Klondex Announces Active 2007 Drilling and Underground Development Program; Extends New Ore Zone at Battle Mountain-Eureka Trend Property

Klondex Mines Ltd. (TSX: KDX) today announced that its exploratory drilling program at its Fire Creek Property in the Battle Mountain-Eureka Trend in Northern Nevada is scheduled to resume by mid-April. The drilling program is intended to expand the resource in the Main Zone as well as to test the remaining IP anomalies (possible ore bearing structures) identified outside of the Main and Far North Zones. Additionally, the Company is filing an Amendment to its Plan of Operations to permit underground access to the Main Zone mineralization for the purpose of definition drilling and bulk sampling.

To support its increased level of activity at Fire Creek, Klondex will establish an administrative office in North Central Nevada and a field office on site. The Company is pleased to announce the appointment of James L. Balagna III, B.A. (Geology) as Senior Geologist and manager of the Company’s underground development program. Mr. Balagna has 18 years of gold mining experience in Northern Nevada, most recently with Glamis Gold at their Marigold project near Valmy, Nevada, where he served as Senior Geologist. Prior to joining Glamis in 1999, Mr. Balagna also worked with FirstMiss Gold, Rayrock Mines and Placer Dome. He earned his geology degree from the University of Colorado at Denver. Given Mr. Balagna’s substantial experience in exploration and mining geology, he is expected to make a valuable contribution to the progress of the Company and its plans for Fire Creek.

In September 2006, Klondex announced an NI-43-101 compliant Indicated Mineral Resource totaling 1,045,738 ounces of gold in two zones: the Main Zone (801,681 ounces in 912,366 metric tonnes grading 27.33 grams per tonne “gpt”) and the Far North Zone (244,047 ounces in 724,188 tonnes grading 10.48 gpt).

2007 Fire Creek Development Program:

1. Main Zone Resource Expansion; Seven holes totaling 2,560 meters will be drilled in the untested areas of the “boiling zone” (which carries most of the gold values) in the Main Resource area. Constraints imposed on the area of influence of individual drill intercepts in the September resource estimate resulted in the exclusion of these areas from the resource calculation, and it is believed that these seven drill holes may result in a significant addition to the overall high-grade resource. The primary purpose of these holes will be to extend known high-grade mineralization to depths as shown in Table 1 below.
Table 1; Fire Creek Main Zone Resource Expansion Drilling 2007 (Potential Targets)
Proposed Targets and Objectives
Extend zone to south indicated by FC0619 on Vein #2 (34.0 gpt over est true 2.4 m width)
1 Extend zone to south indicated by FC0619 on Vein #3 (85.8 gpt over est true 2.13 m width)


Additional Intercept on Vein # 4 near FC0619 (54.8 gpt/3.7m), FC0519 (9.1 gpt/1.0m) and FCO508 (8.0 gpt/2.1m)
Extend zone to depth indicated by FC0619 on Vein #2 (34.0 gpt over est true 2.4 m width)
2 Extend zone to depth indicated by FC0619 on Vein #3 (85.8 gpt over est true 2.13 m width)
Additional Intercept on Vein # 4 below FC0519 (9.1 gpt/1.0m)
Extend zone to depth indicated by FC0621 on Vein #2 (43.6 gpt over est true 2.4 m width)
3

Extend zone to depth indicated by FC0621 on Vein #3 (5.5 gpt over est true 1.0 m width)
Additional Intercept on Vein # 4
Intercept on Vein #2 between FC0621 (43.2 gpt/2.4m) and FC0416 (5.6 gpt/3.7m)
4 Extend zone to depth indicated by FC0412 on Vein #3 (8.5 gpt over est true 2.13 m width)
Additional Intercept on Vein # 4 and Vein #5
Additional Intercept on Vein # 2
5 Extend zone to depth indicated by FC0408 on Vein #3 (14.2 gpt over est true 2.13 m width)
Additional Intercept on Vein # 4 and Vein #5
Extend zone to depth indicated by FC0416 on Vein #6 (19.4 gpt over est true 2.13 m width)
Additional Intercept on Vein # 2
Extend zone to depth indicated by FC0405 on Vein #3 (14.9 gpt over est true 2.13 m width)
6 Additional Intercept on Vein # 4
Intercept on Vein #5 between 95825 (4.0 gpt/2.5m) and FC0515 (88.8 gpt/2.13m)
Additional Intercept on Vein # 6
Extend zone to depth indicated by FC0417 on Vein #7 (8.7 gpt over est true 2.13 m width)
Intercept on Vein # 3 between 95830(9.9 gpt/3.1m) and FC0515C (18.9 gpt/2.13m)
7 Additional Intercept on Vein # 4
Extend zone to south indicated by FC0512 on Vein # 5 (12.7 gpt over est true 2.13 m width)
Intercept on Vein # 6 between FC0417 (118.0 gpt/2.5m) and FC0426 (37.2 gpt/1.52m)
Extend zone to depth indicated by FC0417A on Vein # 7 (8.7 gpt over est true 2.13 m width)

