montreal marketing trip€¦ · corporate presentation montreal marketing trip may 16, 2017....

CORPORATE PRESENTATION

MONTREAL MARKETING TRIPM AY 16 , 2 017

Cautionary Note Regarding Forward-Looking Information

This presentation contains certain information that may constitute forward-looking information under applicable Canadian and U.S. securities legislation, including but not limited to

information about results of exploration, development, mining, evaluation activities, results of reclamation activities, the estimation or realization of mineral resources and mineral

reserves, the timing and amount of estimated future production, the making of future production decisions, expectations regarding realization of synergies relating to Klondex's projects,

the timing and receipt of required permits and approvals, capital expenditures, costs and timing of the development of new mineral deposits, requirements for additional capital, the

sufficiency of working capital and liquidity, and the future prices of precious and base metals. 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; operational, funding and liquidity risks; the degree to which mineral resource and mineral reserve estimates are reflective of actual mineral

resources and mineral reserves; 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 the U.S. and 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.

U.S. Cautionary Note Regarding the Use of Mining Terms

This presentation has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ from the requirements of U.S. securities laws. All

resource and reserve estimates included in this presentation have been prepared in accordance with NI 43-101. NI 43- 101 is a rule developed by the Canadian Securities Administrators

that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. These standards differ significantly from the

mineral reserve disclosure requirements of the U.S. Securities and Exchange Commission (the “SEC”) set out in industry guide 7. In particular, the SEC’s industry guide 7 applies

different standards in order to classify mineralization as a reserve. As a result, the definitions of proven and probable reserves used in NI 43-101 differ from the definitions in SEC

industry guide 7. Under SEC standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and

legally produced or extracted at the time the reserve determination is made. However, Klondex’s estimated proven and probable reserves previously reported under NI 43-101 for Fire

Creek, Midas and True North are equivalent to those determined under SEC Industry Guide 7.

This presentation also uses the terms “resources”, “measured resources”, “indicated resources” and “inferred resources”. United states investors are advised that, while such terms

are recognized and required by Canadian securities laws, the SEC does not recognize them. Mineral resources that are not mineral reserves do not have demonstrated economic

viability. United States investors are cautioned not to assume that all or any part of measured or indicated resources will ever be converted into reserves. Further, inferred resources

have a great amount of uncertainty as to their existence and as to 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. Disclosure of “contained ounces” in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits

issuers to report mineralization that does not constitute “reserves” by SEC standards as in- place tonnage and grade without reference to unit measures. Consequently, resource

information contained in this presentation is not comparable to similar information that would generally be disclosed by U.S. companies in accordance with the rules of the SEC.

Qualified Person

Brian Morris, Vice President, Exploration of Klondex Mines is a "qualified person" as defined by National Instrument 43-101 – Standards of Disclosure for Mineral Projects

(NI 43-101) and has reviewed and is responsible for the technical information contained in this presentation.

CAUTIONARY NOTES

2

http://www.sedar.com/

http://www.sec.gov/

Deliver on Our

Commitments

Safety First!

No LTA’s at any of

Our Operations

Significant

Experience

in Narrow

Vein

Underground

Mining

Three Flagship Assets

in Nevada Servicing

One Central Mill

Gaining Scale in Canada

Growing Our

Mineral Resources –

Extending Mine Life

Significant Exploration

Potential at All of

Our Operations

Significant

Liquidity,

Minimal

Debt

COMPELLING VALUE PROPOSITION

Mined 57,633 GEOs

in Q1 2017

Produced ~25,000 GEOs

in April 2017 in Nevada

2017 Production

Guidance of ~210,000

– 225,000 GEOs,

at Cash Costs Per GEO

Sold of $680 – $710*

*See “Non-GAAP Performance Measures at the end of the presentation. *See press release dated April 19, 2017

