Klondex Closes U.S. $20 Million Secured Facility to Advance Underground Development of High-Grade Nevada Gold Project

Klondex Mines Ltd. (TSX: KDX) announces it has secured a U.S. $20
million gold-backed debt facility (the 'Facility?) for its wholly-owned
subsidiary, Klondex Gold & Silver Mining Company ('KGS?) to fund a
transformational underground development and bulk sampling program at
Fire Creek, its high-grade [10.11 gr./tonne] gold project in North
Central Nevada. The Facility is being funded by Waterton Global Value,
L.P. (the 'Lender?)

Blane Wilson, President & COO, comments: 'We spent many months seeking a
financial structure to fund our underground program that would also meet
our goal of limiting shareholder dilution. This U.S. dollar facility
meets those goals and gives KDX the flexibility to fully execute on its
Fire Creek underground program. That program includes the construction
of a 4,000-foot decline, in-fill drilling from underground stations and
initial high-grade gold production via bulk sampling, which is expected
to commence by year-end.

Klondex Chairman & CEO, Bill Solloway, observes, 'With funding, permits,
plans and contractors in place, the start of Klondex′s underground
development is imminent. We believe this progression from pure
exploration to a hybrid model of exploration and production via bulk
sampling represents a transformation delivering substantial value for
our shareholders as it unfolds.?

The gold-backed facility bears interest at 9% per annum and consists of
three drawdowns commencing with $10,000,000 at closing and two
subsequent drawdowns of $5,000,000 each conditioned on the achievement
of certain development milestones.

Borrowings under the Facility are to be repaid in equal monthly
installments ? from March 2012 through February 2014 - of physical gold
bullion from KGS′s anticipated gold recovery at Fire Creek. Monthly gold
repayments will be determined by a formula based on the principal owed,
the number of installments, and a 20% discount to the spot price of
gold. At any time the Lender may request monthly payments be made in
cash, without penalty and KGS may prepay the Facility in whole or in
part in physical gold ounces or cash (as the Lender may select). KGS′s
obligations are secured by a lien and a first priority security interest
in all its properties and assets, including Fire Creek. KDX has issued a
guarantee backed by a share pledge over its shares in KGS.

The Lender has been granted an exclusive right to purchase all gold
produced by Fire Creek for a three-year period beginning one year prior
to Facility′s maturity date. Generally, pricing will be based on a
30-day average gold price at a 1% discount to such average price.

At closing, KGS pays a structuring fee of 1% of the aggregate amount of
the Facility and also pays a structuring fee of 1% of each drawdown. The
Lender also receives four-year 'First Tranche? warrants to purchase 1.4
million of KDX′s shares priced at $3.99 per share. First Tranche
warrants, if exercised within 18 months of issuance, will also earn an
equal number of new warrants exercisable until April 5, 2016 at the
higher of 115% of the 5-day volume weighted average price at the time of
the issuance, or $5.00, whichever is greater. Upon the second and third
drawdown, the Lender will receive an additional 300,000 four-year
warrants to purchase KDX′s common shares at a strike price 115% above
the market price at the time of issuance. All warrants are
non-transferable.

About Waterton Global Value, L.P.

Waterton Global Value, L.P. is an affiliate of Waterton Global Resource
Management, a Toronto-based resource-focused investment fund launched in
2010. Waterton Global invests in junior resource companies with strong
management teams, effective capital structures, and high-quality assets
in the mining, precious and base metals, oil, and natural gas sectors.
Waterton Global seeks to build long-term partnerships with companies who
have proven world-class potential and enduring growth prospects by
providing customised capital solutions with a relationship focus.
Waterton Global′s Fund Family team brings a diverse portfolio and
12-year track record as leading investors in private and public
companies in North America, Europe, Asia, and Australia.

About Klondex Mines (www.klondexmines.com):

Klondex Mines Ltd. is focused on the exploration and development of its
100% owned high-grade Fire Creek gold deposit in North Central Nevada.
Fire Creek is a compelling, low-Capex mining prospect that is well
located near power, transportation, mining infrastructure and several
milling facilities. Klondex plans to initiate an underground exploration
and bulk sampling program in Q2 2011, with initial bulk sampling
production targeted to begin by year-end 2011. Klondex has identified
the following NI 43-101 compliant resource at Fire Creek:

Klondex had 36,544,089 shares issued and outstanding and 41,319,089
shares on a fully diluted basis as of December 31, 2010.

ON BEHALF OF KLONDEX MINES LTD.

Klondex Mines Ltd.

Bryson Goodwin, (604) 341-1531

brysongoodwin@shaw.ca

or

Jaffoni
& Collins

David Collins, (212) 835-8500

KDX@jcir.com