplies
|
|
$
|
5,541
|
|
|
$
|
3,290
|
|
Production related inventories:
|
|
|
|
|
||||
Stockpiles
|
|
6,604
|
|
|
5,745
|
|
||
In-process
|
|
7,316
|
|
|
3,826
|
|
||
Doré finished goods
|
|
1,849
|
|
|
3,209
|
|
||
|
|
$
|
21,310
|
|
|
$
|
16,070
|
|
|
|
Years ended December 31,
|
||||||||||
Type of previously incurred cost
|
|
2016
|
|
2015
|
|
2014
|
||||||
Cash production costs
|
|
$
|
2,323
|
|
|
$
|
1,016
|
|
|
$
|
—
|
|
Allocated depreciation and depletion
|
|
546
|
|
|
185
|
|
|
—
|
|
|||
Write-down of production inventories
|
|
$
|
2,869
|
|
|
$
|
1,201
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
||||||
Period-end prices used in write-down calculation
|
|
|
|
|
|
|
||||||
Price per gold ounce
|
|
$
|
1,159
|
|
|
$
|
1,062
|
|
|
$
|
1,199
|
|
Price per silver ounce
|
|
$
|
16.24
|
|
|
$
|
13.82
|
|
|
$
|
15.97
|
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Prepaid taxes
|
|
$
|
1,390
|
|
|
$
|
5,085
|
|
Prepaid claim maintenance and land holding costs
|
|
1,012
|
|
|
589
|
|
||
Prepaid insurance
|
|
497
|
|
|
389
|
|
||
Utilities, rent, and service deposits
|
|
178
|
|
|
—
|
|
||
Other
|
|
1,601
|
|
|
992
|
|
||
|
|
$
|
4,678
|
|
|
$
|
7,055
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Gold Purchase Agreement
|
|
$
|
3,989
|
|
|
$
|
4,884
|
|
|
$
|
5,302
|
|
Promissory Note
|
|
824
|
|
|
—
|
|
|
—
|
|
|||
Revolver interest and stand-by fees
|
|
577
|
|
|
—
|
|
|
—
|
|
|||
Capital lease obligations
|
|
47
|
|
|
—
|
|
|
—
|
|
|||
Senior Notes
|
|
—
|
|
|
2,296
|
|
|
3,111
|
|
|||
Other
|
|
175
|
|
|
118
|
|
|
(69
|
)
|
|||
Less: capitalized interest
|
|
(273
|
)
|
|
—
|
|
|
—
|
|
|||
|
|
$
|
5,339
|
|
|
$
|
7,298
|
|
|
$
|
8,344
|
|
Fiscal Year:
|
|
Capital leases
|
|
Gold Purchase Agreement
|
|
Revolver
|
|
Total
|
||||||||
2017
|
|
$
|
510
|
|
|
$
|
10,660
|
|
|
$
|
—
|
|
|
$
|
11,170
|
|
2018
|
|
524
|
|
|
10,949
|
|
|
12,589
|
|
|
24,062
|
|
||||
2019
|
|
39
|
|
|
—
|
|
|
—
|
|
|
39
|
|
||||
2020
|
|
39
|
|
|
—
|
|
|
—
|
|
|
39
|
|
||||
2021
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Less: Interest and amortization of issuance costs
|
|
(47
|
)
|
|
(3,651
|
)
|
|
(1,424
|
)
|
|
(5,122
|
)
|
||||
Principal portion of payments
|
|
$
|
1,068
|
|
|
$
|
17,958
|
|
|
$
|
11,165
|
|
|
$
|
30,191
|
|
|
|
|
|
December 31,
|
||||||
|
|
Note
|
|
2016
|
|
2015
|
||||
Balance, beginning of year
|
|
|
|
$
|
12,387
|
|
|
$
|
12,032
|
|
Changes in estimates
|
|
|
|
2,866
|
|
|
(516
|
)
|
||
Accretion expense
|
|
|
|
1,122
|
|
|
871
|
|
||
Additions resulting from Hollister Acquisition - Hollister
|
|
4
|
|
4,481
|
|
|
—
|
|
||
Additions resulting from Hollister Acquisition - Aurora
|
|
4
|
|
2,677
|
|
|
—
|
|
||
Additions resulting from True North Acquisition
|
|
4
|
|
1,793
|
|
|
—
|
|
||
Effect of foreign currency
|
|
|
|
110
|
|
|
—
|
|
||
Balance, end of year
|
|
|
|
$
|
25,436
|
|
|
$
|
12,387
|
|
|
|
Year ended December 31, 2016
|
|
Outstanding at beginning of year
|
|
—
|
|
Granted
|
|
180,183
|
|
Redeemed
|
|
—
|
|
Outstanding at end of period
|
|
180,183
|
|
|
|
|
|
December 31,
|
||||||
Description
|
|
Recorded Within
|
|
2016
|
|
2015
|
||||
Gold Purchase Agreement embedded derivative
|
|
Derivative assets, current
|
|
$
|
1,247
|
|
|
$
|
1,466
|
|
Gold Purchase Agreement embedded derivative
|
|
Derivative assets, non-current
|
|
1,545
|
|
|
4,048
|
|
||
|
|
|
|
$
|
2,792
|
|
|
$
|
5,514
|
|
|
|
|
|
|
|
|
||||
Gold Offering Agreement
|
|
Derivative liabilities, current
|
|
$
|
1,721
|
|
|
$
|
1,176
|
|
Gold Offering Agreement
|
|
Derivative liabilities, non-current
|
|
331
|
|
|
1,599
|
|
||
|
|
|
|
$
|
2,052
|
|
|
$
|
2,775
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Gold Purchase Agreement embedded derivative
|
|
$
|
(2,167
|
)
|
|
$
|
3,243
|
|
|
$
|
3,789
|
|
Gold Offering Agreement
|
|
(1,115
|
)
|
|
124
|
|
|
3,299
|
|
|||
Forward metal sales
|
|
(3,682
|
)
|
|
—
|
|
|
—
|
|
|||
Currency swap
|
|
(682
|
)
|
|
—
|
|
|
—
|
|
|||
|
|
$
|
(7,646
|
)
|
|
$
|
3,367
|
|
|
$
|
7,088
|
|
|
|
Outstanding Future Deliveries
|
|
Years ended December 31,
|
||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Gold ounces delivered
|
|
8,000
|
|
|
8,000
|
|
|
8,000
|
|
|
7,500
|
|
|
6,750
|
|
|||||
Average forward gold price received
|
|
$
|
1,369
|
|
|
$
|
1,333
|
|
|
$
|
1,308
|
|
|
$
|
1,296
|
|
|
$
|
1,291
|
|
Average gold spot price on delivery date
|
|
n/a
|
|
|
n/a
|
|
|
$
|
1,248
|
|
|
$
|
1,152
|
|
|
$
|
1,234
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Gold ounces purchased by counterparty
|
|
48,957
|
|
|
36,066
|
|
|
27,528
|
|
|||
Average gold price paid to the Company
|
|
$
|
1,214
|
|
|
$
|
1,146
|
|
|
$
|
1,266
|
|
Average gold spot price on delivery date
|
|
$
|
1,247
|
|
|
$
|
1,187
|
|
|
$
|
1,293
|
|
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
Assets:
|
|
Note
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
Gold Purchase Agreement embedded derivative
|
|
8
|
|
$
|
—
|
|
|
$
|
2,792
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,514
|
|
|
$
|
—
|
|
|
|
|
|
$
|
—
|
|
|
$
|
2,792
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,514
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Deferred share units liability
|
|
10
|
|
$
|
—
|
|
|
$
|
812
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Gold Offering Agreement
|
|
|
|
—
|
|
|
—
|
|
|
2,052
|
|
|
—
|
|
|
—
|
|
|
2,775
|
|
||||||
|
|
|
|
$
|
—
|
|
|
$
|
812
|
|
|
$
|
2,052
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,775
|
|
|
|
Years ended December 31,
|
||||||
Gold Offering Agreement liability:
|
|
2016
|
|
2015
|
||||
Balance at beginning of the period
|
|
$
|
2,775
|
|
|
$
|
4,373
|
|
Gain from change in fair value
|
|
(723
|
)
|
|
(1,598
|
)
|
||
Balance at end of the period
|
|
$
|
2,052
|
|
|
$
|
2,775
|
|
|
