KLDX Klondex Mines Ltd. (delisted)

Klondex Mines Ltd. (TSX: KDX or OTCQX: KLNDF), a Nevada gold exploration and development company, today announced the first batch of assay results from its 2012 underground in-fill drilling program at its Fire Creek project in North Central Nevada.

In-fill drilling in the south end of the Main Zone continues to demonstrate apparent continuity, including mineralization that is continuous for at least 90 meters (295 feet) along strike, which runs to the north-northwest. Recent drill results have also yielded a new, preliminary interpretation of the orientation of Main Zone mineralization. Summary results are reported in the tables below and reflected in the accompanying figures.

Klondex also announced it has started its 2012 surface drilling program. The program targets 15,000 meters (49,000 feet) of surface drilling, principally to support the underground in-fill drilling program in further defining Main Zone mineralization. Klondex confirmed plans for an updated technical report in Q3 2012 and reported progress on its underground decline and workings.

Blane Wilson, CEO of Klondex, commented, “Klondex’s Fire Creek exploration and development program is progressing well despite some earlier delays. We continue to encounter encouraging signs of Main Zone continuity through our in-fill program, as well as data that could present a more favorable view of the orientation of mineralization. We are complementing our underground effort to better define the Main Zone mineralization with our surface drilling program that started May 29th.

“To reduce exploration costs, we are using a reverse circulation (RC) rig to pre-collar 15 holes to about 600 feet. We will complete those holes using a diamond core rig. The first three of the pre-collars have been completed, and the core rig is scheduled to arrive on site the first two weeks of July. The program’s objective is to further define the bulk sample area and guide development of Main Zone mineralization.”

Updated Technical Report

As previously announced, Klondex has engaged Micon International Limited, a leading provider of mining consulting services, to assist in the preparation of a new National Instrument 43-101 technical report. This report will incorporate new drilling data from 2011 and from 2012 to date. It is targeted for completion in Q3 2012. Micon is currently reviewing the Fire Creek exploration database and will proceed with resource modeling in the coming weeks. Klondex Chief Geologist Steven L. McMillin is serving as a Qualified Person supervising the update along with Micon Senior Geologist, Thomas C. Stubens.

Underground Decline and Bulk Sampling

Mr. Wilson added, “We are also making substantial headway on our underground decline. So far in 2012 we have completed 419 meters (1,374 feet) of underground advance, including 312 meters (1,022 feet) of the main decline.”

Since inception, Klondex has completed a total of 909 meters (2,982 feet) of underground workings, including a main decline advance of 678 meters (2,223 feet). Klondex is now in the vicinity of its first bulk sampling location and must complete a ventilation raise required under its permits prior to starting bulk sampling production. Construction bids on the vent raise are pending and work is expected to begin by the end of July.

Underground In-Fill Drilling Program

Klondex has been actively progressing its in-fill drilling program, utilizing access provided by the underground workings. The program is testing the continuity of the resource between surface exploration holes. Klondex is targeting 19,812 meters (65,000 feet) of underground drilling in 2012. To date in 2012, it has completed 29 holes for a total of 7,024 meters (23,044 feet) from drill station #1. The holes tested the southern known extent of Main Zone mineralization.

Underground drilling completed in 2011 included 16 holes totaling 3,774 meters (12,381 feet). All 16 of these holes encountered gold mineralization greater than 3 g/t gold. Seven holes remain to be drilled in the initial 52-hole program before the drill moves to drill station #2, a newly constructed bay off of the main decline (Figure 1 – Fire Creek Plan View). Approximately 5,000 meters (16,404 feet) are expected to be drilled from this station to test a central portion of the Main Zone. Drilling will then incrementally progress north along the Main Zone.

In-Fill Drilling Results

(Table 1) shows an overview of intercepts greater than 1g/t gold for the 2012 holes for which results are available. Logging and sampling is progressing simultaneously on both newly drilled holes as well as earlier drilled holes, and assay results from these holes will be reported periodically as they become available.

(Figure 2 – Fire Creek Plan View - Close up) illustrates a close-up plan-view of all 2012 results to date, which continue to extend continuity of mineralization throughout the southern extent of the Main Zone. Mineralization is continuous for at least 90 meters (295 feet) along strike to the north-northwest. The lateral spacing between drill fans in the vicinity of mineralization is approximately 15 meters (49 feet). It is anticipated that results from drill station #2 will further extend continuity of mineralization to the north. Current results suggest a moderate westerly dip for mineralization that was previously interpreted as distinct vertical to steeply east dipping zones. This possible new mineralization orientation would suggest that there may be substantial untested regions located up-dip and down-dip of known mineralization. This new interpretation is preliminary and will be tested by the surface drill program and continued underground drilling.

  Klondex Mines Ltd.

