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ARTICLES
OF
KLONDEX MINES LTD.

PART 1 - INTERPRETATION

1.1         Definitions

In these Articles, unless the context otherwise requires:

1.2          Business Corporations Act and Interpretation Act Definitions Applicable

The definitions in the Business Corporations Act and the definitions and rules of construction in the Interpretation Act (British Columbia), with the necessary changes, so far as applicable, and unless the context requires otherwise, apply to these Articles as if they were an enactment. If there is a conflict between a definition in the Business Corporations Act and a definition or rule in the Interpretation Act (British Columbia) relating to a term used in these Articles, the definition in the Business Corporations Act will prevail in relation to the use of the term in these Articles. If there is a conflict between these Articles and the Business Corporations Act , the Business Corporations Act will prevail.

PART 2 - SHARES AND SHARE CERTIFICATES

2.1        Authorized Share Structure

The authorized share structure of the Company consists of shares of the class or classes and series, if any, described in the Notice of Articles of the Company as the same may be amended from time to time.

2.2        Form of Share Certificate

Each share certificate issued by the Company must comply with, and be signed as required by, the Business Corporations Act .

2.3        Shareholder Entitled to Certificate or Acknowledgment

Each shareholder is entitled, without charge, to (a) one share certificate representing the shares of each class or series of shares registered in the shareholder’s name or (b) a non-transferable written acknowledgment of the shareholder’s right to obtain such a share certificate, provided that in respect of a share held jointly by several persons, the Company is not bound to issue more than one share certificate and delivery of a share certificate for a share to one of several joint shareholders or to one of the shareholders’ duly authorized agents will be sufficient delivery to all.

2.4          Delivery by Mail

Any share certificate or non-transferable written acknowledgment of a shareholder’s right to obtain a share certificate may be sent to the shareholder by mail at the shareholder’s registered address and neither the Company nor any director, officer or agent of the Company is liable for any loss to the shareholder because the share certificate or acknowledgement is lost in the mail or stolen.

2.5        Replacement of Worn Out or Defaced Certificate or Acknowledgement

If the directors are satisfied that a share certificate or a non-transferable written acknowledgment of the shareholder’s right to obtain a share certificate is worn out or defaced, they must, on production to them of the share certificate or acknowledgment, as the case may be, and on such other terms, if any, as they think fit:

2.6        Replacement of Lost, Stolen or Destroyed Certificate or Acknowledgment

If a share certificate or a non-transferable written acknowledgment of a shareholder’s right to obtain a share certificate is lost, stolen or destroyed, a replacement share certificate or acknowledgment, as the case may be, must be issued to the person entitled to that share certificate or acknowledgment, as the case may be, if the directors receive:

2.7        Splitting Share Certificates

If a shareholder surrenders a share certificate to the Company with a written request that the Company issue in the shareholder’s name two or more share certificates, each representing a specified number of shares and in the aggregate representing the same number of shares as the share certificate so surrendered, the Company must cancel the surrendered share certificate and issue replacement share certificates in accordance with that request.

2.8        Certificate Fee

There must be paid to the Company, in relation to the issue of any share certificate under Articles 2.5, 2.6 or 2.7, the amount determined by the directors, if any, which must not exceed the amount prescribed under the Business Corporations Act .

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2.9        Recognition of Trusts

Except as required by law or statute or these Articles, no person will be recognized by the Company as holding any share upon any trust, and the Company is not bound by or compelled in any way to recognize (even when having notice thereof) any equitable, contingent, future or partial interest in any share or fraction of a share or (except as by law or statute or these Articles provided or as ordered by a court of competent jurisdiction) any other rights in respect of any share except an absolute right to the entirety thereof in the shareholder.

PART 3 - ISSUE OF SHARES

3.1        Directors Authorized

Subject to the Business Corporations Act and the rights of the holders of issued shares of the Company, the Company may issue, allot, sell or otherwise dispose of the unissued shares, and issued shares held by the Company, at the times, to the persons, including directors, in the manner, on the terms and conditions and for the issue prices (including any premium at which shares with par value may be issued) that the directors may determine. The issue price for a share with par value must be equal to or greater than the par value of the share, if any.

3.2        Commissions and Discounts

The Company may at any time, pay a reasonable commission or allow a reasonable discount to any person in consideration of that person purchasing or agreeing to purchase shares of the Company from the Company or any other person or procuring or agreeing to procure purchasers for shares of the Company.

3.3        Brokerage

The Company may pay such brokerage fee or other consideration as may be lawful for or in connection with the sale or placement of its securities.

3.4          Conditions of Issue

Except as provided for by the Business Corporations Act , no share may be issued until it is fully paid. A share is fully paid when:

3.5          Share Purchase Warrants and Rights

Subject to the Business Corporations Act , the Company may issue share purchase warrants, options and rights upon such terms and conditions as the directors determine, which share purchase warrants, options and rights may be issued alone or in conjunction with debentures, debenture stock, bonds, shares or any other securities issued or created by the Company from time to time.

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PART 4 - SHARE REGISTERS

4.1        Central Securities Register

As required by and subject to the Business Corporations Act , the Company must maintain in British Columbia a central securities register. The directors may, subject to the Business Corporations Act , appoint an agent to maintain the central securities register. The directors may also appoint one or more agents, including the agent which keeps the central securities register, as transfer agent for its shares or any class or series of its shares, as the case may be, and the same or another agent as registrar for its shares or such class or series of its shares, as the case may be. The directors may terminate such appointment of any agent at any time and may appoint another agent in its place.

4.2        Closing Register

The Company must not at any time close its central securities register.

PART 5 - SHARE TRANSFERS

5.1        Registering Transfers

A transfer of a share of the Company must not be registered unless:

5.2        Form of Instrument of Transfer

The instrument of transfer in respect of any share of the Company must be either in the form, if any, on the back of the Company’s share certificates or in any other form that may be approved by the directors from time to time.

5.3        Transferor Remains Shareholder

Except to the extent that the Business Corporations Act otherwise provides, the transferor of shares is deemed to remain the holder of the shares until the name of the transferee is entered in a securities register of the Company in respect of the transfer.

5.4          Signing of Instrument of Transfer

If a shareholder, or his or her duly authorized attorney, signs an instrument of transfer in respect of shares registered in the name of the shareholder, the signed instrument of transfer constitutes a complete and sufficient authority to the Company and its directors, officers and agents to register the number of shares specified in the instrument of transfer or specified in any other manner, or, if no number is specified, all the shares represented by the share certificates or set out in the written acknowledgments deposited with the instrument of transfer:

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5.5        Enquiry as to Title Not Required

Neither the Company nor any director, officer or agent of the Company is bound to inquire into the title of the person named in the instrument of transfer as transferee or, if no person is named as transferee in the instrument of transfer, of the person on whose behalf the instrument is deposited for the purpose of having the transfer registered or is liable for any claim related to registering the transfer by the shareholder or by any intermediate owner or holder of the shares, of any interest in the shares, of any share certificate representing such shares or of any written acknowledgment of a right to obtain a share certificate for such shares.

5.6          Transfer Fee

There must be paid to the Company, in relation to the registration of any transfer, the amount, if any, determined by the directors.

PART 6 - TRANSMISSION OF SHARES

6.1          Legal Personal Representative Recognized on Death

In case of the death of a shareholder, the legal personal representative, or if the shareholder was a joint holder, the surviving joint holder, will be the only person recognized by the Company as having any title to the shareholder’s interest in the shares. Before recognizing a person as a legal personal representative, the directors may require proof of appointment by a court of competent jurisdiction, a grant of letters probate, letters of administration or such other evidence or documents as the directors consider appropriate.

6.2        Rights of Legal Personal Representative

The legal personal representative has the same rights, privileges and obligations that attach to the shares held by the shareholder, including the right to transfer the shares in accordance with these Articles, provided the documents required by the Business Corporations Act and the directors have been deposited with the Company.

PART 7 - PURCHASE OF SHARES

7.1        Company Authorized to Purchase Shares

Subject to Article 7.2, the special rights and restrictions attached to the shares of any class or series and the Business Corporations Act , the Company may, if authorized by the directors, purchase or otherwise acquire any of its shares at the price and upon the terms specified in such resolution.