3

Three Flagship Assets in

Nevada – Aurora provides

additional optionality

Consolidating in Northern

Nevada – three mines serviced

by one central mill

True North developing

into another significant operation

in North America

EXPANDING IN NORTH AMERICA

4

NEVADA AND CANADA RESOURCES

461

345

231

511

507

505473

441

562

267

287

428

526

287

296

668

388

231

511

507

505

*Mineral Resource update for Fire Creek and Midas will occur mid-year

5

HOLLISTER ESTIMATED DEVELOPMENT

TIMELINE

6

Q1 OPERATIONAL HIGHLIGHTSON TRACK TO MEET ANNUAL OPERATING GUIDANCE

• Produced approximately 25,000 GEOs in April 2017

• Mined 57,633 GEOs in Q1, ~27% of annual production guidance

• Produced 34,454 GEOs in Q1, ~13% increase YoY

• Q1 average mill head grade increase by ~30% QoQ

• Generated a stockpile at Midas in Nevada of 30,890 tons at

average grade of 0.94 opt

CONSOLIDATED STATISTICSFIRE

CREEKMIDAS HOLLISTER NEVADA TOTAL TRUE NORTH TOTAL

MINED (GEOS) 37,605 14,065 2,047 53,717 3,916 57,633

PRODUCTION (GEOS) 19,201 11,453 – 30,654 3,800 34,454

SALES (GEOS) (1) (2) 16,540 12,782 – 29,322 4,415 33,737

CASH COSTS (PER GEO SOLD)(1) $410 $981 – $659 $2,070 $844

MINING COST PER TON $283 $244 $635 $294 $248 $282

TONS PER DAY MILLED 241 tpd 437 tpd – 677 tpd 322 tpd N/A

MINED HEAD GRADE (AUEQ) 1.19 opt 0.35 opt 0.29 opt 0.68 opt 0.14 opt N/A

(1)This is a non-GAAP measure; refer to the Non-GAAP Performance Measures section of this Press Release for additional detail.(2) Gold equivalent measures are the gold measure plus the silver measure divided by a GEO ratio. GEO ratios are computed by

dividing the average realized gold price per ounce by the average realized silver price per ounce received by us in the respective

period and match the ratios used to determine the production cash costs per GEO sold. Refer to the Non-GAAP Performance

Measures section of this Press Release for additional detail.

7

LOW HIGH

CORPORATE G&A (millions) $15 $17

HOLLISTER DEVELOPMENT & PROJECT COSTS (millions) $7 $9

REGIONAL EXPLORATION EXPENSE (millions) $3 $5

ALL-IN COSTS PER GOLD OZ SOLD(1) $1,070 $1,130

GEO Production Cash Costs per GEO Sold(1) CapEx (millions)

LOW HIGH LOW HIGH LOW HIGH

MIDAS (2) 42,000 45,000 $925 $950 $15 $17

FIRE CREEK 97,000 100,000 $475 $500 $27 $29

HOLLISTER(3) 30,000 35,000 $935 $960 – –

NEVADA TOTAL 169,000 180,000 $670 $700 $42 $46

TRUE NORTH(4) 41,000 45,000 $725 $750 $15 $16

CONSOLIDATED TOTAL 210,000 225,000 $680 $710 $57 $62

• ~36% production growth YoY

• Operating 4 mines,

2 mills in 2 countries

• Flexible capital allocation

strategy

(1) This is a Non-GAAP measure; refer to the Non-GAAP Performance

Measures section of this Presentation for additional detail.

(2) Includes CapEx from Midas mill of $4-5 M. *See press release dated January 18, 2017

Q1 OPERATIONAL GUIDANCEON TRACK TO ACHIEVE ANNUAL GUIDANCE

(3) The guidance will be updated, as required, upon completion of a technical report

for the Gloria zone, expected to be completed in the second quarter of 2017.

(4) Based on an estimated CDN:US dollar exchange rate of 0.75:1.

8

2017 PRODUCTION FORECAST

• Q1 production primarily from Fire Creek and Midas

• True North and Hollister ramping up; production

weighted towards H2

• Midas mill running at full capacity

• On schedule to meet annual

production guidance of 210,000

to 225,000 GEOs45%

FIRE

CREEK

15%HOLLISTER

20%

TRUE

NORTH

20%

MIDAS

2017Guidance:

