Scotia Capital Appointed by Klondex as Financial Advisor to Review Silvercorp Bid and Alternatives

Klondex Mines Ltd. (TSX: KDX) announced today that its independent Special Committee of the Board of Directors has appointed Scotia Capital Inc. as financial advisor to advise it on the offer by Silvercorp Metals Inc. (TSX: SVM; NYSE Amex: SVM) to acquire all outstanding shares of Klondex (for 0.5 of a common share of Silvercorp for each share of Klondex) as well as any alternative transactions, and to make recommendations to the Board thereon.

The Board of Directors of Klondex recommends that shareholders defer tendering their shares or making any decision on the Silvercorp Offer until the Board, Special Committee and its financial advisor have 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 news releases and circulars in accordance with applicable securities laws.

Klondex has been engaged in discussions for some time with potential mining industry and financial partners concerning a range of possible strategic or financial transactions aimed at enabling the continued exploration of Klondex’s Fire Creek high-grade gold deposit in North Central Nevada both from the surface and via a proposed underground in-fill drilling and bulk sampling program. Klondex will utilize the services of Scotia Capital to develop and review potential alternative transactions from these and other potential parties.

Based on yesterday’s closing share price, Silvercorp’s all-stock bid of 0.5 of a share of Silvercorp common stock for each share of Klondex common stock was valued at approximately CDN $2.05 per Klondex share. Yesterday’s closing price of Klondex common stock was CDN $1.99.

About Scotia Capital:

As a member of the Scotiabank Group, Scotia Capital offers corporate and investment banking and capital markets products to corporate, government and institutional clients. It provides full-service coverage across the NAFTA region, as well as a niche focus in select markets globally. Scotia Capital has 28 offices and more than 300 relationship managers organized around industry specialties. Scotiabank is one of North America's premier financial institutions and Canada's most international bank. With more than 69,000 employees, Scotiabank Group and its affiliates serve approximately 12.8 million customers in some 50 countries around the world. Scotiabank offers a diverse range of products and services including personal, commercial, corporate and investment banking. With more than $509 billion in assets (as at January 31, 2009), Scotiabank trades on the Toronto (BNS) and New York Exchanges (BNS). For more information please visit www.scotiabank.com or www.scotiacapital.com.

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 11,098 acres of fee land and unpatented mining claims. In March 2009 Klondex defined and disclosed in a technical report entitled “Updated Report on the Fire Creek Gold Property Lander Co., Nevada” dated March 25, 2009, an Indicated Mineral Resource at Fire Creek estimated at 5,043,033 tonnes grading 10.11 grams per metric ton (gpt) 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 metric ton in hole FC0417. Richard Kern (P.Geo), Project Manager, of Reno, Nevada, is the Company’s qualified person on the project as required under NI 43-101and has reviewed the technical information contained in this press release.

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. 75-80 percent of Klondex’s known resource is on private 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.

Contacts:

Jaffoni & Collins Incorporated
David Collins, 212-835-8500
KDX@jcir.com

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