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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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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 American 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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o
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Emerging growth company
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ý
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estimates of future mineral production, mining activities and sales (including graphs or other visual representations of future production forecasts);
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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, 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 (proven & probable) and resources (measured, indicated and inferred);
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estimates regarding potential cost savings, productivity and operating performance;
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expectations regarding the start-up time, ramp up time or ability to put a mine into production;
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expectations regarding the design, mine life, mill availability, production and costs applicable to sales and exploration potential of our mines and projects;
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recovery rate estimates;
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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 prices of gold, silver and other metals and commodities;
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the cost of operations;
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capital expenditures;
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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; including the impact of weather on such operating performance;
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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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external stakeholders;
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our ability to obtain or maintain necessary financing;
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other risks and hazards associated with mining operations;
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uncertainty of estimates of capital costs, operating costs, production and economic returns;
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uncertainty related to inferred mineral resources;
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labor relations and our need and/or ability 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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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;
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Practical Mining LLC has stated that the proven and probable reserves reported in the amended and restated technical report titled "Technical Report for the Fire Creek Project, Lander County, Nevada, Amended" dated March 2, 2018, effective November 30, 2017 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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Practical Mining LLC has stated that the proven and probable reserves reported in the technical report titled "Technical Report for the True North Mine, Bissett, Manitoba, Canada" dated May 12, 2017, effective March 31, 2017 and the Mineral Reserve update for True North effective as of February 14, 2017, 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 amended and restated technical report titled "Technical Report and Pre-Feasibility Study for the Hollister Underground Mine, Elko County, Nevada" dated August 9, 2017, effective as of May 31, 2017 and the Mineral Reserve update for Hollister effective as of May 31, 2017 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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2015 LBMA
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$
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1,296
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$
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1,049
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$
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1,160
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$
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18.23
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$
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13.71
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$
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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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2017 LBMA
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1,346
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1,151
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1,257
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18.56
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15.22
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17.05
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2017 Klondex Average
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1,263
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17.23
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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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97
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32
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129
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Midas (including mill)
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128
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81
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209
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Hollister
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72
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57
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129
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Aurora
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12
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—
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12
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True North
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186
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139
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325
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Corporate and other
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60
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—
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60
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Total
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555
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309
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864
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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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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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adjacent or adverse land or mineral ownership that results in constraints on current or future mine operations;
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geological problems, including seismic activity, earthquakes and other natural disasters;
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metallurgical and other processing problems;
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unusual or unexpected mineralogy or rock formations;
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ground or slope failures;
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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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flooding or fires;
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equipment failures;
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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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lower than expected ore grades or recovery rates;
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accidents;
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delays in the receipt of or failure to receive necessary government permits;
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the results of litigation, including appeals of agency decisions;
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delays in transportation;
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interruption of energy supply;
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labor disputes;
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inability to obtain satisfactory insurance coverage;
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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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the failure of equipment or processes to operate in accordance with specifications or expectations.
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the identification of potential gold mineralization;
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the availability of government-granted exploration permits;
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the quality of management and geological and technical expertise; and
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the capital available for exploration.
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increases in production or capital costs or lower gold and silver prices;
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changes in financial estimates by us or by any securities analysts who might cover our securities;
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speculation about our business in the press or the investment community;
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conditions or trends in our industry, the market or the economy generally;
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changes in the prices of gold or silver;
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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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the inability to service or restructure our debt;
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changes in our credit rating or future prospects;
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announcements by us or our competitors of significant acquisitions, strategic partnerships or divestitures;
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capital commitments;
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failure to meet the conditions necessary to remain listed for trading on the TSX, NYSE American, or other similar markets;
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additions or departures of key personnel;
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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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sales of our securities, including sales by our directors, officers or significant stockholders.
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NYSE American (USD$)
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TSX (CDN$)
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High
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Low
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High
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Low
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2017
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4th quarter
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$
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3.89
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$
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2.16
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$
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4.85
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$
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2.75
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3rd quarter
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3.80
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2.81
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4.69
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3.57
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2nd quarter
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4.01
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2.88
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5.37
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3.88
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1st quarter
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5.91
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3.82
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7.73
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5.09
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2016
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4th quarter
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5.94
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3.91
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7.95
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5.29
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3rd quarter
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6.03
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3.75
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7.84
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4.85
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2nd quarter
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3.87
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2.60
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4.93
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3.40
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1st quarter
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3.49
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|
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1.76
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4.04
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2.57
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January 1,
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December 31,
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2013
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2013
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2014
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2015
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2016
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2017
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||||||||||||
Klondex Mines Ltd.
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$
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100.00
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$
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119.84
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$
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133.33
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$
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162.70
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$
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369.84
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$
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205.56
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S&P 500
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100.00
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132.14
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150.02
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152.07
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169.92
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206.69
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||||||
GDXJ Junior Gold Miners ETF
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100.00
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39.22
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30.63
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24.91
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44.59
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48.25
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Years ended December 31,
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Results of operations
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2017
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2016
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2015
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2014
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2013
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Revenue
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$
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240,651
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$
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198,175
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$
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154,081
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$
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112,622
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$
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—
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Total cost of sales
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206,855
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137,500
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106,971
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61,236
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—
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Net (loss) income
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(23,664
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)
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(1,700
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)
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44,253
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26,884
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(25,089
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)
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Basic net (loss) income per share
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(0.13
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)
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(0.01
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)
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0.33
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0.23
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(0.38
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)
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Diluted net (loss) income per share
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(0.13
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)
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(0.01
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)
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0.32
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0.23
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(0.38
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)
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December 31,
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Financial position
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2017
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2016
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2015
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2014
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2013
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Cash and cash equivalents
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$
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23,674
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$
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47,636
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$
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59,097
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$
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45,488
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$
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12,127
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Inventories
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42,583
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21,310
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16,070
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18,601
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—
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Mineral properties, plant and equipment, net
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289,450
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276,223
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86,582
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71,307
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2,459
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|||||
Total assets
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391,555
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379,978
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202,823
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165,251
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15,350
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Debt, current
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902
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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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|||||
Debt, non-current
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35,405
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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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|||||
Asset retirement obligations
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21,108
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25,436
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|
|
12,387
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12,032
|
|
|
1,010
|
|
|||||
Total liabilities
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|
111,526
|
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101,924
|
|
|
59,717
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|
|
79,366
|
|
|
15,510
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|
|||||
Total shareholders' equity
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|
280,029
|
|
|
278,054
|
|
|
143,106
|
|
|
85,885
|
|
|
(160
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)
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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
2017
;
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•
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2018 full year outlook
which summarizes our estimates for
2018
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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•
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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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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 GEO sold, all-in sustaining costs per gold ounce 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. As of
December 31, 2017
, we had operated 1,903 days (~5.2 years) at Fire Creek, 1,182 days (~3.2 years) at Midas, 53 days (~0.1 years) at True North, and 454 days (~1.2 years) at Hollister and Aurora, without a lost-time injury. During
2017
, we had one lost-time injury at True North. Prior to this, True North had operated for nearly two years without a lost-time injury.
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•
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Consolidated performance
- We mined a total of
222,233
GEOs. Mined ounces are calculated using tons hauled from underground to surface (or tons hauled from tailings) multiplied by the assays from production sampling. We produced a total of
189,456
GEO's, an increase of
17%
from
161,289
GEOs produced during 2016.
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•
|
Nevada performance
- At Fire Creek, Midas, and Hollister, we mined
356,697
ore tons during the year at an average mined head grade of
0.53
GEOs per ton. Nevada operations mined
190,409
GEOs. Production cash costs per GEO sold in Nevada was
$692
. The Company began processing Hollister ore at the Midas mill at the end of the third quarter with process optimization ongoing.
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•
|
Fire Creek
- We mined
123,754
ore tons from Fire Creek in the year at an average mined head grade of
0.90
GEO per ton, producing
108,126
GEOs, in-line with guidance for the year.
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•
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Midas
- The Midas mine also performed in-line with guidance for the year. For the year, we mined
156,927
ore tons at an average mined head grade of
0.33
GEO per ton. Produced ounces for the year were
45,062
GEOs.
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•
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Hollister
- The Hollister mine development continued to increase in the fourth quarter, mining over 9,000 GEOs. For the year, Hollister mined
66,453
tons at a grade of
0.38
GEOs per ton containing 25,464 GEOs. Produced ounces for the year was
7,371
GEOs. Stockpiles at the end of 2017 contained approximately 15,000 GEOs from 44,000 tons at a GEO grade of 0.40 ounces per ton.
|
•
|
True North
- At True North in Canada, we mined
228,495
ore tons from mining operations at an average mine head grade of
0.12
gold ounces per ton (3.73 grams per tonne) producing
24,636
GEOs. We also milled
80,848
tons from the True North tailings at an average grade of
0.04
gold ounces per ton (1.24 grams per tonne) producing an additional
3,285
gold ounces. This production was approximately 7,000 GEOs short of the low end of the revised guidance for the year. This shortfall was due to mining lower than forecasted grades.
|
•
|
Ounces sold and financial results
- We sold
190,865
GEOs, consisting of
177,402
gold ounces and
984,176
silver ounces. Revenue was
$240.7 million
from average realized selling prices per gold and silver ounce of
$1,261
and
$17.26
, respectively. Net loss was
$23.7 million
(
$0.13
loss per share - basic and diluted).
|
•
|
Cash flows and liquidity
- Our ending cash balance was
$23.7 million
after
$26.4 million
of operating cash flows,
$66.4 million
used in investing activities, and
$15.7 million
provided by financing activities. Ending working capital was
$37.4 million
and total liquidity was
$42.4 million
when including the
$5.0 million
of Revolver availability.
|
•
|
Spending
- Capital, exploration, and development spending totaled
$28.7 million
at Fire Creek,
$16.7 million
at Midas including the Midas mill,
$22.1 million
at Hollister,
$2.7 million
at Aurora,
$14.7 million
at True North, and
$0.6 million
at corporate for total capital, exploration and development spending of
$85.6 million
.
|
•
|
Acquisition -
On October 19, 2017, the Company completed its arrangement with Bison Gold Resources Inc. ("Bison Gold"), pursuant to which the Company acquired all of the common shares of Bison Gold. Under the terms of the Arrangement, each former Bison Gold shareholder received 0.1242 of a common share of Klondex for each Bison Gold common share held prior to the arrangement. The Company issued a total of 1,956,126 shares.