210,000 - 225,000 GEOs

9

FIRE CREEK

• Extending the veins in the main

workings

• Expanding district-wide

mineralization using geophysics

as a targeting tool

• Fire Creek District remains open

in all directions and at depth

TRUE NORTH

• Continue to extend mineralization

in the 710 and 711 zones

• New discovery in the SAM zone

• Mineral Reserve update

expected in Q2 2017

HOLLISTER

• Infill drilling at Gloria zone

• Initial Mineral Resource estimate

in Q2 for Gloria zone

• Hatter Graben surface drill

program to begin in Q2

• Hatter Graben Mineral Resource

estimate in Q1 2018

SIGNIFICANT EXPLORATION POTENTIAL

10

FIRE CREEK UG DRILLING RESULTSEXTENDING THE MAIN VEINS

FCU-068824.1’ @ 0.20 opt Au

Modeled Vein

VeinExtension

Inferred Vein Extension

Drill Hole showing Intercepts > 0.1 opt Au

New Drill Hole Intercept (drilled thickness)

FCU-70933.0’ @ 0.84 opt Au

Including 3.0’ @ 1.06 opt Au

FCU-07141.7’ @ 96.92 opt Au


FCU-07041.8’ @ 2.16 opt Au

FCU-068918.3’ @ 1.08 opt Au


FCU-06928.0’ @ 1.47 opt Au


FCU-056212.7’ @ 0.33 opt Au

Including 3.0’ @ 0.90 opt AuFCU-0662

5.0’ @ 2.50 opt Au

FCU-06948.0’ @ 0.84 opt Au

FCU-71653.8’ @ 0.45 opt Au


N

*See Press Release dated February 8, 2017

11

FIRE CREEK SURFACE DRILLING SUCCESSEXTENDS DISTRICT-WIDE MINERALIZATION TO THE WEST, EAST, AND NORTH


12

FIRE CREEK SURFACE EXPLORATION RESULTSEXPLORATION POTENTIAL ACROSS THE DISTRICT

FCC-0061: 1.9ft @ 0.56 opt Au

*FCC-0020: 10ft @ 0.53 opt AuPreviously Reported

*FCC-0068: 17ft @ 0.43 opt Au

*FCC-0067: 1.8ft @ 0.12 opt Au

*Drill holes projected

into cross sectionResistivity Map


13

Currently ~1,800 ft of strike,

and vertical extension of

~1,200 ft

GLOR15 – 034:

18.36 opt AuEq over

1.7ft

Gloria West

Vein SystemOpen

500 ft

Hatter Graben Vein System

Open In All Directions

H8 – 285:

0.47 opt Au

over 12.5 ft

Currently ~1,800 ft of strike

and vertical extension

of ~1,200 ft

H8 – 269:

1.77 opt Au

over 2.1 ft

GLOR15 – 034:

18.36 opt AuEq

over 1.7ft

HOLLISTER PROPERTYHATTER GRABEN VEIN SYSTEM

14

GLORIA LONG SECTION – LOOKING

NORTH

15

HOLLISTERPLAN VIEW – MINEABILITY INDEX

30N1E

Clem/Gwe

n

Intersectio

n

Gloria

30S1E

Hatter Graben> 1ft Vein

¼ft < Vein < 1ft

Stringers < ¼ft

Poor Structure

Little Antelope

Creek Fault

Proposed Drill Site

Hatter Graben

20,000 ft. of drilling to convert

to an inferred resource

A

A’

16

HOLLISTERLONG SECTION LOOKING NORTH - MINEABILITY INDEX

30N1E

/30S1

E

Clem/Gwen

Intersection

GloriaHatter Graben

Tertiary

Ordovician

Tertiary

Ordovician

Little Antelope

Creek Fault

> 1ft Vein

¼ft < Vein < 1ft

Stringers < ¼ft

Poor Structure

~1,200 ft.

~600 ft.

OPEN OPEN

OPEN

A A’

OPEN

17

Cohiba Vein+9.2 kozs MI (33.5ktons @ 0.274opt Au)+31.2 kozs Inf (124.8ktons @ 0.250opt Au)

16L Veins-4.9kozs MI (18.2ktons @ 0.269opt Au)+8.4 kozs Inf (22.8ktons @ 0.370opt Au)

710/711 Veins+56.3 kozs MI (228.1ktons @ 0.247opt Au)+81.2 kozs Inf (343.6ktons @ 0.236opt Au)

Deep East Veins+21.9 kozs MI (126.8ktons @ 0.173opt Au)+84.1 kozs Inf (377.7ktons @ 0.223opt Au)

