Klondex buys idled Rice Lake gold mine for US$32M

VANCOUVER -- Klondex Mines Ltd. (TSX: KDX) will pay US$32 million to acquire the idled Rice Lake gold mine and mill complex near Bissett, Man.

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Klondex says the Manitoba property complements its flagship operations in Nevada, which includes the Midas gold mining and milling complex.

Its president and chief executive, Paul Andre Huet, says Klondex will be able to use equipment from Midas and its expertise in underground mining for the Rice Lake operation, which has operated intermittently since 1931. It was last idled in May.

The Rice Lake complex was formerly the core asset of San Gold Corp. but sold to a Manitoba numbered economy in June as part of a court-supervised bankruptcy.

Under the proposed acquisition, Klondex will pay US$20 million in cash and provide an interest-bearing note for the other US$12 million, to be paid down in three equal annual instalments.

In addition to the Rice Lake complex, Klondex gets a 50 per cent interest in the Tully gold project near Timmins, Ont., and a 32 per cent stake in SGX Resources.

"This acquisition represents an excellent opportunity for Klondex to acquire a production ready gold asset in a top ranking mining jurisdiction in Canada," Huet said in a statement.

He said Klondex would be able to redeploy excess equipment and its operational expertise from its other operations, which include the Fire Creek mine and Midas complex in Nevada.

"Even with this acquisition, our number one strategic objective is to fill the Midas mill from our Nevada operations," Huet said.



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