7.2          Purchase When Insolvent

The Company must not make a payment or provide any other consideration to purchase or otherwise acquire any of its shares if there are reasonable grounds for believing that:

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7.3        Sale and Voting of Purchased Shares

If the Company retains a share redeemed, purchased or otherwise acquired by it, the Company may sell, gift or otherwise dispose of the share, but, while such share is held by the Company, it:

PART 8 - BORROWING POWERS

8.1        Company Authorized to Borrow

The Company, if authorized by the directors, may:

PART 9 - ALTERATIONS

9.1        Alteration of Authorized Share Structure

Subject to Article 9.2, the Business Corporations Act , and any regulatory or stock exchange requirements applicable to the Company, the Company may by directors’ resolution:

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9.2        Special Rights and Restrictions

Subject to the Business Corporations Act and any regulatory or stock exchange requirements applicable to the Company, the Company may by directors’ resolution:

9.3          Change of Name

The Company may by directors’ resolution authorize an alteration of its Notice of Articles in order to change its name subject to any other regulatory or stock exchange requirements applicable to the Company.

9.4        Other Alterations

If the Business Corporations Act does not specify the type of resolution and these Articles do not specify another type of resolution, the Company may by directors’ resolution alter these Articles subject to any other regulatory or stock exchange requirements applicable to the Company.

PART 10 - MEETINGS OF SHAREHOLDERS

10.1       Annual General Meetings

Unless an annual general meeting is deferred or waived in accordance with the Business Corporations Act , the Company must hold its first annual general meeting within 18 months after the date on which it was incorporated or otherwise recognized, and after that must hold an annual general meeting at least once in each calendar year and not more than 15 months after the last annual reference date at such time and place as may be determined by the directors.

10.2       Resolution Instead of Annual General Meeting

If all the shareholders who are entitled to vote at an annual general meeting consent by a unanimous resolution under the Business Corporations Act to all of the business that is required to be transacted at that annual general meeting, the annual general meeting is deemed to have been held on the date of the unanimous resolution. The shareholders must, in any unanimous resolution passed under this Article 10.2, select as the Company’s annual reference date a date that would be appropriate for the holding of the applicable annual general meeting.

10.3       Calling of Meetings of Shareholders

The directors may, whenever they think fit, call a meeting of shareholders.

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10.4       Notice for Meetings of Shareholders

The Company must send notice of the date, time and location of any meeting of shareholders, in the manner provided in these Articles, or in such other manner, if any, as may be prescribed by ordinary resolution (whether previous notice of the resolution has been given or not), to each shareholder entitled to attend the meeting, to each director and to the auditor of the Company, unless these Articles otherwise provide, at least the following number of days before the meeting:

10.5       Record Date for Notice

The directors may set a date as the record date for the purpose of determining shareholders entitled to notice of any meeting of shareholders. The record date must not precede the date on which the meeting is to be held by more than two months or, in the case of a general meeting requisitioned by shareholders under the Business Corporations Act , by more than four months. The record date must not precede the date on which the meeting is held by fewer than:

If no record date is set, the record date is 5 p.m. on the day immediately preceding the first date on which the notice is sent or, if no notice is sent, the beginning of the meeting.

10.6      Record Date for Voting

The directors may set a date as the record date for the purpose of determining shareholders entitled to vote at any meeting of shareholders. The record date must not precede the date on which the meeting is to be held by more than two months or, in the case of a general meeting requisitioned by shareholders under the Business Corporations Act , by more than four months. If no record date is set, the record date is 5 p.m. on the day immediately preceding the first date on which the notice is sent or, if no notice is sent, the beginning of the meeting.

10.7      Failure to Give Notice and Waiver of Notice

The accidental omission to send notice of any meeting to, or the non-receipt of any notice by, any of the persons entitled to notice does not invalidate any proceedings at that meeting. Any person entitled to notice of a meeting of shareholders may, in writing or otherwise, waive or reduce the period of notice of such meeting.

10.8      Notice of Special Business at Meetings of Shareholders

If a meeting of shareholders is to consider special business within the meaning of Article 11.1, the notice of meeting must:

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PART 11 - PROCEEDINGS AT MEETINGS OF SHAREHOLDERS

11.1      Special Business

At a meeting of shareholders, the following business is special business:

11.2        Special Majority

The majority of votes required for the Company to pass a special resolution at a meeting of shareholders is two-thirds ( ⅔ ) of the votes cast on the resolution.

11.3        Quorum

Subject to the special rights and restrictions attached to the shares of any class or series of shares, the quorum for the transaction of business at a meeting of shareholders is one person who is, or who represents by proxy, one or more shareholders who, in the aggregate, hold at least 5% of the issued shares entitled to be voted at the meeting.

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11.4        One Shareholder May Constitute Quorum

If there is only one shareholder entitled to vote at a meeting of shareholders:

11.5      Other Persons May Attend

The directors, the chief executive officer (if any), the president (if any), the chief financial officer (if any), the secretary (if any), the assistant secretary (if any), any lawyer for the Company, the auditor of the Company and any other persons invited by the directors are entitled to attend any meeting of shareholders, but if any of those persons does attend a meeting of shareholders, that person is not to be counted in the quorum and is not entitled to vote at the meeting unless that person is a shareholder or proxy holder entitled to vote at the meeting.

11.6      Requirement of Quorum

No business, other than the election of a chair of the meeting and the adjournment of the meeting, may be transacted at any meeting of shareholders unless a quorum of shareholders entitled to vote is present at the commencement of the meeting, but such quorum need not be present throughout the meeting.

11.7      Lack of Quorum

If, within one-half hour from the time set for the holding of a meeting of shareholders, a quorum is not present:

11.8      Lack of Quorum at Succeeding Meeting

If, at the meeting to which the meeting referred to in Article 11.7(2) was adjourned, a quorum is not present within one-half hour from the time set for the holding of the meeting, the person or persons present and being, or representing by proxy, one or more shareholders entitled to attend and vote at the meeting constitute a quorum.

11.9        Chair

The following individual is entitled to preside as chair at a meeting of shareholders:

11.10     Selection of Alternate Chair

If, at any meeting of shareholders, there is no chair of the board or president present within 15 minutes after the time set for holding the meeting, or if the chair of the board and the president are unwilling to act as chair of the meeting, or if the chair of the board and the president have advised the secretary, if any, or any director present at the meeting, that they will not be present at the meeting, the directors present must choose one of their number or the Company’s solicitor to be chair of the meeting failing which the shareholders entitled to vote at the meeting who are present in person or by proxy may choose any person present at the meeting to chair the meeting.

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11.11     Adjournments

The chair of a meeting of shareholders may, and if so directed by the meeting must, adjourn the meeting from time to time and from place to place, but no business may be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

11.12     Notice of Adjourned Meeting

It is not necessary to give any notice of an adjourned meeting or of the business to be transacted at an adjourned meeting of shareholders except that, when a meeting is adjourned for 30 days or more, notice of the adjourned meeting must be given as in the case of the original meeting.

11.13     Decisions by Show of Hands or Poll

Subject to the Business Corporations Act , every motion put to a vote at a meeting of shareholders will be decided on a show of hands unless a poll, before or on the declaration of the result of the vote by show of hands, is directed by the chair or demanded by at least one shareholder entitled to vote who is present in person or by proxy.

11.14     Declaration of Result

The chair of a meeting of shareholders must declare to the meeting the decision on every question in accordance with the result of the show of hands or the poll, as the case may be, and that decision must be entered in the minutes of the meeting. A declaration of the chair that a resolution is carried by the necessary majority or is defeated is, unless a poll is directed by the chair or demanded under Article 11.13, conclusive evidence without proof of the number or proportion of the votes recorded in favour of or against the resolution.

11.15     Motion Need Not be Seconded

No motion proposed at a meeting of shareholders need be seconded unless the chair of the meeting rules otherwise, and the chair of any meeting of shareholders is entitled to propose or second a motion.

11.16     Casting Vote

In case of an equality of votes, the chair of a meeting of shareholders does not, either on a show of hands or on a poll, have a second or casting vote in addition to the vote or votes to which the chair may be entitled as a shareholder.

11.17     Manner of Taking Poll

Subject to Article 11.18, if a poll is duly demanded at a meeting of shareholders:

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11.18     Demand for Poll on Adjournment

A poll demanded at a meeting of shareholders on a question of adjournment must be taken immediately at the meeting.

11.19     Chair Must Resolve Dispute

In the case of any dispute as to the admission or rejection of a vote given on a poll, the chair of the meeting must determine the dispute, and his or her determination made in good faith is final and conclusive.