SAM Veins+12.2 kozs MI (41.2ktons @ 0.296opt Au)+3.5 kozs Inf (14.1ktons @ 0.250opt Au)

26L

16L

Measured + Indicated

Inferred

TRUE NORTHMINERAL RESOURCE ESTIMATE

*See Press Releases dated March 29 & January 24, 2017

New Discovery26-16-001

0.36 opt Au over 15.0 ft12.3 g/t over 4.6 m

007

18

Q1 2017 Q1 2016

REVENUE $41.7M $36.4M

NET (LOSS) INCOME ($10.2M) ($6.7M)

NET (LOSS) INCOME PER SHARE (BASIC) ($0.06) ($0.05)

AVERAGE REALIZED GOLD PRICE (US$/OZ) $1,237 $1,171

AVERAGE REALIZED SILVER PRICE (US$/OZ) $18.00 $14.98

CAPITAL EXPENDITURES $17.0M $11.9M

CASH FLOW (OUTFLOW) FROM OPERATIONS ($4.0M) $1.6M

(1) See Non--GAAP Performance Measures” at the end of the presentation

• Revenue was $41.7 million,

increase of ~15% YoY

• US GAAP Net Loss impacted by:

– Write-down of production

inventories of ~$3.7 M

– Development & Project costs

of ~$5.5M (capitalized under IFRS)

– Loss on derivatives of ~$2.1M

– Foreign currency loss of ~$1.0M

SELECTED FINANCIAL DATASOLID FINANCIAL RESULTS

CONSOLIDATED STATISTICSFIRE

CREEKMIDAS HOLLISTER NEVADA TOTAL TRUE NORTH TOTAL

CASH COST PER GEO SOLD(1) $410 $981 – $659 $2,070 $844

ALL-IN-COSTS (PER AU OZ)(1) $839 $1,536 – $1,082 $2,923 $1,719

19

(1) Metal inventory is the value of the estimated recoverable gold and silver ounces contained in

our Inventories if sold at March 31, 2017 period-end prices.

(2) During Q1 the revolver was extended to December 31, 2019

~$104.4

Million of

Available

Liquidity

(US$M) Q1 2017 Q4 2016

CASH $29.6M $47.6M

METAL INVENTORY $51.8M $26.2M

REVOLVING CREDIT FACILITY $23.0M $23.0M

TOTAL LIQUIDITY ~$104.4M ~$96.8M

• Significant amount of Metal Inventory will

convert to operating cash in Q2

• Re-paid 2,000 Au ozs of debt related to Gold

Purchase Agreement

BALANCE SHEET STRENGTHLIQUIDITY AND WORKING CAPITAL

$29.6M$23M

$51.8M

REVOLVING

CREDIT

FACILITY 2 CASH

METAL

INVENTORY 1

20

Forward Looking

No Lost Time Incidents

Mineral Resource Estimate for the Gloria Zone at Hollister – Q2 2017

Mineral Reserve and Resource Update at Fire Creek and Midas – Q3 2017

Mineral Resource Estimate for Hatter Graben at Hollister – Q1 2018

Successful Ramp-up at True North and Hollister by Year End

Deliver 2017 Annual Operating Guidance

DELIVERING ON OUR COMMITMENTS

21

For More Information

John SeabergSVP Investor Relations and

Corporate Development

Office 775.284.5757

Cell 303.668.7991

[email protected]

RECORD OF OPERATIONAL EXCELLENCEMIDAS POST-ACQUISITION IMPROVEMENTS

7598110

220

IMPROVING EFFICIENCIES

KDX

PRE-KDX

HEADCOUNT MOBILE EQUIPMENT

445

%450

%

140

%

340

%

REDUCING DILUTION RATES

KDX

PRE-KDX

DILUTION TPD

268

562

75

384

INCREASING MINERAL RESOURCES

MEASURED

& INDICATED

INFERRED

PRE-KDX 2015 MINERAL RESOURCE

000’s AuEq Ozs

• Reduced workforce by 50%

• Transferred 25% of the equipment

for use at Fire Creek – reduced

2014 capex by ~$7 million

• Increased resource, doubled grade

to the mill

• Pre-KDX AuEq grade: 0.15 opt

vs. 2015 head grade 0.30 opt

• 2 yard scoops, from 4 yard scoops

• Jumbo’s replaced by handheld drills

• 6-8’ wide ore drifts, down from 12’

