Mr. Paul Huet reports

KLONDEX REACHES POSITIVE PRODUCTION DECISION AT TRUE NORTH

Klondex Mines Ltd. has made a positive production decision at its underground True North gold mine in Manitoba, Canada. Additionally, the company is pleased to provide an updated mineral reserve and mineral resource for True North.

Preliminary estimated operating statistics:

• Annual mill throughput of 600 to 1,000 tons per day;
• Initial annual production of 45,000 to 65,000 gold ounces;
• Average all-in sustaining costs of $950 to $1,050 per Au ounce;
• Annual capital expenditures of $15-million to $25-million;
• National Instrument 43-101 technical report will be issued within 45 days of this press release.

Mineral reserve and mineral resource highlights:

• The True North proven and probable (P&P) mineral reserve is 85,500 Au ounces at a grade of 0.24 ounce per ton Au contained within 352,000 tons.
• The True North measured and indicated (M&I) mineral resource is 294,000 Au ounces at a grade of 0.21 ounce per ton Au contained within 1,386,000 tons.
• The True North mineral reserve and mineral resource are exclusive of the results of 35 of the 50 initial drill holes completed in the second quarter of this year (see press release dated June 29, 2016).
• The True North year-end mineral resource update is expected in first quarter 2017.

                     TRUE NORTH MINERAL RESERVE
 
Category             Tons            Au           Au           Au  
                       (k)        (oz/t)        (g/t)        (koz)

Proven                153         0.241         8.26         36.7
Probable              199         0.245         8.40         48.8
Total P&P             352         0.243         8.33         85.5

                      TRUE NORTH MINERAL RESOURCE
 
Category             Tons            Au           Au           Au  
                       (k)        (oz/t)        (g/t)        (koz)

Measured              455         0.232         7.95          106     
Indicated             931         0.202         6.93          188     
Total M&I           1,386         0.212         7.27          294     
Inferred            2,793         0.165         5.66          460

1. Mineral resources are inclusive of mineral reserves.                     
2. Mineral reserves are calculated at a gold price of $1,500 per 
ounce.   
3. Mineral resources are calculated at a gold price of $1,750 per 
ounce.  
4. U.S.-dollar-to-Canadian-dollar exchange rate is 0.80.                                       
5. Metallurgical process recovery for gold is 94 per cent.                       
6. Mineral resources include resource modelling dilution to a 
minimum width of four feet or the vein width, whichever is 
greater.                 
7. Mineral reserves include mining dilution and are constrained 
to a five-foot minimum mining width.                                            
8. Cut-off grade for the resources is 0.09 ounce per ton Au.                        
9. Cut-off grade for the reserve is 0.13 ounce per ton Au, which 
includes a mining cost of $69/ton, processing cost of $28/ton, 
general and administrative cost of $45/ton, and sustaining 
development cost of $42/ton.                          
10. Mineral resource and reserve tonnage calculations used a bulk 
density of 0.086 ton/cubic foot.                                                    
11. Mining losses of 2 per cent have been applied to the designed 
mine excavations and no additional unplanned dilution has been 
applied.   
12. The effective date for mineral reserves and resources is June 
30, 2016. 
13. Mineral resources which are not mineral reserves do not have          
demonstrated economic viability. The estimate of mineral 
resources may be materially affected by environmental, 
permitting, legal, title, taxation, socio-political, marketin, or 
other relevant issues.        
14. The quantity and grade of reported inferred resources in this         
estimation are uncertain in nature and there has been 
insufficient exploration to define these inferred resources as 
indicated or measured mineral resources and it is uncertain if 
further exploration will result in upgrading them to the 
indicated or measured mineral resource category.                                                    
15. The mineral resources in this press release were estimated 
using the Canadian Institute of Mining, Metallurgy and Petroleum 
standards on mineral resources and reserves, definitions, and          
guidelines prepared by the CIM standing committee on reserve 
definitions and adopted by the CIM council.

Paul Huet, president and chief executive officer, stated: "I am very pleased to have been able to deliver a positive production decision on our True North asset ahead of our initial expected time frame. This will be our third operational mine and we believe it will deliver significant value to our shareholders. We are also pleased with the updated mineral reserve and resource estimate at True North knowing that it only includes the results of 15 of our initial 50 drill holes from 2016. We are optimistic about the potential to continue to increase our mineral reserves and mineral resources in Canada."

The True North mineral reserves and mineral resources are based on 7,746 drill holes totalling 213,206 metres (699,496 feet) and include data from 15 new drill holes totalling 1,949 m (6,393 feet), completed by Klondex since May, 2016. In addition to the drilling, the mineral reserve and mineral resource estimate also utilizes 28,763 channel samples provided from mining on the mineralized structures.

The updated mineral reserve and mineral resource estimates for True North were prepared by P&E Mining Consultants Inc.

To view partial results of the company's initial drill program at its True North gold mine, please see the company's press release dated June 29, 2016.

Mineral resource assumptions

Classification of the mineral resource as measured, indicated or inferred was undertaken based on the number of drill and channel sample composites used, and the average distance from the block to the composites.

A measured mineral resource grade model block must have incorporated four composites within a distance of 50 feet. For an indicated mineral resource, a grade model block must have incorporated four composites within 100 feet and an inferred mineral resource must have incorporated four composites within 500 feet. The search orientation ellipse was maintained approximately parallel to the strike and dip of each vein. Only gold values were estimated at True North.

Drill interval assays for True North were performed by TSL Laboratories Inc. of Saskatoon, Sask. (independent laboratory). Channel sample assays were performed by Klondex's in-house laboratory at True North, using fire assaying with gravimetric finish and check samples were sent to TSL Laboratories of Saskatoon, Sask.

Drill samples cited in this news release for True North were acquired by independent drilling contractors under the direction of Klondex staff. Standards and blanks were inserted every 20 samples or at least one per hole in the case where there are less than 20 samples in a hole. Duplicates are generated by the lab and reassayed internally. Quality assurance/quality control samples are tracked, and, if a result plots outside of predetermined QA/QC gate limits, the batch is reassayed and the new results replace the previous values.

Qualified person

Scientific and technical information in this press release has been reviewed and approved by Eugene Puritch, PEng (PEO licence No. 100014010), a qualified person within the meaning of National Instrument 43-101.

The company has 100-per-cent interests in two producing mineral properties: the Fire Creek mine and the Midas mine and ore-processing facility, both of which are located in the state of Nevada, United States, as well as the recently acquired True North gold mine and ore-processing facility in Manitoba, Canada. The company is in the process of acquiring the Hollister mine and Esmeralda mill, located in northern Nevada, U.S.

We seek Safe Harbor.