|
|
|
|
||||
(Loss) gain on derivative, net:
|
|
|
|
|
||||
Settlement losses
|
|
$
|
(1,838
|
)
|
|
$
|
(1,474
|
)
|
Gain from change in fair value
|
|
723
|
|
|
1,598
|
|
||
|
|
$
|
(1,115
|
)
|
|
$
|
124
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
|
December 31, 2014
|
|||||||||||||||||||||||
Exercise price per share - CDN$
|
|
Number outstanding
|
|
Weighted average remaining life (years)
|
|
Weighted average exercise price - CDN$
|
|
Number outstanding
|
|
Weighted average remaining life (years)
|
|
Weighted average exercise price - CDN$
|
|
Number outstanding
|
|
Weighted average remaining life (years)
|
|
Weighted average exercise price - CDN$
|
|||||||||||
$0.00 - $1.49
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
525,826
|
|
|
0.8
|
|
|
1.43
|
|
|
$1.50 - $1.99
|
|
1,140,800
|
|
|
0.11
|
|
|
1.95
|
|
|
3,178,166
|
|
|
1.61
|
|
1.94
|
|
|
4,263,300
|
|
|
1.69
|
|
|
1.84
|
|
|||
$2.00 - $2.49
|
|
5,000,000
|
|
|
12.11
|
|
|
2.15
|
|
|
5,186,200
|
|
|
12.68
|
|
2.15
|
|
|
5,566,000
|
|
|
12.98
|
|
|
2.17
|
|
|||
$2.50 - $3.00
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,400,000
|
|
|
0.27
|
|
|
2.76
|
|
||
$6.00
|
|
5,000,000
|
|
|
15.26
|
|
|
6.00
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
|
|
11,140,800
|
|
|
12.30
|
|
|
$
|
3.86
|
|
|
8,364,366
|
|
|
8.45
|
|
$
|
2.07
|
|
|
11,755,126
|
|
|
6.83
|
|
|
2.24
|
|
|
|
December 31, 2016
|
|
Common shares authorized for issuance under New Share Plan
|
|
15,597,387
|
|
Common shares reserved for issuance under all plans
|
|
(6,393,386
|
)
|
Common shares available for future grants
|
|
9,204,001
|
|
|
|
Years ended December 31,
|
||||||||||
Share-based compensation cost by award
|
|
2016
|
|
2015
|
|
2014
|
||||||
Share options
|
|
$
|
1,431
|
|
|
$
|
2,501
|
|
|
$
|
2,459
|
|
Restricted share units - time vesting criteria
|
|
1,083
|
|
|
283
|
|
|
—
|
|
|||
Restricted share units - performance vesting criteria
|
|
144
|
|
|
—
|
|
|
—
|
|
|||
Common share awards
|
|
20
|
|
|
314
|
|
|
371
|
|
|||
|
|
$
|
2,678
|
|
|
$
|
3,098
|
|
|
$
|
2,830
|
|
Capitalized as part of an asset cost
|
|
$
|
123
|
|
|
$
|
81
|
|
|
$
|
50
|
|
Recognized tax benefit
|
|
$
|
983
|
|
|
$
|
286
|
|
|
$
|
50
|
|
Unrecognized share-based compensation cost by award
|
|
December 31, 2016
|
||
Restricted share units - time vesting criteria
|
|
$
|
2,001
|
|
Restricted share units - performance vesting criteria
|
|
901
|
|
|
Share options
|
|
564
|
|
|
Common share awards
|
|
16
|
|
|
|
|
$
|
3,482
|
|
|
|
December 31,
|
||||||
Restricted share units - time based vesting
|
|
2016
|
|
2015
|
||||
Weighted-average estimated forfeiture rate of RSUs granted
|
|
14.21
|
%
|
|
0.04
|
%
|
||
Fair value of RSUs vested (thousands)
|
|
$
|
262
|
|
|
$
|
26
|
|
Intrinsic value of RSUs vested (thousands)
|
|
$
|
495
|
|
|
$
|
26
|
|
Weighted-average grant date fair value - CDN$ (per award)
|
|
$
|
6.40
|
|
|
$
|
3.03
|
|
|
|
Year ended December 31, 2016
|
||||||||||||
Restricted share units - performance-based vesting
|
|
Number of RSUs
|
|
Weighted
Average Grant-Date Fair Value - CDN$ |
|
Weighted Average Remaining Vesting Period of Unvested RSUs (years)
|
|
Aggregate Intrinsic Value of RSUs Outstanding (thousands)
|
||||||
Outstanding, beginning of year
|
|
—
|
|
|
—
|
|
|
|
|
|
||||
Granted
|
|
212,243
|
|
|
6.60
|
|
|
|
|
|
||||
Vested and issued
|
|
—
|
|
|
—
|
|
|
|
|
|
||||
Forfeited
|
|
—
|
|
|
—
|
|
|
|
|
|
||||
Outstanding and unvested, end of year
|
|
212,243
|
|
|
$
|
6.60
|
|
|
2.87
|
|
|
$
|
988
|
|
|
|
December 31,
|
||
Restricted share units - performance-based vesting
|
|
2016
|
||
Weighted-average estimated forfeiture rate of RSUs granted
|
|
—
|
%
|
|
Fair value of RSUs vested (thousands)
|
|
$
|
1,072
|
|
Intrinsic value of RSUs vested (thousands)
|
|
$
|
988
|
|
Weighted-average grant date fair value - CDN$ (per award)
|
|
$
|
6.60
|
|
|
|
December 31,
|
||||||||||
Common share awards
|
|
2016
|
|
2015
|
|
2014
|
||||||
Weighted-average estimated forfeiture rate of common share awards granted
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|||
Fair value of common share awards vested (thousands)
|
|
$
|
333
|
|
|
$
|
255
|
|
|
$
|
8
|
|
Intrinsic value of common share awards vested (thousands)
|
|
$
|
666
|
|
|
$
|
371
|
|
|
$
|
8
|
|
Weighted-average grant date fair value - CDN$ (per award)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2.04
|
|
|
|
Year ended December 31, 2016
|
||||||||||||
Share options
|
|
Number of Share Options
|
|
Weighted
Average Exercise Price - CDN$ |
|
Weighted Average Remaining Contractual Period of Outstanding Options (years)
|
|
Aggregate Intrinsic Value of Options Outstanding (thousands)
|
||||||
Outstanding, beginning of year
|
|
10,193,318
|
|
$
|
2.10
|
|
|
|
|
|
||||
Granted
|
|
730,000
|
|
|
4.45
|
|
|
|
|
|
||||
Forfeited
|
|
(625,557
|
)
|
|
2.48
|
|
|
|
|
|
||||
Exercised
|
|
(5,037,369
|
)
|
|
1.79
|
|
|
|
|
|
||||
Expired
|
|
(27,287
|
)
|
|
2.50
|
|
|
|
|
|
||||
Outstanding, end of year
|
|
5,233,105
|
|
|
$
|
2.68
|
|
|
3.16
|
|
|
$
|
14,008
|
|
Vested and exercisable, end of year
|
|
3,759,603
|
|
|
$
|
2.32
|
|
|
2.90
|
|
|
$
|
11,017
|
|
|
|
December 31,
|
||||||||||
Share options
|
|
2016
|
|
2015
|
|
2014
|
||||||
Intrinsic value of options exercised (in thousands)
|
|
$
|
12,277
|
|
|
$
|
2,741
|
|
|
$
|
358
|
|
Fair value of options vested (in thousands)
|
|
2,779
|
|
|
3,446
|
|
|
3,150
|
|
|
|
Years ended December 31,
|
||||||||||
Share options
|
|
2016
|
|
2015
|
|
2014
|
||||||
Risk-free interest rate
|
|
0.59
|
%
|
|
0.85
|
%
|
|
1.31
|
%
|
|||
Forfeiture rate
|
|
13.99
|
%
|
|
12.07
|
%
|
|
—
|
%
|
|||
Volatility
|
|
46.08
|
%
|
|
47.31
|
%
|
|
48.24
|
%
|
|||
Dividend yield
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|||
