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Press release from Business Wire

Klondex Encounters Two Gold Veins with 95.5 g/t (2.79 oz/ton) Gold over 0.9 meters (3.0 feet) and 43.5 g/t (1.27 oz/ton) Gold over 1.5 meters (5.0 feet) During Underground Exploration Development at its Fire Creek Project in Nevada

Wednesday, October 31, 2012

Klondex Encounters Two Gold Veins with 95.5 g/t (2.79 oz/ton) Gold over 0.9 meters (3.0 feet) and 43.5 g/t (1.27 oz/ton) Gold over 1.5 meters (5.0 feet) During Underground Exploration Development at its Fire Creek Project in Nevada09:52 EDT Wednesday, October 31, 2012 ELKO, Nev. & VANCOUVER, British Columbia (Business Wire) -- Klondex Mines Ltd. (TSX: KDX) (OTCQX: KLNDF) is pleased to report that two gold-rich vein structures were encountered during underground exploration development of the Main Zone at its Fire Creek gold project in Lander County, Nevada. As part of the on-going underground resource delineation, Klondex constructed two crosscuts through the Main Zone. This development work enables Klondex to follow up on the previously reported drill holes reported in September. More importantly it allows for increased understanding of the physical nature of the structures, namely the FC12-11S hole, which returned 2,910 g/t (85 oz/ton) gold across a true thickness of 1.5 meters (4.8 feet) (Figure 1 click here and Figure 2 click here). ACC5360, the southern crosscut, was excavated to a length of 104 meters (340 feet), and the northern crosscut, ACC5355, is currently 79 meters (260 feet) in length. The crosscuts are approximately 76 meters (250 feet) apart. Mapping and sampling of the crosscuts, combined with previous surface drill hole results, support continuity of structure and grade of veins within the Main Zone. Paul Huet, Klondex's President & CEO, commented, “These crosscuts have provided further evidence of the continuity and grades of Main Zone gold mineralization at the heart of the Fire Creek deposit. Importantly, these vein structures remain open to the north, south and at depth; they will be the subject of future exploration seeking to unlock the value of this resource. “We plan to resume infill drilling from underground, while we re-log the historical core holes to build an improved geological model. These efforts will assist us in the development of a formal mining plan. In the coming months we plan to report assay results from the underground development and the balance of the previous underground drilling. We also plan an updated NI 43-101 compliant resource estimate, under the direction of Micon International, which is targeted for completion in Q3 2013.” The two veins intersected by the crosscuts are reviewed as follows:         • The A-Vein grades 95.5 g/tonne (2.79 oz/ton) over a true thickness of 0.9 meters (3.0 feet) in the southern ACC5360 crosscut. The vein also appears to have been encountered over a true thickness of 1.8 meters (6.0 feet) in the northern ACC5355 crosscut, where assays are pending. The vein is vertical to steeply-west dipping and trends approximately N20W. It has sharp gold-grade boundaries, and consists primarily of bladed-calcite quartz within a 0.2-0.4 meter (0.7–1.3 foot) pyrite-clay breccia alteration envelope.   The vein can be traced over a length of 114 meters (375 feet) in crosscuts and drill holes, and remains open along strike to the north and south. Using the 6 drill holes and the ACC5360 crosscut which define this portion of the A-Vein, and excluding internal waste in two of the drill hole intercepts, the vein has a weighted average grade of 74.8 g/tonne (2.18 oz/ton) gold over an average true width of 1.0 meter (3.1 feet).   • The B-Vein grades 43.5 g/tonne (1.27 oz/ton) over 1.5 meters (5 feet) in the ACC5360 crosscut. It is located approximately 22 meters (72 feet) east of the A-Vein in the crosscut. The vein dips steeply west, and trends N10-15W. The vein has sharp gold-grade boundaries and consists of a series of sheeted veins 2-4 cm (0.8-1.6 inches) thick in a sheared, brecciated clay-pyrite matrix.   It can be traced over a length of 114 meters (375 feet) and remains open along strike to the north and south. Using the 11 drill holes and the ACC5360 crosscut which define this portion of the B-Vein, the vein has a weighted average grade of 249.8 g/tonne gold uncut (7.27 oz/ton) or 63.8 g/tonne (1.86 oz/ton) when cut to 182.3 g/t gold (5.3 oz/ton) over an average true width of 1.0 meter (3.3 feet).   About Klondex Mines Ltd. (www.klondexmines.com): Klondex Mines is focused on the exploration and development of its Fire Creek gold deposit in North Central Nevada. Fire Creek is a compelling gold mining prospect located in a region of prolific gold production that is near power, transportation, mining infrastructure and several milling facilities. As of October 30, 2012, Klondex had 47.4 million shares issued and outstanding and 59.7 million shares on a fully-diluted basis. Sample results cited in this news release were obtained from crosscut drifting by SMD, an independent contractor working under the direction of Klondex staff. Assays were determined by Pinnacle Analytical Laboratories, Lovelock, Nevada, and Inspectorate America Corporation, Sparks, Nevada, both independent analytical laboratories. The content of this press release has been reviewed by Steven L. McMillin, CPG-11031 (American Inst. of Prof. Geol.), Project Manager and Chief Geologist for Klondex Mines Ltd., as a non-independent Qualified Person. This news release contains forward-looking statements, including about current expectations on the timing of project development. These forward-looking statements entail various risks and uncertainties, are based on current expectations, are subject to a number of uncertainties and risks, and actual results may differ materially from those contained in such statements. These uncertainties and risks include, but are not limited to, the strength of the global economy; the price of gold; operational, funding and liquidity risks; the degree to which mineral resource estimates are reflective of actual mineral resources; the degree to which factors which would make a mineral deposit commercially viable are present; the risks and hazards associated with underground operations. Risks and uncertainties about the Company's business are more fully discussed in the Company's disclosure materials filed with the securities regulatory authorities in Canada and available at www.sedar.com. Readers are urged to read these materials. Klondex assumes no obligation to update any forward-looking statement or to update the reasons why actual results could differ from such statements unless required by law. On Behalf of Klondex Mines Ltd.Paul Andre HuetPresident & CEOInvestor & Media Contact:Catalyst Global LLCDavid Collins, Toni Trigiani212-924-9800 or 917-734-0399 mobileKDX@catalyst-ir.com