Mr. Paul Huet reports

KLONDEX ANNOUNCES ACQUISITION OF RICE LAKE MINE AND MILL COMPLEX

Klondex Mines Ltd. has entered into a definitive agreement to acquire the Rice Lake mine and mill complex located near Bissett, Man., for $32-million (U.S.).

The purchase price, which is subject to customary adjustments, comprises $20-million (U.S.) in cash and $12-million (U.S.) in deferred payments in the form of a promissory note secured against Rice Lake and other purchased assets. The note will have a principal amount of $12-million (U.S.) with an annual interest rate of 4 per cent and interest is payable monthly. Per the terms of the agreement, Klondex is required to pay $4-million (U.S.) of the principal amount in each of the next three years on the anniversary of the closing date. Klondex may at its option repay the entire principal amount then outstanding at any time at no additional cost. The promissory note contains customary covenants.

Paul Andre Huet, Klondex's president and chief executive officer, commented: "This acquisition represents an excellent opportunity for Klondex to acquire a production-ready gold asset in a top-ranking mining jurisdiction in Canada. Rice Lake is similar to the Midas acquisition in that we will not only benefit from the redeployment of equipment and other mining synergies with our existing operations, but we will also be able to apply our team's demonstrated operational expertise to a deposit ideally suited for narrow vein underground mining techniques. Even with this acquisition, our No. 1 strategic objective is to fill the Midas mill from our Nevada operations. Fire Creek and Midas continue to be our flagship assets and we will not lose our focus on these core properties."

Key highlights of the acquisition:

• Cash transaction with zero dilution to Klondex shareholders;
• Production-ready asset in a top-ranked mining jurisdiction: fully permitted operation consisting of three main deposits that comprise the Rice Lake mine and a milling complex in Manitoba, Canada;
• Leverages Klondex's technical expertise in narrow-vein underground mining: Klondex will apply the same principles used at Fire Creek and Midas at Rice Lake;
• Extensive surface and underground infrastructure: approximately $375-million in historical capital investment since 2007, including extensive underground development and a fully functional 2,500-ton-per-day milling facility;
• Immediate value opportunities: potential to reprocess gold contained in tailings and redeploy excess equipment to Fire Creek and Midas as the Rice Lake mine is rightsized;
• Significant exploration opportunity and 400-square-kilometre land package: several opportunities to extend mineralized zones downdip and along strike, as well as excellent targets for new discoveries;
• Proven gold production: Over 450,000 ounces of gold production since 2000; as of Dec. 31, 2014, estimated proven and probable gold reserves were 455,000 ounces, measured and indicated mineral resources were 634,000 ounces of gold, and inferred mineral resources were 1,101,000 ounces of gold.

Rice Lake action plan

Klondex intends to implement at Rice Lake the same grade and dilution control methods it has applied to the narrow-veined Fire Creek and Midas operations. By applying a more selective mining approach to the Rice Lake operation, Klondex will reduce tonnage, minimize dilution and focus on producing higher-margin ounces.

Transaction overview

Under the terms of the agreement, Klondex will acquire 100 per cent of Rice Lake along with certain related assets and equipment. In addition to Rice Lake, the company is also acquiring a 50-per-cent interest in the Tully gold project located near Timmins, Ont., and approximately 43 million common shares in SGX Resources Inc., representing approximately 32 per cent of the issued and outstanding common shares of SGX.

The acquisition is expected to close by the end of the first quarter of 2016, subject to regulatory approvals and the satisfaction of other standard conditions precedent.

Rice Lake overview

Rice Lake is an underground gold mining operation consisting of three underground deposits with a modern, fully permitted 2,500-ton-per-day mill. Gold was originally discovered at Rice Lake in 1911 and intermittent mining operations since 1931 have produced more than 1.5 million ounces of gold. Mining took place continuously from 2007 until May, 2015, over which time in excess of $375-million was invested into the property and approximately 390,000 ounces of gold was produced. Mining ceased and the operation was placed on care and maintenance in May, 2015.

Rice Lake historical mineral estimate

A historical mineral estimate of the mineral reserves and resources for Rice Lake as of Dec. 31, 2014, is shown in the table. These mineral reserves and resources were prepared by the prior owner in accordance with National Instrument 43-101 under the supervision of a qualified person. However, a qualified person from Klondex has not done sufficient work to classify this historical mineral estimate as current mineral reserves or mineral resources, and Klondex is not treating such estimate as current mineral reserves or mineral resources. Klondex anticipates completing the work necessary to prepare and file an updated National Instrument 43-101 technical report after the transaction closes.

             HISTORICAL MINERAL RESERVE AND RESOURCES TABLE

                                 Tons       Grade      Grade       Gold
                                 (000)      (oz/t)      (g/t)   (000 oz)
Reserves
Proven                            214       0.192        6.6         41
Probable                        2,415       0.172        5.9        414
Total proven and probable       2,629       0.173        5.9        455
Resources
Measured resources                224       0.229        7.9         51
Indicated resources             2,949       0.197        6.8        582
Measured and indicated          3,173       0.200        6.8        634
Inferred resources              5,829       0.189        6.5      1,101

1. Historical estimate of mineral reserves and mineral resources as
reported by San Gold Corp. (a prior owner of Rice Lake) in its annual
information form dated March 31, 2015, for the financial year ended
Dec. 31, 2014, which refers to the technical report dated effective
Feb. 4, 2013, and amended on Feb. 25, 2013 (with an effective date of
mineral resources and mineral reserves of Dec. 31, 2012) as updated by
subsequent press releases of San Gold, all of which are available at
SEDAR under San Gold's profile. The key assumptions, parameters and
methods used to prepare the estimate are described in the San Gold
AIF. As discussed in the San Gold AIF, mineral reserves and mineral
resources were prepared by San Gold in accordance with National
Instrument 43-101 under the supervision of a qualified person.
2. As discussed in the San Gold AIF, mineral reserves were calculated
by San Gold using a gold price of $1,350 per ounce. A cut-off grade of
4.11 g/t gold was used for estimating mineral reserves. A cut-off
grade of between 2.74 and 3.43 g/t gold was used for estimating mineral
resources. Proven and probable mineral reserves are included in the
measured and indicated mineral resources.
3. Inferred mineral resources are in addition to measured and indicated
resources. Inferred mineral resources have a great amount of
uncertainty as to their existence and whether they can be mined legally
or economically. It cannot be assumed that all or any part of the
inferred resources will ever be upgraded to a higher category.

Advisers

GMP Securities is acting as financial adviser to Klondex on this transaction and Bennett Jones LLP is serving as legal adviser.

Conference call information and presentation materials

Klondex will conduct a conference call and webcast to discuss the transaction announcement on Dec. 17, 2015, at 9 a.m. ET. A slide presentation to accompany the conference call will also be available at the company's website.

Dial-in numbers:

Canada and United States toll-free dial-in:  1-800-319-4610

Toronto and international:  1-416-915-3239

Outside of Canada and U.S. call:  1-604-638-5340

Replay numbers:

Canada and U.S. toll-free:  1-855-669-9658 followed by 3599 followed by the pound key

Outside Canada and U.S. call:  1-604-674-8052 followed by 3599 followed by the pound key

The replay is available until end of day Thursday, Dec. 24, 2015.

Qualified person

Scientific and technical information in this press release has been reviewed and approved by Brian Morris (AIPG CPG-11786), a qualified person within the meaning of National Instrument 43-101.

We seek Safe Harbor.