Expected option life
|
|
5.0 years
|
|
|
5.0 years
|
|
|
3.4 years
|
|
|||
Weighted average grant-date fair value - CDN$
|
|
$
|
1.77
|
|
|
$
|
1.19
|
|
|
$
|
0.77
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Current:
|
|
|
|
|
|
|
||||||
Canada
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
United States
|
|
(3,477
|
)
|
|
(3,167
|
)
|
|
(2,049
|
)
|
|||
Total current income tax (expense) / benefit
|
|
(3,477
|
)
|
|
(3,167
|
)
|
|
(2,049
|
)
|
|||
Deferred:
|
|
|
|
|
|
|
|
|
|
|||
Canada
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
United States
|
|
(247
|
)
|
|
14,905
|
|
|
(906
|
)
|
|||
Total deferred income tax (expense) / benefit
|
|
(247
|
)
|
|
14,905
|
|
|
(906
|
)
|
|||
Total income tax (expense) / benefit
|
|
$
|
(3,724
|
)
|
|
$
|
11,738
|
|
|
$
|
(2,955
|
)
|
|
|
Years ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
Amount
|
|
Amount
|
|
Amount
|
||||||
Income and mining tax (expense) / benefit at statutory rate
|
|
$
|
(601
|
)
|
|
$
|
(8,454
|
)
|
|
$
|
(7,758
|
)
|
Effects of Canada to United States statutory rates on earnings of subsidiaries
|
|
(2,445
|
)
|
|
(3,033
|
)
|
|
(2,903
|
)
|
|||
State income tax expense
|
|
(2,515
|
)
|
|
(2,342
|
)
|
|
(1,822
|
)
|
|||
Share-based compensation expense
|
|
1,395
|
|
|
130
|
|
|
(257
|
)
|
|||
Percentage depletion
|
|
5,993
|
|
|
309
|
|
|
—
|
|
|||
Foreign exchange rate gain / (loss)
|
|
127
|
|
|
(1,174
|
)
|
|
(1,482
|
)
|
|||
Deferred tax asset (recognized) / not recognized
|
|
(5,627
|
)
|
|
26,428
|
|
|
12,889
|
|
|||
Other
|
|
(51
|
)
|
|
(126
|
)
|
|
(1,622
|
)
|
|||
Income tax (expense) / benefit
|
|
$
|
(3,724
|
)
|
|
$
|
11,738
|
|
|
$
|
(2,955
|
)
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Mineral properties, plant and equipment
|
|
$
|
41,340
|
|
|
$
|
13,933
|
|
Net operating losses
|
|
14,341
|
|
|
11,641
|
|
||
Asset retirement obligation
|
|
4,729
|
|
|
3,792
|
|
||
Inventory
|
|
1,479
|
|
|
1,783
|
|
||
Tax credits
|
|
1,402
|
|
|
713
|
|
||
Derivatives
|
|
971
|
|
|
971
|
|
||
Share-based compensation
|
|
—
|
|
|
286
|
|
||
Other
|
|
6,580
|
|
|
3,862
|
|
||
Deferred tax assets
|
|
70,842
|
|
|
36,981
|
|
||
Valuation allowances
|
|
(62,381
|
)
|
|
(20,217
|
)
|
||
Net deferred tax assets
|
|
8,461
|
|
|
16,764
|
|
||
|
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
|
||||
Share-based compensation
|
|
(396
|
)
|
|
—
|
|
||
Property, plant and equipment and inventory
|
|
(1,494
|
)
|
|
(791
|
)
|
||
Foreign exchange and other
|
|
(1,251
|
)
|
|
(3,163
|
)
|
||
Deferred tax liabilities
|
|
(3,141
|
)
|
|
(3,954
|
)
|
||
Net deferred tax asset
|
|
$
|
5,320
|
|
|
$
|
12,810
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Balance, beginning of year
|
|
$
|
(20,217
|
)
|
|
$
|
(39,895
|
)
|
|
$
|
(41,165
|
)
|
U.S. built-in loss not recognized
|
|
1,142
|
|
|
1,142
|
|
|
(10,612
|
)
|
|||
AMT credits not recognized
|
|
(689
|
)
|
|
(410
|
)
|
|
(303
|
)
|
|||
Recognition of US deferred tax assets
|
|
—
|
|
|
17,530
|
|
|
10,588
|
|
|||
Canadian exploration and development expense pools
|
|
(36,538
|
)
|
|
—
|
|
|
—
|
|
|||
Canadian net operating losses
|
|
(6,079
|
)
|
|
1,416
|
|
|
1,597
|
|
|||
Balance, end of year
|
|
$
|
(62,381
|
)
|
|
$
|
(20,217
|
)
|
|
$
|
(39,895
|
)
|
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
Note
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net (loss) income
|
|
|
|
$
|
(1,700
|
)
|
|
$
|
44,253
|
|
|
$
|
26,884
|
|
Weighted average common shares:
|
|
|
|
|
|
|
|
|
||||||
Basic
|
|
|
|
146,295,998
|
|
|
132,279,526
|
|
|
115,481,622
|
|
|||
Effect of:
|
|
|
|
|
|
|
|
|
||||||
Share options
|
|
14
|
|
—
|
|
|
3,682,637
|
|
|
1,422,539
|
|
|||
Warrants
|
|
13
|
|
—
|
|
|
2,792,283
|
|
|
1,005,310
|
|
|||
Common share awards
|
|
14
|
|
—
|
|
|
244,512
|
|
|
—
|
|
|||
Diluted
|
|
|
|
146,295,998
|
|
|
138,998,958
|
|
|
117,909,471
|
|
|||
Net (loss) income per share
|
|
|
|
|
|
|
|
|
||||||
Basic
|
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.33
|
|
|
$
|
0.23
|
|
Diluted
|
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.32
|
|
|
$
|
0.23
|
|
|
|
Quarters
|
|
|
||||||||||||||||
2016
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Year
|
||||||||||
Revenues
|
|
$
|
36,441
|
|
|
$
|
49,993
|
|
|
$
|
55,641
|
|
|
$
|
56,100
|
|
|
$
|
198,175
|
|
Cost of sales
|
|
26,134
|
|
|
29,002
|
|
|
34,659
|
|
|
47,705
|
|
|
137,500
|
|
|||||
Gross profit
|
|
10,307
|
|
|
20,991
|
|
|
20,982
|
|
|
8,395
|
|
|
60,675
|
|
|||||
Net (loss) income
|
|
(6,663
|
)
|
|
(4,484
|
)
|
|
7,269
|
|
|
2,178
|
|
|
(1,700
|
)
|
|||||
Basic net (loss) income per share
|
|
(0.05
|
)
|
|
(0.03
|
)
|
|
0.05
|
|
|
0.02
|
|
|
(0.01
|
)
|
|||||
Diluted net (loss) income per share
|
|
(0.05
|
)
|
|
(0.03
|
)
|
|
0.05
|
|
|
0.02
|
|
|
(0.01
|
)
|
|||||
2015
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
37,924
|
|
|
$
|
41,253
|
|
|
$
|
38,139
|
|
|
$
|
36,765
|
|
|
$
|
154,081
|
|
Cost of sales
|
|
26,845
|
|
|
26,557
|
|
|
26,845
|
|
|
26,724
|
|
|
106,971
|
|
|||||
Gross profit
|
|
11,079
|
|
|
14,696
|
|
|
11,294
|
|
|
10,041
|
|
|
47,110
|
|
|||||
Net income
|
|
9,490
|
|
|
8,006
|
|
|
8,432
|
|
|
18,325
|
|
|
44,253
|
|
|||||
Basic net income per share
|
|
0.07
|
|
|
0.06
|
|
|
0.06
|
|
|
0.14
|
|
|
0.33
|
|
|||||
Diluted income per share
|
|
0.07
|
|
|
0.06
|
|
|
0.06
|
|
|
0.13
|
|
|
0.32
|
|
Year ended December 31, 2016
|
Fire Creek
|
|
Midas
|
|
True North
|
|
Hollister
|
|
Aurora
|
|
Corporate and other
|
|
Total
|
||||||||||||||
Revenues
|
$
|
125,026
|
|
|
$
|
63,806
|
|
|
$
|
9,343
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
198,175
|
|
Cost of sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Production costs
|
46,246
|
|
|
49,599
|
|
|
10,544
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