|
|
|
Years ended December 31,
|
|
Change
|
||||||||||||||||
Revenues
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||
Gold revenue
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fire Creek
|
|
$
|
140,500
|
|
|
$
|
123,403
|
|
|
$
|
93,739
|
|
|
$
|
17,097
|
|
|
$
|
29,664
|
|
Midas
|
|
44,657
|
|
|
39,783
|
|
|
33,492
|
|
|
4,874
|
|
|
6,291
|
|
|||||
Hollister
|
|
5,995
|
|
|
—
|
|
|
—
|
|
|
5,995
|
|
|
—
|
|
|||||
True North
|
|
32,512
|
|
|
9,329
|
|
|
—
|
|
|
23,183
|
|
|
9,329
|
|
|||||
|
|
223,664
|
|
|
172,515
|
|
|
127,231
|
|
|
51,149
|
|
|
45,284
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Silver revenue
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fire Creek
|
|
1,292
|
|
|
1,623
|
|
|
1,284
|
|
|
(331
|
)
|
|
339
|
|
|||||
Midas
|
|
14,913
|
|
|
24,023
|
|
|
25,566
|
|
|
(9,110
|
)
|
|
(1,543
|
)
|
|||||
Hollister
|
|
727
|
|
|
—
|
|
|
—
|
|
|
727
|
|
|
—
|
|
|||||
True North
|
|
55
|
|
|
14
|
|
|
—
|
|
|
41
|
|
|
14
|
|
|||||
|
|
16,987
|
|
|
25,660
|
|
|
26,850
|
|
|
(8,673
|
)
|
|
(1,190
|
)
|
|||||
|
|
$
|
240,651
|
|
|
$
|
198,175
|
|
|
$
|
154,081
|
|
|
$
|
42,476
|
|
|
$
|
44,094
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Total gold revenue (thousands)
|
|
$
|
223,664
|
|
|
$
|
172,515
|
|
|
$
|
127,231
|
|
Gold ounces sold
|
|
177,402
|
|
|
138,516
|
|
|
110,058
|
|
|||
Average realized price (per ounce)
|
|
$
|
1,261
|
|
|
$
|
1,245
|
|
|
$
|
1,156
|
|
|
|
|
|
|
|
|
||||||
The change in gold revenue was attributable to:
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
|
|
||||||
Change in ounces sold
|
|
$
|
48,311
|
|
|
$
|
32,956
|
|
|
|
||
Change in average realized price
|
|
2,216
|
|
|
9,795
|
|
|
|
||||
Effect of average realized price change on ounces sold increase
|
|
622
|
|
|
2,533
|
|
|
|
||||
|
|
$
|
51,149
|
|
|
$
|
45,284
|
|
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Total silver revenue (thousands)
|
|
$
|
16,987
|
|
|
$
|
25,660
|
|
|
$
|
26,850
|
|
Silver ounces sold
|
|
984,176
|
|
|
1,470,992
|
|
|
1,708,548
|
|
|||
Average realized price (per ounce)
|
|
$
|
17.26
|
|
|
$
|
17.44
|
|
|
$
|
15.72
|
|
|
|
|
|
|
|
|
||||||
The change in silver revenue was attributable to:
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
|
|
||||||
Change in ounces sold
|
|
$
|
(8,496
|
)
|
|
$
|
(3,720
|
)
|
|
|
||
Change in average realized price
|
|
(265
|
)
|
|
2,939
|
|
|
|
||||
Effect of average realized price change on ounces sold increase
|
|
88
|
|
|
(409
|
)
|
|
|
||||
|
|
$
|
(8,673
|
)
|
|
$
|
(1,190
|
)
|
|
|
|
|
Years ended December 31,
|
|
Change
|
||||||||||||||||
Cost of sales
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||
Production costs
|
|
$
|
134,311
|
|
|
$
|
106,389
|
|
|
$
|
83,318
|
|
|
$
|
27,922
|
|
|
$
|
23,071
|
|
Depreciation and depletion
|
|
47,778
|
|
|
28,242
|
|
|
22,452
|
|
|
19,536
|
|
|
5,790
|
|
|||||
Write-down of production inventories
|
|
24,766
|
|
|
2,869
|
|
|
1,201
|
|
|
21,897
|
|
|
1,668
|
|
|||||
|
|
$
|
206,855
|
|
|
$
|
137,500
|
|
|
$
|
106,971
|
|
|
$
|
69,355
|
|
|
$
|
30,529
|
|
Cost of sales by mine
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fire Creek
|
|
$
|
74,288
|
|
|
$
|
57,858
|
|
|
$
|
45,218
|
|
|
$
|
16,430
|
|
|
$
|
12,640
|
|
Midas
|
|
69,042
|
|
|
63,345
|
|
|
61,753
|
|
|
5,697
|
|
|
1,592
|
|
|||||
Hollister
|
|
15,204
|
|
|
—
|
|
|
—
|
|
|
15,204
|
|
|
—
|
|
|||||
True North
|
|
48,321
|
|
|
16,297
|
|
|
—
|
|
|
32,024
|
|
|
16,297
|
|
|||||
|
|
$
|
206,855
|
|
|
$
|
137,500
|
|
|
$
|
106,971
|
|
|
$
|
69,355
|
|
|
$
|
30,529
|
|
|
|
Years ended December 31,
|
|
Change
|
||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||
General and administrative
|
|
$
|
19,401
|
|
|
$
|
15,804
|
|
|
$
|
12,375
|
|
|
$
|
3,597
|
|
|
$
|
3,429
|
|
|
|
Years ended December 31,
|
|
Change
|
||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||
Exploration
|
|
$
|
8,246
|
|
|
$
|
12,765
|
|
|
$
|
9,813
|
|
|
$
|
(4,519
|
)
|
|
$
|
2,952
|
|
|
|
Years ended December 31,
|
|
Change
|
||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||
Development and projects costs
|
|
$
|
11,674
|
|
|
$
|
8,953
|
|
|
$
|
—
|
|
|
$
|
2,721
|
|
|
$
|
8,953
|
|
|
|
Years ended December 31,
|
|
Change
|
||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||
(Loss) gain on derivatives, net
|
|
$
|
(1,182
|
)
|
|
$
|
(7,646
|
)
|
|
$
|
3,367
|
|
|
$
|
6,464
|
|
|
$
|
(11,013
|
)
|
|
|
Years ended December 31,
|
|
Change
|
||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||
Interest expense, net
|
|
$
|
(4,117
|
)
|
|
$
|
(5,339
|
)
|
|
$
|
(7,298
|
)
|
|
$
|
1,222
|
|
|
$
|
1,959
|
|
|
|
Years ended December 31,
|
|
Change
|
||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||
Foreign currency (loss) gain, net
|
|
$
|
(8,601
|
)
|
|
$
|
651
|
|
|
$
|
15,059
|
|
|
$
|
(9,252
|
)
|
|
$
|
(14,408
|
)
|
|
|
Years ended December 31,
|
|
Change
|
||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||
Loss on debt extinguishment
|
|
$
|
(288
|
)
|
|
$
|
(519
|
)
|
|
$
|
(2,103
|
)
|
|
$
|
231
|
|
|
$
|
1,584
|
|
|
|
Years ended December 31,
|
|
Change
|
||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||
Income tax benefit (expense)
|
|
$
|
(5,596
|
)
|
|
$
|
(3,724
|
)
|
|
$
|
11,738
|
|
|
$
|
(1,872
|
)
|
|
$
|
(15,462
|
)
|
|
|
Years ended December 31,
|
|
Change
|
||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||
Net (loss) income
|
|
$
|
(23,664
|
)
|
|
$
|
(1,700
|
)
|
|
$
|
44,253
|
|
|
$
|
(21,964
|
)
|
|
$
|
(45,953
|
)
|
|
|
Years ended December 31,
|
|
Change
|
||||||||||||||||
Mine Operations - Fire Creek
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||
Ore tons mined
|
|
123,754
|
|
|
119,721
|
|
|
87,952
|
|
|
4,033
|
|
|
31,769
|
|
|||||
Average gold equivalent mined head grade (oz/ton)
(1)
|
|
0.90
|
|
|
0.90
|
|
|
1.01
|
|
|
0.00
|
|
|
(0.11
|
)
|
|||||
Gold equivalent mined (oz)
(1)
|
|
111,125
|
|
|
107,290
|
|
|
88,876
|
|
|
3,835
|
|
|
18,414
|
|
|||||
Gold mined (oz)
|
|
109,955
|
|
|
106,107
|
|
|
87,399
|
|
|
3,848
|
|
|
18,708
|
|
|||||
Silver mined (oz)
|
|
85,994
|
|
|
86,931
|
|
|
108,285
|
|
|
(937
|
)
|
|
(21,354
|
)
|
|||||
Ore tons milled
|
|
134,152
|
|
|
120,553
|
|
|
86,574
|
|
|
13,599
|
|
|
33,979
|
|
|||||
Average gold equivalent mill head grade (oz/ton)
(1)
|
|
0.88
|
|
|
0.91
|
|
|
0.97
|
|
|
(0.03
|
)
|
|
(0.06
|
)
|
|||||
Average gold mill head grade (oz/ton)
|
|
0.87
|
|
|
0.90
|
|
|
0.95
|
|
|
(0.03
|
)
|
|
(0.05
|
)
|
|||||
Average silver mill head grade (oz/ton)
(2)
|
|
0.66
|
|
|
0.77
|
|
|
1.16
|
|
|
(0.11
|
)
|
|
(0.39
|
)
|
|||||
Average gold recovery rate (%)
|
|
91.7
|
%
|
|
93.6
|
%
|
|
93.5
|
%
|
|
(1.9
|
%)
|
|
0.1
|
%
|
|||||
Average silver recovery rate (%)
(2)
|
|
82.1
|
%
|
|
86.6
|
%
|
|
92.0
|
%
|
|
(4.5
|
%)
|
|
(5.4
|
%)
|
|||||
Gold equivalent produced (oz)
(1)
|
|
108,126
|
|
|
102,383
|
|
|
78,312
|
|
|
5,743
|
|
|
24,071
|
|
|||||
Gold produced (oz)
|
|
107,143
|
|
|
101,286
|
|
|
77,055
|
|
|
5,857
|
|
|
24,231
|
|
|||||
Silver produced (oz)
|
|
72,283
|
|
|
80,593
|
|
|
92,114
|
|
|
(8,310
|
)
|
|
(11,521
|
)
|
|||||
Gold equivalent sold
(oz)
(1)
|
|
112,455
|
|
|
100,022
|
|
|
82,191
|
|
|
12,433
|
|
|
17,831
|
|
|||||
Gold sold (oz)
|
|
111,430
|
|
|
98,723
|
|
|
81,080
|
|
|
12,707
|
|
|
17,643
|
|
|||||
Silver sold (oz)
|
|
75,345
|
|
|
95,454
|
|
|
81,441
|
|
|
(20,109
|
)
|
|
14,013
|
|
|||||
Revenues and realized prices
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gold revenue (000s)
|
|
$
|
140,500
|
|
|
$
|
123,403
|
|
|
$
|
93,739
|
|
|
$
|
17,097
|
|
|
$
|
29,664
|
|
Silver revenue (000s)
|
|
1,292
|
|
|
1,623
|
|
|
1,284
|
|
|
(331
|
)
|
|
339
|
|
|||||
Total revenues (000s)
|
|
$
|
141,792
|
|
|
$
|
125,026
|
|
|
$
|
95,023
|
|
|
$
|
16,766
|
|
|
$
|
30,003
|
|
Average realized gold price ($/oz)
|
|
$
|
1,261
|
|
|
$
|
1,250
|
|
|
$
|
1,156
|
|
|
$
|
11
|
|
|
$
|
94
|
|
Average realized silver price ($/oz)
|
|
$
|
17.15
|
|
|
$
|
17.00
|
|
|
$
|
15.77
|
|
|
$
|
0.15
|
|
|
$
|
1.23
|
|
Non-GAAP Measures
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Production cash costs per GEO sold
(1)(2)
|
|
$
|
479
|
|
|
$
|
462
|
|
|
$
|
455
|
|
|
$
|
17
|
|
|
$
|
7
|
|
(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. Mined ounces are calculated using tons hauled to surface multiplied by the assays from production sampling.
|
||||||||||||||||||||
(2)
This is a non-GAAP measure; refer to the
Non-GAAP Performance Measures
section of this MD&A for additional detail.
