On Track to Achieve Full Year Production and Cost Guidance

VANCOUVER, BC--(Marketwired - November 03, 2016) - Klondex Mines Ltd. (TSX: KDX) (NYSE MKT: KLDX) ("Klondex", the "Company", "we", "our", or "us") is pleased to announce its operational and financial results for the third quarter of 2016 as well as recent developments. This press release should be read in conjunction with our third quarter 2016 interim financial statements and related management's discussion & analysis ("MD&A"), which are available on our website (www.klondexmines.com), on SEDAR (www.sedar.com), and on EDGAR (www.sec.gov). All dollar amounts included in this press release are expressed in thousands of United States dollars, unless otherwise noted, and are based on our financial statements and MD&A, which were prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. References to "Notes" refers to the notes contained in the third quarter 2016 interim financial statem ents. "Nevada Operations" collectively refers to our Fire Creek and Midas mines.

Third Quarter 2016 Highlights

Health, Safety, and Environmental - No lost-time injuries or environmental citations at Fire Creek, Midas or True North.

True North - Positive production decision and first gold sold, now have three producing mines.

Cash Flows and Liquidity - Strengthened financial position and liquidity. Following a CDN$129.5 million equity offering, cash balance of $131.1 million, working capital of $119.9 million (ratio of 4.1:1), and total liquidity of $144.9 million when including the Revolver availability. On October 3, 2016, remitted $80.0 million payment to complete Hollister Acquisition.

Ounces Sold and Financial Results - Sold 41,553 gold equivalent ounces ("GEOs"), consisting of 36,648 gold ounces and 362,500 silver ounces. Revenue of $53.0 million from average selling prices per gold and silver ounce of $1,276 and $17.26, respectively. Net income of $7.2 million (or $0.05 per share - basic).

Nevada Operations and Performance Measures - Produced 35,324 GEOs and continued trend of increasing GEO grades milled at Nevada Operations. Nevada Operations operating metrics were: 761 ore tons milled per day at an average GEO mill head grade of 0.55 oz/ton. Cost metrics are as follows:

                                                                                                                                         
                                   Production cash costs per gold equivalent ounce sold   All-in sustaining costs per gold ounce sold   All-in costs per gold ounce sold (excluding True North)
Non-IFRS Measure - Nevada Operations(1)   $                             671                             $                         1,155                      $                           1,206
 
(1) See Non-IFRS Performance Measures in this Press Release.
 

Mineral Reserves and Resources - Updated Mineral Reserve and Mineral Resource estimates for Fire Creek, Midas, and True North.

Capital Expenditures - Spent $8.9 million at Fire Creek, $8.0 million at Midas, $3.8 million at True North, and $0.1 million at corporate for total capital spending of $20.8 million.

Recent Developments

Hollister Acquisition and Private Placement - On October 3, 2016, completed the acquisition of the Hollister and Aurora projects, located in Nevada, USA. Synergies with our Nevada Operations and significant future operational and exploration potential.

True North Technical Report - On October 27, 2016, we filed a Technical Report for True North and reported a Mineral Reserve in the tailings of ~32,400 Au oz consisting of 1,170k tons at an average grade of 0.028 Au opt. This is in addition to the Mineral Reserve and Mineral Resource of the True North gold mine announced on September 12, 2016.

Secured Revolving Facility - On October 27, 2016, we amended our Revolver to increase its capacity by $10.0 million to $35.0 million, further strengthening our financial position and liquidity.

Mr. Paul Huet, President and CEO commented, "We continue to deliver on our commitments as our third quarter operating and financial results were in line with our plans. Due to the planned development activities conducted throughout the year, we are well positioned to achieve our full year production and cost guidance." Mr. Huet continued, "We also achieved a milestone in the third quarter by placing our third mine into production. True North has become an important asset in our portfolio and we are excited about its future contributions to our profitability."

2016 Full Year Outlook

Nevada Operations

We maintain our targeted total annual production costs and GEO production guidance, which is expected to be weighted approximately 45%-50% in the first-half of 2016 and 50%-55% in the second-half of 2016. While we maintain our annual total Nevada Operations guidance, our production cash cost per GEO range was decreased by $50 at Fire Creek and was increased by $50 at Midas. Our 2016 GEO production and grades are expected to progressively increase from the first half of the year to the second half of the year following the completion of planned first-half development and silling activities. GEO grades milled at our Nevada Operations were 0.44 oz/ton, 0.52 oz/ton, and 0.55 oz/ton during the first, second, and third quarters of 2016, respectively.

The following table outlines our annual guidance compared to actual results and presents all-in costs per gold ounce sold exclusive of True North, which was acquired during the first quarter of 2016 (after the release of our full-year guidance):

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