this offer is good for a limit time only (till july 21, that is)

Since Silvercorp announced its intention to make its offer on June 8, 2009, a number of issues have arisen which Klondex shareholders should carefully consider as they make their decision with respect to Silvercorp's offer:

- Klondex has been unable to present a compelling alternative to Silvercorp's offer;

- Klondex has been unable to demonstrate any additional value that was not already well known by the market on June 8, 2009;

- Klondex issued 1,714,285 shares (an ownership position of approximately 6%) via a private placement completed on June 30, 2009, which granted the subscriber a two-year pre-emptive right to participate in up to 50% of certain future Klondex equity financings and one of six Klondex board seats, all at a discount of approximately 20% to Silvercorp's offer price, even though Silvercorp's offer was conditional upon Klondex not issuing any shares; and

- the Klondex board granted themselves standalone indemnity agreements concurrent with undertaking the private placement.

At least two of the conditions to Silvercorp's offer remain unfulfilled or breached and unwaived as a result of the Klondex shareholder rights plan remaining in place and the private placement of securities and grant of ancillary rights completed by Klondex on June 30, 2009.

So long as the Klondex shareholder rights plan remains in place, Silvercorp will not take up any shares tendered to its offer. Silvercorp intends to petition the British Columbia Securities Commission during the week of July 13, 2009 to cease trade the rights issued under the Klondex shareholder rights plan.

If Silvercorp's offer is terminated, withdrawn or otherwise unsuccessful, Klondex's share price can be expected to decline precipitously. Klondex's closing share price on the TSX on June 3, 2009 was C$1.13. Over the two trading days between the close on June 3, 2009 and the close on June 5, 2009 (the last trading day prior to Silvercorp's announcement of its intention to make the offer), Klondex's share price increased C$0.24 (or approximately 21%) on almost four times its normal two-day trading volume. Klondex's 20-day volume-weighted average price on the TSX as at June 5, 2009 was C$1.13, consistent with its closing price on June 3, 2009. Since June 5, 2009, the share prices of other junior Nevada-based gold mining companies have declined by approximately 16% on average. Had Klondex's share price not been supported by the Silvercorp offer, it is reasonable to expect that its share price would have performed in line with other junior Nevada-based gold mining companies. A decline of approximately 16% would result in a Klondex share price today of approximately C$0.95. Currently, the Silvercorp offer represents a 94% premium to C$0.95 (based on Silvercorp's 20-day volume-weighted average price on the TSX as at July 14, 2009). Klondex shareholders should tender their shares to Silvercorp's offer to protect against the substantial share price decline that they can expect to occur if Silvercorp's offer is terminated, withdrawn or otherwise unsuccessful.

If Silvercorp's offer is terminated, withdrawn or otherwise unsuccessful, Klondex's trading liquidity can be expected to return to pre-offer levels. Klondex's average daily trading volume on the TSX over the three months ended June 5, 2009 (the last trading day prior to Silvercorp's announcement of its intention to make the offer) was approximately 41,000 shares per day. Since June 5, 2009, approximately 11.5 million Klondex shares have traded, representing approximately 440,000 shares per day or more than ten times its normal daily trading volume. This has provided Klondex shareholders with trading liquidity that was previously unavailable to them.

Klondex may also face litigation from shareholders or other third parties if Silvercorp's offer is terminated, withdrawn or otherwise unsuccessful. In such case, it is possible that shareholders of Klondex may take issue with the Klondex board for: (i) refusing to waive the Klondex shareholder rights plan; (ii) completing the private placement and granting the subscriber a pre-emptive right and a board seat, with the knowledge that doing so was a breach of a condition of the Silvercorp offer and that the pre-emptive right, in particular, would present a significant obstacle to any bidder for Klondex; and (iii) agreeing to private placement terms including a pre-emptive right and a board seat at a substantial discount to Silvercorp's offer price. Klondex shareholders should encourage the Klondex board to provide them with the opportunity to decide for themselves whether to accept or reject the Silvercorp offer by immediately waiving the Klondex shareholder rights plan and avoiding the breach of any further conditions of the Silvercorp offer.

Klondex's disclosure record may also be the subject of legal scrutiny. Klondex has not filed a number of its material contracts in its public disclosure record, including most recently the agreements it entered into in connection with the private placement announced on June 30, 2009. Not only is this failure to file material contracts contrary to the law, it also makes it difficult for Klondex shareholders to properly assess Silvercorp's offer, since they do not have access to material information included in the undisclosed material contracts that may influence their decision as to whether to accept or reject the Silvercorp offer. Silvercorp has objected in writing to the regulatory authorities regarding certain of Klondex's disclosure practices, most notably in connection with the disclosure regarding Klondex's recent private placement given that an agreement on price was reached on June 25, 2009 but no disclosure was made until June 30, 2009 despite Klondex's timely disclosure obligations. It is also worth noting that the Klondex board granted themselves standalone indemnity agreements concurrent with undertaking the private placement. Consistent with past practice, those indemnity agreements have not been publicly filed by Klondex.

Klondex's Fire Creek property will require a considerable amount of capital to advance from its current exploration stage through development to commercial production. Raising the required amount of capital represents a significant financing risk for a single-asset, exploration-stage company such as Klondex, which has yet to acquire any operational personnel. Even if Klondex can successfully finance the development of a mine on the Fire Creek property as a standalone company, Klondex shareholders will suffer considerable dilution in raising the required level of capital to build such a mine. Raising capital is always a challenge, but with the pre-emptive right granted by the Klondex board to the subscriber under the recent private placement, it will be even more difficult. The subscriber will exercise significant control over the terms of any financing and may well gain effective control over Klondex if it fully exercises its rights. Klondex shareholders should seriously consider the attractive premium Silvercorp is offering today versus the significant financing risk and inevitable dilution they will incur if Klondex proceeds with its standalone plan to develop a mine at Fire Creek.

Silvercorp urges Klondex shareholders who have not yet tendered their shares to do so immediately. Furthermore, Silvercorp urges Klondex shareholders to contact the Klondex board and the special committee of directors, entrusted with acting in their best interest, to encourage them to provide Klondex shareholders with the information they need to properly assess the Silvercorp offer and to waive the Klondex shareholder rights plan so Klondex shareholders can decide for themselves whether to accept or reject the Silvercorp offer prior to the expiry time of 5:00 pm (Eastern Time) on July 21, 2009.