106,389
|
|
|||||||
Depreciation and depletion
|
11,612
|
|
|
13,272
|
|
|
3,358
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,242
|
|
|||||||
Write-down of production inventories
|
—
|
|
|
474
|
|
|
2,395
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,869
|
|
|||||||
|
67,168
|
|
|
461
|
|
|
(6,954
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
60,675
|
|
|||||||
Other operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
General and administrative
|
835
|
|
|
835
|
|
|
126
|
|
|
—
|
|
|
—
|
|
|
14,008
|
|
|
15,804
|
|
|||||||
Exploration
|
8,754
|
|
|
4,011
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,765
|
|
|||||||
Development and projects costs
|
—
|
|
|
—
|
|
|
5,531
|
|
|
3,406
|
|
|
16
|
|
|
—
|
|
|
8,953
|
|
|||||||
Asset retirement and accretion
|
168
|
|
|
725
|
|
|
68
|
|
|
1,629
|
|
|
63
|
|
|
—
|
|
|
2,653
|
|
|||||||
Business acquisition costs
|
—
|
|
|
—
|
|
|
1,159
|
|
|
1,094
|
|
|
—
|
|
|
—
|
|
|
2,253
|
|
|||||||
Provision for legal settlement
|
2,850
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
150
|
|
|
3,000
|
|
|||||||
Loss on equipment disposal
|
—
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
109
|
|
|
126
|
|
|||||||
Income (loss) from operations
|
$
|
54,561
|
|
|
$
|
(5,110
|
)
|
|
$
|
(13,855
|
)
|
|
$
|
(6,129
|
)
|
|
$
|
(79
|
)
|
|
$
|
(14,267
|
)
|
|
$
|
15,121
|
|
Capital expenditures
|
$
|
23,779
|
|
|
$
|
23,835
|
|
|
$
|
11,246
|
|
|
$
|
808
|
|
|
$
|
615
|
|
|
$
|
1,433
|
|
|
$
|
61,716
|
|
Total assets
|
$
|
47,606
|
|
|
$
|
99,141
|
|
|
$
|
50,171
|
|
|
$
|
113,990
|
|
|
$
|
15,164
|
|
|
$
|
53,906
|
|
|
$
|
379,978
|
|
Year ended December 31, 2015
|
Fire Creek
|
|
Midas
|
|
True North
|
|
Hollister
|
|
Aurora
|
|
Corporate and other
|
|
Total
|
||||||||||||||
Revenues
|
$
|
95,023
|
|
|
$
|
59,058
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
154,081
|
|
Cost of sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Production costs
|
37,394
|
|
|
45,924
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
83,318
|
|
|||||||
Depreciation and depletion
|
7,824
|
|
|
14,628
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,452
|
|
|||||||
Write-down of production inventories
|
—
|
|
|
1,201
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,201
|
|
|||||||
|
49,805
|
|
|
(2,695
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47,110
|
|
|||||||
Other operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
General and administrative
|
515
|
|
|
515
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,345
|
|
|
12,375
|
|
|||||||
Exploration
|
3,166
|
|
|
6,647
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,813
|
|
|||||||
Asset retirement and accretion
|
55
|
|
|
816
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
871
|
|
|||||||
Business acquisition costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
328
|
|
|
328
|
|
|||||||
Loss on equipment disposal
|
—
|
|
|
352
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
352
|
|
|||||||
Income (loss) from operations
|
$
|
46,069
|
|
|
$
|
(11,025
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(11,673
|
)
|
|
$
|
23,371
|
|
Capital expenditures
|
$
|
18,749
|
|
|
$
|
16,395
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,454
|
|
|
$
|
36,598
|
|
Total assets
|
$
|
39,453
|
|
|
$
|
124,191
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
39,179
|
|
|
$
|
202,823
|
|
Year ended December 31, 2014
|
Fire Creek
|
|
Midas
|
|
True North
|
|
Hollister
|
|
Aurora
|
|
Corporate and other
|
|
Total
|
||||||||||||||
Revenues
|
$
|
75,890
|
|
|
$
|
36,732
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
112,622
|
|
Cost of sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Production costs
|
25,156
|
|
|
29,274
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
54,430
|
|
|||||||
Depreciation and depletion
|
2,560
|
|
|
4,246
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,806
|
|
|||||||
Write-down of production inventories
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
|
48,174
|
|
|
3,212
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51,386
|
|
|||||||
Other operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
General and administrative
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,818
|
|
|
8,818
|
|
|||||||
Exploration
|
—
|
|
|
3,415
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,415
|
|
|||||||
Development and projects costs
|
7,820
|
|
|
7,522
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
125
|
|
|
15,467
|
|
|||||||
Asset retirement and accretion
|
47
|
|
|
581
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
628
|
|
|||||||
Business acquisition costs
|
—
|
|
|
2,042
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,042
|
|
|||||||
Income (loss) from operations
|
$
|
40,307
|
|
|
$
|
(10,348
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(8,943
|
)
|
|
$
|
21,016
|
|
Capital expenditures
|
$
|
5,903
|
|
|
$
|
1,210
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
769
|
|
|
$
|
7,882
|
|
Total assets
|
$
|
23,057
|
|
|
$
|
114,273
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
27,921
|
|
|
$
|
165,251
|
|
|
December 31,
|
||||||
Long-lived assets, net:
|
2016
|
|
2015
|
||||
Nevada (Fire Creek, Midas, Hollister, Aurora, and Corporate and other)
|
$
|
237,105
|
|
|
$
|
86,582
|
|
Canada (True North)
|
39,118
|
|
|
—
|
|
||
Total
|
$
|
276,223
|
|
|
$
|
86,582
|
|
|
|
|
|
Years ended December 31,
|
||||||||||
Customer
|
|
Segments reporting revenue
|
|
2016
|
|
2015
|
|
2014
|
||||||
Auramet International, LLC
|
|
Fire Creek, Midas, True North
|
|
$
|
80,368
|
|
|
$
|
97,585
|
|
|
$
|
56,480
|
|
Investec Bank Plc
|
|
Fire Creek, Midas
|
|
94,550
|
|
|
—
|
|
|
—
|
|
|||
Franco-Nevada GLW Holdings Corp.