|
|
|
Years ended December 31,
|
|
Change
|
||||||||||||||||
Mine Operations - Midas
|
|
2017
|
|
2016
|
|
2015
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||
Ore tons mined
|
|
156,927
|
|
|
193,856
|
|
|
175,173
|
|
|
(36,929
|
)
|
|
18,683
|
|
|||||
Average gold equivalent mined head grade (oz/ton)
(1)
|
|
0.33
|
|
|
0.28
|
|
|
0.30
|
|
|
0.05
|
|
|
(0.02
|
)
|
|||||
Gold equivalent mined (oz)
(1)
|
|
52,116
|
|
|
54,612
|
|
|
52,664
|
|
|
(2,496
|
)
|
|
1,948
|
|
|||||
Gold mined (oz)
|
|
38,247
|
|
|
32,444
|
|
|
30,060
|
|
|
5,803
|
|
|
2,384
|
|
|||||
Silver mined (oz)
|
|
1,009,639
|
|
|
1,569,518
|
|
|
1,663,655
|
|
|
(559,879
|
)
|
|
(94,137
|
)
|
|||||
Ore tons milled
|
|
157,363
|
|
|
190,982
|
|
|
174,714
|
|
|
(33,619
|
)
|
|
16,268
|
|
|||||
Average gold equivalent mill head grade (oz/ton)
(1)
|
|
0.32
|
|
|
0.28
|
|
|
0.31
|
|
|
0.04
|
|
|
(0.03
|
)
|
|||||
Average gold mill head grade (oz/ton)
|
|
0.24
|
|
|
0.17
|
|
|
0.18
|
|
|
0.07
|
|
|
(0.01
|
)
|
|||||
Average silver mill head grade (oz/ton)
(2)
|
|
6.05
|
|
|
8.13
|
|
|
9.39
|
|
|
(2.08
|
)
|
|
(1.26
|
)
|
|||||
Average gold recovery rate (%)
|
|
90.8
|
%
|
|
93.9
|
%
|
|
93.1
|
%
|
|
(3.1
|
%)
|
|
0.8
|
%
|
|||||
Average silver recovery rate (%)
(2)
|
|
81.9
|
%
|
|
86.7
|
%
|
|
92.3
|
%
|
|
(4.8
|
%)
|
|
(5.6
|
%)
|
|||||
Gold equivalent produced (oz)
(1)
|
|
45,062
|
|
|
48,623
|
|
|
49,397
|
|
|
(3,561
|
)
|
|
(774
|
)
|
|||||
Gold produced (oz)
|
|
34,343
|
|
|
29,824
|
|
|
28,838
|
|
|
4,519
|
|
|
986
|
|
|||||
Silver produced (oz)
|
|
780,316
|
|
|
1,345,989
|
|
|
1,513,112
|
|
|
(565,673
|
)
|
|
(167,123
|
)
|
|||||
Gold equivalent sold
(oz)
(1)
|
|
47,298
|
|
|
50,977
|
|
|
51,085
|
|
|
(3,679
|
)
|
|
(108
|
)
|
|||||
Gold sold (oz)
|
|
35,456
|
|
|
31,777
|
|
|
28,978
|
|
|
3,679
|
|
|
2,799
|
|
|||||
Silver sold (oz)
|
|
862,093
|
|
|
1,374,685
|
|
|
1,627,107
|
|
|
(512,592
|
)
|
|
(252,422
|
)
|
|||||
Revenues and realized prices
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gold revenue (000s)
|
|
$
|
44,657
|
|
|
$
|
39,783
|
|
|
$
|
33,492
|
|
|
$
|
4,874
|
|
|
$
|
6,291
|
|
Silver revenue (000s)
|
|
14,913
|
|
|
24,023
|
|
|
25,566
|
|
|
(9,110
|
)
|
|
(1,543
|
)
|
|||||
Total revenues (000s)
|
|
$
|
59,570
|
|
|
$
|
63,806
|
|
|
$
|
59,058
|
|
|
$
|
(4,236
|
)
|
|
$
|
4,748
|
|
Average realized gold price ($/oz)
|
|
$
|
1,260
|
|
|
$
|
1,252
|
|
|
$
|
1,156
|
|
|
$
|
8
|
|
|
$
|
96
|
|
Average realized silver price ($/oz)
|
|
$
|
17.30
|
|
|
$
|
17.48
|
|
|
$
|
15.71
|
|
|
$
|
(0.18
|
)
|
|
$
|
1.77
|
|
Non-GAAP Measures
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Production cash costs per GEO sold
(1)(2)
|
|
$
|
1,008
|
|
|
$
|
981
|
|
|
$
|
919
|
|
|
$
|
27
|
|
|
$
|
62
|
|
(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. Mined ounces are calculated using tons hauled to surface multiplied by the assays from production sampling.
|
||||||||||||||||||||
(2)
This is a non-GAAP measure; refer to the
Non-GAAP Performance Measures
section of this MD&A for additional detail.
|
|
|
December 31, 2017
|
||||||||||
|
|
Gold
|
|
Silver
|
|
Total
|
||||||
Estimated ounces in
Inventories
|
|
25,767
|
|
|
149,476
|
|
|
|
||||
Period-end prices
|
|
$
|
1,297
|
|
|
$
|
16.87
|
|
|
|
||
|
|
$
|
33,420
|
|
|
$
|
2,521
|
|
|
$
|
35,941
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net (loss) income
|
|
$
|
(23,664
|
)
|
|
$
|
(1,700
|
)
|
|
$
|
44,253
|
|
Net non-cash adjustments
|
|
64,004
|
|
|
36,003
|
|
|
(10,312
|
)
|
|||
Net change in non-cash working capital
|
|
(13,905
|
)
|
|
10,967
|
|
|
7,306
|
|
|||
Net cash provided by operating activities
|
|
26,435
|
|
|
45,270
|
|
|
41,247
|
|
|||
Net cash used in investing activities
|
|
(66,431
|
)
|
|
(159,693
|
)
|
|
(29,878
|
)
|
|||
Net cash provided by financing activities
|
|
15,744
|
|
|
104,608
|
|
|
5,272
|
|
|||
Effect of foreign exchange on cash balances
|
|
290
|
|
|
(1,646
|
)
|
|
(3,032
|
)
|
|||
Net increase (decrease) in cash
|
|
(23,962
|
)
|
|
(11,461
|
)
|
|
13,609
|
|
|||
Cash, beginning of period
|
|
47,636
|
|
|
59,097
|
|
|
45,488
|
|
|||
Cash, end of period
|
|
$
|
23,674
|
|
|
$
|
47,636
|
|
|
$
|
59,097
|
|
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, 2017 and 2016
|
|
Consolidated Statements of (Loss) Income for the Years Ended December 31, 2017, 2016, and 2015
|
|
Consolidated Statements of Comprehensive (Loss) Income for the Years Ended December 31, 2017, 2016, and 2015
|
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2016, and 2015
|
|
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2017, 2016, and 2015
|
|
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)
|
|
|
Note
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
Assets
|
|
|
|
|
|
|
||||
Current assets
|
|
|
|
|
|
|
||||
Cash and cash equivalents
|
|
|
|
$
|
23,674
|
|
|
$
|
47,636
|
|
Inventories
|
|
5
|
|
42,583
|
|
|
21,310
|
|
||
Prepaid expenses and other
|
|
6
|
|
7,580
|
|
|
4,678
|
|
||
Derivative assets
|
|
11
|
|
17
|
|
|
1,247
|
|
||
Total current assets
|
|
|
|
73,854
|
|
|
74,871
|
|
||
Mineral properties, plant and equipment, net
|
|
7
|
|
289,450
|
|
|
276,223
|
|
||
Derivative assets
|
|
11
|
|
—
|
|
|
1,545
|
|
||
Restricted cash
|
|
|
|
9,555
|
|
|
10,055
|
|
||
Deferred tax assets
|
|
15
|
|
18,696
|
|
|
17,284
|
|
||
Total assets
|
|
|
|
$
|
391,555
|
|
|
$
|
379,978
|
|
Liabilities
|
|
|
|
|
|
|
||||
Current liabilities
|
|
|
|
|
|
|
||||
Accounts payable
|
|
|
|
$
|
28,302
|
|
|
$
|
23,797
|
|
Accrued compensation and benefits
|
|
|
|
4,296
|
|
|
4,672
|
|
||
Derivative liabilities
|
|
11
|
|
170
|
|
|
1,721
|
|
||
Debt
|
|
8
|
|
902
|
|
|
8,502
|
|
||
Provision for legal settlement
|
|
|
|
—
|
|
|
3,000
|
|
||
Income taxes payable
|
|
|
|
2,833
|
|
|
—
|
|
||
Total current liabilities
|
|
|
|
36,503
|
|
|
41,692
|
|
||
Derivative liabilities
|
|
11
|
|
—
|
|
|
331
|
|
||
Debt
|
|
|
|
35,405
|
|
|
21,689
|
|
||
Deferred share units liability
|
|
10
|
|
945
|
|
|
812
|
|
||
Asset retirement obligations
|
|
9
|
|
21,108
|
|
|
25,436
|
|
||
Deferred tax liabilities
|
|
15
|
|
17,565
|
|
|
11,964
|
|
||
Total liabilities
|
|
|
|
111,526
|
|
|
101,924
|
|
||
Commitments and contingencies
|
|
21
|
|
|
|
|
||||
Shareholders' Equity
|
|
|
|
|
|
|
||||
Unlimited common shares authorized, no par value; 179,614,947 and 175,251,538 issued and outstanding at December 31, 2017 and 2016, respectively
|
|
|
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
|
|
|
377,714
|
|
|
363,899
|
|
||
Accumulated deficit
|
|
|
|
(81,944
|
)
|
|
(58,280
|
)
|
||
Accumulated other comprehensive loss
|
|
|
|
(15,741
|
)
|
|
(27,565
|
)
|
||
Total shareholders' equity
|
|
|
|
280,029
|
|
|
278,054
|
|
||
Total liabilities and shareholders' equity
|
|
|
|
$
|
391,555
|
|
|
$
|
379,978
|
|
KLONDEX MINES LTD.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(US dollars in thousands, except per share amounts)
|
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
Note
|
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues
|
|
|
|
$
|
240,651
|
|
|
$
|
198,175
|
|
|
$
|
154,081
|
|
Cost of sales
|
|
|
|
|
|
|
|
|
||||||
Production costs
|
|
|
|
134,311
|
|
|
106,389
|
|
|
83,318
|
|
|||
Depreciation and depletion
|
|
|
|
47,778
|
|
|
28,242
|
|
|
22,452
|
|
|||
Write-down of production inventories
|
|
5
|
|
24,766
|
|
|
2,869
|
|
|
1,201
|
|
|||
|
|
|
|
33,796
|
|
|
60,675
|
|
|
47,110
|
|
|||
Other operating expenses
|
|
|
|
|
|
|
|
|
||||||
General and administrative
|
|
|
|
19,401
|
|
|
15,804
|
|
|
12,375
|
|
|||
Exploration
|
|
|
|
8,246
|
|
|
12,765
|
|
|
9,813
|
|
|||
Development and projects costs
|
|
|
|
11,674
|
|
|
8,953
|
|
|
—
|
|
|||
Asset retirement and accretion
|
|
|
|
(1,872
|
)
|
|
2,653
|
|
|
871
|
|
|||
Business acquisition costs
|
|
|
|
—
|
|
|
2,253
|
|
|
328
|
|
|||
Provision for legal settlement
|
|
|
|
—
|
|
|
3,000
|
|
|
—
|
|
|||
Loss on equipment disposal
|
|
|
|
352
|
|
|
126
|
|
|
352
|
|
|||
(Loss) income from operations
|
|
|
|
(4,005
|
)
|
|
15,121
|
|
|
23,371
|
|
|||
Other income (expense)
|
|
|
|
|
|
|
|
|
||||||
(Loss) gain on derivatives, net
|
|
11
|
|
(1,182
|
)
|
|
(7,646
|
)
|
|
3,367
|
|
|||
Interest expense, net
|
|
|
|
(4,117
|
)
|
|
(5,339
|
)
|
|
(7,298
|
)
|
|||
Foreign currency (loss) gain, net
|
|
|
|
(8,601
|
)
|
|
651
|
|
|
15,059
|
|
|||
Loss on debt extinguishment
|
|
8
|
|
(288
|
)
|
|
(519
|
)
|
|
(2,103
|
)
|
|||
Interest income and other (expense), net
|
|
|
|
125
|
|
|
(244
|
)
|
|
119
|
|
|||
Income (loss) before tax
|
|
|
|
(18,068
|
)
|
|
2,024
|
|
|
32,515
|
|
|||
Income tax benefit (expense)
|
|
15
|
|
(5,596
|
)
|
|
(3,724
|
)
|
|
11,738
|
|
|||
Net (loss) income
|
|
|
|
$
|
(23,664
|
)
|
|
$
|
(1,700
|
)
|
|
$
|
44,253
|
|
|
|
|
|
|
|
|
|
|
||||||
Net (loss) income per share
|
|
|
|
|
|
|
|
|
||||||
Basic
|
|
16
|
|
$
|
(0.13
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
0.33
|
|
Diluted
|
|
16
|
|
$
|
(0.13
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
0.32
|
|
KLONDEX MINES LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(US dollars in thousands)
|
|
|
Years ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net (loss) income
|
|
$
|
(23,664
|
)
|
|
$
|
(1,700
|
)
|
|
$
|
44,253
|
|
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustments, net of tax (expense) benefit of ($4,154), $523, and $5,129 for the years ended December 31, 2017, 2016, and 2015, respectively.
