Klondex Mines Limited (KLDX) Announces Q2 Production of 41,436 GEOs

Klondex Mines Ltd. (NYSE: KLDX) is pleased to report its preliminary production results for the second quarter of 2016 for its Fire Creek and Midas mines.

                        Three months ended June   Six months ended June 30, 

                                30, 2016                     2016           

                       -------------------------  ------------------------- 

                         Fire                       Fire                    

                        Creek    Midas    Total    Creek    Midas    Total  

                       -------  -------  -------  -------  -------  ------- 

Ore tons milled         33,968   52,226   86,194   66,710   93,239  159,949 

Average gold equivalent                                                     

 mill head grade                                                            

 (oz/ton)(1)              0.91     0.26     0.52     0.81     0.24     0.48 

Average gold mill head                                                      

 grade (oz/ton)           0.90     0.14     0.44     0.80     0.13     0.41 

Average silver mill                                                         

 head grade (oz/ton)      0.69     8.99     5.72     0.80     8.60     5.31 

Average gold recovery                                                       

 rate (%)                 93.7%    93.7%    93.7%    93.7%    94.9%    93.9%

Average silver recovery                                                     

 rate (%)                 85.9%    85.9%    85.9%    87.4%    87.9%    87.8%

Gold equivalent                                                             

 produced (ounces)(1)   29,067   12,320   41,436   50,627   20,910   71,592 

Gold produced (ounces)  28,800    7,021   35,821   50,019   11,764   61,783 

Silver produced                                                             

 (ounces)               20,148  403,212  423,360   46,841  699,641  746,482 

Gold equivalent sold                                                        

 (ounces)(1)            26,160   11,707   37,914   45,152   23,896   69,103 

Gold sold (ounces)      25,889    6,610   32,499   44,434   15,029   59,463 

Silver sold (ounces)    20,406  387,910  408,316   55,251  678,339  733,590 

                                                                            

(1) Gold equivalent ounces ("GEO") and grades are computed as the           

 applicable gold ounces/grade plus the silver ounces/grade divided by a GEO 

 ratio. GEO ratios are computed by dividing the average realized gold price 

 per ounce by the average realized silver price per ounce received by the   

 Company in the respective period. Preliminary Q2 GEO ratios were           

 approximately 75.3:1 for Fire Creek, 76.1:1 for Midas, and 75.4:1 for      

 Total. For the six month period ended June 30, 2016, preliminary GEO       

 ratios were approximately 77.0:1 for Fire Creek, 76.5:1 for Midas, and     

 76.1:1 for Total.                                                          

                                                                            

The progressive increase in GEO production during the second quarter of 2016 was primarily due to an increase in tons mined and milled. Average gold equivalent mill head grades at Fire Creek improved from the first quarter as the Company returned to mining higher grade zones. Average gold equivalent mill head grades improved slightly at Midas due to mine sequencing. The Company continues to expect the mill head grades at Midas to progressively increase throughout the year. Average silver recovery rates were slightly lower than expected due to higher mill throughput, which reduced ore retention time in the leach tanks.

The Company reiterates its 2016 production guidance of 145,000 to 150,000 GEOs, which is split approximately 45%-50% in the first half of 2016 and 50%-55% in the second half of 2016.

Mr. Paul Huet, President and CEO commented, "We achieved record GEO production for the Company in the second quarter and are on our way to accomplish our goal of filling the Midas mill. We are well positioned to meet our production guidance for the year as we expect our mining rates and mill head grades to be consistent with the second quarter results, or even improve slightly, according to our mine plans." Mr. Huet continued, "We remain on track to execute on our strategy, as we continue to make strong progress at the True North mine in Canada and we remain confident that we will be in position to make a production decision in the third quarter."

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