|
|
Midas
|
|
9,981
|
|
|
8,636
|
|
|
8,327
|
|
|||
Waterton Global Value, L.P.
|
|
Fire Creek
|
|
13,276
|
|
|
42,780
|
|
|
26,076
|
|
|||
Asahi Refining, Inc. (formerly Johnson Matthey Inc.)
|
|
Fire Creek, Midas
|
|
—
|
|
|
5,080
|
|
|
21,739
|
|
|||
|
|
|
|
$
|
198,175
|
|
|
$
|
154,081
|
|
|
$
|
112,622
|
|
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
Note
|
|
2016
|
|
2015
|
|
2014
|
||||||
Cash paid for federal and state income taxes
|
|
|
|
$
|
1,915
|
|
|
$
|
8,177
|
|
|
$
|
1,750
|
|
Mobile equipment acquired through capital lease obligations
|
|
|
|
145
|
|
|
1,371
|
|
|
—
|
|
|||
Common shares and warrants issued for Hollister Acquisition
|
|
4
|
|
29,568
|
|
|
—
|
|
|
—
|
|
|||
Mineral properties, plant and equipment acquired through Promissory Note
|
|
|
|
12,000
|
|
|
—
|
|
|
—
|
|
|||
Warrants issued on Midas acquisition and financings
|
|
4
|
|
—
|
|
|
—
|
|
|
5,896
|
|
|
Page
|
Report of Independent Registered Public Accounting Firm
|
|
Management’s Report on Internal Control over Financial Reporting
|
|
Consolidated Balance Sheets at December 31, 2016 and 2015
|
|
Consolidated Statements of (Loss) Income for the Years Ended December 31, 2016, 2015, and 2014
|
|
Consolidated Statements of Comprehensive (Loss) Income for the Years Ended December 31, 2016, 2015, and 2014
|
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2016, 2015, and 2014
|
|
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2016, 2015, and 2014
|
|
Notes to Consolidated Financial Statements
|
|
|
|
KLONDEX MINES LTD.
|
|
|
|
|
Registrant
|
|
Date:
|
March 23, 2017
|
|
By:
|
/s/ Paul Andre Huet
|
|
|
|
|
Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Paul Andre Huet
|
|
President, Chief Executive Officer and Director (Principal Executive Officer)
|
|
March 23, 2017
|
Paul Andre Huet
|
|
|||
|
|
|
|
|
/s/ Barry Dahl
|
|
Chief Financial Officer and Authorized U.S. Representative (Principal Financial Officer and Principal Accounting Officer)
|
|
March 23, 2017
|
Barry Dahl
|
|
|||
|
|
|
|
|
/s/ Richard J. Hall
|
|
Chairman of the Board and Director
|
|
March 23, 2017
|
Richard J. Hall
|
|
|||
|
|
|
|
|
/s/ Blair Schultz
|
|
Director
|
|
March 23, 2017
|
Blair Schultz
|
|
|||
|
|
|
|
|
/s/ Rodney Cooper
|
|
Director
|
|
March 23, 2017
|
Rodney Cooper
|
|
|||
|
|
|
|
|
/s/ Mark Daniel
|
|
Director
|
|
March 23, 2017
|
Mark Daniel
|
|
|||
|
|
|
|
|
/s/ Jamie Haggarty
|
|
Director
|
|
March 23, 2017
|
Jamie Haggarty
|
|
|||
|
|
|
|
|
/s/ William Matlack
|
|
Director
|
|
March 23, 2017
|
William Matlack
|
|
|||
|
|
|
|
|
/s/ Charles Oliver
|
|
Director
|
|
March 23, 2017
|
Charles Oliver
|
|
Exhibit
|
|
Filed with this
|
|
Incorporated by Reference
|
|||
Number
|
Exhibit Title
|
Form 10-K
|
Form
|
File No.
|
Exhibit
|
Date Filed
|
|
2.1
|
Stock Purchase Agreement dated December 4, 2013, between Newmont USA Limited, Klondex Holdings (USA) Inc., and Klondex Mines Ltd.
|
|
8-K
|
001-37563
|
2.1
|
3/15/2017
|
|
2.2
|
Membership Interest Purchase Agreement dated July 25, 2016, among Waterton Precious Metals Fund II Cayman, LP, Waterton Nevada Splitter, LLC, Klondex Holdings (USA) Inc., and Klondex Mines Ltd.
|
|
6-K
|
001-37563
|
99.2
|
08/05/2016
|
|
2.3
|
Asset Purchase Agreement dated December 16, 2015, among Klondex Canada Ltd., Klondex Mines Ltd. and Shoreline Gold Inc.
|
|
6-K
|
001-37563
|
99.1
|
4/13/2016
|
|
3.1
|
Notice of Articles of Klondex Mines Ltd.
|
|
S-8
|
333-215156
|
4.1
|
12/16/2016
|
|
3.2
|
Articles of Klondex Mines Ltd.
|
|
S-8
|
333-215156
|
4.1
|
12/16/2016
|
|
10.1**
|
Klondex Mines Ltd. Share Incentive Plan
|
|
S-8
|
333-215156
|
4.2
|
12/16/2016
|
|
10.2
|
Gold Purchase Agreement dated February 11, 2014, between Klondex Mines Ltd. and Franco-Nevada GLW Holdings Corp.
