Klondex Reports Fiscal Year 2013 Annual Results

VANCOUVER, BRITISH COLUMBIA--(Marketwired - March 31, 2014) - Klondex Mines Ltd. (TSX:KDX)(OTCQX:KLNDF) is pleased to announce that it has filed its audited annual consolidated financial statements for the financial year ended December 31, 2013.

Paul Huet, President and CEO commented, "Klondex began 2013 with a strong foundation to unlock value for its shareholders. We completed the Company's 2013 plan to finance and develop our key asset after strengthening the board and management team in 2012. As we look towards an even stronger 2014 with both the Fire Creek project and the Midas mine, we expect to continue our growth and transformation to a Gold and silver producer. We have built a team of strong operators who have ambitious aspirations for Klondex and are aligned with the shareholders to generate returns."

During the year ended December 31, 2013, the Company continued working towards its objective of transitioning its Fire Creek Project from the exploration and evaluation stage to a producing asset. With the completion of the Midas Mine acquisition, the Company intends to continue to explore and develop Klondex properties, continue its Midas mining operations, process mineralized material from its Fire Creek Project under a Bulk Sample Permit and seek further opportunities to provide third party toll milling services.

Fourth Quarter 2013 Highlights and Significant Events

• Beginning in August 2013, Klondex shipped a total of 8,007 dry short tons at a head grade of 44.3 g/t (1.291 opt) Au from Fire Creek to Midas for processing. Klondex received total proceeds of $8.4mm from the sale of 6,208 ounces of gold delivered to the Midas mill.
  • This amount was reported as sale of mineralized material and credited to Exploration and Evaluation Assets.
• The updated Fire Creek mineral resource estimate was announced on September 16. The updated mineral resource estimate, using inverse distance cubed methodology and a 7 g/t Au cut-off, consisted of the following:
  • 44.7 g/t (1.304 opt) Au - totaling 295,900 ounces of Gold, Measured and Indicated.
  • 19.2 g/t (0.560 opt) Au - totaling 421,400 ounces of Gold, Inferred.
• On October 8, the 26 hole Fire Creek infill drilling program extended the Joyce structure by 91m (300ft) south, remaining open to the north, and extended the Vonnie structure by 50m (165ft) north and 110m (360ft) south. Highlights included:
  • FC-13-079U - 61.9 g/t (1.8 opt) gold over 0.9m (3.1ft)
  • FC-13-085U - 211.0 g/t (6.2 opt) gold over 0.2m (0.6ft)
  • FC-13-089U - 43.3 g/t (1.3 opt) gold over 1.1m (3.7ft)
  • FC-13-092U - 23.2 g/t (0.7 opt) gold over 1.5m (5.0ft)
• On October 16, Klondex completed a $19.5 million special warrant financing, priced at $1.37 per special warrant. Subsequently, on October 22, Klondex retired all of its outstanding short term debt of $4 million.
• In October, Klondex completed the excavation of the secondary egress.
• On October 31, Klondex began drilling the West Zone mineralization to follow up on previously identified targets. Phase one drilling targeted the northern extension of mineralization, and phase two and three, will target the potential southern extension.
• On December 4, Klondex entered into a stock purchase agreement with Newmont Mining to acquire the Midas mine and milling facility for total consideration of US$83mm. This included US$55mm in cash and US$28mm to replace the reclamation bond as well as the issuance of 5mm purchase warrants to Newmont with an exercise price of C$2.15 and a 15 year term:
  • The acquisition was completed in early February 2014 and was funded through an equity offering ($42.6mm), debt ($25mm) and a Gold purchase arrangement with Franco-Nevada (US$33.8mm).
• On December 19, Klondex announced that three of five reverse circulation drill holes, part of a water hydrology study, encountered mineralization suggesting possible extensions of the current resource model. Intercepts and their locations included:
  • FC-13-27S - 13.0 g/t (0.38 opt) Au over 10.7m (35 ft), 250 ft north of the known Joyce structure block model, and 1070 ft north of the last blasted Joyce face round.
  • FC-13-26S - 9.2 g/t (0.27 opt) Au over 4.6m (15 ft), 480 ft south of the closest modeled vein and west of the main ramp.
  • FC-13-25S - 10.4 g/t (0.30 opt) Au over 1.5m (5 ft), 250 ft south of the resource model.
• As at December 31, 2013, the Company had cash of $13,509,155.

Underground Development and Bulk Sampling at Fire Creek