11.20     Casting of Votes

On a poll, a shareholder entitled to more than one vote need not cast all the votes in the same way.

11.21     Demand for Poll

No poll may be demanded in respect of the vote by which a chair of a meeting of shareholders is elected.

11.22     Demand for Poll Not to Prevent Continuance of Meeting

The demand for a poll at a meeting of shareholders does not, unless the chair of the meeting so rules, prevent the continuation of a meeting for the transaction of any business other than the question on which a poll has been demanded.

11.23     Retention of Ballots and Proxies

The Company must, for at least three months after a meeting of shareholders, keep each ballot cast on a poll and each proxy voted at the meeting, and, during that period, make them available for inspection during normal business hours by any shareholder or proxyholder entitled to vote at the meeting. At the end of such three month period, the Company may destroy such ballots and proxies.

PART 12 - VOTES OF SHAREHOLDERS

12.1      Number of Votes by Shareholder or by Shares

Subject to any special rights or restrictions attached to any shares and to the restrictions imposed on joint shareholders under Article 12.3:

12.2        Votes of Persons in Representative Capacity

A person who is not a shareholder may vote at a meeting of shareholders, whether on a show of hands or on a poll, and may appoint a proxy holder to act at the meeting, if, before doing so, the person satisfies the chair of the meeting, or the directors, that the person is a legal personal representative or a trustee in bankruptcy for a shareholder who is entitled to vote at the meeting.

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12.3        Votes by Joint Holders

If there are joint shareholders registered in respect of any share:

12.4        Legal Personal Representatives as Joint Shareholders

Two or more legal personal representatives of a shareholder in whose sole name any share is registered are, for the purposes of Article 12.3, deemed to be joint shareholders.

12.5        Representative of a Corporate Shareholder

If a corporation, that is not a subsidiary of the Company, is a shareholder, that corporation may appoint a person to act as its representative at any meeting of shareholders of the Company, and:

Evidence of the appointment of any such representative may be sent to the Company by written instrument, fax or any other method of transmitting legibly recorded messages.

12.6      Proxy Provisions Do Not Apply to All Companies

Articles 12.7 to 12.15 do not apply to the Company if and for so long as it is a public company or a pre-existing reporting company which has the Statutory Reporting Company Provisions (as defined in section 1(1) of the Business Corporations Act ) as part of its Articles or to which the Statutory Reporting Company Provisions apply.

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12.7        Appointment of Proxy Holders

Every shareholder of the Company, including a corporation that is a shareholder but not a subsidiary of the Company, entitled to vote at a meeting of shareholders of the Company may, by proxy, appoint one or more (but not more than five) proxy holders to attend and act at the meeting in the manner, to the extent and with the powers conferred by the proxy.

12.8        Alternate Proxy Holders

A shareholder may appoint one or more alternate proxy holders to act in the place of an absent proxy holder.

12.9        Proxy Holder Need Not Be Shareholder

A person appointed as a proxy holder need not be a shareholder.

12.10     Deposit of Proxy

A proxy for a meeting of shareholders must:

A proxy may be sent to the Company by written instrument, fax or any other method of transmitting legibly recorded messages.

12.11     Validity of Proxy Vote

A vote given in accordance with the terms of a proxy is valid notwithstanding the death or incapacity of the shareholder giving the proxy and despite the revocation of the proxy or the revocation of the authority under which the proxy is given, unless notice in writing of that death, incapacity or revocation is received:

12.12     Form of Proxy

A proxy, whether for a specified meeting or otherwise, must be either in the following form or in any other form approved by the directors or the chair of the meeting:

[name of company]
(the “Company”)

The undersigned, being a shareholder of the Company, hereby appoints [name] or, failing that person, [name] , as proxy holder for the undersigned to attend, act and vote for and on behalf of the undersigned at the meeting of shareholders of the Company to be held on [month, day, year] and at any adjournment of that meeting.

Number of shares in respect of which this proxy is given (if no number is specified, then this proxy if given in respect of all shares registered in the name of the shareholder): ______________

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12.13     Revocation of Proxy

Subject to Article 12.14, every proxy may be revoked by an instrument in writing that is:

12.14     Revocation of Proxy Must Be Signed

An instrument referred to in Article 12.13 must be signed as follows:

12.15     Production of Evidence of Authority to Vote

The chair of any meeting of shareholders may, but need not, inquire into the authority of any person to vote at the meeting and may, but need not, demand from that person production of evidence as to the existence of the authority to vote.

PART 13 - DIRECTORS

13.1      First Directors; Number of Directors

The first directors are the persons designated as directors of the Company in the Notice of Articles that applies to the Company when it is recognized under the Business Corporations Act . There is no requirement for the directors or shareholders to fix or set the number of directors from time to time. If the Company is a public company, the Company shall have at least three directors. If the Company is not a public company, the Company shall have at least one director.

13.2        Change in Number of Directors

If the number of directors is at any time fixed or set hereunder:

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13.3        Directors’ Acts Valid Despite Vacancy

An act or proceeding of the directors is not invalid merely because fewer than the number of directors set or otherwise required under these Articles is in office.

13.4        Qualifications of Directors

A director is not required to hold a share in the capital of the Company as qualification for his or her office but must be qualified as required by the Business Corporations Act to become, act or continue to act as a director.

13.5        Remuneration of Directors

The directors are entitled to the remuneration for acting as directors, if any, as the directors may from time to time determine. If the directors so decide, their remuneration, if any, may be determined by the shareholders. That remuneration may be in addition to any salary or other remuneration paid to any officer or employee of the Company as such, who is also a director.

13.6        Reimbursement of Expenses of Directors

The Company must reimburse each director for the reasonable expenses that he or she may incur in and about the business of the Company.

13.7        Special Remuneration for Directors

If any director performs any professional or other services for the Company that in the opinion of the directors are outside the ordinary duties of a director, or if any director is otherwise specially occupied in or about the Company’s business, he or she may be paid remuneration fixed by the directors, or, at the option of that director, fixed by ordinary resolution, and such remuneration may be either in addition to, or in substitution for, any other remuneration that he or she may be entitled to receive.

13.8        Gratuity, Pension or Allowance on Retirement of Director

Unless otherwise determined by ordinary resolution, the directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any director who has held any salaried office or place of profit with the Company or to his or her spouse or dependants and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.

PART 14 - ELECTION AND REMOVAL OF DIRECTORS

14.1      Election at Annual General Meeting

At every annual general meeting and in every unanimous resolution contemplated by Article 10.2:

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14.2      Consent to be a Director

No election, appointment or designation of an individual as a director is valid unless:

then each director then in office continues to hold office until the earlier of:

14.4      Places of Retiring Directors Not Filled

If, at any meeting of shareholders at which there should be an election of directors, the places of any of the retiring directors are not filled by that election, those retiring directors who are not re-elected and who are asked by the newly elected directors to continue in office will, if willing to do so, continue in office to complete the number of directors for the time being set pursuant to these Articles until further new directors are elected at a meeting of shareholders convened for that purpose. If any such election or continuance of directors does not result in the election or continuance of the number of directors for the time being set pursuant to these Articles, the number of directors of the Company is deemed to be set at the number of directors actually elected or continued in office.

14.5      Directors May Fill Casual Vacancies

Any casual vacancy occurring in the board of directors may be filled by the directors.

14.6        Remaining Directors Power to Act

The directors may act notwithstanding any vacancy in the board of directors, but if the Company has fewer directors in office than the number set pursuant to these Articles as the quorum of directors, the directors may only act for the purpose of appointing directors up to that number or of summoning a meeting of shareholders for the purpose of filling any vacancies on the board of directors or, subject to the Business Corporations Act , for any other purpose.

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14.7      Shareholders May Fill Vacancies

If the Company has no directors or fewer directors in office than the number set pursuant to these Articles as the quorum of directors, the shareholders may elect or appoint directors to fill any vacancies on the board of directors.

14.8      Additional Directors

Notwithstanding Articles 13.1 and 13.2, between annual general meetings or unanimous resolutions contemplated by Article 10.2, the directors may appoint one or more additional directors, but the number of additional directors appointed under this Article 14.8 must not at any time exceed:

Any director so appointed ceases to hold office immediately before the next election or appointment of directors under Article 14.1(1), but is eligible for re-election or re-appointment.