|
|
40-F/A
|
001-37563
|
99.129
|
9/21/2015
|
|
10.3**
|
Employment Agreement - Paul Huet
|
|
8-K
|
001-37563
|
10.2
|
3/15/2017
|
|
10.4**
|
Employment Agreement - Barry Dahl
|
|
8-K
|
001-37563
|
10.1
|
3/15/2017
|
|
10.5**
|
Employment Agreement - John Seaberg
|
|
8-K
|
001-37563
|
10.3
|
3/15/2017
|
|
10.6**
|
Employment Agreement - Michael Doolin
|
|
8-K
|
001-37563
|
10.5
|
3/15/2017
|
|
10.7**
|
Employment Agreement - Brian Morris
|
|
8-K
|
001-37563
|
10.4
|
3/15/2017
|
|
10.8**
|
Employment Agreement - John Antwi
|
|
8-K
|
001-37563
|
10.7
|
3/15/2017
|
|
10.9**
|
Employment Agreement - Brent Kristof
|
|
8-K
|
001-37563
|
10.6
|
3/15/2017
|
|
10.10
|
Secured Revolving Facility Agreement dated March 23, 2016, between Klondex Mines Ltd. and Investec Bank PLC
|
|
6-K
|
001-37563
|
99.5
|
11/18/2016
|
|
10.11**
|
Klondex Mines Ltd. Share Option and Restricted Share Unit Plan
|
|
6-K
|
001-37563
|
Schedule B of Exhibit 99.2
|
5/19/2016
|
|
10.12**
|
Klondex Mines Ltd. Deferred Share Unit Plan
|
X
|
|
|
|
|
|
10.13
|
Amendment to Secured Revolving Facility Agreement between Klondex Mines Ltd. and Investec Bank PLC dated October 28, 2016
|
|
6-K
|
001-37563
|
99.6
|
11/18/2016
|
|
21.1
|
Subsidiaries of Klondex Mines Ltd.
|
X
|
|
|
|
|
|
23.1
|
Consent of PricewaterhouseCoopers LLP
|
X
|
|
|
|
|
|
23.2
|
Consent of Practical Mining LLC
|
X
|
|
|
|
|
|
23.3
|
Consent of Mark Odell
|
X
|
|
|
|
|
|
23.4
|
Consent of Laura Symmes
|
X
|
|
|
|
|
|
23.5
|
Consent of Sarah Bull
|
X
|
|
|
|
|
|
23.6
|
Consent of Karl Swanson
|
X
|
|
|
|
|
|
23.7
|
Consent of Marek Nowak
|
X
|
|
|
|
|
|
23.8
|
Consent of P&E Mining Consultants Inc.
|
X
|
|
|
|
|
|
23.9
|
Consent of Eugene Puritch
|
X
|
|
|
|
|
(i)
|
a consolidation, merger, amalgamation, arrangement or other reorganization or acquisition involving the Corporation or any of its Affiliates and another corporation or other entity, as a result of which the holders of Voting Securities prior to the completion of the transaction hold less than 50% of the outstanding Voting Securities of the successor corporation after completion of the transaction;
|
(ii)
|
the sale, lease, exchange or other disposition, in a single transaction or a series of related transactions, of assets, rights or properties of the Corporation and/or any of its Affiliates which have an aggregate book value greater than 30% of the book value of the assets, rights and properties of the Corporation and its Affiliates on a consolidated basis to any other person or entity, other than a disposition to a wholly-owned Affiliate in the course
|
(iii)
|
a resolution is adopted to wind-up, dissolve or liquidate the Corporation;
|
(iv)
|
any person, entity or group of persons or entities acting jointly or in concert (an "
Acquiror
") acquires or acquires control (including, without limitation, the right to vote or direct the voting) of Voting Securities which, when added to the Voting Securities owned of record or beneficially by the Acquiror or which the Acquiror has the right to vote or in respect of which the Acquiror has the right to direct the voting, would entitle the Acquiror and/or Associates and/or Affiliates of the Acquiror to cast or to direct the casting of 50% or more of the votes attached to all of the Corporation's outstanding Voting Securities which may be cast to elect directors of the Corporation or the successor corporation (regardless of whether a meeting has been called to elect directors);
|
(v)
|
as a result of or in connection with: (A) a contested election of directors; or (B) a consolidation, merger, amalgamation, arrangement or other reorganization or acquisitions involving the Corporation or any of its Affiliates and another corporation or other entity (a "
Transaction
"), fewer than 50% of the directors of the Corporation are persons who were directors of the Corporation immediately prior to such election or the Transaction; or
|
(vi)
|
the Board adopts a resolution to the effect that a Change of Control as defined herein has occurred or is imminent.
|
(b)
|
the number of Deferred Share Units granted to and standing to the credit of the Eligible Director from time to time.
|
(a)
|
Subject to the remainder of this Section 3.04, Vested Deferred Share Units will be redeemed following a U.S. Eligible Director's Separation from Service or following a Canadian Eligible Director's Termination Date, as applicable, on a date selected by the Committee in its sole discretion, and the Eligible Director shall have no ability to influence, directly or indirectly, the calendar year in which payment is made (the "
Redemption Date
"). Vested Deferred Share Units credited to the Eligible Director's Account shall be redeemed and shall be paid by the Corporation to the Eligible Director (or if the Eligible Director has died, to the Eligible Director's Beneficiary) in the form of a lump sum cash payment, less Applicable Withholding Taxes.
|
(b)
|
The Market Value of the Deferred Share Units for the purposes of determining the amount to be paid to the Eligible Director upon redemption of Deferred Share Units pursuant to this Section 3.04 shall be determined as of the Redemption Date. Each Deferred Share Unit so redeemed shall entitle the Eligible Director to receive the Market Value in cash in an amount that is rounded down to the nearest cent, less any Applicable Withholding Taxes as deducted, withheld and/or remitted in accordance with Section 4.01(c). The date on which such cash payment is made to the Eligible Director is the "
Payment Date
".
|
(c)
|
The Payment Date with respect to Deferred Share Units of U.S. Eligible Directors will in all cases be on or before December 31
st
of the calendar year in which the Separation from Service occurs, or, if later by the date that is 2 ½ months after the date of the Separation from Service and the Eligible Director shall have no ability to influence, directly or indirectly, the calendar year in which the Payment Date occurs. The Payment Date with respect to Deferred Share Units of Canadian Eligible Directors will in all cases be on or before December 15
th
of the calendar year following the year in which the Termination Date occurs, and no Payment Date shall occur prior to the Canadian Eligible Director's Termination Date. In selecting the Redemption Date, the Committee will give due consideration to the time required to process the redemption of Deferred Share Units in order to ensure that the Payment Date will occur within the time limitations of this Section 3.04(c).
|
(d)
|
It is highly unlikely that a U.S. Eligible Director will be a "specified employee" as that term is defined under Section 409A of the Code ("
Specified Employee
"). However, if a U.S. Eligible Director is a Specified Employee at the time of his/her Separation from Service, the Payment Date with respect to the Deferred Share Units will not be before the date that is six months and one day following his or her Separation from Service.
