Klondex Appoints Special Committee to Review Silvercorp Takeover Offer and other Strategic Alternatives for its “Fire Creek” 1.6 Million Ounce Indicated Gold Resource in Nevada

Klondex Mines Ltd. (TSX: KDX) announced today that it has formed a special committee of the Board of Directors to review the unsolicited takeover bid for Klondex by Silvercorp Metals Inc. (TSX: SVM; NYSE Amex: SVM). The Special Committee is chaired by Robert Sibthorpe and includes John Pollock, P. Eng. and Ronald Shorr, CFA; brief bios of the committee are provided below. Klondex also reported that a number of holders of its share purchase warrants have exercised their warrants, generating additional cash to fund the Company’s operations.

Klondex has been engaged in discussions with prospective 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’s dialogues have focused on strategic equity and/or debt investments, related technical services agreements, proposals for the sale or merger of some or all of the company and other complementary transactions. Discussions of this nature have been ongoing for some time.

Robert Sibthorpe, Chairman of the Special Committee, stated: “Many of our shareholders have held Klondex shares for many years and have paid substantially more for their shares than the current price. They recognize the value we have developed at Fire Creek, as well as the substantial potential that still remains in further expanding and developing the resource. We believe they have been attracted to our singular focus on Nevada gold exploration as well as our efforts to limit the risk and capital investment required to initiate our bulk sampling program. Recent shareholder conversations confirm their support for management and the Board taking sufficient time to review all possible strategic alternatives prior to choosing the best path forward.”

The Silvercorp bid, commenced by advertisement in the Globe and Mail on June 15, 2009, is not a “Permitted Bid” under Klondex’s 2007 Shareholder Rights Plan (the “Rights Plan”). In the absence of a waiver of the application of the Rights Plan which is under consideration by the Board, the rights issued under the Rights Plan (the “Rights”) will separate from the common shares and become exercisable after the close of business on Monday, June 22, 2009 (the “Separation Time”). At the Separation Time, each Right will entitle the holder to purchase one common share of Klondex for $100. If after the Separation Time, an event occurs which could result in a person becoming the holder of greater than 20% of the outstanding shares, then 10 business days after such event, each Right will entitle the holder to purchase for $100 common shares of Klondex having an aggregate market price of CDN $200.

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 CDN $1.83 per Klondex share, or approximately CDN $48.9 million, based on 26,719,804 shares issued and outstanding as of March 31, 2009. Yesterday’s closing price of Klondex common stock was CDN $1.78.

Klondex recommends that its shareholders defer making any decision on the Silvercorp offer until the Board has reviewed all potential opportunities and is able to make a formal recommendation.


Mr. Sibthorpe, a director of Klondex, is a geological consultant (MBA, B. Sc (Geol)) with extensive experience in the mineral exploration sector working in geology and business development with senior mining companies including Noranda, Falconbridge and Ivanhoe Mines. He also served as a research and corporate finance analyst in the securities industry for Midland Doherty Ltd., Yorkton Securities Inc. and Canaccord Capital Corp. Mr. Sibthorpe is also a Director of Madison Minerals Inc. (TSX-V: MMR) and Oromin Resources (TSX-V: OLE).

Mr. Shorr, a director of Klondex, has over 30 years of experience in the precious metals industry and is President and CEO of Maudore Minerals Ltd. (TSX-V: MAO). Mr. Shorr is also a director of: Longview Capital Partners Incorporated (TSX-V: LV) and Tournigan Energy Corporation (TSX-V: TVC). Mr. Shorr was a senior mining analyst with Bear, Stearns & Co. and Morgan Stanley Dean Witter. Mr. Shorr earned his BA from the University of Michigan, his MBA from Harvard Business School, and did post-graduate work at Columbia University's Henry Crumb School of Mines.

Mr. Pollock, a director of Klondex, has served as a Professional Mining Engineer since 1970 and is President and CEO of Newstrike Resources Ltd. (TSX-V: NR). Previously, he worked for various mining companies, primarily for Pioneer Consultants Ltd. and was a founder of several TSX-listed companies, including Warren Explorations Limited, Jonpol Explorations Ltd, Northway Explorations Ltd., T&H Resources Ltd. and Aurado Explorations Limited. Mr. Pollock currently serves as a director of Premier Gold Mines Limited (TSX: PG). He received his Ontario Prospector License in 1950 and attended Michigan Technological University of Houghton, Michigan.

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. 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’ known resource is on private land. For more information, please visit www.klondexmines.com.


“William Solloway” “Bob Sibthorpe”
President Director

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

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