Category Archives: Special Situation

The “New” Klondex Mines – Nevada Gold Moving to Initial Production

Feb. 19, 2013     Klondex Mines Ltd.  TSX: KDX or OTCQX: KLNDF    $1.25

High-Grade Nevada Gold Mine Transformed the Past 8 Months
by New CEO, Team, Plan & Funding; Now Targeting Initial Gold
Production by Year-End with a Team That Has Done it Before

Site View Photo

Why Klondex? – Why Now? KDX has been transformed over 8 months by a new Board & management. Key issues have been addressed, a realistic plan and budget confirmed, $30M in funding raised, impressive exploration results continue, & management is executing on its goals to reach initial bulk sampling. The “New Klondex” story is not yet well known, but the company is working to change that.

KDX Table 1

Klondex Strengths:

  • CEO led Midas mine (Newmont) & Hollister mine from start-up to production of
    over 80k gold oz/year
  • Clear plan for continued development & initial production at Fire Creek by end of 2013
  • Capital in place to fund 2013 program
  • Clear goals: new resource, drilling, vent raise, water management, milling agreement, board additions, bulk sampling
  • Recent exploration has shown high grades, Main Zone continuity and discovered new West Zone
  • Under-explored: meaningful exploration potential
  • In heart of Nevada gold country; good geologic, regulatory & infrastructure environment
  • Low-Cap-Ex path to initial production
  • Significant valuation discount on EV/Resource basis
  • “New Klondex” story not well known

KDX Table 2

About: Klondex Mines is a gold exploration & development company focused on its Fire Creek gold property in Nevada with a gold resource of 1.6M oz. indicated and 0.5M oz. inferred.
Klondex has developed an underground decline and workings to access mineralization for in-fill and exploration drilling as well as bulk sampling. Fire Creek is permitted for small scale, bulk sample gold production anticipated to commence by year-end 2013.

Recent Visible Gold Discovery at Fire Creek

Visible Gold

KDX Intercepts   ✪  212.924.9800   ✪

Disclosure: The parent of CG Focus List, Catalyst Global LLC, is currently providing and has provided investor relations services to Klondex Mines Ltd. since 2007. Coverage of Klondex Mines by CG Focus List is completely independent of Catalyst Global’s IR activities and reflects the belief of several major investors that Klondex shares represent significant value at this time. Neither CG Focus List nor Catalyst Global have received compensation of any kind for the preparation and distribution of this Alert.

CG Focus List and/or its affiliates do have long positions in Klondex shares but per our trading policy we have not bought or sold shares in the last five trading days following today’s article and will not effect any transactions in Klondex stock for five days following the distribution of today’s article.

EBIX, Inc. Nasdaq: EBIX – Our Valentine?

Insurance Services/Software Provider EBIX, Inc. (EBIX) – Our Valentine? 2/13/13
(Alert issued intraday, stock closed at $18.42, up $1.24 (7%) on 1.3M shares)

EBIX Chart

13M shares short out of 37M… we hope the shorts are saying… “What me worry?”

Our planned approach for CG Focus List was to prepare a more formal and thorough one page Alert on each idea, but for those who know us and EBIX – and given time constraints – we threw this together to re-flag the idea for you on a day when the stock is acting “better.” We were not planning to profile EBIX at this time, but today’s trading was brought to our attention by a chartist we know who had told us the stock was a “Sell” on a technical basis the past two years; he now thinks it looks attractive but not conclusive.  We have been working on what was going to be our first idea for CG Focus List. It is almost ready for the presses so you will see one more idea in the next few days.  Then we’ll get back to asking for your favorite stock ideas!  Please be generous and please spread the word about CG Focus List.

As long term believers (and shareholders) in the EBIX story the past 10 years (though we have seen the stock stagnate the past 2 years under waves of rumor & innuendo while getting progressively cheaper…) today’s trading activity makes us think it’s not hopeless that Wall Street could love again… Thank you St. Valentine!?

The naysayers can sling all the mud they like about the stock & the CEO (a former client for 2 years ~2004-2006), but the growth, cash flow and business premise all seem very real; and the execution over 10 years nothing short of amazing. Further, we are hopeful that organic growth will seep into the numbers more each successive quarter as the sales team and selling/cross-selling initiatives they have put into place the last year or two mature at the same time the Company’s expanded size and scope make it more likely to win new or additional business from larger insurance players.

As a major holder of the stock said to us the other day, and we’ve not checked his math yet but he knows the story well (we paraphrase): “if EBIX delivers on the CEO’s goal of growing to $500M in sales with comparable operating margins (~39%) within 3 years, the share price should rise 2-fold while maintaining the same single digit multiple and paying us a 1 1/2 % yield along the way…” (We note that the prior goals of $100M & $200M in sales seemed a stretch but have both been achieved as promised).

Someone’s going to be right on the stock, but we believe that 10 years of precedent with a CEO who’s executed well and delivered as promised on the business while increasing his exposure to the stock is a data set that is more reliable than the scurrilous rumors adeptly floated into the market to scare away week hands. Of course we could be wrong so we keep asking the tough questions as well…

The shorts have certainly succeeded in creating fear around the name, but perhaps the tide has turned and they are experiencing some fear as the stock comes to life on no news as Q4 reporting approaches.

Either way, we do expect the shorts to return with their proven methods, particularly if the shares continue their rally in the coming days and months.  They’ve been masterful and far too successful in scaring 25% and more out of the stock each time they make a run for the Company.

Suffice it to say, we think the story is worth a very close look and a fair review of the pros and cons.

EBIX is covered by Craig-Hallum and Singular Research and perhaps Northland – not sure?

Steve Barlow is the IR guy and very good at it.

Steve Barlow

Call him not us!  He’s paid to know the answers. We’re just trying to add value by exchanging ideas worthy of consideration.

Disclosure: CG Focus List and/or its affiliates have had a long position in EBIX shares for years but per our policy we have not bought or sold shares related to this position in the last five trading days following today’s article. Feeling the stock was depressed and a potential rebound candidate on Q4 results, we had put in place a modest LONG trading position more than five days prior to this article. We may reduce this position as a result of the execution of out of the money limit orders, depending on EBIX market activity.


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