2012 Fire Creek Underground Drill Results – June 4, 2012

    ( >1 gram Au per Tonne cut-off)   ( >0.029 oz Au per Short Ton cut-off)     Grade Hole No. From To Length (grams Au/ From To Length Grade (oz     (meters)   (meters) (meters) Tonne) (ft) (ft) (ft) Au/st) FC-12-001U   143.408   150.449 7.041 8.145 470.5 493.6 23.1 0.238 including   144.475   145.390 0.914 38.700 474 477 3 1.130 including   145.390   145.999 0.610 14.800 477 479 2 0.432 and   199.339   217.475 18.136 2.978 654 713.5 59.5 0.087 including   201.168   201.778 0.610 17.450 660 662 2 0.510 including   204.826   205.435 0.610 8.460 672 674 2 0.247                       FC12-002U   147.127   148.803 1.676 4.100 482.7 488.2 5.5 0.120 and   151.638   155.448 3.810 5.840 497.5 510 12.5 0.171 including   151.638   153.071 1.433 7.480 497.5 502.2 4.7 0.218 including   153.071   154.747 1.676 5.500 502.2 507.7 5.5 0.161                       FC12-031U   No Significant Gold Values No Significant Gold Values                       FC12-033U   89.306   95.402 6.096 1.960 293 313 20 0.057 and   96.012   98.298 2.286 12.476 315 322.5 7.5 0.364 including   96.012   96.561 0.549 16.200 315 316.8 1.8 0.473 including   96.56064   98.298 1.737 11.300 316.8 322.5 5.7 0.330 and   103.9978   106.070 2.073 4.160 341.2 348 6.8 0.121 and   162.1536   163.982 1.829 8.430 532 538 6 0.246                       FC-12-034U   140.818   144.018 3.200 3.968 462 472.5 10.5 0.116 including   143.256   144.018 0.762 7.960 470 472.5 2.5 0.232 and   150.205   157.886 7.681 3.723 492.8 518 25.2 0.109 including   151.242   151.790 0.549 5.380 496.2 498 1.8 0.157                       FC-12-035U   86.563   89.611 3.048 1.644 284 294 10 0.048 including   89.215   89.611 0.396 2.280 292.7 294 1.3 0.067                       FC-12-036U   124.358   125.882 1.524 3.320 408 413 5 0.097 and   144.170   148.742 4.572 2.471 473 488 15 0.072 including   146.822   148.742 1.920 3.900 481.7 488 6.3 0.114 and   229.118   231.038 1.920 4.740 751.7 758 6.3 0.138  

Table 1: 2012 intercepts >1g/t Au. True widths cannot be determined at this time.

 

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. Fire Creek is a compelling gold mining prospect located near power, transportation, mining infrastructure and several milling facilities. Fire Creek’s mineral resource is reviewed in the most recent technical report that is available here with additional disclosure available via SEDAR.

As of June 15, 2012, Klondex had 47.0 million shares issued and outstanding and 59.1 million shares on a diluted basis.

Sample results cited in this news release were obtained from HQ diameter core drill holes (96mm hole; 63.5mm core) completed by American Drilling, an independent contractor working under the direction of Klondex Gold & Silver staff. Assays were determined by ALS Minerals, Reno, Nevada, an independent analytical laboratory.

This news release contains forward-looking statements, including about current expectations on the timing of project development. These forward-looking statements entail various risks and uncertainties, are based on current expectations, are subject to a number of uncertainties and risks, and actual results may differ materially from those contained in such statements. These uncertainties and risks include, but are not limited to, the strength of the global economy; the price of gold; operational, funding and liquidity risks; the degree to which mineral resource estimates are reflective of actual mineral resources; the degree to which factors which would make a mineral deposit commercially viable are present; the risks and hazards associated with underground operations. Risks and uncertainties about the Company’s business are more fully discussed in the Company’s disclosure materials filed with the securities regulatory authorities in Canada and available at www.sedar.com. Readers are urged to read these materials. Klondex assumes no obligation to update any forward-looking statement or to update the reasons why actual results could differ from such statements unless required by law. The contents of this press release have been reviewed by Steven L. McMillin, CPG-11031 (American Inst. of Prof. Geol.) and Chief Geologist for Klondex Mines Ltd., as a non-independent Qualified Person.

CAUTIONARY NOTE TO U.S. INVESTORS CONCERNING RESOURCES

This press release uses the terms "inferred mineral resources," "indicated mineral resources," and "mineral resources" which are Canadian mining terms defined in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects under the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM") Standards on Mineral Resources and Mineral Reserves (the "CIM Standards"). The CIM Standards differ significantly from standards in SEC Industry Guide 7 under the United States Securities Act of 1933, as amended. While the terms "mineral resource," "indicated mineral resources," and "inferred mineral resources" are recognized and required by Canadian regulations, they are not defined terms under SEC Industry Guide 7 and are not normally permitted to be used in reports filed with the Securities and Exchange Commission. Readers are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves. "Inferred mineral resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Readers are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. As such, information regarding resources contained in this press release may not be comparable to similar information made public by United States companies subject to reporting and disclosure requirements under United States federal securities laws and the rules and regulations promulgated thereunder.

   

On Behalf of Klondex Mines Ltd.

Blane W. Wilson

President & CEO

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