Klondike Silver Corp.

Klondike Silver Corp.

June 03, 2009 13:00 ET

Klondike Silver Corp.: Test Mining at the 4755 Level of the Silvana Mine to Provide Mill Feed

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 3, 2009) - Klondike Silver Corp. (TSX VENTURE:KS) (the 'Company') is pleased to announce that a program of underground rehabilitation and subsequent test-mining is under way on the 4755 Level of the Silvana Mine in the historic Sandon Silver Camp of south-central British Columbia.

The Company is the largest landholder in the Slocan Camp, which has produced more than 24 million ounces of silver plus by-product base metals since the late 1800s. The land package includes ten historic mines and a fully permitted 100-tonne-per-day mill.

At the Silvana Mine, Company personnel have identified several small but potentially economically mineable areas beyond the limits of productive former stopes developed in the early 1970s. These areas lie roughly 100 feet (30 metres) or more in elevation above the main 4625 Level adit access. Detailed re-examination of historic records, including assays from diamond drill holes and chip/channel samples, show the possibility of mineralized areas amenable to small-scale mining using best-practice grade control to achieve desired economic returns.

The work program now under way includes replacing a timbered ore-chute on 4625 Level at the base of the gravity muck pass from 4755 Level, rehabilitating the skipway and manway between the two levels, re-establishing compressed air, water and electrical services and bringing mining equipment up to 4755 Level.

Initial test-mining will be by sub-drifting in the Main Lode structure towards the identified areas of interest. Channel and muck sampling will be carried out to identify the best sections for stoping. The muck from the development will be evaluated and stockpiled as appropriate.

The mill run of economic-grade material from test-mining at Silvana will follow the completion of processing of millfeed from the Company's Stump Property (Yukon Territory).

The Main Lode structure - the principal source of the Slocan Camp's silver-lead-zinc production - is more than 5 miles (8 km) long, extending from Silverton on Slocan Lake in the west to Sandon in the east through the 'Silver Ridge' of the Selkirk Mountains, 30 miles (50 km) north of Nelson, BC.

The Silvana production was from a length of less than one mile (1.5 km) of the Main Lode under Silver Ridge, westerly from the Silversmith Mine, a former major producer near Sandon. The Company holds approximately 1.5 km of the ground to the west of this productive zone, to within a quarter of a mile (0.5 km) of the Mammoth Mine.

About 1.5 million tons of ore was locally processed or direct-shipped from these historic operations. Total recovered production to 1964 from the western segment was 9.5 million ounces of silver, 45,000 tons of lead and 60,000 tons of zinc. The eastern segment yielded approximately 9 million ounces of silver, 43,000 tons of lead and 13,000 tons of zinc. The eastern segment was the first area developed and mined, and as a result less zinc was recovered from processing, likely because the metal was less sought after or was difficult to recover using technology available at the time.

Almost all of this recovered production came from a zone within the Main Lode lying roughly between 4,000 feet (1,200 m) and 5,500 feet (1,700 m) elevation. The central unexplored portion of this prospective deep zone passes for 2.5 miles (4 km) beneath the 5,000 (1,500 m) to nearly 8,000 feet (2,400 m) approximate elevations of steep-sided Silver Ridge. This area received initial underground exploration westerly from the Silversmith Mine area in the late 1940s by the Kelowna Exploration Company using a program of lateral drift mining and diamond drilling.

A similar but extensive program was conducted westwards from the Kelowna work by the "Silmonac Syndicate" in late 1962. The Syndicate's persistence was rewarded in 1967 with the discovery from underground diamond drilling of a silver-lead-zinc mineralized section of the Main Lode (not recognized definitively as such at the time).

This section was explored, developed and mined by Silmonac's successors, including Kam-Kotia Mines Limited, Silvana Mines Inc., Dickenson Mines Limited and Treminco Resources Ltd. almost continuously from 1970 to 1993, and now by Klondike Silver. Production to date is about 8 million ounces of silver and over 30,000 tons each of lead and zinc from some 550,000 tons of mill feed, representing 30% of the area's silver and 25% of its lead production. This makes the Silmonac/ Silvana operation the second largest single producer of silver and lead in the Slocan camp after the Standard Mine. It should be noted that the silver-to-lead ratio from Silvana production was higher than production from the Standard Mine, an enhancement that improves the potential economics of Silvana's typical mill feed.

The technical information in this news release has been prepared in accordance with Canadian regulatory requirements set out in National Instrument 43-101. Mr. Edward Craft, P.Eng., is designated as the qualified person who reviewed and approved the contents of this press release.

About Klondike Silver

Klondike Silver Corp. has assembled a quality portfolio of silver and silver-rich poly-metallic properties in historic mineral districts in North America, and is applying advanced exploration technologies to add value to these core assets. Klondike Silver is reviving the Gowganda and Elk Lake silver camps in Ontario, and the world-famous Klondike district of Yukon Territory. The Company owns a 100 TPD fully operational flotation mill in Sandon, BC, which is currently processing material from one of its Yukon properties and local mines in the historic Slocan Silver Camp.

The statements made in this news release may contain forward-looking statements that may involve a number of risks and uncertainties. Actual events or results could differ materially from the Company's expectations and projections.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this news release.

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