Klondex Mines Ltd.

Klondex Generates 2015 Operating Cash Flow of $47.4 million, Increases Cash Balance by 30%, and Targets 16% Increase In 2016 GEO Production

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Vancouver, BC - March 23, 2016 - Klondex Mines Ltd. (TSX: KDX; NYSE MKT: KLDX) ("Klondex", the "Company", "we", "our", or "us" - http://www.commodity-tv.net/c/mid,3159,Companies_und_Projects/?v=294628 ) is pleased to announce its operational and financial results for the fourth quarter and full year of 2015 as well as recent 2016 developments. This release should be read in conjunction with our 2015 audited financial statements and related management's discussion & analysis ("MD&A"), which are available on our website (www.klondexmines.com), on SEDAR (www.sedar.com), and on EDGAR (www.sec.gov).   All dollar amounts included in this press release are expressed in thousands of United States dollars, unless otherwise noted, and are based on our financial statements and MD&A, which has been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board.

Full Year 2015 Highlights

•   Health, Safety, and Environmental - No lost-time injuries and have now operated 1,173 days (~3.2 years) at Fire Creek and 450 days (~1.2 years) at our Midas mine and ore milling facility ("Midas") without a lost-time injury. Environmental assessment approved by the BLM after year-end allows Fire Creek to advance its mining and exploration activities, including construction of a new waste rock storage facility.

•   Cash Flows and Liquidity - 2015 cash balance increased by $13.6 million, or 29.9%, to $59.1 million. The Company prepaid in full $17.6 million of principal on the 11.0% senior secured notes ("Senior Notes") with the proceeds received from its September public offering.

•   Ounces Sold and Revenues - Sold 133,084 GEOs, consisting of 110,058 gold ounces and 1,708,548 silver ounces. Record revenue of $155.2 million based on average selling prices per gold and silver ounce of $1,166 and $15.72, respectively. Full year 2015 net income was $22.5 million, or $0.17 per share - basic.

•   Production and Performance Measures - Produced 127,527 GEOs, a 21% increase from 2014.  2015 production exceeded our original guidance and was slightly below our revised outlook due to heavy December snowfall at the Midas mill.  Significant margins from operations with production cash costs of $626 per GEO sold and all-in sustaining costs of $786 per gold ounce sold.

•   Mine Operating Statistics - Milled 261,288 ore tons, a 52% increase from 2014, as we work toward filling the Midas mill to capacity.  Annual averages for select metrics were: 716 ore tons milled per day, 0.43 oz/ton gold mill head grade, 6.66 oz/ton silver mill head grade, 0.52 oz/ton GEO mill head grade.

Fourth Quarter 2015 Highlights

•   Cash Flows and Liquidity - Operating cash flows of $10.8 million achieving a cash balance of $59.1 million for the fourth quarter and year-end.

•   Ounces Sold and Revenues - Sold 33,600 gold equivalent ounces ("GEOs"), consisting of 28,221 gold ounces and 406,129 silver ounces. Revenue totaled $37.2 million from average selling prices per gold and silver ounce of $1,106 and $14.64, respectively. Fourth quarter net income was $6.4 million, or $0.05 per share - basic.

•   Production and Performance Measures - Produced 30,249 GEOs at production cash costs of $593 per GEO sold, a 5% decrease from the $621 per GEO sold in the third quarter.

•   Mine Operating Statistics - Milled 69,568 ore tons. Quarterly averages for select metrics were: 756 ore tons milled per day, 0.41 oz/ton gold mill head grade, 5.36 oz/ton silver mill head grade, 0.48 oz/ton GEO mill head grade.

Recent 2016 Developments

•   Acquisition of Rice Lake - On January 22, 2016, we acquired the Rice Lake mine and mill located near Bissett, Manitoba, Canada for $32.0 million. This acquisition represents an important opportunity to strategically and responsibly grow our business in a mining friendly jurisdiction while leveraging our technical expertise in narrow-vein underground mining.

•   Secured Revolving Facility - On March 23, 2016, we entered into a $25.0 million secured revolving facility agreement with Investec Bank PLC, thereby strengthening our financial position and liquidity.

Paul Andre Huet, President and Chief Executive Officer said, “2015 was a record year for Klondex in many ways. Our production continues to grow while our production cash costs continue to decrease, generating significant operating cash flow to fuel our business.  We ended the year with approximately $60 million in cash, a 30% increase from the end of last year, and another $19 million in inventory. Additionally, in March 2016, we successfully secured a $25 million revolving credit facility at competitive rates, further demonstrating the strength of our balance sheet. We're well positioned to continue to grow our business in the future, targeting 16% greater production in 2016 at similar production costs, which we expect will once again result in significant free cash flow for our shareholders.”