2. Outside Target Exploration; In the summer of 2006 a large induced polarization (IP) survey was conducted in an effort to identify additional possible ore targets. The survey, which used 100 meter dipole spacing, demonstrated a positive response from the Main and Far North Zones and identified an additional 15 targets outside these zones. The anomalies which could be drilled from areas permitted under the current Plan of Operations were tested in the fall of 2006. The most encouraging results came from drilling on Anomaly # 4. Drill hole FC0632 (previously reported) included 7.55 gpt over 3.05 m and 8.17 gpt over 3.05 m. Results for hole FC0634 located 100 meters to the north have been received and include 6.34 gpt over 4.6 meters. Results from other 2006 drilling and plans for 2007 are shown in Table 2 below. The Company’s exploration consultants, MinQuest Inc. of Reno, Nevada, have noted that most of the known gold-bearing veins are within a N45°W trending 350 meters-wide – the “Fire Creek Mineral Trend” - suggesting that the area between the Main and Far North Zones is very prospective. Target priorities and drill plans are shown on the Company’s website at http://www.klondexmines.com/s/News.asp.
Table 2; Fire Creek IP Target Drilling
Anomaly Status Hole # Result Comments


0
Tested FC0639

1.23 gpt over 42.7 m and 7.2 gpt over 2.43 m


Possible open pit target
Definition drilling in 2007

1
Untested First level Priority in 2007 Drilling

2
Untested Second level priority in 2007 drilling

3
Untested Second level priority in 2007 drilling

4
Tested FC0632 7.55 gpt over 3.05 m and 8.17 gpt over 3.05 m "New North Zone"
Definition drilling planned
FC0634 6.34 gpt over 4.6 m

5
Untested Second level priority in 2007 drilling

6
Tested Pyrite only No further work

7
Tested Pyrite only No further work

8
Tested Pyrite only No further work

9
Tested Pyrite only No further work

10 to 14
Untested Third level priority in 2007 drilling

3. Underground Program; Fire Creek’s current Plan of Operations is being amended to include about 3,000 meters of underground workings to permit access to the Main Zone on two levels. Subject to obtaining approval and availability of contractors, this work is scheduled to commence in September of this year. The underground levels will facilitate in-fill drilling to improve knowledge regarding grade and vein continuity. Klondex will file an application for designation as a “Small Scale Facility” as defined by Nevada Regulation NAC 445A.377, allowing for the extraction and processing of not more than 33,180 metric tonnes of ore per year and no more than 109,090 metric tonnes in total. This designation will allow for the extraction of a series of bulk samples from selected areas in the Main Zone. Possible sites for this activity as defined by previous drilling and estimated in the NI 43-101 resource summary are listed in table 3.
Table 3; Possible locations for Bulk Sampling at Fire Creek Main Zone
VEIN Section

Drill
Gold Grams True Width Area Sq. Tonnes Gold


Hole
Per Ton Meters Meters Oz.
M6A 3+50-N FC0417 118.00 3.62 5,838 53,891 204,445
M5 3+00N FC0515C 88.78 2.13 6,028 32,805 93,630
M3 0+50N FCO619 85.80 2.13 3,195 17,354 47,870
M2 1+00 FC0413 68.01 2.44 1,121 6,972 15,244
M4 3+50N FC0513 64.90 2.13 2,696 14,643 30,554
M4 0+50N FCO619 54.80 3.66 1,112 10,378 18,285
M2 0+50N FCO618 55.42 2.13 1,185 6,436 11,468
M2 1+00N FC0621 43.80 2.44 3,268 20,333 28,633
M2 0+50N FC0419 38.74 2.29 1,147 6,688 8,329
M12 750N FC0608 34.13 3.20 5,441 44,399 48,718
M2 0+50N FCO619 34.00 2.44 2,994 18,629 20,363
M4 4+00N FC0403 30.65 2.29 2,674 15,592 15,364
M3 3+50N FC0402 30.11 2.13 1,299 7,056 6,830
Weighted
Average 61.07 Total 255,175 549,731

Underground Development/Bulk Sampling Opportunity:

During the exploration and development phase of the underground program Feasibility Studies and Permit Applications will be carried out to advance the deposit to full production. The Company anticipates that the processing of bulk samples may be carried out at mills within trucking distance, such as those owned by Newmont and Barrick. Based on preliminary estimates developed in-house for permitting, underground access, exploration, drilling, mining and other costs, Klondex believes it could generate a substantial operating profit during a proposed three-year underground development/bulk sampling program. Klondex currently believes that proceeds from such an effort could be more than sufficient to fund the Company’s move into full production of the Fire Creek property, as well as to pursue other development opportunities. The Company has determined that the extraction of these bulk samples will not materially affect the overall economics of the Main Zone.

Klondex’s current working capital position is approximately CDN$9.5 million and currently 22.5 million shares are issued and outstanding. Dilution to 26.9 million shares through the exercise of existing options and warrants would result in an additional CDN$8.1 million in working capital.

Richard Kern (P.Geo) of Reno, Nevada, is the Company’s qualified person on the project as required under NI 43-101and has reviewed the technical information contained in this press release.

Klondex has in place a rigorous QA/QC program consistent with National Instrument 43-101 and using best industry practice. Core is sawed in half and assayed on 5-foot maximum lengths by ALS Chemex Labs of Reno, Nevada, responsible for all Klondex Mine’s assaying at Fire Creek.

Source : www.klondexmines.com