|
|
11,824
|
|
|
(1,488
|
)
|
|
(14,598
|
)
|
|||
Comprehensive income (loss)
|
|
$
|
(11,840
|
)
|
|
$
|
(3,188
|
)
|
|
$
|
29,655
|
|
KLONDEX MINES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(US dollars in thousands)
|
|
|
|
|
Years ended December 31,
|
||||||||||
|
Note
|
|
2017
|
|
2016
|
|
2015
|
|||||||
Operating activities
|
|
|
|
|
|
|
|
|
||||||
Net (loss) income
|
|
|
|
$
|
(23,664
|
)
|
|
$
|
(1,700
|
)
|
|
$
|
44,253
|
|
Significant items not involving cash
|
|
|
|
|
|
|
|
|
||||||
Depreciation and depletion
|
|
|
|
47,940
|
|
|
28,909
|
|
|
20,350
|
|
|||
Asset retirement and accretion
|
|
|
|
(1,872
|
)
|
|
2,653
|
|
|
871
|
|
|||
Derivative fair value adjustments
|
|
|
|
981
|
|
|
2,155
|
|
|
(4,427
|
)
|
|||
Write-down of production inventories
|
|
5
|
|
6,058
|
|
|
546
|
|
|
185
|
|
|||
Foreign exchange, net
|
|
|
|
10,287
|
|
|
(18
|
)
|
|
(13,617
|
)
|
|||
Deferred tax expense (benefit)
|
|
|
|
4,189
|
|
|
251
|
|
|
(14,905
|
)
|
|||
Share-based compensation
|
|
14
|
|
3,661
|
|
|
2,678
|
|
|
3,098
|
|
|||
Deliveries under Gold Purchase Agreement
(1)
|
|
|
|
(8,040
|
)
|
|
(5,992
|
)
|
|
(3,752
|
)
|
|||
Loss on equipment disposal
|
|
|
|
352
|
|
|
126
|
|
|
352
|
|
|||
Write-off of unamortized debt issuance costs
|
|
|
|
—
|
|
|
519
|
|
|
1,533
|
|
|||
Deferred share unit expense
|
|
10
|
|
50
|
|
|
839
|
|
|
—
|
|
|||
Non-cash interest expense
|
|
|
|
398
|
|
|
337
|
|
|
—
|
|
|||
Provision for legal settlement
|
|
|
|
—
|
|
|
3,000
|
|
|
—
|
|
|||
|
|
|
|
40,340
|
|
|
34,303
|
|
|
33,941
|
|
|||
Changes in non-cash working capital
|
|
|
|
|
|
|
|
|
||||||
Trade receivables
|
|
|
|
—
|
|
|
37
|
|
|
(37
|
)
|
|||
Inventories
|
|
|
|
(15,778
|
)
|
|
(5,419
|
)
|
|
3,822
|
|
|||
Prepaid expenses and other
|
|
|
|
(2,582
|
)
|
|
3,006
|
|
|
26
|
|
|||
Accounts payable
|
|
|
|
5,034
|
|
|
11,175
|
|
|
2,703
|
|
|||
Accrued compensation and benefits
|
|
|
|
(412
|
)
|
|
2,183
|
|
|
792
|
|
|||
Provision for legal settlement
|
|
|
|
(3,000
|
)
|
|
—
|
|
|
—
|
|
|||
Income taxes payable
|
|
|
|
2,833
|
|
|
(15
|
)
|
|
—
|
|
|||
Net cash provided by operating activities
|
|
|
|
26,435
|
|
|
45,270
|
|
|
41,247
|
|
|||
Investing activities
|
|
|
|
|
|
|
|
|
||||||
Expenditures on mineral properties, plant and equipment
|
|
|
|
(65,633
|
)
|
|
(61,716
|
)
|
|
(36,598
|
)
|
|||
Change in accounts payable related to expenditures on mineral properties, plant and equipment
|
|
|
|
(935
|
)
|
|
—
|
|
|
—
|
|
|||
Change in restricted cash, net
|
|
|
|
500
|
|
|
2,023
|
|
|
6,720
|
|
|||
Cash paid for acquisitions
|
|
|
|
(363
|
)
|
|
(100,000
|
)
|
|
—
|
|
|||
Net cash used in investing activities
|
|
|
|
(66,431
|
)
|
|
(159,693
|
)
|
|
(29,878
|
)
|
|||
Financing activities
|
|
|
|
|
|
|
|
|
||||||
Issuance of share capital, net of costs
|
|
|
|
—
|
|
|
95,722
|
|
|
18,639
|
|
|||
Cash transactions related to share-based compensation
|
|
|
|
1,581
|
|
|
6,840
|
|
|
3,173
|
|
|||
Cash received from warrant exercises
|
|
|
|
1,681
|
|
|
3,328
|
|
|
2,656
|
|
|||
Proceeds from Revolver draw
|
|
8
|
|
23,000
|
|
|
12,000
|
|
|
—
|
|
|||
Repayment of Secured Promissory Note
|
|
|
|
—
|
|
|
(12,000
|
)
|
|
—
|
|
|||
Repayment of capital lease obligations
|
|
|
|
(558
|
)
|
|
(450
|
)
|
|
—
|
|
|||
Payment of debt issuance costs
|
|
|
|
(134
|
)
|
|
(832
|
)
|
|
—
|
|
|||
Repayment of Gold Purchase Agreement
|
|
8
|
|
(9,826
|
)
|
|
—
|
|
|
—
|
|
|||
Repayment of Senior Notes
|
|
|
|
—
|
|
|
—
|
|
|
(19,196
|
)
|
|||
Net cash provided by financing activities
|
|
|
|
15,744
|
|
|
104,608
|
|
|
5,272
|
|
|||
Effect of foreign exchange on cash balances
|
|
|
|
290
|
|
|
(1,646
|
)
|
|
(3,032
|
)
|
|||
Net increase (decrease) in cash
|
|
|
|
(23,962
|
)
|
|
(11,461
|
)
|
|
13,609
|
|
|||
Cash, beginning of period
|
|
|
|
47,636
|
|
|
59,097
|
|
|
45,488
|
|
|||
Cash, end of period
|
|
|
|
$
|
23,674
|
|
|
$
|
47,636
|
|
|
$
|
59,097
|
|
(1)
Represents
Revenue
less
Interest Expense
attributable to the Gold Purchase Agreement (as defined herein).
|
||||||||||||||
See
Note 19. Supplemental cash flow information
for additional details.
|
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 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
|
|
|
|
5,037,369
|
|
|
6,840
|
|
|
—
|
|
|
—
|
|
|
6,840
|
|
||||
Warrant exercises
|
|
13
|
|
2,223,566
|
|
|
3,328
|
|
|
—
|
|
|
—
|
|
|
3,328
|
|
||||
Common share awards forfeited
|
|
|
|
(62,499
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Restricted share unit vestings
|
|
|
|
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
|
|
Share-based compensation expense
|
|
14
|
|
—
|
|
|
3,661
|
|
|
—
|
|
|
—
|
|
|
3,661
|
|
||||
Option exercises
|
|
14
|
|
1,058,856
|
|
|
1,792
|
|
|
—
|
|
|
—
|
|
|
1,792
|
|
||||
Warrant exercises
|
|
13
|
|
1,140,800
|
|
|
1,681
|
|
|
—
|
|
|
—
|
|
|
1,681
|
|
||||
Restricted share unit vestings, net of shares withheld to satisfy tax withholding
|
|
14
|
|
207,627
|
|
|
(211
|
)
|
|
—
|
|
|
—
|
|
|
(211
|
)
|
||||
Common shares issued in Bison Gold Arrangement
|
|
13
|
|
1,956,126
|
|
|
6,892
|
|
|
—
|
|
|
—
|
|
|
6,892
|
|
||||
Net (loss)
|
|
|
|
—
|
|
|
—
|
|
|
(23,664
|
)
|
|
—
|
|
|
(23,664
|
)
|
||||
Foreign currency translation adjustments
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,824
|
|
|
11,824
|
|
||||
Balance at December 31, 2017
|
|
|
|
179,614,947
|
|
|
$
|
377,714
|
|
|
$
|
(81,944
|
)
|
|
$
|
(15,741
|
)
|
|
$
|
280,029
|
|
•
|
Stockpiles
represent ore that has been brought to the surface from underground for our Nevada properties and ore that has been mined for our True North property 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. 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.
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Supplies
|
|
$
|
9,300
|
|
|
$
|
5,541
|
|
Production related inventories:
|
|
|
|
|
||||
Stockpiles
|
|
18,749
|
|
|
6,604
|
|
||
In-process
|
|
12,516
|
|
|
7,316
|
|
||
Doré finished goods
|
|
2,018
|
|
|
1,849
|
|
||
|
|
$
|
42,583
|
|
|
$
|
21,310
|
|
|
|
Years ended December 31,
|
||||||||||
Type of previously incurred cost
|
|
2017
|
|
2016
|
|
2015
|
||||||
Cash production costs
|
|
$
|
18,708
|
|
|
$
|
2,323
|
|
|
$
|
1,016
|
|
Allocated depreciation and depletion
|
|
6,058
|
|
|
546
|
|
|
185
|
|
|||
Write-down of production inventories
|
|
$
|
24,766
|
|
|
$
|
2,869
|
|
|
$
|
1,201
|
|
|
|
|
|
|
|
|
||||||
Prices used in write-down calculation
|
|
|
|
|
|
|
||||||
Price per gold ounce
|
|
$
|
1,297
|
|
|
$
|
1,159
|
|
|
$
|
1,062
|
|
Price per silver ounce
|
|
$
|
16.87
|
|
|
$
|
16.24
|
|
|
$
|
13.82
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Prepaid taxes
|
|
$
|
3,496
|
|
|
$
|
1,390
|
|
Canadian taxes receivable
|
|
1,568
|
|
|
762
|
|
||
Prepaid claim maintenance and land holding costs
|
|
847
|
|
|
909
|
|
||
Vendor prepayments
|
|
696
|
|
|
315
|
|
||
Prepaid insurance
|
|
178
|
|
|
518
|
|
||
Other
|
|
795
|
|
|
784
|
|
||
|
|
$
|
7,580
|
|
|
$
|
4,678
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Gold Purchase Agreement
|
|
$
|
2,620
|
|
|
$
|
3,989
|
|
|
$
|
4,884
|
|
Promissory Note
|
|
—
|
|
|
824
|
|
|
—
|
|
|||
Revolver interest and stand-by fees
|
|
1,294
|
|
|
577
|
|
|
—
|
|
|||
Capital lease obligations
|
|
44
|
|
|
47
|
|
|
—
|
|
|||
Senior Notes
|
|
—
|
|
|
—
|
|
|
2,296
|
|
|||
Other
|
|
159
|
|
|
175
|
|
|
118
|
|
|||
Less: capitalized interest
|
|
—
|
|
|
(273
|
)
|
|
—
|
|
|||
|
|
$
|
4,117
|
|
|
$
|
5,339
|
|
|
$
|
7,298
|
|
Fiscal Year:
|
|
Capital leases
|
|
Gold Purchase Agreement
|
|
Revolver
|
|
Total
|
||||||||
2018
|
|
$
|
970
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
970
|
|
2019
|
|
484
|
|
|
—
|
|
|
38,723
|
|
|
39,207
|
|
||||
2020
|
|
480
|
|
|
—
|
|
|
—
|
|
|
480
|
|
||||
2021
|
|
337
|
|
|
—
|
|
|
—
|
|
|
337
|
|
||||
2022
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Less: Interest and amortization of issuance costs
|
|
(137
|
)
|
|
—
|
|
|
(4,550
|
)
|
|
(4,687
|
)
|
||||
Principal portion of payments
|
|
$
|
2,134
|
|
|
$
|
—
|
|
|
$
|
34,173
|
|
|
$
|
36,307
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Balance, beginning of period
|
|
$
|
25,436