2016 Full Year Outlook

Nevada Operations

We expect to continue to grow our Nevada operations in 2016 with a targeted 16% increase in total production over 2015 actuals while our production cash costs per GEO sold are expected to remain at comparable levels as we maintain our focus on consistently mining profitable ounces.  2016 GEO production is expected to increase from the first quarter to the fourth quarter as we increase our mining rates and throughput at the Midas mill during the year. Targeted annual GEO production is expected to be weighted approximately 40%-45% in the first half of 2016 and 55%-60% in the second half of 2016. 2016 capital expenditures projection have increased slightly from the prior year actual to $50.0 million, with approximately 60% projected to be spent at Fire Creek, 30% projected to be spent at Midas, and 10% projected to be spent at the Midas mill.  Of the 2016 capital expenditure estimate, approximately $12.3 million is expected to be spent on drilling and exploration.  

Rice Lake Project

Due to the fact that Rice Lake is a fully permitted, previously producing mining complex, we expect an efficient and straightforward process to identify the most profitable and responsible program to advance the project.  We have retained a portion of the existing site workforce, including members of the team who will be integral in developing a right-sized mine plan, capable of generating free cash flow (if a production decision is made).  Efforts and activities at Rice Lake will be executed based on best in class health, safety, and environmental practices consistent with the Company's core values.

It is our expectation that there is substantial value and upside potential in a variety of areas at the Rice Lake property, and our 2016 goals will therefore include the following:

•   Mineral resources - Develop a new mineral resource estimate that includes both historical and new drill results. New drill results will be based on priority targets and zones which we believe can contribute to a quality mineral resource estimate.

•   Mine Plan - Generate a detailed mine plan that optimizes the ore body, subsequent to the completion of a new mineral resource estimate.

•   Exploration - Commence a small-scale, selective exploration campaign to improve our understanding of, and to identify mineralization (if any) in, areas close to existing underground workings.

•   Gold in tailings - Assess the potential to recover gold in tailings through sonic drilling, assaying, and metallurgical testing.

•   Site infrastructure and equipment - Perform a thorough assessment of site facilities, infrastructure, underground workings, and mobile equipment and refurbish as needed. Identify and transfer any excess pieces of equipment to our Nevada operations as appropriate.

•   Production decision - Upon completion of the above, we expect to be in a position to make a formal decision in the second half of 2016 as to whether to commence production.

During 2015, Fire Creek and Midas together sold 110,058 gold ounces and 1,708,548 silver ounces.  Revenues, Production costs, and Depreciation and depletion increased during 2015 as the Midas acquisition was completed in February 2014, after which we began increasing production at both Midas and Fire Creek (2015 was our first full year of production). Increases in Revenues in 2015 from higher ounce volumes were partially offset by lower average realized selling prices (2015 gold and silver prices per ounce of $1,166 and $15.72, respectively, compared to 2014 gold and silver prices per ounce of $1,310 and $18.47, respectively).  General and administrative expenses increased in 2015 due to increased staff levels at the corporate office and additional legal, regulatory, and listings fees from our NYSE MKT listing. Finance charges were primarily related to the Senior Notes (which were fully repaid) and effective interest on the gold purchase agreement.  We recorded a $2.1 million Loss on extinguishment of senior notes when we prepaid in full $17.6 million of principal on our Senior Notes.

We generated $47.4 million of net operating cash flows which was more than $45.6 million of capital expenditures included in the  $35.8 million of net cash used in investing activities.  We received net proceeds from an equity offering of $18.7 million, which were used to repay the Senior Notes principal balance of $17.6 million, significantly improved our liquidity and financial position. 

Our cash balance increased by 29.9%, to $59.1 million, and our working capital increased by 29.3%, to $62.4 million, from December 31, 2014 to December 31, 2015. 

On a consolidated basis, Fire Creek and Midas's 2015 results included the sale of 133,084 GEOs, consisting of 110,058 gold ounces and 1,708,548 silver ounces, as higher second half production from Fire Creek due to increased tons and consistent grades was offset by lower second half production from Midas due to lower grades associated with the mining sequence. To lessen the impact of Midas's lower grades on our planned consolidated ounce production, we increased the tons milled from both Midas and Fire Creek in the second half. GEOs produced during the end of the fourth quarter were slightly tempered by heavy snowfall at the Midas mill which deferred the processing of certain mined ore tons into 2016.  Fourth quarter recovery rates include the effects of our annual stockpile inventory reconciliation, which resulted in downward ounce adjustments. Our 2015 per ounce costs were well below average realized gold prices and continued to generate significant cash margins.