14.9        Ceasing to be a Director

A director ceases to be a director when:

14.10     Removal of Director by Shareholders

The Company may remove any director before the expiration of his or her term of office by special resolution. In that event, the shareholders may elect, or appoint by ordinary resolution, a director to fill the resulting vacancy. If the shareholders do not elect or appoint a director to fill the resulting vacancy contemporaneously with the removal, then the directors may appoint or the shareholders may elect, or appoint by ordinary resolution, a director to fill that vacancy.

14.11     Removal of Director by Directors

The directors may remove any director before the expiration of his or her term of office if:

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PART 15 - ALTERNATE DIRECTORS

15.1      Appointment of Alternate Director

Any director (an “appointor”) may by notice in writing received by the Company appoint any person (an “appointee”) who is qualified to act as a director to be his or her alternate to act in his or her place at meetings of the directors or committees of the directors at which the appointor is not present unless (in the case of an appointee who is not a director) the directors have reasonably disapproved the appointment of such person as an alternate director and have given notice to that effect to his or her appointor within a reasonable time after the notice of appointment is received by the Company.

15.2        Notice of Meetings

Every alternate director so appointed is entitled to notice of meetings of the directors and of committees of the directors of which his or her appointor is a member and to attend and vote as a director at any such meetings at which his or her appointor is not present.

15.3      Alternate for More Than One Director Attending Meetings

A person may be appointed as an alternate director by more than one director, and an alternate director:

15.4        Consent Resolutions

Every alternate director, if authorized by the notice appointing him or her, may sign in place of his or her appointor any resolutions to be consented to in writing.

15.5      Alternate Director an Agent

Every alternate director is deemed to be the agent of his or her appointor.

15.6        Revocation or Amendment of Appointment of Alternate Director

An appointor may at any time, by notice in writing received by the Company, revoke or amend the terms of the appointment of an alternate director appointed by him or her.

15.7      Ceasing to be an Alternate Director

The appointment of an alternate director ceases when:

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15.8      Remuneration and Expenses of Alternate Director

The Company may reimburse an alternate director for the reasonable expenses that would be properly reimbursed if he or she were a director, and the alternate director is entitled to receive from the Company such proportion, if any, of the remuneration otherwise payable to the appointor as the appointor may from time to time direct.

PART 16 - POWERS AND DUTIES OF DIRECTORS

16.1      Powers of Management

The directors must, subject to the Business Corporations Act and these Articles, manage or supervise the management of the business and affairs of the Company and have the authority to exercise all such powers of the Company as are not, by the Business Corporations Act or by these Articles, required to be exercised by the shareholders of the Company. For clarity, notwithstanding the provisions of section 11.1(2), the directors may exercise any of those powers contemplated for shareholder approval, if permitted by the Business Corporations Act , including setting the remuneration of the Company’s auditors.

16.2        Appointment of Attorney of Company

The directors may from time to time, by power of attorney or other instrument, under seal if so required by law, appoint any person to be the attorney of the Company for such purposes, and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the directors under these Articles and excepting the power to fill vacancies in the board of directors, to remove a director, to change the membership of or fill vacancies in, any committee of the directors, to appoint or remove officers appointed by the directors and to declare dividends) and for such period, and with such remuneration and subject to such conditions as the directors may think fit. Any such power of attorney may contain such provisions for the protection or convenience of persons dealing with such attorney as the directors think fit. Any such attorney may be authorized by the directors to sub-delegate all or any of the powers, authorities and discretions for the time being vested in him or her.

PART 17 - DISCLOSURE OF INTEREST OF DIRECTORS

17.1        Obligation to Account for Profits

A director or senior officer who holds a disclosable interest (as that term is used in the Business Corporations Act ) in a contract or transaction into which the Company has entered or proposes to enter is liable to account to the Company for any profit that accrues to the director or senior officer under or as a result of the contract or transaction only if and to the extent provided in the Business Corporations Act .

17.2        Restrictions on Voting by Reason of Interest

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A director who holds a disclosable interest in a contract or transaction into which the Company has entered or proposes to enter is not entitled to vote on any directors’ resolution to approve that contract or transaction, unless all the directors have a disclosable interest in that contract or transaction, in which case any or all of those directors may vote on such resolution.

17.3      Interested Director Counted in Quorum

A director who holds a disclosable interest in a contract or transaction into which the Company has entered or proposes to enter and who is present at the meeting of directors at which the contract or transaction is considered for approval may be counted in the quorum at the meeting whether or not the director votes on any or all of the resolutions considered at the meeting.

17.4      Disclosure of Conflict of Interest or Property

A director or senior officer who holds any office or possesses any property, right or interest that could result, directly or indirectly, in the creation of a duty or interest that materially conflicts with that individual’s duty or interest as a director or senior officer, must disclose the nature and extent of the conflict as required by the Business Corporations Act .

17.5      Director Holding Other Office in the Company

A director may hold any office or place of profit with the Company, other than the office of auditor of the Company, in addition to his or her office of director for the period and on the terms (as to remuneration or otherwise) that the directors may determine.

17.6      No Disqualification

No director or intended director is disqualified by his or her office from contracting with the Company either with regard to the holding of any office or place of profit the director holds with the Company or as vendor, purchaser or otherwise, and no contract or transaction entered into by or on behalf of the Company in which a director is in any way interested is liable to be voided for that reason.

17.7        Professional Services by Director or Officer

Subject to the Business Corporations Act , a director or officer, or any person in which a director or officer has an interest, may act in a professional capacity for the Company, except as auditor of the Company, and the director or officer or such person is entitled to remuneration for professional services as if that director or officer were not a director or officer.

17.8      Director or Officer in Other Corporations

A director or officer may be or become a director, officer or employee of, or otherwise interested in, any person in which the Company may be interested as a shareholder or otherwise, and, subject to the Business Corporations Act , the director or officer is not accountable to the Company for any remuneration or other benefits received by him or her as director, officer or employee of, or from his or her interest in, such other person.

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PART 18 - PROCEEDINGS OF DIRECTORS

18.1        Meetings of Directors

The directors may meet together for the conduct of business, adjourn and otherwise regulate their meetings as they think fit, and meetings of the directors held at regular intervals may be held at the place, at the time and on the notice, if any, as the directors may from time to time determine.

18.2        Voting at Meetings

Questions arising at any meeting of directors are to be decided by a majority of votes and, in the case of an equality of votes, the chair of the meeting does have a second or casting vote.

18.3        Chair of Meetings

The following individual is entitled to preside as chair at a meeting of directors:

18.4      Meetings by Telephone or Other Communications Medium

A director may participate in a meeting of the directors or of any committee of the directors in person or by telephone if all directors participating in the meeting, whether in person or by telephone or other communications medium, are able to communicate with each other. A director may participate in a meeting of the directors or of any committee of the directors by a communications medium other than telephone if all directors participating in the meeting, whether in person or by telephone or other communications medium, are able to communicate with each other and if all directors who wish to participate in the meeting agree to such participation. A director who participates in a meeting in a manner contemplated by this Article 18.4 is deemed for all purposes of the Business Corporations Act and these Articles to be present at the meeting and to have agreed to participate in that manner .

18.5        Calling of Meetings

A director may, and the secretary or an assistant secretary of the Company, if any, on the request of a director must, call a meeting of the directors at any time.

18.6      Notice of Meetings

Other than for meetings held at regular intervals as determined by the directors pursuant to Article 18.1, reasonable notice of each meeting of the directors, specifying the place, day and time of that meeting must be given to each of the directors and the alternate directors by any method set out in Article 24.1 or orally or by telephone.

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18.7        When Notice Not Required

It is not necessary to give notice of a meeting of the directors to a director or an alternate director if:

18.8        Meeting Valid Despite Failure to Give Notice

The accidental omission to give notice of any meeting of directors to, or the non-receipt of any notice by, any director or alternate director, does not invalidate any proceedings at that meeting.

18.9        Waiver of Notice of Meetings

Any director or alternate director may send to the Company a document signed by him or her waiving notice of any past, present or future meeting or meetings of the directors and may at any time withdraw that waiver with respect to meetings held after that withdrawal. After sending a waiver with respect to all future meetings and until that waiver is withdrawn, no notice of any meeting of the directors need be given to that director and, unless the director otherwise requires by notice in writing to the Company, to his or her alternate director, and all meetings of the directors so held are deemed not to be improperly called or constituted by reason of notice not having been given to such director or alternate director.

18.10     Quorum

The quorum necessary for the transaction of the business of the directors may be set by the directors and, if not so set, is deemed to be set at two directors or, if the number of directors is set at one, is deemed to be set at one director, and that director may constitute a meeting.