• Apply cut and fill mining from raises

in appropriate locations

Note: Please see the press release dated September 16, 2015 and the technical report titled "Preliminary Feasibility

Study for the Midas Mine, Elko County, Nevada", as amended and re-filed April 2, 2015 (effective date of January 31, 2014)

on SEDAR for details regarding the mineral resources disclosed herein, including details regarding the key assumptions,

parameters and methods used to estimate the mineral resources.

A – 1

BUY-SIDE OUTREACHSHIFTING FOCUS TO INSTITUTIONAL INVESTORS

CURRENT SHAREHOLDERS LOCATION % OWNERSHIP

VAN ECK ASSOCIATES New York, NY 13.68%

SENTRY INVESTMENTS Toronto, ON 8.25%

U.S. GLOBAL INVESTORS San Antonio, TX 6.82%

OPPENHEIMER New York, NY 4.20%

FIDELITY (CANADA) AM Toronto, ON 3.78%

K2 & ASSOCIATES Toronto, ON 3.85%

BMO AM Toronto, ON 2.67%

TOCQUEVILLE AM New York, NY 2.55%

O'SHAUGHNESSY AM Stamford, CT 2.30%

SPROTT AM Toronto, ON 2.14%

DEUTSCHE BANK New York, NY 1.79%

*Source: FactSet – March 20, 2017

A-2

Fire Creek Mineral Reserves

Category Tons (k) Au opt Au g/t Au koz

Proven 128 0.218 7.47 27.9

Probable 306 0.251 8.61 76.9

Total P&P 434 0.242 8.30 104.7

Category Tons (k) Au opt Au g/t Ag opt Ag g/t AuEq opt AuEq g/t Au koz Ag koz AuEq koz

Proven 121 1.703 58.40 1.37 47.1 1.722 59.05 206 166 208

Probable 119 0.715 24.51 0.50 17.0 0.722 24.74 85 59 86

Total P&P 240 1.213 41.59 0.94 32.2 1.226 42.03 291 225 294

Midas Mineral Reserves

True North Mineral Reserves


Proven 141 0.261 8.95 9.18 314.8 0.388 13.31 37 1,295 55

Probable 307 0.335 11.47 3.84 131.6 0.388 13.29 103 1,180 119

Total P&P 449 0.311 10.68 5.52 189.2 0.388 13.30 140 2,475 174

Note: See Notes to Mineral Reserves and Mineral Resources on slide A - 7.


Probable 1,950 0.022 0.75 43.2

True North Tailings Mineral Reserves

MINERAL RESERVES

A – 3


Measured 521 0.220 7.54 115

Indicated 1,276 0.214 7.34 273

Total M&I 1,797 0.216 7.40 388

Inferred 3,676 0.182 6.24 668


Measured 180 1.637 56.12 1.30 44.7 1.655 56.74 294 234 298

Indicated 346 0.591 20.27 0.51 17.5 0.598 20.50 205 176 207

Total M&I 526 0.948 32.52 0.78 26.8 0.959 32.89 499 411 505

Inferred 931 0.538 18.43 0.48 16.4 0.544 18.66 501 446 507


Measured 417 0.400 13.72 7.97 273.4 0.511 17.51 167 3,325 213

Indicated 697 0.362 12.41 4.73 162.1 0.428 14.66 252 3,295 298

Total M&I 1,114 0.376 12.90 5.94 203.7 0.459 15.73 419 6,620 511

Inferred 671 0.303 10.39 2.93 100.5 0.344 11.79 203 1,966 231

Note: See Notes to Mineral Reserves and Mineral Resources on slide A - 7.

Fire Creek Mineral Resources

Midas Mineral Resources

True North Mineral Resources


Indicated 2,138 0.024 0.82 51.0

Inferred 47 0.022 0.75 1.1

True North Tailings Mineral Resources

MINERAL RESOURCES

A – 4

Notes to Nevada’s Mineral Reserve and Resource

1. Mineral Resource is inclusive of Mineral Reserve.

2. Fire Creek and Midas Mineral Reserves are calculated at a gold price

of US$1,200 per ounce and a silver price of US$17.00 per ounce.