Fire Creek performed well and as planned during 2015, with an average daily milling rate of approximately 237 tons per day (151 tons per day in 2014). Our gold production increased during 2015 due to higher tons milled as we had access to additional working faces, including the ability to longhole stope in the second half of the year in the Karen, Hui Wu, and Joyce veins, which accounted for approximately 15% of the ore tons mined during 2015. The longhole stoping program improved our second half production rates and costs from the first six months of 2015, while maintaining the 2015 average gold equivalent mill head grade.  During 2015, we also had additional pieces of equipment in our mobile fleet which allowed us to increase our mining rate over 2014.

During 2015, with an average daily milling rate of approximately 479 tons per day (320 tons per day in 2014), we were able to increase the GEOs produced at Midas despite lower average GEO grades.  When including ore processed from Fire Creek, the Midas mill's daily average processing rate peaked at 772 tons per day during the third quarter of 2015.  During 2015, lower second half metal grades were associated with the required mining sequences as we advanced the ore development in the high-grade 905 vein by an additional 300 feet due to the discovery of high-grade south extensions into previously unrecognized mineralized material. This resulted in mining areas with lower grades which decreased production levels compared to the first half of 2015. Although near-term production mining activities will continue to support the mine plan, we expect our average GEO grades to remain at second half 2015 levels (or decrease) until more historical mining areas and the recently discovered 505 vein are brought into production.

Webcast and Conference Call

Klondex will report its financial results for the fourth quarter and full year 2015 on Wednesday, March 23, 2016.  A conference call and webcast will be held the following morning on Thursday, March 24, 2016 at 10:30am ET/7:30am PT. The conference call telephone numbers are listed below.

Canada & USA Toll Free Dial In: +1 800-319-4610

Toronto: +1 416-915-3239

International: +1 604-638-5340

Callers should dial in 5 to 10 minutes prior to the scheduled start time and ask to join the Klondex call. The webcast will be available on the Company's website or by clicking services.choruscall.ca/links/klondex20160324.html.

About Klondex Mines Ltd. (www.klondexmines.com)

We are a well-capitalized, junior-tier gold and silver mining company focused on exploration, development, and production in a safe, environmentally responsible, and cost-effective manner. We have 100% interests in two producing mineral properties, the Fire Creek mine and the Midas mine and ore milling facility, both of which are located in the State of Nevada, USA, as well as the recently acquired Rice Lake mine and mill in Manitoba, Canada.

For More Information Contact:

John Seaberg

Senior Vice President, Investor Relations

O: 775-284-5757

M: 303-668-7991

jseaberg@klondexmines.com

In Europe:

Swiss Resource Capital AG

Jochen Staiger

info@resource-capital.ch

www.resource-capital.ch

____________________________________________________________________________________________________________________________________________

Cautionary Note Regarding Technical Information and Forward-looking Information

This news release contains certain information that may constitute forward-looking information or forward-looking statements under applicable Canadian and U.S. securities legislation (collectively, "forward looking information"), including but not limited to information about current expectations on the timing and success of exploration and development activities, the timing and success of mining operations, the Company's ability to produce and sell gold and silver, the Company’s achievement of the full-year projections for ounce production, metal grades and production costs, the Company's ability to meet annual operations estimates, the ability to maintain average daily milling rates, the Company's capital addition expenditures, the Company's intention and ability to monetize mineralized material, the results of economic studies regarding the Company's mineral projects, the Company's financial conditions, the successful execution and project development at all of the Company's mines and projects, and related permitting. This forward-looking information entails various risks and uncertainties that are based on current expectations, and actual results may differ materially from those contained in such information. These uncertainties and risks include, but are not limited to, the strength of the global economy; the price of gold and silver; 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; and the ability of Klondex to fund its substantial capital requirements and 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 United States available at www.sedar.com and www.sec.gov, respectively. Readers are urged to read these materials. Klondex assumes no obligation to update any forward-looking information or to update the reasons why actual results could differ from such information unless required by law.

Technical Information

Scientific and technical information in this press release has been reviewed and approved by Brian Morris, a "qualified person" within the meaning of NI 43-101.



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