Broker Rodman expects Klondex Mines Ltd's (TSE:KDX, NYSEMKT:KLDX) Nevada mines to continue to outperform, which should help 'maintain' profitability in the second half of 2017.
The broker repeated a 'buy' on the share and targets $6.15 a share.
Last week, Klondex shares were lifted after it raised its production guidance for the full year after a strong second quarter.
The figure goes to between 213,000 and 230,000 gold equivalent ounces (GEOs) from 210,000 - 225,000 GEOs previously.
Revenue hit a quarterly record of US$86.79mln, up 74% from US$49.99mln a year earlier. That fed through to net income of US$4.5mln, or 4 cents a share, versus a net loss the year before of US$4.5mln, or a loss of 3 cents a share.
We highlight that the Midas mill processed 92,232 tonnes of ore from both Fire Creek and Midas in 2Q17 for a 7% YoY (year -on-year) increase, said Rodman analyst Heiko Ihle.
Record throughput, along with higher-than-expected grades at Midas and Fire Creek, contributed to a 43% increase in gold equivalent ounces produce compared to the same quarter of 2016, the analyst said.
"We believe that the Nevada operations can continue to outperform, given that the Midas mill is expected to process Hollister ore in 2H17.
"We note that the mill recently converted four leach tanks to Carbon in Leach (CIL), which should allow the company to maintain current recovery rates despite the addition of ore from Hollister," added Ihle.
Last week, the gold and silver producer generated US$30mln of operating in cash flow, which was almost double the US$15.4mln in the same period of 2016.
Klondex shares nudged 0.24% higher in Toronto to C$4.11 on the day.