3. Fire Creek and Midas Mineral Resources are calculated at a gold price

of US$1,400 per ounce and a silver price of US$19.83 per ounce.

4. Metallurgical recoveries for gold and silver are 94% and 92%,

respectively, at all properties.

5. One ounce of gold is equivalent to 72.12 ounces of silver.

6. Mineral Resources include resource dilution to a minimum mining

width of four feet or the vein width plus two feet, whichever is greater.

7. Cut off grades for the Mineral Resources at Fire Creek and Midas are

0.228 and 0.196 opt AuEq, respectively.

8. Cut off grade for the Mineral Reserves at Fire Creek and Midas are

0.343 and 0.305 opt AuEq, respectively.

9. The effective date for the Fire Creek and Midas Mineral Resource is

June 30, 2016 and May 31, 2016, respectively.

10. 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, sociopolitical, marketing, or other relevant issues.

11. 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 an Indicated or

Measured Mineral Resource and it is uncertain if further exploration

will result in upgrading them to an Indicated or Measured Mineral

Resource category.

12. The Mineral Resources in this press release were estimated using the

Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM

Standards on Mineral Resources and Reserves, Definitions and

Guidelines prepared by the CIM Standing Committee on Reserve

Definitions and adopted by CIM Council.

(1) See press releases dated September 12 & 14, 2016, & March 29, 2017

NOTES TO MINERAL RESERVES AND RESOURCES

Notes to True North Mineral Reserve and Resource

1. Mineral Resource is inclusive of Mineral Reserve.

2. Mineral Reserve is calculated at a gold price of C$1,500 per ounce.

3. Mineral Resource is calculated at a gold price US $1,400 per oz.

4. US$:CDN$ exchange rate is 0.80.

5. Metallurgical process recovery for gold is 94%.

6. Mine and Mill Cost C$141.52 per ton.

7. The effective date for True North mineral resources is February 14, 2017.

8. CIM definitions were followed for the Mineral Resource Estimate.

9. Mineral Resource include resource modeling dilution to a minimum width of four feet or the

vein width, whichever is greater.

10. Mineral Reserve includes mining dilution and is constrained to a five foot minimum mining

width.

11. Cut off grade for the Resource is 0.09 opt Au (3.09 grams per tonne).

12. Cut off grade for the Reserve is 0.13 opt Au which includes a mining cost of C$69/ton,

processing cost of C$28/ton, G&A cost of C$45/ton and sustaining development cost

of C$42/ton.

13. Mineral Resource and Reserve tonnage calculations used a bulk density 0.086 tons/cu. ft.

14. Mining losses of 2% have been applied to the designed mine excavations, and no additional

unplanned dilution has been applied.

15. The effective date for Mineral Reserve and Resource is June 30, 2016.

16. 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, marketing, or other relevant issues. There is no

certainty that all or any part of the Inferred Mineral Resource will be upgraded to an Indicated

or Measured Mineral Resource as a result of continued exploration.

17. 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 an

Indicated or Measured Mineral Resource and it is uncertain if further exploration will result in

upgrading them to an Indicated or Measured Mineral Resource category.

18. The Mineral Resources in this press release were estimated using the Canadian Institute of

Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves,

Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions

and adopted by CIM Council.

A – 5

Notes to True North Tailings Mineral Reserve

1. Tailings Mineral Resource is inclusive of Mineral Reserves.

2. Tailings Mineral Reserve estimate is based on tailings located at True North produced by previous operators to Klondex.

3. Tailings Mineral Reserve was estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves,

Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council.

4. No mining losses have been applied to the designed historic tailing excavations and no additional unplanned dilution has been included.

5. Contained metal may differ due to rounding.

6. Cut-off grade = 0.026 opt Au (0.89 g/t Au) for 2016 to 2018 and 0.020 opt Au (0.69 g/t Au) for 2019 to 2023

7. A dry bulk density of 0.044 tons per cubic foot was utilized in the tailings Mineral Reserve tonnage calculation.

Notes to True North Tailings Mineral Resource

1. Tailings Mineral Resource is inclusive of Tailings Mineral Reserve.

2. Tailings Mineral Resource estimate is based on tailings located at True North produced by previous operators to Klondex.