18.11     Validity of Acts Where Appointment Defective

Subject to the Business Corporations Act , an act of a director or officer is not invalid merely because of an irregularity in the election or appointment or a defect in the qualification of that director or officer.

18.12     Consent Resolutions in Writing

A resolution of the directors or of any committee of the directors consented to in writing by all of the directors entitled to vote on it, whether by signed document, fax, email or any other method of transmitting legibly recorded messages, is as valid and effective as if it had been passed at a meeting of the directors or of the committee of the directors duly called and held. Such resolution may be in two or more counterparts which together are deemed to constitute one resolution in writing. A resolution passed in that manner is effective on the date stated in the resolution or on the latest date stated on any counterpart. A resolution of the directors or of any committee of the directors passed in accordance with this Article 18.12 is deemed to be a proceeding at a meeting of directors or of the committee of the directors and to be as valid and effective as if it had been passed at a meeting of the directors or of the committee of the directors that satisfies all the requirements of the Business Corporations Act and all the requirements of these Articles relating to meetings of the directors or of a committee of the directors.

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PART 19 - EXECUTIVE AND OTHER COMMITTEES

19.1        Appointment and Powers of Executive Committee

The directors may, by resolution, appoint an executive committee consisting of the director or directors that they consider appropriate, and this committee has, during the intervals between meetings of the board of directors, all of the directors’ powers, except:

19.2      Appointment and Powers of Other Committees

The directors may, by resolution:

19.3        Obligations of Committees

Any committee appointed under Articles 19.1 or 19.2, in the exercise of the powers delegated to it, must:

19.4      Powers of Board

The directors may, at any time, with respect to a committee appointed under Articles 19.1 or 19.2:

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19.5        Committee Meetings

Subject to Article 19.3(1) and unless the directors otherwise provide in the resolution appointing the committee or in any subsequent resolution, with respect to a committee appointed under Articles 19.1 or 19.2:

PART 20 - OFFICERS

20.1        Directors May Appoint Officers

The directors may, from time to time, appoint such officers, if any, as the directors determine and the directors may, at any time, terminate any such appointment.

20.2        Functions, Duties and Powers of Officers

The directors may, for each officer:

20.3        Qualifications

No officer may be appointed unless that officer is qualified in accordance with the Business Corporations Act . One person may hold more than one position as an officer of the Company. Any person appointed as the chair of the board or as the managing director must be a director. Any other officer need not be a director.

20.4        Remuneration and Terms of Appointment

All appointments of officers are to be made on the terms and conditions and at the remuneration (whether by way of salary, fee, commission, participation in profits or otherwise) that the directors think fit and are subject to termination at the pleasure of the directors, and an officer may in addition to such remuneration be entitled to receive, after he or she ceases to hold such office or leaves the employment of the Company, a pension or gratuity.

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PART 21 - INDEMNIFICATION

21.1      Definitions

In this Article 21:

21.2        Mandatory Indemnification of Directors and Former Directors

Subject to the Business Corporations Act , the Company must indemnify a director, former director or alternate director of the Company and his or her heirs and legal personal representatives against all eligible penalties to which such person is or may be liable, and the Company must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by such person in respect of that proceeding. Each director and alternate director is deemed to have contracted with the Company on the terms of the indemnity contained in this Article 21.2.

21.3      Indemnification of Other Persons

Subject to any restrictions in the Business Corporations Act , the Company may indemnify any person.

21.4        Non-Compliance with Business Corporations Act

The failure of a director, alternate director or officer of the Company to comply with the Business Corporations Act or these Articles does not invalidate any indemnity to which he or she is entitled under this Part.

21.5        Company May Purchase Insurance

The Company may purchase and maintain insurance for the benefit of any person (or his or her heirs or legal personal representatives) who:

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PART 22 - DIVIDENDS

22.1        Payment of Dividends Subject to Special Rights

The provisions of this Article 22 are subject to the rights, if any, of shareholders holding shares with special rights as to dividends.

22.2      Declaration of Dividends

Subject to the Business Corporations Act , the directors may from time to time declare and authorize payment of such dividends as they may deem advisable.

22.3        No Notice Required

The directors need not give notice to any shareholder of any declaration under Article 22.2.

22.4        Record Date

The directors may set a date as the record date for the purpose of determining shareholders entitled to receive payment of a dividend. The record date must not precede the date on which the dividend is to be paid by more than two months. If no record date is set, the record date is 5 p.m. on the date on which the directors pass the resolution declaring the dividend.

22.5        Manner of Paying Dividend

A resolution declaring a dividend may direct payment of the dividend wholly or partly by the distribution of cash or of specific assets or of fully paid shares or of bonds, debentures or other securities of the Company, or in any one or more of those ways.

22.6        Settlement of Difficulties

If any difficulty arises in regard to a distribution under Article 22.5, the directors may settle the difficulty as they deem advisable, and, in particular, may:

22.7        When Dividend Payable

Any dividend may be made payable on such date as is fixed by the directors.

22.8      Dividends to be Paid in Accordance with Number of Shares

All dividends on shares of any class or series of shares must be declared and paid according to the number of such shares held.

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22.9        Receipt by Joint Shareholders

If several persons are joint shareholders of any share, any one of them may give an effective receipt for any dividend, bonus or other money payable in respect of the share.

22.10     Dividend Bears No Interest

No dividend bears interest against the Company.

22.11     Fractional Dividends

If a dividend to which a shareholder is entitled includes a fraction of the smallest monetary unit of the currency of the dividend, that fraction may be disregarded in making payment of the dividend and that payment represents full payment of the dividend.

22.12     Payment of Dividends

Any dividend or other distribution payable in cash in respect of shares may be paid by cheque, made payable to the order of the person to whom it is sent, and mailed to the address of the shareholder, or in the case of joint shareholders, to the address of the joint shareholder who is first named on the central securities register, or to the person and to the address the shareholder or joint shareholders may direct in writing. The mailing of such cheque will, to the extent of the sum represented by the cheque (plus the amount of the tax required by law to be deducted), discharge all liability for the dividend unless such cheque is not paid on presentation or the amount of tax so deducted is not paid to the appropriate taxing authority.

22.13     Capitalization of Surplus

Notwithstanding anything contained in these Articles, the directors may from time to time capitalize any surplus of the Company and may from time to time issue, as fully paid, shares or any bonds, debentures or other securities of the Company as a dividend representing the surplus or any part of the surplus.

PART 23 - DOCUMENTS, RECORDS AND REPORTS

23.1      Recording of Financial Affairs

The directors must cause adequate accounting records to be kept to record properly the financial affairs and condition of the Company and to comply with the Business Corporations Act .

23.2      Inspection of Accounting Records

Unless the directors determine otherwise, or unless otherwise determined by ordinary resolution, no shareholder of the Company is entitled to inspect or obtain a copy of any accounting records of the Company.

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PART 24 - NOTICES

24.1      Method of Giving Notice

Unless the Business Corporations Act or these Articles provides otherwise, a notice, statement, report or other record required or permitted by the Business Corporations Act or these Articles to be sent by or to a person may be sent by any one of the following methods:

24.2        Deemed Receipt of Mailing

A record that is mailed to a person by ordinary mail to the applicable address for that person referred to in Article 24.1 is deemed to be received by the person to whom it was mailed on the day, Saturdays, Sundays and holidays excepted, following the date of mailing.

24.3      Certificate of Sending

A certificate or other document signed by the secretary, if any, or other officer of the Company or of any other corporation acting in that behalf for the Company stating that a notice, statement, report or other record was addressed as required by Article 24.1, prepaid and mailed or otherwise sent as permitted by Article 24.1 is conclusive evidence of that fact.

24.4      Notice to Joint Shareholders

A notice, statement, report or other record may be provided by the Company to the joint shareholders of a share by providing the notice to the joint shareholder first named in the central securities register in respect of the share.

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24.5      Notice to Trustees

A notice, statement, report or other record may be provided by the Company to the persons entitled to a share in consequence of the death, bankruptcy or incapacity of a shareholder by:

PART 25 - SEAL

25.1        Who May Attest Seal

Except as provided in Articles 25.2 and 25.3, the Company’s seal, if any, must not be impressed on any record except when that impression is attested by the signatures of:

25.2      Sealing Copies

For the purpose of certifying under seal a certificate of incumbency of the directors or officers of the Company or a true copy of any resolution or other document, despite Article 25.1, the impression of the seal may be attested by the signature of any director or officer.