|
(e)
|
Notwithstanding any other provision in the Plan giving the Committee discretion to administer the Plan, interpret its terms, or amend or modify the Plan or Deferred Share Unit Awards, the Redemption Date and the Payment Date of Deferred Share Units will be in accordance with this Section 3.04 and will not be accelerated or delayed unless such acceleration or delay is permitted under Section 409A of the Code in respect of U.S. Eligible Directors or under paragraph 6801(d) of the Tax Act in respect of Canadian Eligible Directors.
|
(f)
|
In the event that any Redemption Date is after the date on which the Shares ceased to be traded on the Exchange, provided such cessation in trading is not reasonably expected to be temporary (the "
Cease Trade Date
"), the Market Value of the Deferred Share Units redeemed by or in respect of the Eligible Director pursuant to Section 3.04(b) shall be determined in accordance with the following:
|
(i)
|
where the Eligible Director's Termination Date or Separation from Service, as applicable, is before or not more than one (1) year after the last Trading Day before the Cease Trade Date, the value of each Deferred Share Unit credited to the Eligible Director's Account at his or her Redemption Date shall be equal to the Market Value on the last Trading Day before the Cease Trade Date; and
|
(ii)
|
where the Eligible Director's Termination Date or Separation from Service, as applicable, is after the date that is more than one (1) year after the last Trading Day before the Cease Trade Date, the value of each Deferred Share Unit credited to the Eligible Director's Account at his or her Redemption Date shall be based on the fair market value of a common share of the Corporation or of a Related Company at his or her Redemption Date as determined on a reasonable and equitable basis by the Committee after receiving the advice of one or more independent firms of investment bankers of national repute.
|
(g)
|
Upon payment of any amount pursuant to this Section 3.04 in satisfaction of Deferred Share Units credited to the Account of an Eligible Director, the particular Deferred Share Units in respect of which such payment was made shall be cancelled and no further payments shall be made from the Plan in relation to such Deferred Share Units.
|
(h)
|
Subject to Sections 3.04(c), in the event that an Eligible Director's Redemption Date as determined pursuant to Section 3.04(a) would otherwise fall between a Dividend Record Date and the related Dividend Payment Date, then notwithstanding Section 3.04(a), the Redemption Date shall be the day immediately following such Dividend Payment Date for purposes of recording in the Account of the Eligible Director amounts referred to in Section 3.03, and making the calculation of the Market Value of the vested Deferred Share Units contemplated by Section 3.04(b). Subject to Sections 3.04(c), in the event that the Corporation is unable, by an Eligible Director's Redemption Date, to compute the Market Value of the vested Deferred Share Units recorded in such Eligible Director's Account by reason of the fact that any data required in order to compute the Market Value of a Share has not been made available to the Corporation, then the Redemption Date shall be the next following Trading Day on which such data is made available to the Corporation.
|
(i)
|
Subject to Sections 3.04(c), in the event that an Eligible Director's Redemption Date as determined pursuant to Section 3.04(a) falls on or within ten (10) Business Days of the expiration of a Blackout Period applicable to such Eligible Director, then notwithstanding Section 3.04(a), the Redemption Date shall be extended to the earlier of: (i) the close of business on the tenth (10th) Business Day following the expiration of the Blackout Period, and (ii) the latest Payment Date specified in section 3.04(c).
|
(j)
|
If the number of outstanding Shares is increased or decreased as a result of a subdivision, consolidation, reclassification or recapitalization and not as a result of the issuance of Shares for additional consideration or by way of a dividend in the ordinary course, the Committee shall
make appropriate adjustments to the number of Deferred Share Units outstanding under the Plan provided that the dollar value of Deferred Share Units credited to an Eligible Director's Account immediately after such an adjustment shall not exceed the dollar value of the Deferred Share Units credited to such Eligible Director's Account immediately prior thereto. Any determinations by the Committee as to the adjustments shall be made in its sole discretion and all such adjustments shall be conclusive and binding for all purposes under the Plan.
|
(k)
|
The following provisions are applicable to Eligible Directors who are both U.S. Eligible Directors and Canadian Eligible Directors ("
Dual Participants
"). For greater clarity, these forfeiture provisions are intended to avoid adverse tax consequences under Section 409A of the Code and/or under paragraph 6801(d) of the regulations under the Tax Act, that may result because of the different requirements as to the time of settlement of Deferred Share Units with respect to a Dual Participant's Separation from Service and such Dual Participant's Termination Date. Unless it is determined that no adverse tax consequences under either the U.S. tax regime or the Canadian tax regime would result, if a Dual Participant otherwise would be entitled to payment of Deferred Share Units in any of the following circumstances, such Deferred Share Units shall instead be immediately and irrevocably forfeited (for greater certainty, without any compensation therefor):
|
(i)
|
a Dual Participant experiences a Separation from Service upon ceasing to be a director while continuing to provide services as an employee in circumstances that do not constitute a retirement from, or loss of office or employment with, the Corporation or an Affiliate, within the meaning of paragraph 6801(d) of the regulations under the Tax Act; or
|
(ii)
|
a Dual Participant experiences a serious disability that continues for more than twenty-nine (29) months in circumstances that constitute a Separation from Service and do not constitute a retirement from, or loss of office or employment with, the Corporation or an Affiliate, within the meaning of paragraph 6801(d) of the regulations under the Tax Act; or
|
(iii)
|
a Dual Participant experiences a retirement from, or loss of office or employment with, the Corporation or an Affiliate thereof, within the meaning of paragraph 6801(d) of the regulations under the Tax Act by virtue of ceasing employment as both an employee and as a director, but he or she continues to provide services as an independent contractor such that he or she has not experienced a Separation from Service.
|
(a)
|
Neither the Corporation nor its Affiliates shall be liable for any tax imposed on any Eligible Director (or Beneficiary) as a result of the crediting, holding or redemption of Deferred Share Units or amounts paid or
|
(b)
|
It is the responsibility of the Eligible Director to complete and file any tax returns which may be required under any applicable tax laws within the period prescribed by such laws.
|
(c)
|
The Corporation and each of its Affiliates shall be authorized to deduct, withhold and/or remit from any amount paid or credited hereunder, or otherwise, such amount as may be necessary so as to ensure the Corporation and any Affiliate will be able to comply with the applicable provisions of any federal, provincial, state or local law relating to the withholding of tax or other required deductions, including on the amount, if any, includable in the income of an Eligible Director or Beneficiary, as the case may be (the "
Applicable Withholding Taxes
").
|
(a)
|
amend the number of securities under the Plan;
|
(b)
|
change the definition of "Eligible Director" under the Plan which would have the potential of narrowing, broadening or increasing insider participation;
|
(c)
|
make amendments to this Section 5.02 of the Plan; or
|
(d)
|
make amendments to Section 5.03 of the Plan that would permit Deferred Share Units, or any other right or interest of an Eligible Director under the Plan, to be assigned or transferred, other than for normal estate settlement purposes;
|
(e)
|
amendments of a housekeeping nature;
|
(f)
|
the addition or a change to the vesting provisions of a Deferred Share Unit or the Plan;
|
(g)
|
a change to the termination provisions of a Deferred Share Unit or the Plan;
|
(h)
|
amendments to reflect changes to applicable securities laws; and
|
(i)
|
amendments to ensure that the Deferred Share Units granted under the Plan will comply with any provisions respecting income tax and other laws in force in any country or jurisdiction of which an Eligible Director to whom a Deferred Share Unit has been granted may from time to time be resident or a citizen.
