Klondex Completes $3.0 Million Financing with China Mineral United to Fund Near-Term Obligations

Klondex Mines Ltd. (TSX: KDX) announced today it has completed a private placement with China Mineral United Management Limited (CMU) for 1,714,285 common shares of Klondex at a price of CDN $1.75 per share, yielding gross proceeds of CDN $3.0 million. The price was determined based on the Volume Weighted Average Price (VWAP) of Klondex common shares Thursday, June 25, 2009, the day the agreement on price was reached. Proceeds of the financing, which have been received by Klondex, in addition to approximately CDN $1.0 million in proceeds from the recent exercise of stock purchase options and warrants, will fund Klondex’s near-term obligations, including the costs of responding to the unsolicited takeover bid made by Silvercorp Metals Inc. (TSX: SVM; NYSE Amex: SVM), upcoming property payments, exploration and corporate overhead as well as expenses triggered by the anticipated grant of permits by the U.S. Bureau of Land Management (BLM) for the Company’s underground program at its Fire Creek deposit in North Central Nevada. BLM permits are currently expected within 30 days.

William Solloway, Klondex’s president, commented, “We are pleased to welcome China Mineral United Management as a long-term investor in our Company and provide the funding required for the development of our Fire Creek deposit as we anticipate the near-term receipt of permits required to initiate our underground program. This funding enables critical operations to proceed at the same time as our Special Committee of the Board and Financial Advisors develop and review potential strategic alternatives to the current Silvercorp Offer.”

In connection with the Private Placement, Klondex has agreed to appoint one nominee of CMU to the board of directors of Klondex. CMU has not yet provided a nominee. In addition, CMU has the right to participate in the next $20 million of future equity issuances by Klondex that are carried out by June 29, 2011, to a maximum of 50% of each such issuance. The right of CMU to appoint a director, and to participate in future equity issuances, will earlier terminate if Klondex ceases to be a reporting issuer.

Klondex paid a finder’s fee to an arms-length finder in connection with the Private Placement. Shares issued under the private placement are subject to a hold period of four months in Canada.

Reflecting the issuance of shares pursuant to this financing and the recent exercise of options and warrants, as of June 30, 2009, Klondex had 29,169,089 shares issued and outstanding and 34,979,089 shares on a fully diluted basis.

About CMU and China Mining United Fund:

China Mineral United Management Limited is an affiliate of China Mining United Investment Co., Ltd. and the China Mining United Fund (the “Fund”). The Fund was established in May 2009 raising initial capital of 500 million Renminbi (US $73 million) and was approved by the National Development and Reform Commission of the People’s Republic of China. It is among the first funds to be registered by the State Administration for Industry and Commerce with a mandate to seek foreign and domestic investments in the resource sector.

Founded by approximately 300 mining entrepreneurs in China, the Fund and its affiliates and subsidiaries seek investment in resource projects in Western Europe, Africa, Australia and North America and will also engage in providing credit guarantees and short term loans to resource companies. It is the Fund’s intent to raise a further 9.5 billion RMB (US $1.4 billion) to fulfill its investment mandate for companies such as Klondex Mines in areas such as gold, copper and iron ore. Klondex is among the Fund’s first investments.

The Fund is chaired by Mr. Zheng Zhi, the founder of the Zhengda Group, and its senior management team includes the former General Engineer of China’s Smelting Metal Department; the former General Engineer of BHP’s mining exploration company and senior geological consultant to the World Bank; and the former Chief Representative of Ivanhoe Mines in China, amongst others.

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 30, 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 equivalent 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.


Jaffoni & Collins Incorporated
David Collins / Ratula Roy Velez, 212-835-8500

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