|
|
|
$
|
12,387
|
|
Changes in estimates
|
|
(5,945
|
)
|
|
2,866
|
|
||
Accretion expense
|
|
1,523
|
|
|
1,122
|
|
||
Additions resulting from Hollister Acquisition - Hollister
|
|
—
|
|
|
4,481
|
|
||
Additions resulting from Hollister Acquisition - Aurora
|
|
—
|
|
|
2,677
|
|
||
Additions resulting from True North Acquisition
|
|
—
|
|
|
1,793
|
|
||
Effect of foreign currency
|
|
94
|
|
|
110
|
|
||
Balance, end of period
|
|
$
|
21,108
|
|
|
$
|
25,436
|
|
|
|
Years ended December 31,
|
||||
|
|
2017
|
|
2016
|
||
Outstanding at beginning of period
|
|
180,183
|
|
|
—
|
|
Granted
|
|
180,183
|
|
|
180,183
|
|
Redeemed
|
|
—
|
|
|
—
|
|
Outstanding at end of period
|
|
360,366
|
|
|
180,183
|
|
|
|
|
|
December 31,
|
||||||
Description
|
|
Recorded Within
|
|
2017
|
|
2016
|
||||
Gold Purchase Agreement embedded derivative
|
|
Derivative assets, current
|
|
$
|
—
|
|
|
$
|
1,247
|
|
Forward metal sales
|
|
Derivative assets, current
|
|
17
|
|
|
—
|
|
||
|
|
|
|
17
|
|
|
1,247
|
|
||
Gold Purchase Agreement embedded derivative
|
|
Derivative assets, non-current
|
|
—
|
|
|
1,545
|
|
||
|
|
|
|
$
|
17
|
|
|
$
|
2,792
|
|
|
|
|
|
|
|
|
||||
Gold Offering Agreement
|
|
Derivative liabilities, current
|
|
$
|
170
|
|
|
$
|
1,721
|
|
Forward metal sales
|
|
Derivative liabilities, current
|
|
—
|
|
|
—
|
|
||
|
|
|
|
170
|
|
|
1,721
|
|
||
Gold Offering Agreement
|
|
Derivative liabilities, non-current
|
|
—
|
|
|
331
|
|
||
|
|
|
|
$
|
170
|
|
|
$
|
2,052
|
|
|
Years ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Gold ounces
|
16,000
|
|
|
8,000
|
|
|
7,500
|
|
|||
Average forward gold price
|
$
|
1,286
|
|
|
$
|
1,308
|
|
|
$
|
1,296
|
|
Average gold spot price on delivery date
|
$
|
1,278
|
|
|
$
|
1,248
|
|
|
$
|
1,152
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Gold ounces purchased by counterparty
|
|
77,692
|
|
|
48,957
|
|
|
36,066
|
|
|||
Average gold price paid to the Company
|
|
$
|
1,231
|
|
|
$
|
1,214
|
|
|
$
|
1,146
|
|
Average gold spot price on delivery date
|
|
$
|
1,260
|
|
|
$
|
1,247
|
|
|
$
|
1,187
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Gold ounces covered
|
|
171,036
|
|
|
109,140
|
|
|
—
|
|
|||
Average price per gold ounce
|
|
$
|
1,261
|
|
|
$
|
1,244
|
|
|
$
|
—
|
|
Silver ounces covered
|
|
1,084,896
|
|
|
1,468,516
|
|
|
—
|
|
|||
Average price per silver ounce
|
|
$
|
17.24
|
|
|
$
|
16.54
|
|
|
$
|
—
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
Assets:
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
Gold Purchase Agreement embedded derivative
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,792
|
|
|
$
|
—
|
|
Forward metal sales
|
|
—
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
|
$
|
—
|
|
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,792
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Deferred share units liability
|
|
$
|
—
|
|
|
$
|
945
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
812
|
|
|
$
|
—
|
|
Gold Offering Agreement
|
|
—
|
|
|
—
|
|
|
170
|
|
|
—
|
|
|
—
|
|
|
2,052
|
|
||||||
|
|
$
|
—
|
|
|
$
|
945
|
|
|
$
|
170
|
|
|
$
|
—
|
|
|
$
|
812
|
|
|
$
|
2,052
|
|
|
|
Years ended December 31,
|
||||||
Gold Offering Agreement liability:
|
|
2017
|
|
2016
|
||||
Balance at beginning of the period
|
|
$
|
2,052
|
|
|
$
|
2,775
|
|
Gain from change in fair value
|
|
(1,882
|
)
|
|
(723
|
)
|
||
Balance at end of the period
|
|
$
|
170
|
|
|
$
|
2,052
|
|
|
|
|
|
|
||||
(Loss) gain on derivative, net:
|
|
|
|
|
||||
Settlement losses
|
|
$
|
(2,297
|
)
|
|
$
|
(1,838
|
)
|
Gain from change in fair value
|
|
1,882
|
|
|
723
|
|
||
|
|
$
|
(415
|
)
|
|
$
|
(1,115
|
)
|
|
|
December 31, 2017
|
|
December 31, 2016
|
|
December 31, 2015
|
|||||||||||||||||||||||
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$
|
|||||||||||
$1.50 - $1.99
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
1,140,800
|
|
|
0.11
|
|
$
|
1.95
|
|
|
3,178,166
|
|
|
1.61
|
|
|
$
|
1.94
|
|
$2.00 - $2.49
|
|
5,001,242
|
|
|
11.11
|
|
|
2.15
|
|
|
5,000,000
|
|
|
12.11
|
|
2.15
|
|
|
5,186,200
|
|
|
12.68
|
|
|
2.15
|
|
|||
$6.00
|
|
5,000,000
|
|
|
14.26
|
|
|
6.00
|
|
|
5,000,000
|
|
|
15.26
|
|
6.00
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
|
10,001,242
|
|
|
12.68
|
|
|
$
|
4.07
|
|
|
11,140,800
|
|
|
12.30
|
|
$
|
3.86
|
|
|
8,364,366
|
|
|
8.45
|
|
|
$
|
2.07
|
|
|
|
December 31, 2017
|
|
Common shares authorized for issuance under New Share Plan
|
|
15,985,730
|
|
Common shares reserved for issuance under all plans
|
|
(6,031,697
|
)
|
Common shares available for future grants
|
|
9,954,033
|
|
|
|
Years ended December 31,
|
||||||||||
Share-based compensation cost by award
|
|
2017
|
|
2016
|
|
2015
|
||||||
Share options
|
|
$
|
503
|
|
|
$
|
1,431
|
|
|
$
|
2,501
|
|
Restricted share units - time vesting criteria
|
|
2,419
|
|
|
1,083
|
|
|
283
|
|
|||
Restricted share units - performance vesting criteria
|
|
723
|
|
|
144
|
|
|
—
|
|
|||
Common share awards
|
|
16
|
|
|
20
|
|
|
314
|
|
|||
|
|
$
|
3,661
|
|
|
$
|
2,678
|
|
|
$
|
3,098
|
|
Capitalized as part of an asset cost
|
|
$
|
89
|
|
|
$
|
123
|
|
|
$
|
81
|
|
Recognized tax benefit
|
|
$
|
625
|
|
|
$
|
983
|
|
|
$
|
286
|
|
Unrecognized share-based compensation cost by award
|
|
December 31, 2017
|
||
Restricted share units - time vesting criteria
|
|
$
|
2,240
|
|
Restricted share units - performance vesting criteria
|
|
1,308
|
|
|
Share options
|
|
107
|
|
|
|
|
$
|
3,655
|
|
|
|
December 31,
|
||||||||||
Restricted share units - time based vesting
|
|
2017
|
|
2016
|
|
2015
|
||||||
Weighted-average estimated forfeiture rate of RSUs granted
|
|
13.33
|
%
|
|
14.21
|
%
|
|
0.04
|
%
|
|||
Fair value of RSUs vested (thousands)
|
|
$
|
1,127
|
|
|
$
|
262
|
|
|
$
|
26
|
|
Intrinsic value of RSUs vested (thousands)
|
|
$
|
950
|
|
|
$
|
495
|
|
|
$
|
26
|
|
Weighted-average grant date fair value - CDN$ (per award)
|
|
$
|
4.62
|
|
|
$
|
6.40
|
|
|
$
|
3.03
|
|
|
|
December 31,
|
||||||
Restricted share units - performance based vesting
|
|
2017
|
|
2016
|
||||
Weighted-average estimated forfeiture rate of RSUs granted
|
|
—
|
%
|
|
—
|
%
|
||
Fair value of RSUs vested (thousands)
|
|
$
|
—
|
|
|
$
|
—
|
|
Intrinsic value of RSUs vested (thousands)
|
|
$
|
—
|
|
|
$
|
—
|
|
Weighted-average grant date fair value - CDN$ (per award)
|
|
$
|
4.60
|
|
|
$
|
6.60
|
|
|
|
Year ended December 31, 2017
|
||||||||||||
Common share awards
|
|
Number of Common Share Awards
|
|
Weighted
Average Grant-Date Fair Value - CDN$ |
|
Weighted-Average Remaining Vesting Period of Unvested Common Shares (years)
|
|
Aggregate Intrinsic Value of Common Shares Outstanding (thousands)
|
||||||
Issued and outstanding, beginning of year
|
|
56,665
|
|
$
|
2.09
|
|
|
|
|
|
||||
Granted
|
|
—
|
|
|
—
|
|
|
|
|
|
||||
Vested and released
|
|
(56,665
|
)
|
|
2.09
|
|
|
|
|
|
||||
Forfeited
|
|
—
|
|
|
—
|
|
|
|
|
|
||||
Issued and outstanding, end of year
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
|
December 31,
|
||||||||||
Common share awards
|
|
2017
|
|
2016
|
|
2015
|
||||||
Weighted-average estimated forfeiture rate of common share awards granted
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|||
Fair value of common share awards vested (thousands)
|
|
$
|
95
|
|
|
$
|
333
|
|
|
$
|
255
|
|
Intrinsic value of common share awards vested (thousands)
|
|
$
|
192
|
|
|
$
|
666
|
|
|
$
|
371
|
|
Weighted-average grant date fair value - CDN$ (per award)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Year ended December 31, 2017
|
|||||||||||
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
|
|
5,233,105
|
|
$
|
2.68
|
|
|
|
|
|
|||
Granted
|
|
—
|
|
|
—
|
|
|
|
|
|
|||
Forfeited
|
|
(106,666
|
)
|
|
3.17
|
|
|
|
|
|
|||
Exercised
|
|
(1,058,856
|
)
|
|
2.23
|
|
|
|
|
|
|||
Expired
|
|
—
|
|
|
—
|
|
|
|
|
|
|||
Outstanding, end of year
|
|
4,067,583
|
|
|
$
|
2.78
|
|
|
2.28
|
|
$
|
2,367
|
|
Vested and exercisable, end of year
|
|
3,784,249
|
|
|
$
|
2.60
|
|
|
2.19
|
|
$
|
2,328
|
|
|
|
December 31,
|
||||||||||
Share options
|
|
2017
|
|
2016
|
|
2015
|
||||||
Intrinsic value of options exercised (in thousands)
|
|
$
|
3,514
|
