Klondex Waives Application of Previous Shareholder Rights Plan and Adopts New Shareholder Rights Plan

Klondex Mines Ltd. (TSX: KDX) (“Klondex” or the “Company”) announced today that it has adopted a new shareholder rights plan (the “New Plan”) and that it has waived the application of its previous shareholder rights plan (the “Original Plan”) to the take-over bid commenced by Silvercorp Metals Inc. (TSX: SVM

The New Plan, which is effective immediately and a copy of which is available on SEDAR, is substantially the same as the Original Plan, except it provides the Board of Directors with the discretion to defer the timing of the separation of Rights from the Common Stock (which did not exist under the Original Plan), clarifies the circumstances constituting a Flip-in Event which triggers the Rights, and it differs with respect to the exercise formula of the Rights after the occurrence of a Flip-in Event. By virtue of having been waived with respect to the Silvercorp Offer, the Original Plan has also been waived with respect to any other take-over bid made by way of a take-over bid circular prior to the expiry of the Silvercorp Offer.

Pursuant to the terms of the New Plan, bids that meet certain criteria intended to protect the interests of all shareholders are deemed to be "Permitted Bids." A Permitted Bid must be made by way of a take-over bid circular prepared in compliance with applicable securities laws and, in addition to certain other conditions, must remain open for 60 days. In the event a take-over bid does not meet the Permitted Bid requirements of the New Plan, the rights issued under the plan will entitle shareholders, other than any shareholder or shareholders involved in the take-over bid, to purchase additional common shares of Klondex at a significant discount to the market price of the common shares at that time. The Silvercorp Offer does not and did not constitute a “Permitted Bid” under the New Plan or the Original Plan.

Klondex adopted the New Plan to ensure, to the extent reasonably possible, that shareholders of the Company will be treated fairly in connection with the Silvercorp Offer and any other offer made for the common shares of the Company. Pursuant to the New Plan, the Board of Directors has deferred the Separation Time of the Rights as it relates to the Silvercorp Offer.

The New Plan will be submitted for ratification by common shareholders at the next annual and special meeting of shareholders of the Company. To remain effective, the New Plan must be approved by more than 50% of the votes cast at that meeting.

Klondex has been notified by the Toronto Stock Exchange (the "TSX") that the TSX will defer consideration of the acceptance of the New Plan until such time as the TSX is satisfied that the Ontario Securities Commission will not intervene pursuant to National Policy 62-202 of the Canadian Securities Administrators. Pursuant to TSX policies, the TSX automatically defers acceptance of shareholders rights plans when there is a specific take-over bid that is being made for the shares of a company.

The Board of Directors of Klondex recommends that shareholders defer making any decision on the Silvercorp Offer until the Board has had an opportunity to fully review the offer and to make a formal recommendation on its merits. Shareholders will be notified by the Board of its recommendation through a news release and circular in accordance with applicable securities laws.

About Klondex Mines:

Klondex Mines Ltd. is a gold exploration company focused on the development and expansion of its 100%-owned, high-grade Fire Creek deposit in Nevada which consists of 10,708 acres of fee and lease land. In March 2009 Klondex defined an Indicated Mineral Resource at Fire Creek estimated at 5,043,033 tonnes grading 10.11 grams per tonne containing 1,639,822 ounces of gold and an Inferred Mineral Resource Estimated at 1,833,423 tonnes grading 8.63 gpt for 508,799 ounces of gold equivalent. The Fire Creek deposit is classified as a “bonanza” grade epithermal gold deposit characterized by high-grade drill intervals including 1.52 meters grading 411 grams (13 oz.) per tonne in hole FC0417.

Fire Creek is located in North Central Nevada, an area of prolific gold production, at the intersection of the Battle Mountain-Eureka Trend and the Northern Nevada Rift. The Company was founded over 35 years ago, and its property portfolio consists of four gold exploration projects, all in Nevada. Eighty percent of Klondex’s known resource is on company-owned land. For more information, please visit www.klondexmines.com.

Cautionary Statement:

This news release may contain forward looking statements. Actual results may differ materially from those indicated by such statements. All statements, other than statements of historical fact, included in this news release, are forward looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.


Jaffoni & Collins Incorporated
David Collins, 212-835-8500

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