This morning I take a look at news from two high-grade producers Klondex Mines, and Excellon Resources.
Klondex Mines - (KDX:TSX) - Klondex Mines continues to deliver fantastic operational results for shareholders. In the third quarter, Klondex produced 33,846 gold-equivalent ounces at its two mines in Nevada. CEO Paul Huet and his team have consistently hit or exceeded production guidance.
The strong operating performance in the quarter has seen guidance increased by management for the year by an additional 5,000 AuEq ounces.
Investors will need to wait another couple weeks for financial results but I would expect another quarter of free cash flow.
Klondex reports third-quarter financial results on Nov. 11, with a conference call and webcast the following morning at 10:30 a.m. ET/7:30 a.m. PT.
Klondex has one huge advantage over its peers: high-grade gold. The Fire Creek project is one of the top underground gold mines in the world at about 45 g/t and Midas ranks high as well, at about 13 g/t.
I did notice in the quarterly results that the gold-equivalent grade has been dropping quarter over quarter. It was down to 13.4 g/t from 16.5 g/t in the first quarter.
Even 13.4 g/t is miles ahead of its peers, but something to watch for KDX investors.
Paul Andre Huet, Klondex President and Chief Executive Officer commented, "Our operations continue to perform as planned. We had another strong operating performance in the third quarter selling 33,846 gold equivalent ounces and are now increasing our annual production guidance for the second straight quarter by another 5,000 ounces to between 130,000 and 135,000 gold equivalent ounces for the year, primarily due to additional working faces, positive reconciliations and ongoing dilution management at both Midas and Fire Creek."
Klondex shareholders are having an excellent year even though gold is down year to date. Mining high-grade ore allows KDX to have low all-in sustaining cost of sub US$800 per ounce.
Klondex has been reinvesting in growth and sustaining capital with the profits and has spent $23 million of the $43 million planned for 2015. Cash balance at the end of the second quarter was $68 million.
If you are looking for a high-grade small junior gold producer that is generating free cash flow, KDX is worthy of some due diligence.
Excellon Resources - (EXN:TSX) - Excellon is one of the world's highest-grade silver producers with operations in Mexico. Most companies would kill to have the grade EXN has, 547 g/t this quarter. The problem for shareholders is that even with the high grades, EXN has struggled to make a profit.
Third-quarter results will be out on Nov. 12.
I would expect another small loss for the quarter with lower silver, lead and zinc prices.
"The third quarter saw improved production with better grades and an improved cost profile," stated Brendan Cahill, president and chief executive officer. "We are aiming for the lower end of our production targets for the year due to the delay in the implementation of the optimization plan for Platosa. The optimization plan continues to be the company's top priority, with our technical teams currently working to improve the project's efficacy and cost. We expect to provide an update on the optimization plan shortly."
A tough year for $EXN shareholders, as management attempts to optimize the mine plan and turn operations around. Third-quarter results will show how the turnaround is progressing.
I love to follow potential turnaround stories because if they happen, you see excellent share price appreciation. A couple examples are Lake Shore Gold and Kirkland Lake Gold.
Read: Excellon Reports Third Quarter 2015 Production
Thanks for reading.
This is not investment advice. All facts are to be checked and verified by reader. As always please do your own due diligence.