25.3        Mechanical Reproduction of Seal

The directors may authorize the seal to be impressed by third parties on share certificates or bonds, debentures or other securities of the Company as they may determine appropriate from time to time. To enable the seal to be impressed on any share certificates or bonds, debentures or other securities of the Company, whether in definitive or interim form, on which facsimiles of any of the signatures of the directors or officers of the Company are, in accordance with the Business Corporations Act or these Articles, printed or otherwise mechanically reproduced, there may be delivered to the person employed to engrave, lithograph or print such definitive or interim share certificates or bonds, debentures or other securities one or more unmounted dies reproducing the seal and the chair of the board or any senior officer together with the secretary, treasurer, secretary-treasurer, an assistant secretary, an assistant treasurer or an assistant secretary-treasurer may in writing authorize such person to cause the seal to be impressed on such definitive or interim share certificates or bonds, debentures or other securities by the use of such dies. Share certificates or bonds, debentures or other securities to which the seal has been so impressed are for all purposes deemed to be under and to bear the seal impressed on them.

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KLONDEX MINES LTD.

SHARE INCENTIVE PLAN

Dated for Reference May 9, 2013

ARTICLE 1
PURPOSE AND INTERPRETATION

Purpose

1.1                         The purpose of this Plan is to provide for the acquisition of Common Shares by Participants for the purpose of advancing the interests of the Corporation through the motivation, attraction and retention of key employees and directors of the Corporation and to secure for the Corporation and the shareholders of the Corporation the benefits inherent in the ownership of Common Shares by key employees and directors of the Corporation, it being generally recognized that share incentive plans aid in attracting, retaining and encouraging employees and directors due to the opportunity offered to them to acquire a proprietary interest in the Corporation. It is the intention of the Corporation that this Plan will at all times be in compliance with the TSX Policies (as hereinafter defined) and any inconsistencies between this Plan and the TSX Policies whether due to inadvertence or changes will be resolved in favour of the TSX Policies.

Definitions

1.2                         In this Plan,

Affiliate has the meaning assigned thereto in the TSX Manual;

Associate has the meaning assigned thereto in the TSX Manual;

Black-out Period means an interval of time during which the Corporation has determined that certain Participants may not trade any securities of the Corporation because they may be in possession of undisclosed material information pertaining to the Corporation, or for any other reason prescribed by statute or securities regulation generally. For greater certainty, a Black-out Period does not include a period during which a cease trade order is in effect to which the Corporation or in respect of an Insider, that Insider, is subject;

Board means the board of directors of the Corporation or any committee thereof duly empowered or authorized to grant options under this Plan;

Calendar Year means the period January 1 to December 31 in any year;

Change of Control includes situations where after giving effect to the contemplated transaction and as a result of such transaction:

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where such Person or combination of Persons did not previously hold a sufficient number of voting shares to affect materially the control of the Corporation or its successor. In the absence of evidence to the contrary, any Person or combination of Persons acting in concert by virtue of an agreement, arrangement, commitment or understanding, acquiring or holding more than 20% of the voting shares of the Corporation or its successor and causing a change of 50% or more of the members of the Board of Directors in any 14-month period is deemed to affect materially the control of the Corporation or its successor;

Common Shares means common shares of the Corporation;

Compensation Shares means the total number of Common Shares which may be issued in the future to a Participant pursuant to the Share Compensation Plan;

Corporation means Klondex Mines Ltd. and includes, unless the context otherwise requires, all of its Subsidiaries and/or Affiliates and successors according to law;

Director means a director of the Corporation as may be elected or appointed from time to time;

Disinterested Shareholder Approval means approval by a majority of the votes cast by the Corporation’s shareholders at a duly constituted shareholders’ meeting, excluding votes attached to Common Shares beneficially owned by Insiders;

Distribution has the meaning assigned by the Securities Act, and generally refers to a distribution of securities by the Corporation from treasury;

Effective Date for an Option means the date of grant thereof;

Employee means:

Exercise Price means the amount payable per Common Share on the exercise of an Option, as determined in accordance with the terms hereof;

Expiry Date means the day on which an Option lapses as specified in the Option Commitment therefor or otherwise in accordance with the terms of this Plan;

Grantee means the recipient of a Compensation Share hereunder;

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Insider has the meaning assigned thereto in the TSX Manual;

Market Price of the Common Shares at any relevant date means the volume weighted average Canadian dollar trading price of the Common Shares on the TSX for the five (5) trading days prior to that relevant date, calculated by dividing the total value by the total volume of Common Shares traded (or, if such Common Shares are not then listed and posted for trading on the TSX, on such stock exchange on which such Common Shares are listed and posted for trading as may be selected for such purpose by the Board). In the event that such Common Shares are not listed and posted for trading on any stock exchange, the Market Price shall be the fair market value of such Common Shares as determined by the Board in their sole discretion;

Officer means a duly appointed officer of the Corporation;

Option means the right to purchase Common Shares granted hereunder to a Participant;

Option Commitment means the notice of grant of an Option delivered by the Corporation hereunder to a Participant and substantially in the form of Schedule A hereto;

Option Plan means the share option plan, the terms of which are set out at Article 2 herein or as may be amended;

Option Plan Administrator means the Officer to whom responsibility for the administration of the Option Plan has been delegated by the Board;

Option Plan Shares means the total number of Common Shares which may be reserved for issuance as Optioned Shares under the Option Plan as provided in Section 2.2;

Optioned Shares means Common Shares that may be issued in the future to a Participant upon the exercise of an Option;

Optionee means the recipient of an Option hereunder;

Outstanding Shares means at the relevant time, the number of outstanding Common Shares from time to time;

Participant means a Person entitled to become an Optionee or Grantee hereunder, namely a Director, Officer, Employee or Service Provider, or any individual employed by a Service Provider who is the primary party providing the services, or any personal holding corporation controlled by a Participant or any registered retirement savings plans established by a Participant of the Corporation, and any Person engaged to provide ongoing management or consulting services for the Corporation, whether or not they have a written employment contract with the Corporation, determined by the Board as being eligible for participation in the Plan;

Person has the meaning assigned thereto in the TSX Manual;

Plan means this share incentive plan, the terms of which are set out herein or as may be amended;

Regulatory Approval means the approval of the TSX and any other securities regulatory authority that may have lawful jurisdiction over the Plan and any Options issued hereunder;

Securities Act means the Securities Act , R.S.B.C. 1996, c. 418, as amended from time to time;

Service Provider means a Person engaged by the Corporation to provide services for an initial, renewable or extendable period of 12 months or more;

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Share Compensation Arrangement means a stock option, stock option plan, employee stock purchase plan or any other compensation or incentive mechanism involving the issuance or potential issuance of Common Shares to one or more Participants, including a share purchase from treasury which is financially assisted by the Corporation by way of a loan, guarantee or otherwise;

Share Compensation Plan means the share compensation plan, the terms of which are set out at Article 3 herein or as may be amended;

Shareholder Approval means approval by a majority of the votes cast by the Corporation’s shareholders at a duly constituted shareholders’ meeting;

Subsidiary means any company which is a subsidiary of the Corporation. For the purposes of the Plan, a body corporate shall be deemed to be a subsidiary of another body corporate if:

TSX or Exchange means the Toronto Stock Exchange;

TSX Manual means the guide for TSX listed companies in effect at the date of this Plan, together with any subsequent amendments thereto; and

TSX Policies means the rules and policies of the TSX as amended from time to time.

Gender, Etc.

1.3                         In this Plan, unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders.

ARTICLE 2
SHARE OPTION PLAN

Establishment of Share Option Plan

2.1                         There is hereby established a share option plan to recognize contributions made by Participants and to create an incentive for their continuing assistance to the Corporation. All share options granted by the Corporation under Share Compensation Arrangements that predate the date of this Option Plan shall be subject to the provisions of this Option Plan and to the extent legal to do so, shall be deemed to have been granted under this Option Plan.

Maximum Option Plan Shares

2.2                         The maximum aggregate number of Option Plan Shares that may be reserved for issuance under the Option Plan at any point in time is 15% of the Outstanding Shares at the time Option Plan Shares are reserved for issuance as a result of the grant of an Option, less (i) any Common Shares reserved for issuance under share options granted under Share Compensation Arrangements other than this Option Plan and (ii) any Common Shares reserved for issuance under the Share Compensation Plan.

