NEVADA FIRE CREEK PROJECT NEARS BULK SAMPLING

Fire Creek expected to begin Bulk Sampling Program by end of 2013

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Message: Klondex Mines Reports Solid Progress at Fire Creek Nevada Gold Deposit
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Tue Jul 26, 2011
Klondex Mines Reports Solid Progress at Fire Creek Nevada Gold Deposit
- 1,367 Feet of Underground Workings and
5,500 Feet of Surface Drilling Completed This Season -

Vancouver, BC - July 26, 2011 - Klondex Mines Ltd. (TSX: KDX) today reviewed plans and progress for its underground exploration and development program and its surface drilling program at its 100% owned Fire Creek gold deposit in North Central Nevada.

Klondex President and CEO, Blane Wilson, commented, "This is an extremely exciting time for Klondex and Fire Creek, as an unprecedented level of exploration and development activity for the Company is underway. We have built a strong and efficient team to manage and execute these efforts using a mix of Klondex staff and experienced mining, engineering, exploration, permitting and construction consultants and contractors. Our underground mining contractor SMD is working 24-hours per day with two shifts, giving us confidence in reaching our stated goals for infill drilling and bulk sampling activities this year.

"The start of our surface exploration program was delayed several weeks, but we now have three drill rigs working on site and are confident we can complete our full plan. A reverse circulation (RC) rig and a diamond core rig have commenced initial drilling, and a directional drill rig started their program this past weekend."

Surface Infrastructure:
Klondex has completed the construction and lining of two waste water ponds, as well as a range of other required drainage and fire requirements. The Company has located three buildings on the work site to house mine site management as well as to provide facilities for the surface and underground crews. The update of the Eureka County portion of the access road has been completed and the Lander county portion will be finished once BLM approvals are received.

Underground Program:
Klondex's Fire Creek underground exploration and development program is centered around a planned 1,113 meter (3,650 foot) decline (12' wide x 14' high) to access Main Zone mineralization to enable further evaluation of the resource at depth as well as for bulk sampling production. The decline has been designed to be upgradable to support eventual full scale production. Including other workings, Klondex plans a total of 1,974 meters (6,475 feet) of underground development in the first phase. Klondex is utilizing small-scale mechanized mining performed by Small Mines Development (SMD), a respected and highly experienced underground contract miner. KDX plans to utilize toll processing for the bulk sample tonnage.

Through July 24, 2011, Klondex has completed 1,367 feet of underground development, including 905 feet of the decline. Klondex broke ground on the decline on April 27, 2011 and remains on track with its expectations to commence underground in-fill drilling by the end of August. The underground drilling will further test Main Zone mineralization and provide valuable data to further define the Fire Creek mineral resource and to guide underground development. Klondex also expects to initiate bulk sampling by the end of the year 2011. Under its Nevada state permits, Klondex is able to extract and process up to 36,500 short tons of material per year with a maximum of 120,000 short tons over the permit's five-year life. Klondex plans to target higher grades for its bulk sampling activity.

The outsourcing of mining, processing and exploration activities, under the close supervision of KDX's experienced Nevada team, enables Klondex to pursue a substantial base of activity while at the same time limiting its capital investment.

Surface Exploration:
Klondex has budgeted U.S. $3.4 million for a 2011 surface exploration program planned to include approximately 11,000 meters (36,000 feet) of core drilling and 7,000 meters (23,000 feet) of RC drilling. To date, less than 20% of Klondex's Fire Creek property has been explored, with the deposit remaining open in all directions and at depth. Klondex's 2011 Fire Creek surface drill program is focused on:
  • In-fill and resource expansion core drilling of the Main, Far North and New North Zones.
  • Core drilling of new veins intersected by RC drilling of IP anomalies will be explored with core drilling to determine their extent, with a focus on two new intersections south of the Far North Zone and one east of the Main Zone.
  • Directional drilling, which allows near-vertical holes to be turned nearly horizontal, will enable Klondex to test for possible extensions of Main Zone veins within brittle rocks encountered at depth. This is the first time Klondex has utilized directional drilling to target deeper mineralization at Fire Creek.
  • RC drilling of untested IP anomalies identified by prior geophysical surveys. A total of ten anomalies have not been drill tested, and Klondex plans to test them all in 2011 along with additional drilling of anomalies where gold-bearing structures were identified, but no ore grade values (+5.0 g/t gold) have been intersected.
As a result of weather and delays in permitting approvals for certain drill sites, Klondex has experienced approximately six weeks of delay in commencing surface drilling at Fire Creek. Three rigs (one core, one RC and one directional) are now on site and drilling. To date, the rigs have completed 3,280 feet of core and 2,135 feet of RC drilling, amounting to one completed hole and one in progress for each rig. The deep-hole directional drill rig was recently mobilized to the site and commenced drilling July 22nd. The crew will use a mud rotary drill to reach 1,500 feet and from there a mud motor will be used to reach 2,000 feet while bending the hole to a horizontal path on which deep core drilling will take place. This will be the first time that Klondex has explored Fire Creek at such depth.

Richard Kern (P.Geo), of Reno, Nevada, a qualified person as defined under National Instrument 43-101, has reviewed and approved the technical information contained in this press release.

About Klondex Mines Ltd. (www.klondexmines.com):
Klondex Mines is focused on the exploration and development of its 100% owned Fire Creek gold deposit in North Central Nevada. As of July 25, 2011, Klondex had 37.0million shares issued and outstanding and 43.6 million shares on a diluted basis.

On Behalf of Klondex Mines Ltd.

Blane Wilson
President and CEO


Investor Contacts:
Bryson Goodwin
Klondex Mines Ltd.
brysongoodwin@shaw.ca
(604) 341-1531

David Collins
Jaffoni & Collins
KDX@jcir.com
(212) 835-8500
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