TORONTO (miningweekly.com) – Gold explorer and project developer Klondex Mines on Monday revealed more details on how it planned to finance its $83-million acquisition of the Midas mine and milling facility, in Nevada, by specifying indicative terms for its $35-million financing package with Franco-Nevada.

Klondex on Friday announced a $35-million financing package with royalty and stream company, which would consist of a prepaid gold purchase arrangement and a 2.5% net smelter royalty (NSR) on the Fire Creek and Midas properties.

Under the royalty agreement, Klondex would make gold deliveries at the end of each month from June 30, 2014, to December 31, 2018, for a total of 38 250 oz delivered, and the 2.5% NSR royalty would start in 2019, after the prepaid schedule had been completed.

The obligations under the gold financing and the previously announced senior secured notes would be secured against the assets of the company and the obligations under the gold financing and the notes would rank pari passu.

Financing for the acquisition from Newmont would also comprise a $35-million private placement of subscription receipts and a private placement of secured notes for about $25-million. The entire financing, which still required regulatory approvals and definitive documentation, would be used to pay for the Midas deal as well as to repay $7-million in outstanding debt, Klondex said on Friday.

Klondex president and CEO Paul Huet billed the acquisition as “transformational” for the company, during a “pivotal point” in Klondex’s development.

Last week he noted that Klondex's management team could leverage past experience, with some of the core leadership team having previously worked at Midas, to “vastly” benefit from the synergies.

The deal would bring together two excellent epithermal deposits with a high-quality central mill.

Klondex is mainly engaged in exploring and developing its high-grade Fire Creek gold project, in north-central Nevada.