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Eligibility

2.3                         Options to purchase Common Shares may be granted hereunder to Participants from time to time subject to the provisions hereof. Participants that are corporate entities will be required to undertake in writing not to effect or permit any transfer of ownership or option of any of its shares, nor issue more of its shares (so as to indirectly transfer the benefits of an Option), as long as such Option remains outstanding, unless Shareholder Approval and the written permission of the TSX are obtained.

Options Granted Under the Plan

2.4                         All Options granted under the Option Plan will be evidenced by an Option Commitment in the form attached as Schedule A, showing the number of Optioned Shares, the term of the Option, the vesting terms, if any, and the Exercise Price.

2.5                         Subject to specific variations approved by the Option Plan Administrator, all terms and conditions set out herein will be deemed to be incorporated into and form part of an Option Commitment made hereunder.

Restrictions

2.6                         The aggregate number of Common Shares reserved for issuance pursuant to all Share Compensation Arrangements in favour of any one Optionee shall not exceed 5% of the Outstanding Shares at the time of such grant.

Options Not Exercised

2.7                         In the event an Option granted under the Option Plan is exercised, expires unexercised, or is terminated by reason of dismissal of the Optionee for cause or is otherwise lawfully cancelled prior to exercise of the Option, the Optioned Shares that were issuable thereunder will be returned to the Option Plan and will be eligible for re-issue.

Financial Assistance for Purchase of Common Shares

2.8                         Subject to applicable law, the Corporation may, in its sole discretion, arrange for the Corporation to make loans or provide guarantees for loans by financial institutions to assist Participants to purchase Common Shares upon the exercise of an Option so granted and to assist the Participants to pay any income tax payable upon exercise of an Option. Any loans granted by the Corporation to assist Participants to purchase Common Shares upon the exercise of an Option shall be full recourse to the Participant and be secured by the Common Shares purchased with the proceeds of the loan, and shall be at such rates of interest, if any, and on such other terms as may be determined by the Corporation.

2.9                         The Common Shares may be sold by the Participant at any time provided that an amount equivalent to the Option Exercise Price per Share sold, or the balance of the loan, whichever is the lesser, is applied in repayment of the loan.

Powers of the Option Plan Administrator

2.10                       The Option Plan Administrator, subject to the general approval of the Board to review and amend the actions of the Option Plan Administrator, will be responsible for the general administration of the Option Plan and the proper execution of its provisions, the interpretation of the Option Plan and the determination of all questions arising hereunder. Without limiting the generality of the foregoing, the Option Plan Administrator has the power to

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The Option Plan Administrator shall also be responsible for reporting to the TSX that an Option granted, exercised or cancelled as contemplated in subsection 613(i) of the TSX Manual or any successor provision thereof.

2.11                       The Board may amend or discontinue this Option Plan at any time, provided, however, that no such amendment may materially and adversely affect any Option rights previously granted to an Optionee under this Option Plan without the consent of the Optionee, except to the extent required by law.

2.12                       Notwithstanding anything contained to the contrary in this Option Plan or in any resolution of the Board in implementation thereof, in the event the Corporation proposes to amalgamate, merge or consolidate with any other corporation (other than with a wholly-owned Subsidiary of the Corporation) or to liquidate, dissolve or wind-up, the Corporation shall have the right, upon written notice thereof to each Optionee holding Options under this Plan, to permit the exercise of all such Options within the thirty (30) day period next following the date of such notice and to determine that upon the expiration of such thirty (30) day period, all rights of Optionees to such Options or to exercise same (to the extent not theretofore exercised) shall ipso facto terminate and cease to have any further force or effect whatsoever; and the Board may, by resolution, advance the date by which any Option may be exercised or, subject to applicable regulatory provisions, extend the Expiry Date or advance the vesting of any Option, in the manner to be set forth in such resolution. The Board shall not, however, be under any obligation to advance or extend the Expiry Date of any Option or advance the vesting of any Option.

Nature of Payments

2.13                       All Options granted pursuant to the Option Plan are in consideration of services performed or to be performed for the Corporation. Except to the extent required under applicable law, any income or gain realized pursuant to Options under the Plan shall not constitute compensation for purposes of any employee benefit plans of the Corporation except as may be determined by the Board.

TERMS AND CONDITIONS OF OPTIONS

Exercise Price

2.14                       The Option Exercise Price per share for Common Shares which are the subject of any Options shall be fixed by the Option Plan Administrator at the time such Option is granted, but in any case will be no less than the Market Price.

Term of Option

2.15                       Options can be exercisable for a term of up to a maximum of ten (10) years from the date the Option is granted, subject to Section 2.28.

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Option Amendment

2.16                       An Option must be outstanding for at least one year before the Corporation may extend its Expiry Date, subject to the limits contained in Section 2.15.

Vesting of Options

2.17                       The vesting of Options is at the discretion of the Option Plan Administrator, and will generally be subject to:

Variation of Vesting Periods

2.18                       At the time an Option is granted which carries vesting provisions, the Option Plan Administrator may vary such vesting provisions, subject to Regulatory Approval and ratification by the Board.

2.19                       The vesting as determined by the Option Plan Administrator in accordance with this Option Plan shall be automatically and immediately accelerated such that all remaining Options will then be available for exercise upon the occurrence of a “take over bid” which is a “formal bid”, as those terms are defined under the Securities Act.

2.20                       In the event of a Change of Control occurring, Options granted to Directors, Officers and Employees which are subject to a vesting provision shall be deemed to have immediately vested upon the occurrence of the Change of Control.

2.21                       In the event of a Director not being nominated for re-election as a Director of the Corporation, although consenting to act and being under no legal incapacity which would prevent the Director from being a member of the Board, Options granted to such Director which are subject to a vesting provision shall be deemed to have vested on the date of Meeting upon which the Director is not re-elected.

Optionee Ceasing to be Director, Employee or Service Provider

2.22                       No Option may be exercised after the Participant has left the employ/office or has been advised his services are no longer required or his service contract has expired, subject to the following:

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2.23                       If an Optionee, or in the case of an Option granted to an Optionee who falls under the definition of Service Provider, an Optionee’s employer, retires, resigns or is terminated from employment or engagement with the Corporation, the loss of limitation, if any, pursuant to the Option Commitment with respect to Options which were not vested at that time or which, if vested, were cancelled, shall not give rise to any right to damages and shall not be included in the calculation of or form any part of any severance allowance, retiring allowance or termination settlement of any kind whatsoever in respect of such Options.

Non Assignable

2.24                       All Options will be exercisable only by the Optionee to whom they are granted and will not be assignable or transferable, except by will or by the laws of succession of the domicile of the deceased Optionee. No Option granted hereunder shall be pledged, hypothecated, charged, transferred, assigned or otherwise encumbered or disposed of, and if any attempt is made to do so, it will automatically become null and void.

Adjustment of the Number of Optioned Shares

2.25                       The number of Common Shares subject to an Option will be subject to adjustment in the events and in the manner following:

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COMMITMENT AND EXERCISE PROCEDURES

Option Commitment

2.26                       Upon grant of an Option hereunder, the Option Plan Administrator will deliver or will cause to be delivered to the Optionee an Option Commitment detailing the terms of such Options and upon such delivery the Optionee will be subject to the Option Plan and have the right to purchase the Optioned Shares at the Exercise Price set out therein subject to the terms and conditions hereof.

Manner of Exercise

2.27                       An Optionee who wishes to exercise his Option may do so by delivering to the Corporation a properly executed written form of notice of exercise in such form as the Corporation may require, containing such representations and warranties as the Corporation may require and designating, among other things:

Options Expiring During Blackout Period

2.28                       Should the Expiry Date for an Option fall within a Blackout Period, or within nine (9) Business Days following the expiration of a Blackout Period, such Expiry Date shall be the tenth (10 ^th ) Business Day after the end of the Blackout Period, such 10th Business Day to be considered the Expiration Date for such Option for all purposes under the Option Plan. The 10th Business Day period referred to in this Section 2.28 may not be changed by the Board under any circumstances.

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No Options to be Granted During a Black-out Period

2.29                       Notwithstanding anything to the contrary herein contained, no Option shall be granted hereunder during a Black-out Period. If an Option is inadvertently granted during a Black-out Period, it shall not take effect until the 10 ^th Business Day after the expiry of the Black-out Period and the Exercise Price shall be the Market Price on such 10 ^th Business Day.

