Klondex Mines Reports Solid Progress at Fire Creek Nevada Gold Deposit

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:

Klondex Mines Ltd.

Bryson Goodwin,
604-341-1531

brysongoodwin@shaw.ca

or

Jaffoni
& Collins

David Collins, 212-835-8500

KDX@jcir.com