|
(a)
|
the offeror delivers with such notice an irrevocable and unconditional offer to grant replacement deferred share rights to the holders of Deferred Share Units on the equity securities offered as consideration;
|
(b)
|
the Committee has determined, in good faith, that such replacement deferred share rights have substantially the same economic value as the Deferred Share Units being surrendered; and
|
(c)
|
the surrender of Deferred Share Units and the granting of replacement deferred share rights can be effected on a tax deferred basis under the Tax Act and in compliance with Section 409A.
|
|
|
|
|
|
Name
|
|
State or other Jurisdiction of Incorporation
|
|
Aggregate Ownership
|
Klondex Canada Ltd.
|
|
British Columbia
|
|
100%
|
0985472 B.C. Ltd.
|
|
British Columbia
|
|
100%
|
Klondex Holdings (USA) Inc.
|
|
Nevada
|
|
100%
|
Klondex Gold & Silver Mining Company
|
|
Nevada
|
|
100%
|
Klondex Midas Holdings Limited
|
|
Nevada
|
|
100%
|
Klondex Midas Operations Inc.
|
|
Nevada
|
|
100%
|
Klondex Schuma Holdings LLC
|
|
Nevada
|
|
100%
|
Klondex Hollister Mine Inc.
|
|
Nevada
|
|
100%
|
Klondex Aurora Mine Inc.
|
|
Nevada
|
|
100%
|
1.
|
Amended and Restated Technical Report titled “Preliminary Feasibility Study for the Midas Mine, Elko County, Nevada” dated April 2, 2015, effective August 31, 2014;
|
2.
|
Technical Report titled “Technical Report for the Fire Creek Project, Lander County, Nevada” dated March 28, 2016, effective June 30, 2015.
|
1.
|
Amended and Restated Technical Report titled “Preliminary Feasibility Study for the Midas Mine, Elko County, Nevada” dated April 2, 2015, effective August 31, 2014;
|
2.
|
Technical Report titled “Technical Report for the Fire Creek Project, Lander County, Nevada” dated March 28, 2016, effective June 30, 2015.
|
1.
|
Amended and Restated Technical Report titled “Preliminary Feasibility Study for the Midas Mine, Elko County, Nevada” dated April 2, 2015, effective August 31, 2014;
|
2.
|
Technical Report titled “Technical Report for the Fire Creek Project, Lander County, Nevada” dated March 28, 2016, effective June 30, 2015.
|
1.
|
Amended and Restated Technical Report titled “Preliminary Feasibility Study for the Midas Mine, Elko County, Nevada” dated April 2, 2015, effective August 31, 2014;
|
2.
|
Technical Report titled “Technical Report for the Fire Creek Project, Lander County, Nevada” dated March 28, 2016, effective June 30, 2015.
|
1.
|
I have reviewed this Annual Report on Form 10-K of Klondex Mines Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d - 15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
|
March 23, 2017
|
By:
|
/s/ Paul Andre Huet
|
|
|
|
|
Paul Andre Huet
|
|
|
|
|
President and Chief Executive Officer (Principal Executive Officer)
|
1.
|
I have reviewed this Annual Report on Form 10-K of Klondex Mines Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d - 15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
|
March 23, 2017
|
By:
|
/s/ Barry Dahl
|
|
|
|
|
Barry Dahl
|
|
|
|
|
Chief Financial Officer (Principal Financial Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.
|
Date:
|
|
March 23, 2017
|
By:
|
/s/ Paul Andre Huet
|
|
|
|
|
Paul Andre Huet
|
|
|
|
|
President and Chief Executive Officer (Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
/s/ Barry Dahl
|
|
|
|
|
Barry Dahl
|
|
|
|
|
Chief Financial Officer (Principal Financial Officer)
|
Mine and MSHA ID#
(1)
|
|
Total # of "Significant and Substantial" Violations Under §104
(2)
|
|
Total # of Orders Issued Under §104(b)
(3)
|
|
Total # of Citations and Orders Issued Under §104(d)
(4)
|
|
Total # of Flagrant Violations Under §110(b)(2)
(5)
|
|
Total # of Imminent Danger Orders Under §107(a)
(6)
|
|
Total Amount of Proposed Assessments from MSHA under the Mine Act
(7)
|
|
Total # of Mining-Related Fatalities
(8)
|
|
Pending Legal Actions
(9)
|
|
Legal Actions Instituted
(10)
|
|
Legal Actions Resolved
(11)
|
|||||||||||
Midas 2602314
|
|
36
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
$
|
141,328
|
|
|
—
|
|
|
28
|
|
|
28
|
|
|
—
|
|
Fire Creek 2602691
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,471
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Hollister 2602535
(12)
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,480
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Aurora 2602235
(12)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
44
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
$
|
153,279
|
|
|
—
|
|
|
28
|
|
|
28
|
|
|
—
|
|
(1)
|
MSHA assigns an identification number to each mine or operation and may or may not assign separate identification numbers to related facilities. The definition of "mine" under section 3 of the Mine Act includes the mine, as well as other items used in, or resulting from, the work of extracting minerals, such as land, structures, facilities, equipment, machines, tools, and minerals preparation facilities.
|
(2)
|
Represents the total number of citations issued (or proposed) by MSHA under Section 104 of the Mine Act for violations of health or safety standards that could significantly and substantially contribute to a serious injury if left unabated.
|
(3)
|
Represents the total number of orders issued under Section 104(b) of the Mine Act, which represents a failure to abate a citation under Section 104(a) of the Mine Act within the period prescribed by MSHA. This results in an order of immediate withdrawal from the area of the mine affected by the condition until MSHA determines the violation has been abated.
|
(4)
|
Represents the total number of citations and orders issued by MSHA under Section 104(d) of the Mine Act for unwarrantable failure to comply with mandatory health or safety standards.
|
(5)
|
Represents the total number of flagrant violations identified by MSHA under Section 110(b)(2) of the Mine Act.
|
(6)
|
Represents the total number of imminent danger orders issued under Section 107(a) of the Mine Act.
|
(7)
|
Amount represents the total United States dollar value of proposed assessments received from MSHA during the year ended
December 31, 2016
.
|
(8)
|
Represents the total number of mining-related fatalities at mines subject to the Mine Act pursuant to Section 1503(a)(1)(G) of the Financial Reform Act.
|
(9)
|
Represents the total number of legal actions pending as of
December 31, 2016
before the Federal Mine Safety and Health Review Commission as required by Section 1503(a) of the Financial Reform Act.
|
(10)
|
Represents the total number of legal actions instituted during the year ended
December 31, 2016
before the Federal Mine Safety and Health Review Commission as required by Section 1503(a) of the Financial Reform Act.
|
(11)
|
Represents the total number of legal actions resolved during the year ended
December 31, 2016
before the Federal Mine Safety and Health Review Commission as required by Section 1503(a) of the Financial Reform Act.
|
(12)
|
Represents information as of October 3, 2016 through
December 31, 2016
, the time for which the mine was under the ownership of Klondex Mines Ltd.
|