|
|
$
|
12,277
|
|
|
$
|
2,741
|
|
Fair value of options vested (in thousands)
|
|
$
|
1,154
|
|
|
$
|
2,779
|
|
|
$
|
3,446
|
|
|
|
December 31,
|
||||||
Share options
|
|
2016
|
|
2015
|
||||
Risk-free interest rate
|
|
0.59
|
%
|
|
0.85
|
%
|
||
Forfeiture rate
|
|
13.99
|
%
|
|
12.07
|
%
|
||
Volatility
|
|
46.08
|
%
|
|
47.31
|
%
|
||
Dividend yield
|
|
—
|
%
|
|
—
|
%
|
||
Expected option life
|
|
5.0 years
|
|
|
5.0 years
|
|
||
Weighted average grant-date fair value - CDN$
|
|
$
|
1.77
|
|
|
$
|
1.19
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Current:
|
|
|
|
|
|
|
||||||
Canada
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
United States
|
|
(1,407
|
)
|
|
(3,477
|
)
|
|
(3,167
|
)
|
|||
Total current income tax (expense) benefit
|
|
(1,407
|
)
|
|
(3,477
|
)
|
|
(3,167
|
)
|
|||
Deferred:
|
|
|
|
|
|
|
|
|
||||
Canada
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
United States
|
|
(4,189
|
)
|
|
(247
|
)
|
|
14,905
|
|
|||
Total deferred income tax (expense)
|
|
(4,189
|
)
|
|
(247
|
)
|
|
14,905
|
|
|||
Total income tax (expense) benefit
|
|
$
|
(5,596
|
)
|
|
$
|
(3,724
|
)
|
|
$
|
11,738
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
2015
|
|||||||
|
|
Amount
|
|
Amount
|
|
Amount
|
||||||
Income and mining tax (expense) / benefit at statutory rate
|
|
$
|
4,697
|
|
|
$
|
(601
|
)
|
|
$
|
(8,454
|
)
|
Effects of Canada to United States statutory rates on earnings of subsidiaries
|
|
(984
|
)
|
|
(2,445
|
)
|
|
(3,033
|
)
|
|||
Effect on deferred tax balances of change in U.S. statutory rate
|
|
(10,495
|
)
|
|
—
|
|
|
—
|
|
|||
State income tax expense
|
|
(2,656
|
)
|
|
(2,515
|
)
|
|
(2,342
|
)
|
|||
Share-based compensation expense
|
|
(633
|
)
|
|
1,395
|
|
|
130
|
|
|||
Percentage depletion
|
|
4,157
|
|
|
5,993
|
|
|
309
|
|
|||
Foreign exchange rate gain / (loss)
|
|
(17
|
)
|
|
127
|
|
|
(1,174
|
)
|
|||
Deferred tax asset (recognized) / not recognized
|
|
449
|
|
|
(5,627
|
)
|
|
26,428
|
|
|||
Other
|
|
(114
|
)
|
|
(51
|
)
|
|
(126
|
)
|
|||
Income tax (expense) / benefit
|
|
$
|
(5,596
|
)
|
|
$
|
(3,724
|
)
|
|
$
|
11,738
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Mineral properties, plant and equipment
|
|
$
|
37,070
|
|
|
$
|
41,340
|
|
Net operating losses
|
|
25,736
|
|
|
14,341
|
|
||
Asset retirement obligation
|
|
4,963
|
|
|
4,729
|
|
||
Inventory
|
|
(2,114
|
)
|
|
1,479
|
|
||
Tax credits
|
|
—
|
|
|
1,402
|
|
||
Derivatives
|
|
36
|
|
|
971
|
|
||
Other
|
|
4,324
|
|
|
6,580
|
|
||
Deferred tax assets
|
|
70,015
|
|
|
70,842
|
|
||
Valuation allowances
|
|
(58,686
|
)
|
|
(62,381
|
)
|
||
Net deferred tax assets
|
|
11,329
|
|
|
8,461
|
|
||
|
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
|
||||
Share-based compensation
|
|
389
|
|
|
(396
|
)
|
||
Property, plant and equipment and inventory
|
|
(9,135
|
)
|
|
(1,494
|
)
|
||
Foreign exchange and other
|
|
(1,452
|
)
|
|
(1,251
|
)
|
||
Deferred tax liabilities
|
|
(10,198
|
)
|
|
(3,141
|
)
|
||
Net deferred tax asset
|
|
$
|
1,131
|
|
|
$
|
5,320
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Balance, beginning of year
|
|
$
|
(62,381
|
)
|
|
$
|
(20,217
|
)
|
|
$
|
(39,895
|
)
|
U.S. built-in loss not recognized
|
|
4,419
|
|
|
1,142
|
|
|
1,142
|
|
|||
AMT credits not recognized
|
|
1,392
|
|
|
(689
|
)
|
|
(410
|
)
|
|||
Recognition of US deferred tax assets
|
|
(959
|
)
|
|
—
|
|
|
17,530
|
|
|||
Canadian exploration and development expense pools
|
|
614
|
|
|
(36,538
|
)
|
|
—
|
|
|||
Canadian net operating losses
|
|
(1,771
|
)
|
|
(6,079
|
)
|
|
1,416
|
|
|||
Balance, end of year
|
|
$
|
(58,686
|
)
|
|
$
|
(62,381
|
)
|
|
$
|
(20,217
|
)
|
|
|
Quarters
|
|
|
||||||||||||||||
2017
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Year
|
||||||||||
Revenues
|
|
$
|
41,710
|
|
|
$
|
86,792
|
|
|
$
|
48,853
|
|
|
$
|
63,296
|
|
|
$
|
240,651
|
|
Cost of sales
|
|
37,637
|
|
|
58,805
|
|
|
43,175
|
|
|
67,238
|
|
|
206,855
|
|
|||||
Gross profit
|
|
4,073
|
|
|
27,987
|
|
|
5,678
|
|
|
(3,942
|
)
|
|
33,796
|
|
|||||
Net (loss) income
|
|
(10,227
|
)
|
|
7,692
|
|
|
(13,392
|
)
|
|
(7,737
|
)
|
|
(23,664
|
)
|
|||||
Basic net (loss) income per share
|
|
(0.06
|
)
|
|
0.04
|
|
|
(0.08
|
)
|
|
(0.04
|
)
|
|
(0.13
|
)
|
|||||
Diluted net (loss) income per share
|
|
(0.06
|
)
|
|
0.04
|
|
|
(0.08
|
)
|
|
(0.04
|
)
|
|
(0.13
|
)
|
|||||
2016
|
|
|
|
|
|
|
|
|
|
|
||||||||||
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
|
)
|
Year ended December 31, 2017
|
Fire Creek
|
|
Midas
|
|
Hollister
|
|
Aurora
|
|
True North
|
|
Corporate and other
|
|
Total
|
||||||||||||||
Revenues
|
$
|
141,792
|
|
|
$
|
59,570
|
|
|
$
|
6,722
|
|
|
$
|
—
|
|
|
$
|
32,567
|
|
|
$
|
—
|
|
|
$
|
240,651
|
|
Cost of sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Production costs
|
53,874
|
|
|
45,018
|
|
|
7,228
|
|
|
—
|
|
|
28,191
|
|
|
—
|
|
|
134,311
|
|
|||||||
Depreciation and depletion
|
20,414
|
|
|
18,891
|
|
|
1,457
|
|
|
—
|
|
|
7,016
|
|
|
—
|
|
|
47,778
|
|
|||||||
Write-down of production inventories
|
—
|
|
|
5,133
|
|
|
6,519
|
|
|
—
|
|
|
13,114
|
|
|
—
|
|
|
24,766
|
|
|||||||
|
67,504
|
|
|
(9,472
|
)
|
|
(8,482
|
)
|
|
—
|
|
|
(15,754
|
)
|
|
—
|
|
|
33,796
|
|
|||||||
Other operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
General and administrative
|
927
|
|
|
943
|
|
|
466
|
|
|
37
|
|
|
961
|
|
|
16,067
|
|
|
19,401
|
|
|||||||
Exploration
|
2,750
|
|
|
476
|
|
|
4,781
|
|
|
—
|
|
|
239
|
|
|
—
|
|
|
8,246
|
|
|||||||
Development and projects costs
|
—
|
|
|
—
|
|
|
10,553
|
|
|
1,121
|
|
|
—
|
|
|
—
|
|
|
11,674
|
|
|||||||
Asset retirement and accretion
|
(266
|
)
|
|
(2,463
|
)
|
|
(204
|
)
|
|
1,010
|
|
|
51
|
|
|
—
|
|
|
(1,872
|
)
|
|||||||
Loss on equipment disposal
|
36
|
|
|
340
|
|
|
—
|
|
|
—
|
|
|
(24
|
)
|
|
—
|
|
|
352
|
|
|||||||
Income (loss) from operations
|
$
|
64,057
|
|
|
$
|
(8,768
|
)
|
|
$
|
(24,078
|
)
|
|
$
|
(2,168
|
)
|
|
$
|
(16,981
|
)
|
|
$
|
(16,067
|
)
|
|
$
|
(4,005
|
)
|
Capital expenditures
|
$
|
25,991
|
|
|
$
|
16,252
|
|
|
$
|
6,716
|
|
|
$
|
1,554
|
|
|
$
|
14,472
|
|
|
$
|
648
|
|
|
$
|
65,633
|
|
Total assets
|
$
|
50,577
|
|
|
$
|
79,878
|
|
|
$
|
129,330
|
|
|
$
|
17,783
|
|
|
$
|
68,895
|
|
|
$
|
45,092
|
|
|
$
|
391,555
|
|
Year ended December 31, 2016
|
Fire Creek
|
|
Midas
|
|
Hollister
|
|
Aurora
|
|
True North
|
|
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
|
—
|
|
|
—
|
|
|
3,406
|
|
|
16
|
|
|
5,531
|
|
|
—
|
|
|
8,953
|
|
|||||||
Asset retirement and accretion
|
168
|
|
|
725
|
|
|
1,629
|
|
|
63
|
|
|
68
|
|
|
—
|
|
|
2,653
|
|
|||||||
Business acquisition costs
|
—
|
|
|
—
|
|
|
1,094
|
|
|
—
|
|
|
1,159
|
|
|
—
|
|
|
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
|
)
|
|
$
|
(6,129
|
)
|
|
$
|
(79
|
)
|
|
$
|
(13,855
|
)
|
|
$
|
(14,267
|
)
|
|
$
|
15,121
|
|
Capital expenditures
|
$
|
23,779
|
|
|
$
|
23,835
|
|
|
$
|
808
|
|
|
$
|
615
|
|
|
$
|
11,246
|
|
|
$
|
1,433
|
|
|
$
|
61,716
|
|
Total assets
|
$
|
47,606
|
|
|
$
|
99,141
|
|
|
$
|
113,990
|
|
|
$
|
15,164
|
|
|
$
|
50,171
|
|
|
$
|
53,906
|
|
|
$
|
379,978
|
|
Year ended December 31, 2015
|
Fire Creek
|
|
Midas
|
|
Hollister
|
|
Aurora
|
|
True North
|
|
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
|
|
|
December 31,
|
||||||
Long-lived assets, net:
|
2017
|
|
2016
|
||||
Nevada (Fire Creek, Midas, Hollister, Aurora, and Corporate and other)
|
$
|
236,497
|
|
|
$
|
237,105
|
|
Canada (True North and Ogama-Rockland)
(1)
|
52,953
|
|
|
39,118
|
|
||
Total
|
$
|
289,450
|
|
|
$
|
276,223
|
|
(1)
Ogama-Rockland was acquired in 2017.
|
|
|
|
|
Years ended December 31,
|
||||||||||
Customer
|
|
Segments reporting revenue
|
|
2017
|
|
2016
|
|
2015
|
||||||
Auramet International, LLC
|
|
Fire Creek, Midas, Hollister, True North
|
|
$
|
193,987
|
|
|
$
|
80,368
|
|
|
$
|
97,585
|
|
Investec Bank Plc
|
|
Fire Creek, Midas, Hollister, True North
|
|
36,503
|
|
|
94,550
|
|
|
—
|
|
|||
Franco-Nevada GLW Holdings Corp.
|
|
Midas
|
|
10,120
|
|
|
9,981
|
|
|
8,636
|
|
|||
Waterton Global Value, L.P.
|
|
Fire Creek
|
|
—
|
|
|
13,276
|
|
|
42,780
|
|
|||
Asahi Refining, Inc. (formerly Johnson Matthey Inc.)