3. 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, marketing, or other relevant issues.

4. Mineral Resource was estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves,

Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council.

5. The quantity and grade of reported Inferred Mineral Resources in this estimation are uncertain in nature and there has been insufficient exploration to define these

Inferred Mineral Resources as an Indicated or Measured Mineral Resource and it is uncertain if further exploration will result in upgrading them to an Indicated or

Measured Mineral Resource category.

6. Contained metal may differ due to rounding.

7. Cut-off grade = 0.015 opt Au (0.51 g/t Au).

8. A dry bulk density of 0.044 tons per cubic foot per cubic foot was utilized in the tailings Mineral Resource estimate tonnage calculation.

(1) See press releases dated October 27, 2016

NOTES TO MINERAL RESERVES AND RESOURCES

A – 6

Non-GAAP Performance Measures

We have included the non-GAAP measures "Production cash costs per gold equivalent ounce sold", ["All-in sustaining cost per gold

ounces sold"] and "All-in costs per gold ounce sold" in this MD&A (collectively, the "Non-GAAP Measures"). These Non-GAAP

Measures are used internally to assess our operating and economic performance and to provide key performance information to

management. We believe that these Non-GAAP Measures, in addition to conventional measures prepared in accordance with GAAP,

provide investors with an improved ability to evaluate our performance and ability to generate cash flows required to fund and sustain

our business. These Non-GAAP Measures are intended to provide additional information and should not be considered in isolation or

as a substitute for measures of performance prepared in accordance with GAAP. These Non-GAAP Measures do not have any

standardized meaning prescribed under GAAP, and therefore may not be comparable to or consistent with measures used by other

issuers or with amounts presented in our financial statements.

Our primary business is gold production and our current and future operations, development, exploration, and life-of-mine plans

primarily focus on maximizing returns from such gold production. As a result, our Non-GAAP Measures are calculated and disclosed on

a per gold or gold equivalent ounce basis

Production Cash Costs Per Gold Equivalent Ounce Sold

Production cash costs per gold equivalent ounce sold presents our cash costs associated with the production of gold equivalent ounces

and, as such, non-cash depreciation and depletion charges are excluded. Production cash costs per gold equivalent ounce sold is

calculated on a per gold equivalent ounce sold basis, and includes all direct and indirect operating costs related to the physical activities

of producing gold, including mining, processing, third-party refining expenses, on-site administrative and support costs, royalties, and

cash portions of net realizable value write-downs on production-related inventories (State of Nevada net proceeds and other such taxes

are excluded). We believe that converting the benefits from selling silver ounces into gold ounces is helpful to analysts and investors as

it best represents the way we operate, which is to maximize returns from gold production. Gold equivalent ounces are computed as the

number of silver ounces required to generate the revenue derived from the sale of one gold ounce, using average realized selling prices

(in thousands, except ounces sold and per ounce amounts):

NON-GAAP PERFORMANCE MEASURES

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Three months ended March 31,

2017 2016

Consolidated Nevada Total(1) True North Total Nevada Total(1)

Average realized price per gold ounce sold $ 1,237 $ 1,238 $ 1,237 $ 1,171

Average realized price per silver ounce sold $ 18.00 $ 18.00 $ 18.00 $ 14.98

Silver ounces equivalent to revenue from one gold ounce 68.7 68.8 68.7 78.2

Silver ounces sold 286,000 1,000 287,000 325,274

GEOs from silver ounces sold 4,163 15 4,178 4,160

Gold ounces sold 25,159 4,400 29,559 26,964

Gold equivalent ounces 29,322 4,415 33,737 31,124

Production costs $ 19,323 $ 6,906 $ 26,229 $ 20,331

Add: Write-down of production inventories (cash portion) (see Note 3 -

Inventories)— 2,234 2,234 —

$ 19,323 $ 9,140 $ 28,463 $ 20,331

Production cash costs per GEO sold $ 659 $ 2,070 $ 844 $ 653(1) During the first quarter 2016, production was only from Fire Creek and Midas. Details for Nevada are presented in the following table.

