MANITOBA – Klondex Mines of Vancouver has entered into a definitive agreement to acquire the Rice Lake gold mine and mill complex in Bissett for US$32 million. Klondex will pay US$20 million in cash and issue a US$12 million promissory note.
Work at the Rice Lake complex was suspended when former owner San Gold sought bankruptcy protection earlier this year. San Gold had made numerous high grade gold discoveries in the Hinge and 007 zones as recently as last year, but the downturn in the gold price took its toll.
The Rice Lake mine produced more than 450,000 oz of gold since 2000. At the end of 2014 the property had proven and probable resources of 2.63 million tonnes grading 5.9 g/t Au and containing 455,000 oz. Measured and indicated resources were 3.17 million tonnes at 0.200 g/t, and the inferred resource was 5.83 million oz at 6.5 g/t Au. Approximately 1.1 million oz of gold is thought to be contained in the total resource.
Klondex operates the Fire Creek and Midas gold mines in Nevada. The company has expertise in narrow vein mining at those projects and plans to apply the same grade and dilution control methods when Rice Lake is reopened. A more selective mining approach at Rice Lake will reduce tonnage, minimize dilution and result in higher margins per ounce, said Klondex.
The Rice Lake acquisition presentation is posted at KlondexMines.com.