|
|
Fire Creek, Midas
|
|
41
|
|
|
—
|
|
|
5,080
|
|
|||
|
|
|
|
$
|
240,651
|
|
|
$
|
198,175
|
|
|
$
|
154,081
|
|
|
|
Years ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Cash paid for federal and state income taxes
|
|
$
|
691
|
|
|
$
|
1,915
|
|
|
$
|
8,177
|
|
Cash paid for interest
|
|
4,117
|
|
|
5,339
|
|
|
7,298
|
|
|||
Mobile equipment acquired through capital lease obligations
|
|
1,624
|
|
|
145
|
|
|
1,371
|
|
|||
Change in accounts payable related to purchase of mineral properties, plant and equipment
|
|
935
|
|
|
—
|
|
|
—
|
|
|||
Common shares issued for Bison Arrangement
|
|
6,892
|
|
|
—
|
|
|
—
|
|
|||
Common shares and warrants issued for Hollister Acquisition
|
|
—
|
|
|
29,568
|
|
|
—
|
|
|||
Mineral properties, plant and equipment acquired through Promissory Note
|
|
—
|
|
|
12,000
|
|
|
—
|
|
|
Page
|
Report of Independent Registered Public Accounting Firm
|
|
Management’s Report on Internal Control over Financial Reporting
|
|
Consolidated Balance Sheets at December 31, 2017 and 2016
|
|
Consolidated Statements of (Loss) Income for the Years Ended December 31, 2017, 2016, and 2015
|
|
Consolidated Statements of Comprehensive (Loss) Income for the Years Ended December 31, 2017, 2016, and 2015
|
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2016, and 2015
|
|
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2017, 2016, and 2015
|
|
Notes to Consolidated Financial Statements
|
Exhibit
|
|
Filed with this
|
|
Incorporated by Reference
|
|||
Number
|
Exhibit Title
|
Form 10-K
|
Form
|
File No.
|
Exhibit
|
Date Filed
|
|
|
8-K
|
001-37563
|
2.1
|
3/15/2017
|
|||
|
8-K/A
|
001-37563
|
2.1
|
7/27/2017
|
|||
|
8-K/A
|
001-37563
|
2.2
|
7/27/2017
|
|||
|
S-8
|
333-215156
|
4.1
|
12/16/2016
|
|||
|
S-8
|
333-215156
|
4.1
|
12/16/2016
|
|||
|
8-K/A
|
001-37563
|
10.5
|
7/27/2017
|
|||
|
8-K/A
|
001-37563
|
10.1
|
7/27/2017
|
|||
|
8-K/A
|
001-37563
|
10.2
|
7/27/2017
|
|||
|
8-K/A
|
001-37563
|
10.3
|
7/27/2017
|
|||
|
8-K/A
|
001-37563
|
10.4
|
7/27/2017
|
|||
X
|
|
|
|
|
|||
X
|
|
|
|
|
|||
|
8-K
|
001-37563
|
10.2
|
3/15/2017
|
|||
|
8-K
|
001-37563
|
10.1
|
3/15/2017
|
|||
|
8-K
|
001-37563
|
10.3
|
3/15/2017
|
|||
|
8-K
|
001-37563
|
10.5
|
3/15/2017
|
|||
|
8-K
|
001-37563
|
10.4
|
3/15/2017
|
|
8-K
|
001-37563
|
10.7
|
3/15/2017
|
|||
|
8-K
|
001-37563
|
10.6
|
3/15/2017
|
|||
|
6-K
|
001-37563
|
Schedule B of Exhibit 99.2
|
5/19/2016
|
|||
|
10-K
|
001-37563
|
10.12
|
3/23/2017
|
|||
|
S-8
|
333-215156
|
4.2
|
12/16/2016
|
|||
X
|
|
|
|
|
|||
X
|
|
|
|
|
|||
X
|
|
|
|
|
|||
X
|
|
|
|
|
|||
X
|
|
|
|
|
|||
X
|
|
|
|
|
|||
X
|
|
|
|
|
|||
X
|
|
|
|
|
|||
X
|
|
|
|
|
|||
X
|
|
|
|
|
|||
X
|
|
|
|
|
|||
X
|
|
|
|
|
|||
X
|
|
|
|
|
|||
X
|
|
|
|
|
|||
X
|
|
|
|
|
|||
X
|
|
|
|
|
|||
X
|
|
|
|
|
|||
X
|
|
|
|
|
|||
|
40-F
|
001-37563
|
99.115
|
9/21/2015
|
|||
|
8-K
|
001-37563
|
99.1
|
8/10/2017
|
|||
|
8-K
|
001-37563
|
99.1
|
3/5/2018
|
|||
|
8-K
|
001-37563
|
99.1
|
5/18/2017
|
|||
101.INS
|
XBRL Instance Document***
|
X
|
|
|
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema***
|
X
|
|
|
|
|
|
|
|
KLONDEX MINES LTD.
|
|
|
|
|
Registrant
|
|
Date:
|
March 14, 2018
|
|
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 14, 2018
|
Paul Andre Huet
|
|
|||
|
|
|
|
|
/s/ Barry Dahl
|
|
Chief Financial Officer and Authorized U.S. Representative (Principal Financial Officer and Principal Accounting Officer)
|
|
March 14, 2018
|
Barry Dahl
|
|
|||
|
|
|
|
|
/s/ Richard J. Hall
|
|
Chairman of the Board and Director
|
|
March 14, 2018
|
Richard J. Hall
|
|
|||
|
|
|
|
|
/s/ Blair Schultz
|
|
Director
|
|
March 14, 2018
|
Blair Schultz
|
|
|||
|
|
|
|
|
/s/ Rodney Cooper
|
|
Director
|
|
March 14, 2018
|
Rodney Cooper
|
|
|||
|
|
|
|
|
/s/ Mark Daniel
|
|
Director
|
|
March 14, 2018
|
Mark Daniel
|
|
|||
|
|
|
|
|
/s/ Jamie Haggarty
|
|
Director
|
|
March 14, 2018
|
Jamie Haggarty
|
|
|||
|
|
|
|
|
/s/ William Matlack
|
|
Director
|
|
March 14, 2018
|
William Matlack
|
|
|||
|
|
|
|
|
/s/ Charles Oliver
|
|
Director
|
|
March 14, 2018
|
Charles Oliver
|
|
AND:
|
KLONDEX CANADA LTD.
,
0985472 B.C. LTO
,
KLONDEX HOLDINGS (USA) INC.
,
KLONDEX MIDAS HOLDINGS LIMITED
,
KLONDEX MIDAS OPERATIONS INC.
and
KLONDEX GOLD & SILVER MINING COMPANY
,
as Guarantors
|
(a)
|
Schedule 2 Requests;
|
(b)
|
Schedule 3 Form of Transfer Certificate;
|
(c)
|
Schedule 4 Form of Assignment Agreement;
|
(d)
|
Schedule 5 Form of Amendment Confirmation; and
|
(e)
|
Schedule 6 Form of Compliance Certificate.
|
(f)
|
the Obligors delivering to the Lender an electronic or facsimile executed copy (with subsequent delivery of originally executed copies) of a customary legal written opinion of Bennett Jones LLP;
|
(g)
|
no event shall have occurred or circumstance exist that has, or could reasonably be expected to have, a Material Adverse Effect; and
|
(h)
|
the Borrowers and each other Obligor paying all accrued and unpaid fees and expenses of the Lender (including, without limitation, the fees and expenses of counsel and the fees set out in the Fee Letter) in connection with the negotiation, preparation and execution of this Amendment and the consummation of the transactions contemplated hereby.
|
KLONDEX MINES LTD.
|
|
Per:
|
/s/ Barry Dahl
|
|
Name:Barry Dahl
Title:Chief Financial Officer
|
KLONDEX CANADA LTD.
|
|
Per:
|
/s/ Barry Dahl
|
|
Name:Barry Dahl
Title:Treasurer and Secretary
|
0985472 B.C. LTD
|
|
Per:
|
/s/ Barry Dahl
|
|
Name:Barry Dahl
Title:Treasurer and Secretary
|
KLONDEX HOLDINGS (USA) INC.
|
|
Per:
|
/s/ Barry Dahl
|
|
Name:Barry Dahl
Title:Treasurer
|
KLONDEX MIDAS HOLDINGS LIMITED
|
|
Per:
|
/s/ Barry Dahl
|
|
Name:Barry Dahl
Title:Treasurer
|
KLONDEX MIDAS OPERATIONS INC.
|
|
Per:
|
/s/ Barry Dahl
|
|
Name:Barry Dahl
Title:Treasurer
|
KLONDEX GOLD & SILVER MINING COMPANY
|
|
Per:
|
/s/ Barry Dahl
|
|
Name:Barry Dahl
Title:Treasurer
|
INVESTEC BANK PLC
,
as Lender and Hedge Counterparty
|
|
Per:
|
/s/ Guy Stringer
|
|
Name:Guy Stringer
Title:Authorised Signatory
|
Per:
|
/s/ Steven Cowland
|
|
Name:Steven Cowland
Title:Authorised Signatory
|
INVESTEC BANK PLC
,
as Security Agent
|
|
Per:
|
/s/ Guy Stringer
|
|
Name:Guy Stringer
Title:Authorised Signatory
|
Per:
|
/s/ Steve Cowland
|
|
Name:Steven Cowland
Title:Authorised Signatory
|
1.
|
We refer to the Agreement. This is a Utilization Request. Terms defined in the Agreement have the same meaning in this Utilization Request unless given a different meaning in this Utilization Request.
|
2.
|
We wish to borrow a Loan on the following terms:
|
Proposed Utilization Date:
|
[ ] (or, if that is not a Business Day, the next Business Day)
|
|
|
Currency of Loan:
|
[ ]
|
|
|
Amount:
|
[ ] or, if less, the Available Commitment
|
|
|
Interest Period:
|
[ ]
|
3.
|
We confirm that each condition specified in clause 4.2 (
Further conditions precedent
) is satisfied on the date of this Utilization Request.
|
4.
|
[This Loan is to be made in [whole]/[part] for the purpose of refinancing [
identify maturing Loan
.] [The proceeds of this Loan should be credited to [
account
].]
|
5.
|
This Utilization Request is irrevocable.
|
1.
|
We refer to the Agreement. This is an Extension Request. Terms defined in the Agreement have the same meaning in this Extension Request unless given a different meaning in this Extension Request.
|
2.
|
We hereby request pursuant to clause 6.2 (
Extension option
) to extend the Original Final by a further 12 month period to _______________.
|
3.
|
We confirm that no Default is continuing or would result from this Extension Request.
|
4.
|
This Extension Request is irrevocable.
|
1.
|
We refer to the Agreement. This is an Amendment Request. Terms defined in the Agreement have the same meaning in this Amendment Request unless given a different meaning in this Amendment Request.
|
2.
|
We hereby request pursuant to clause 2.2(a) (
Amendment to Commitment
) that the Commitment be amended to US$[ ].
|
3.
|
We confirm that no Default is continuing or would result from this Amendment Request.
|
4.
|
This Amendment Request is irrevocable.
|
1.
|
We refer to the Facility Agreement and to the Intercreditor Agreement (as defined in the Facility Agreement). This agreement (the Agreement) shall take effect as a Transfer Certificate for the purpose of the Facility Agreement. Terms defined in the Facility Agreement have the same meaning in this Agreement unless given a different meaning in this Agreement.
|
2.
|
We refer to clause 23.4 (
Procedure for transfer
):
|
a.
|
The Existing Lender and the New Lender agree to the Existing Lender transferring to the New Lender by novation, and in accordance with clause 23.4 (
Procedure for transfer
), all of the Existing Lender's rights and obligations under the Agreement and the other Finance Documents which relate to that portion of the Existing Lender's Commitment and participations in Loans under the Agreement as specified in the Schedule.
|
b.
|
The proposed Transfer Date is [ ].
|
c.
|
The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of clause 28.2 (
Addresses
) are set out in the Schedule.
|
3.
|
The New Lender expressly acknowledges the limitations on the Existing Lender's obligations set out in paragraph (c) of clause 23.3 (
Limitation of responsibility of Existing Lender
).
|
4.
|
This Transfer Certificate may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Transfer Certificate.
|
5.
|
This Transfer Certificate and any non-contractual obligations arising out of or in connection with it are governed by laws of the Province of British Columbia, and the federal laws of Canada as applicable therein.
|
6.
|
This Transfer Certificate has been entered into on the date stated at the beginning of this Transfer Certificate.
|
[Existing Lender]
By:
|
|
[New Lender]
By:
|
1.
|
We refer to the Facility Agreement and to the Intercreditor Agreement (as defined in the Facility Agreement). This is an Assignment Agreement. This agreement (the Agreement) shall take effect as an Assignment Agreement for the purpose of the Facility Agreement and as a Creditor/Creditor Representative Accession Undertaking for the purposes of the Intercreditor Agreement (and as defined in the Intercreditor Agreement). Terms defined in the Facility Agreement have the same meaning in this Agreement unless given a different meaning in this Agreement.
