OPERATOR: CARLIN RESOURCES, LLC
ROYALTY: NSR: 3-5%
Hollister is a historic underground mine with past production of approximately 425,000 ounces. The mine is located at the northern end of the Carlin Trend in the Ivanhoe Mining District, Elko County, Nevada, approximately 121 km east-northeast of Winnemucca, Nevada. Franco-Nevada holds a 3-5% NSR royalty on approximately 28 km2 of the Hollister project as well as a sliding scale NSR, which is subject to gold price and production thresholds and is capped at $3.5 million.
The mine was operated by Great Basin Gold Limited until it was acquired in April 2013 by Waterton Global Resources Management (“Waterton”) through a bankruptcy proceeding with mining suspended in November 2013. Klondex, which operates the Fire Creek/Midas assets highlighted on page 35, purchased the Hollister project in the third quarter of 2016 from a Waterton subsidiary, Carlin Resources, LLC. The acquisition was in consideration for $80 million in cash, 2.6 million common shares of Klondex and 5.0 million warrants to purchase common shares of Klondex.
The acquisition by Klondex offers potential synergies to Hollister including shorter trucking distances to the Midas Mill, lower milling costs and reduced G&A costs. Klondex estimates production of 41,000-45,000 ounces in 2017 which is comprised of a bulk sampling mining program. Klondex is also progressing with an underground definition drill program in the Gloria zone.