The following table presents a reconciliation of Fire Creek and Midas to the "Nevada Total" for the first quarter of 2017 and 2016,

(in thousands, except ounces sold and per ounce amounts): Three months ended March 31,

2017 2016

Nevada Total Fire Creek Midas

Nevada

Total(1) Fire Creek Midas

Nevada

Total(1)

Average realized price per gold ounce sold $ 1,237 $ 1,237 $ 1,237 $ 1,154 $ 1,208 $ 1,171

Average realized price per silver ounce sold $ 18.00 $ 18.00 $ 18.00 $ 15.26 $ 14.94 $ 14.98

Silver ounces equivalent to revenue from one gold ounce 68.7 68.7 68.7 75.6 80.9 78.2

Silver ounces sold 11,145 274,855 286,000 34,845 290,429 325,274

GEOs from silver ounces sold 162 4,001 4,163 461 3,590 4,160

Gold ounces sold 16,378 8,781 25,159 18,545 8,419 26,964

Gold equivalent ounces $ 16,540 $ 12,782 $ 29,322 $ 19,006 $ 12,009 $ 31,124

Production costs $ 6,781 $ 12,542 $ 19,323 $ 8,657 $ 11,674 $ 20,331

Add: Write-down of production inventories (cash portion) (see Note 3 -

Inventories)— — — — — —

$ 6,781 $ 12,542 $ 19,323 $ 8,657 $ 11,674 $ 20,331

Production cash costs per GEO sold $ 410 $ 981 $ 659 $ 455 $ 972 $ 653


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All-in Costs Per Gold Ounce Sold

Our calculation of all-in costs per gold ounce sold is consistent with the June 2013 guidance released by the World Gold Council, a non-regulatory, non-

profit market development organization for the gold industry. All-in costs per gold ounce sold reflect the varying costs of producing gold over the life-

cycle of a mine or project, including costs required to discover and develop new sources of production; therefore, capital amounts related to expansion

and growth projects are included.

All-in costs per gold ounce sold includes all: (1) direct and indirect operating cash costs related to the physical activities of producing gold, including

mining, processing, third-party refining expenses, on-site administrative and support costs, royalties, and cash portions of net realizable value write-

downs on production-related inventories (2) general and administrative expenses, (3) asset retirement and accretion expenses, and (4) capital

expenditures, the total of which is reduced for revenues earned from silver sales. Certain cash expenditures, including State of Nevada net proceeds

and other related taxes, federal tax payments, and financing costs are excluded (in thousands, except ounces sold and per ounce amounts):

Three months ended March 31,

2017 2016

Nevada

Total(1) True North

Hollister,

Aurora, and

Corporate Total

Nevada

Total(1)

Production costs $ 19,323 $ 6,906 $ — $ 26,229 $ 20,331

Add: Write-down of production inventories (cash portion) (see Note 3

- Inventories)— 2,234 — 2,234 170

19,323 9,140 — 28,463 20,501

General and administrative 4,488 3,418

Exploration 127 1,612

Development and projects costs 5,505 766

Asset retirement and accretion 381 247

Expenditures on mineral properties, plant and equipment 17,008 11,929

Less: silver revenue (5,147) (4,872)

All-in costs 50,825 33,601

Gold ounces sold 25,159 4,400 — 29,559 26,964

All-in costs per gold ounce sold $ 1,719 $ 1,246

(1) Nevada Total includes Fire Creek and Midas. During the first quarter of 2016, production was only from Nevada.

For a listing of our total capital expenditures see the Investing cash flows part of the Financial position, liquidity, and capital resources section.


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Klondex has not reconciled forward-looking full year non-GAAP performance measures contained in this presentation to their most

directly comparable GAAP measures, as permitted by Item 10(e)(1)(i)(B) of Regulation S-K. Such reconciliations would require

unreasonable efforts at this time to estimate and quantify with a reasonable degree of certainty various necessary GAAP components,

including for example those related to future production costs, realized sales prices and the timing of such sales, timing and amounts of

capital expenditures, metal recoveries, and corporate general and administrative amounts and timing, or others that may arise during

the year. These components and other factors could materially impact the amount of the future directly comparable GAAP measures,

which may differ significantly from their non-GAAP counterparts.


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