|
2.
|
We refer to clause 23.5 (
Procedure for assignment
):
|
a.
|
The Existing Lender assigns absolutely to the New Lender all the rights of the Existing Lender under the Agreement and the other Finance Documents and in respect of the Transaction Security which relate to that portion of the Existing Lender's Commitment and participations in Loans under the Agreement as specified in the Schedule.
|
b.
|
The Existing Lender is released from all the obligations of the Existing Lender which correspond to that portion of the Existing Lender's Commitment and participations in Loans under the Agreement specified in the Schedule.
|
c.
|
The New Lender becomes a Party as the Lender and is bound by obligations equivalent to those from which the Existing Lender is released under paragraph (b) above.
|
3.
|
The proposed Transfer Date is [ ].
|
4.
|
On the Transfer Date the New Lender becomes Party to the Finance Documents as the Lender.
|
5.
|
The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of clause 28.2 (
Addresses
) are set out in the Schedule.
|
6.
|
The New Lender expressly acknowledges the limitations on the Existing Lender's obligations set out in paragraph (c) of clause 23.3 (
Limitation of responsibility of Existing Lender
).
|
7.
|
This Assignment Agreement acts as notice to the Lender (on behalf of each Finance Party) and, upon delivery in accordance with clause 23.6 (
Copy of Transfer Certificate, Assignment Agreement or Amendment Confirmation to Borrower
), to the Company (on behalf of each Obligor) of the assignment referred to in this Assignment Agreement.
|
8.
|
This Assignment Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Assignment Agreement.
|
9.
|
This Assignment Agreement and any non-contractual obligations arising out of or in connection with it are governed by laws of the Province of British Columbia, and the federal laws of Canada as applicable therein.
|
10.
|
This Assignment Agreement has been entered into on the date stated at the beginning of this Assignment Agreement.
|
1.
|
We refer to the Facility Agreement. This agreement (the Agreement) shall take effect as an Amendment Confirmation for the purpose of the Facility Agreement. Terms defined in the Facility Agreement have the same meaning in this Agreement unless given a different meaning in this Agreement.
|
2.
|
We refer to [clause 2.2 (
Amendment to Commitment
)] of the Facility Agreement.
|
3.
|
The proposed date on which the amendment is to take effect (the Amendment Date) is [ ].
|
4.
|
On the Amendment Date, the Commitment shall be amended to be US$[ ].
|
5.
|
This Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement.
|
6.
|
This Agreement and any non-contractual obligations arising out of or in connection with it are governed by the laws of the Province of British Columbia, and the federal laws of Canada as applicable therein.
|
7.
|
This Agreement has been entered into on the date stated at the beginning of this Agreement.
|
1.
|
We refer to the Agreement. This is a Compliance Certificate. Terms defined in the Agreement have the same meaning when used in this Compliance Certificate unless given a different meaning in this Compliance Certificate.
|
2.
|
We confirm that: [Insert details of covenants to be certified]
|
3.
|
[We confirm that no Default is continuing.]
1*
|
AND:
|
KLONDEX CANADA LTD., 0985472 B.C. LTD, KLONDEX HOLDINGS (USA) INC., KLONDEX MIDAS HOLDINGS LIMITED, KLONDEX MIDAS OPERATIONS INC. and KLONDEX GOLD & SILVER MINING COMPANY
, as Guarantors
|
(a)
|
the Obligors delivering to the Lender an electronic or facsimile executed copy (with subsequent delivery of originally executed copies) of this Amendment;
|
(b)
|
the Obligors delivering to the Lender an electronic or facsimile executed copy (with subsequent delivery of originally executed copies) of a certificate, in form and substance satisfactory to the Lender, from a knowledgeable senior officer of each Obligor certifying in such person's official capacity (and not in an individual capacity and without personal liability) that,
inter alia
, immediately after, the Amendment Effective Date, (i) no Default or Event of Default has occurred and is continuing, (ii) the representations and warranties in the Finance Documents are true and correct in all respects, except to the extent such representations and warranties specifically refer to an earlier date, in which case, they shall be true and correct in all respects as of such earlier date, and (iii) the Obligors on a consolidated basis are in pro forma compliance with the financial covenants set forth in Section 20 of the Facility Agreement (with calculations attached thereto);
|
(c)
|
the Lender shall have received executed copies of the documents and copies of all other deliverables set forth in this Amendment;
|
(d)
|
no event shall have occurred or circumstance exist that has, or could reasonably be expected to have, a Material Adverse Effect; and
|
(e)
|
the Borrowers and each other Obligor paying all accrued and unpaid fees and expenses of the Lender in connection with the negotiation, preparation and execution of this Amendment and the consummation of the transactions contemplated hereby.
|
KLONDEX MINES LTD.
|
|
Per:
|
/s/ Barry Dahl
|
|
Name:Barry Dahl
Title:Chief Financial Officer
|
KLONDEX CANADA LTD.
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Per:
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/s/ Barry Dahl
|
|
Name:Barry Dahl
Title:Treasurer and Secretary
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0985472 B.C. LTD
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Per:
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/s/ Barry Dahl
|
|
Name:Barry Dahl
Title:Treasurer and Secretary
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KLONDEX HOLDINGS (USA) INC.
|
|
Per:
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/s/ Barry Dahl
|
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Name:Barry Dahl
Title:Treasurer
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KLONDEX MIDAS HOLDINGS LIMITED
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|
Per:
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/s/ Barry Dahl
|
|
Name:Barry Dahl
Title:Treasurer
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KLONDEX MIDAS OPERATIONS INC.
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Per:
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/s/ Barry Dahl
|
|
Name:Barry Dahl
Title:Treasurer
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KLONDEX GOLD & SILVER MINING COMPANY
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Per:
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/s/ Barry Dahl
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Name:Barry Dahl
Title:Treasurer
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INVESTEC BANK PLC
,
as Lender and Hedge Counterparty
|
|
Per:
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/s/ Oliver Tagg
|
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Name:Oliver Tagg
Title:Authorised Signatory
|
Per:
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/s/ Mandeep Takhar
|
|
Name:Mandeep Takhar
Title:Authorised Signatory
|
INVESTEC BANK PLC
,
as Security Agent
|
|
Per:
|
/s/ Anthony Rowe
|
|
Name:Anthony Rowe
Title:Authorised Signatory
|
Per:
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/s/ Oliver Tagg
|
|
Name:Oliver Tagg
Title:Authorised Signatory
|
|
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Name
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State or other Jurisdiction of Incorporation
|
|
Aggregate Ownership
|
Klondex Canada Ltd.
|
|
British Columbia
|
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100%
|
0985472 B.C. Ltd.
|
|
British Columbia
|
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100%
|
Bison Gold Resources, Inc.
|
|
Ontario
|
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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.
|
The amended and restated technical report titled “Preliminary Feasibility Study for the Midas Mine, Elko County, Nevada” dated April 2, 2015, with an effective date of August 31, 2014;
|
2.
|
The technical report titled “Technical Report for the True North Mine, Bissett, Manitoba, Canada” dated May 12, 2017, with an effective date of March 31, 2017;
|
3.
|
The amended and restated technical report titled “Technical Report and Pre-Feasibility Study for the Hollister Underground Mine, Elko County, Nevada” dated August 9, 2017, with an effective date of May 31, 2017; and
|
4.
|
The amended and restated technical report titled “Technical Report for the Fire Creek Project, Lander County, Nevada, Amended” dated March 2, 2018, with an effective date of November 30, 2017.
|
1.
|
The amended and restated technical report titled “Preliminary Feasibility Study for the Midas Mine, Elko County, Nevada” dated April 2, 2015, with an effective date of August 31, 2014;
|
2.
|
The technical report titled “Technical Report for the True North Mine, Bissett, Manitoba, Canada” dated May 12, 2017, with an effective date of March 31, 2017;
|
3.
|
The amended and restated technical report titled “Technical Report and Pre-Feasibility Study for the Hollister Underground Mine, Elko County, Nevada” dated August 9, 2017, with an effective date of May 31, 2017; and
|
4.
|
The amended and restated technical report titled “Technical Report for the Fire Creek Project, Lander County, Nevada, Amended” dated March 2, 2018, with an effective date of November 30, 2017.
|
1.
|
The amended and restated technical report titled “Preliminary Feasibility Study for the Midas Mine, Elko County, Nevada” dated April 2, 2015, with an effective date of August 31, 2014; and
|
2.
|
The amended and restated technical report titled “Technical Report for the Fire Creek Project, Lander County, Nevada, Amended” dated March 2, 2018, with an effective date of November 30, 2017.
|
1.
|
The amended and restated technical report titled “Preliminary Feasibility Study for the Midas Mine, Elko County, Nevada” dated April 2, 2015, with an effective date of August 31, 2014;
|
2.
|
The technical report titled “Technical Report for the True North Mine, Bissett, Manitoba, Canada” dated May 12, 2017, with an effective date of March 31, 2017;
|
3.
|
The amended and restated technical report titled “Technical Report and Pre-Feasibility Study for the Hollister Underground Mine, Elko County, Nevada” dated August 9, 2017, with an effective date of May 31, 2017; and
|
4.
|
The amended and restated technical report titled “Technical Report for the Fire Creek Project, Lander County, Nevada, Amended” dated March 2, 2018, with an effective date of November 30, 2017.
|
(i)
|
the information prepared by me or under my supervision, and approved by me, that is of a scientific or technical nature relating to (a) the Midas mine subsequent to August 31, 2014, (b) the Fire Creek Mine subsequent to November 30, 2017, (c) the Hollister Mine subsequent to May 31, 2017, and (d) the True North mine subsequent to March 31, 2017 (collectively, the “Scientific and Technical Information”); and
|
(ii)
|
the information derived from the amended and restated technical report titled “Technical Report and Pre-Feasibility Study for the Hollister Underground Mine, Elko County, Nevada” dated August 9, 2017, with an effective date of May 31, 2017 (the “Technical Report”).
|
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.
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Date:
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March 14, 2018
|
By:
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/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 14, 2018
|
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 14, 2018
|
By:
|
/s/ Paul Andre Huet
|
|
|
|
|
Paul Andre Huet
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
/s/ Barry Dahl
|
|
|
|
|
Barry Dahl
|
|
|
|
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Chief 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
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
29,659
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
Fire Creek 2602691
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
17,281
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Hollister 2602535
|
|
11
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
11,554
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Aurora 2602235
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
1,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
|
29
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
59,494
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
(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 violations of mandatory health or safety standards that could significantly and substantially contribute to the cause and effect of a coal or other mine safety or health hazard under Section 104 of the Mine Act for which we received a citation from the MSHA.
|
(3)
|
Represents the total number of orders issued under Section 104(b) of the Mine Act, which represents a failure to abate a citation issued 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, 2017
.
|
(8)
|
Represents the total number of mining-related fatalities, during the
year ended
December 31, 2017
, at mines subject to the Mine Act pursuant to Section 1503(a)(1)(G) of the Financial Reform Act and Item 104(a)(1)(vii) of Regulation S-K.
|
(9)
|
Represents the total number of legal actions pending as of
December 31, 2017
before the Federal Mine Safety and Health Review Commission as required by Section 1503(a) of the Financial Reform Act and Item 104(a)(3) of Regulation S-K. See
"Pending Legal Actions"
section below for more detail.
|
(10)
|
Represents the total number of legal actions instituted during the
year ended
December 31, 2017
before the Federal Mine Safety and Health Review Commission.
|
(11)
|
Represents the total number of legal actions resolved during the
year ended
December 31, 2017
before the Federal Mine Safety and Health Review Commission.
|
(a)
|
Contests of citations and orders: 0
|
|||
(b)
|
Contests of proposed penalties: 0
|
|||
(c)
|
Complaints for compensation: 0
|
|||
(d)
|
Complaints of discharge, discrimination or interference: 0
|
|||
(e)
|
Applications for temporary relief: 0
|
|||
(f)
|
Appeals of judges' decisions or orders to the Federal Mine Safety and Health Review Commission: 0
|