Delivery of Certificate and Hold Periods

2.30                       As soon as practicable after receipt of the notice of exercise described in Section 2.27 and payment in full for the Optioned Shares being acquired, the Corporation will cause to be delivered a certificate to the Optionee for the appropriate number of Optioned Shares in either certificate form or at the election of the Optionee, by way of book entry form pursuant to the instructions given by the Optionee to the Corporation. Any share certificate, or certificate in book entry form, issued pursuant to this Section 2.30 will bear a legend stipulating any resale restrictions required under applicable securities laws.

Maximum Number of Shares

3.3                         The maximum number of Common Shares made available for the Share Compensation Plan shall not exceed 1,288,482.

Necessary Approvals

3.4                         The obligation of the Corporation to issue and deliver any Common Shares in accordance with the Share Compensation Plan shall be subject to any necessary approvals of any stock exchange or regulatory authority having jurisdiction over the securities of the Corporation. If any Common Shares cannot be issued to any Participant under the Share Compensation Plan for whatever reason, the obligation of the Corporation to issue such Common Shares shall terminate.

ARTICLE 4
GENERAL

Plan Amendments

4.1                         The approval of the Board and the requisite approval from the TSX and the Corporation’s shareholders shall be required for any of the following amendments to be made to this Plan:

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4.2                         The Board may, in its sole discretion, without Shareholder Approval but subject to receipt of the requisite approval from the TSX, make all other amendments to the Plan that are not of the type contemplated in Section 4.1 including,

Employment and Services

4.3                         Nothing contained in the Plan will confer upon or imply in favour of any Optionee or Grantee any right with respect to office, employment or provision of services with the Corporation, or interfere in any way with the right of the Corporation to lawfully terminate the Optionee or Grantee's office, employment or service at any time pursuant to the arrangements pertaining to same. Participation in the Plan by an Optionee or Grantee is voluntary.

No Representation or Warranty

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4.4                         The Corporation makes no representation or warranty as to the future market value of Common Shares issued in accordance with the provisions of the Plan or to the effect of The Income Tax Act (Canada) or any other taxing statute governing the Options or the Common Shares issuable thereunder or the tax consequences to an Optionee or Grantee. Compliance with applicable securities laws as to the disclosure and resale obligations of each Optionee is the responsibility of each Optionee and Grantee and not the Corporation.

Effective Date and Continuation of Plan

4.5                         This Plan shall come into force and be effective on May 9, 2013, subject to approval by shareholders. All options granted under the Corporation’s prior option plan shall continue in full force and effect until their expiry, but shall be deemed to be granted and governed by the terms of the Option Plan contained herein. The Plan shall, subject to the requirements of the TSX regarding Shareholder Approval from time to time, remain in full force and effect until such time as the Board terminates the Plan, and, in respect of the Option Plan, for so long thereafter as Options remain outstanding in favour of any Participant. The Board reserves the right in its absolute discretion to discontinue the Plan at any time with respect to (i) all Common Shares in respect of Options which have not yet been granted hereunder, except that such discontinuance may not alter or impair any Option previously granted to an Optionee under the Plan; and (ii) all Common Shares reserved for issuance under the Share Compensation Plan which have not yet been granted hereunder.

Inability to Obtain Authority

4.6                         The inability of the Corporation to obtain Regulatory Approval, which Regulatory Approval is deemed by the Corporation to be necessary to the lawful issuance of any Common Shares hereunder, shall relieve the Corporation of any liability in respect of the failure to issue such Common Shares.

Insider Participation Limit

4.7                         The aggregate number of Common Shares reserved for issuance to Insiders under this Share Incentive Plan and all Share Compensation Arrangements, in the aggregate, shall not exceed 10% of the number of Outstanding Shares, and the number of Common Shares issued to Insiders, within any one year period, under this Share Incentive Plan and all Share Compensation Arrangements, in the aggregate, shall not exceed 10% of the Outstanding Shares.

Reservation of Common Shares

4.8                         The Corporation, during the term of this Plan, shall at all times reserve and keep available such number of Common Shares as shall be sufficient to satisfy the requirements of the Plan.

Withholding Tax

4.9                         The Corporation shall have the right to make all payments or distributions made pursuant to the Plan to an Optionee or Grantee, as applicable, net of any applicable federal taxes required by law to be withheld or paid as a result of the grant of any Option or Compensation Share, exercise of an Option or any other event occurring pursuant to this Plan. The Corporation shall have the right to withhold from such Optionee or Grantee, as applicable, such withholding taxes as may be required by law, or to otherwise require the Optionee or Grantee, as applicable, to pay such withholding taxes. If the Optionee or Grantee, as applicable, shall fail to make such tax payments as are required, the Corporation shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to such Optionee or Grantee or to take such other action as may be necessary to satisfy such withholding obligations. In satisfaction of the requirement to pay withholding taxes, the Optionee or Grantee may make a written election, which may be accepted or rejected in the discretion of the Board, to have withheld a portion of the Common Shares then issuable to the Optionee or Grantee pursuant to the Plan, having an aggregate Market Price equal to the withholding taxes.

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Expenses

4.10                       All expenses incurred in connection with the Plan shall be borne by the Corporation.

Compliance with Laws

4.11                       The Corporation shall not be obliged to issue any Common Shares upon exercise of Options or pursuant to the Share Compensation Plan if the issue would violate any law or regulation or any rule of any governmental authority or stock exchange. The Corporation shall not be required to issue, register or qualify for resale any Common Shares issuable pursuant to this Plan pursuant to the provisions of a prospectus or similar document, provided that the Corporation shall notify the TSX and any other appropriate regulatory bodies in Canada of the existence of the Plan and the issuance and exercise of Options and the issuance of Common Shares under the Share Compensation Plan.

Governing Laws

4.12                       This Plan shall be governed by and interpreted in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein.

Entire Agreement

4.13                       This Plan and the Option Commitment set out the entire agreement between the Corporation and the Participants relative to an Option and supersede all prior agreements, undertakings and understandings, whether oral or written, save and except for any contract of employment approved by the Board.

Termination

4.14                       The Board reserves the right in its absolute discretion to terminate the Plan with respect to all Common Shares in respect of Options and all Common Shares issuable under the Share Compensation Plan which have not yet been granted hereunder.

[END OF DOCUMENT]

SCHEDULE A

KLONDEX MINES LTD.

SHARE OPTION PLAN
OPTION COMMITMENT

Notice is hereby given that, effective this ________ day of ________________, __________ (the “Effective Date”) KLONDEX MINES LTD. (the "Corporation") has granted to ___________________________________________ (the “Optionee”), an Option to acquire ______________ Common Shares (“Optioned Shares”) up to 5:00 p.m. Vancouver Time on the __________ day of ____________________, __________ (the “Expiry Date”) at an Exercise Price of Cdn$____________ per Optioned Share pursuant to the Corporation’s Share Option Plan (the “Plan”), a copy of which is attached hereto.

Optioned Shares may be acquired as follows:

[insert vesting provisions]

<> [insert hold period when required]

The grant of the Option evidenced hereby and the Expiry Date thereof, is made subject to the terms and conditions of the Plan.

To exercise your Option, deliver a written notice addressed to the Corporation specifying the number of Optioned Shares you wish to acquire, in certificate form, or delivering written instructions to the Corporation for Optioned Shares in non-certificate book entry form, together with a certified cheque or the equivalent thereof in immediately available funds acceptable to the Corporation and payable to the Corporation for the aggregate Exercise Price. A share certificate, or certificate in book entry form, evidencing the Optioned Shares thereby acquired will be issued to the Optionee by the Corporation’s transfer agent in accordance with the Plan.

The Corporation and the Optionee represent that the Optionee under the terms and conditions of the Plan is a bona fide Service Provider (as defined in the Plan), entitled to receive Options.

EXERCISE NOTICE

To:   Klondex Mines Ltd. (the “Corporation”)

The undersigned hereby irrevocably gives notice, pursuant to the Corporation’s Stock Option Plan (the “Plan”), of the exercise of the Option to acquire and hereby subscribes for (cross out inapplicable item):

[check one]

Calculation of total Exercise Price:

The undersigned tenders herewith a certified cheque or bank draft in an amount equal to the total Exercise Price of the aforesaid Shares, as calculated above, and directs the Corporation to issue

[check one]

evidencing said Shares in the name of the undersigned to be mailed to the undersigned at the following address:

_____________________________________________

_____________________________________________

DATED the ______ day of _____________________, 20___.