May 11, 2011
Vancouver, BC - May 11, 2011
- Klondex Mines Ltd. (TSX: KDX) (“Klondex” or the “Company”) announced
today that as a result of a review by the British Columbia Securities
Commission (BCSC) Klondex is issuing the following news release to
clarify its disclosures regarding its Fire Creek property located near
Elko, Nevada. National Instrument 43-101 (“NI 43-101”) compliance issues
occur in the March 30, 2009 technical report “Updated Report on the
Fire Creek Gold Property, Lander Co., Nevada” on SEDAR, (the “2009
Report”) and were also present on the Company’s previous website, in
corporate presentations, and in investor relations materials.
New technical report being prepared
The Company’s annual information form of March 31, 2011 disclosed
material exploration activity since the 2009 Report and thereby
triggered the requirement under NI 43-101 to file a new technical report
concurrent with the AIF. Klondex intends to prepare and file the report
within 30 days.
Klondex clarifies that mineral resource estimates and information about
an underground bulk-sampling project, disclosed in the 2009 Report and
elsewhere, are unsupported by a compliant NI 43-101 technical report,
contrary to NI 43-101. Klondex cautions that the resource estimates, and
expected positive results of the bulk processing, should not be relied
upon until they have been independently verified and supported by an
updated independent technical report. If, because of the new report,
there are material changes in resource estimates, or other material
changes, the Company will promptly announce the results.
The Company’s 2011 PDAC presentation illustrated new models of veins
done by SRK Consulting. However, Klondex clarifies it has not received
new resource estimates, as defined by NI 43-101, since the 2009 report.
Retraction of economic analyses
On its website, in interviews or presentations available via its website
and incorporated by reference in the Company’s press release of
November 5, 2010, the Company referred to results of preliminary
economic analysis of bulk sampling. The analysis included gold
production estimates, cash flow from bulk sampling, net operating cash
flow, operating margins, and economic analysis in terms of $/share based
on discounted gold metal value. The Company’s 2011 PDAC presentation
and an investor presentation on its website disclosed economic analysis
exceeding that of the initial bulk sampling program, including increases
in annual gold production in 2012 and 2013, and cash flow for a
longer-term mine plan based on a $1300 gold price. Klondex hereby
retracts all the referenced economic analyses. When the Company receives
an initial preliminary assessment as defined by NI 43-101, it will
promptly disclose the results and file a technical report as required by
Correction of noncompliant disclosure of mineral resources
Non-compliance issues on the Company’s prior website included one
instance where the inferred resource was termed an “Inferred Mineral
Reserve”, and more frequent reference to mineral resources as “ore” or
an “ore body.” The use of reserve and “ore” was inappropriate because
the Company has not completed a prefeasibility study, which is the
minimum requirement to demonstrate the economic viability implied by
such terms. The previous website and a corporate presentation disclosed
total resources by combining inferred resources with other classes,
contrary to NI 43-101. The Company has corrected its website resource
disclosure to comply with NI 43-101.
In those instances where the Company has retracted, revised, clarified
or updated previous disclosure, the Company advises readers not to rely
on such statements as they may continue to be found in the public
Klondex is committed to bringing its technical and other disclosure into
compliance as quickly as possible and continues to dedicate significant
internal resources to prepare and verify the information contained in
its public disclosures.
Richard Kern, M.Sc. P. Geo, a Director of Klondex, is the Qualified
Person responsible for the accuracy of this news release in compliance
with NI 43-101.
About Klondex Mines (www.klondexmines.com):
Klondex Mines Ltd. is focused on the exploration and development of its
100% owned high-grade Fire Creek gold deposit in North Central Nevada.
Fire Creek is a mining prospect that is located near power,
transportation, mining infrastructure and several milling facilities.
ON BEHALF OF KLONDEX MINES LTD.
William J. Solloway
Chairman and CEO
President and COO
Klondex Mines Ltd.
Jaffoni & Collins
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