Klondike Silver Corp.
TSX VENTURE : KS

Klondike Silver Corp.

December 03, 2009 09:01 ET

Klondike Silver Corp: Drilling Commences on Espiritu Gold-Copper Porphyry Project

- 1000 METER, PHASE ONE DRILL PROGRAM WILL TEST POTENTIAL OF LARGE SCALE PORPHYRY SYSTEM

- EROSION OF THE LEACH CAP HAS EXPOSED ENRICHED SUPERGENE GOLD COPPER SYSTEM

- COPPER VALUES IN SAMPLES TAKEN FROM LEACH CAP IN NORTHEAST ZONE CONSISTENT WITH THOSE TAKEN ABOVE OTHER PORPHYRY DEPOSITS IN NORTHWEST MEXICO AND SOUTHWEST USA

- MINERALIZATION AND ALTERATION OCCUR WITHIN A 1-2 KM BY 5 KM STRUCTURE, TWO ZONES IDENTIFIED TO DATE; NORTHEAST AND SOUTHWEST

- PHASE ONE DRILLING TO DETERMINE THICKNESS OF SUPERGENE ENRICHED LAYER

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 3, 2009) - Klondike Silver Corp. (the "Company") (TSX VENTURE:KS) and Kootenay Gold Inc. (TSX VENTURE:KTN) ("Kootenay") are pleased to announce the phase one diamond drill program has commenced on the Espiritu Gold - Copper porphyry system in Sonora, Mexico.

"We are excited to be moving forward with a much anticipated drill program on the Espiritu project and look forward to testing the potential large scale porphyry gold-copper system," comments Company President, Richard Hughes. "A significant amount of work has been completed by joint venture partner, Kootenay Gold, to advance the property to this point including sampling of the leach-cap zone which has produced copper values consistent with those taken above other porphyry deposits in northwest Mexico and the southwest USA. Initial drilling on the property will focus on determining the thickness and mineralization grade of the enriched Supergene layer."

Drilling will consist of a minimum 1000 meters of HQ core and comprise of 4 to 6 holes in 4 drill sites 100 to 500 meters apart. It is anticipated it will take 3 to 4 weeks to complete the program.

The Espiritu project is owned 100% by Kootenay Gold Inc. and is under option to Klondike Silver Corp. who have the right to earn a 50% interest in the project by making certain payments and exploration expenditures (March 31, 2008).

Geology
The Espiritu project is host to an extensive area of polymetallic vein, stockwork, breccia and gold-copper porphyry mineralization. The evidence of Silver-Gold enriched veins occurring within and adjacent to the gold-copper porphyry style mineralization significantly enhances the economic value of the project due to the potential existence of a strong precious metal component.

Mineralization and alterations are hosted along a 5 km east northeast trending structure that measures between one and two km in width. Two zones of mineralization have been recognized; the northeast zone dominated by a porphyry setting is separated by a major fault from the southwest zone dominated by veins and stockworks of precious and base metal mineralization. The two zones appear to be genetically related with the polymetallic vein/stockwork systems representing mineralization that would be expected to overlie the porphyry setting.

Northeast Zone
The northeast Espiritu porphyry prospect is a 2.2 x 1.4 km sub-circular area defined by a concentric pattern of zonation diagnostic of copper gold porphyry deposits. The different zones are strong propylite, argillic, sericitic and potassic alteration hosted in a biotite, feldspar quartz porphyry.

Mineralization and alteration covers a 1.5 km x 1 km zone. In the biotite zone of alteration, 19 grab samples from the disseminated and fracture mineralization showed good values of copper (average 0.24%) and gold (average 0.239 gpt). In the argillic/sericitic zone of alteration or leach-cap zone, extensive leaching of the fracture and dissemintated mineralization has taken place, and the average copper content shows values of 0.034%, consistent with the general average copper values within the leach-cap zones that sit on top of known porphyry deposits of the southwest USA and northwest Mexico. The polymetallic veins show anomalous values in gold (to a high of 3.60 gpt) and silver (to a high of 462gpt). All samples are grab samples.

Southwest Zone
The southwestern part of the system is represented by veins, breccias and stockworks anomalous in gold, silver, copper, lead and zinc.

At present, the main mineralization in the southwest is defined by several zones spread out along a 2 km length. These are named the west, central and east polymetallic zones. Anomalous mineralization has been recognized in two other separate zones: the PS-1 zone about 2 km to the northwest and the PS-2 zone about 500 metres to the east.

Two stages of mineralization are noted; one stage marked by mainly quartz veins low in all metal values and a second stage marked by veins, breccias and stockworks of polymetallic gold, silver, copper, lead and zinc mineralization.

Fifty-eight grab samples were collected within the west, central and eastern parts of the southwest polymetallic zone. The polymetallic veins averaged 226 gpt silver, 1.58% lead and 1.57% zinc associated with 0.18 gpt gold and 0.15% copper. From the 35 samples collected from the polymetallic system, 18/35 were greater than 0.100 gpt gold and 29/35 were greater than 30 gpt silver.

The PS-1 area gave values of 0.84, 0.50 and 0.46 gpt gold and 277 and 217 gpt silver associated with anomalous lead (to 6%) and zinc(to 1.5%). The PS-2 zone gave silver values of 686, 644 and 487 gpt and anomalous copper, lead and zinc from thirteen samples has been noted. Anomalous values of molybdenum (to 0-0.129%) were noted from this area.

QA/QC
All samples were placed and sealed with tape into a plactic rock sample bag. Each sample was labeled and catalogued and delivered to ALS Chemex's preparation laboratory in Hermosillo, Sonora Mexico where pulps are made of each sample which were then sent to the ALS Chemex laboratory in North Vancouver, B.C. Canada. Each sample was analyzed with a multi acid digestion ICP AES (Plasma Emission Spectroscopy). Samples with precious exceeding the upper detection limit of the ICP AES are analyzed again using fire assay methods with either atomic absorption, emission spectroscopy or gravimetric finishes for gold and silver. Base metals exceeding upper limits are reanalyzed using a four acid ore grade analysis. All samples referred to herein are grab samples. ALS Chemex is an internationally recognized independent laboratory operating to ISO 17025 quality assurance standards. The drill contractor is Globexplore located in Hermosillo, Sonora Mexico.

The foregoing geological disclosure has been reviewed and verified by Kootenay's CEO, James McDonald, P.Geo (a qualified person for the purpose of National Instrument 43-101, Standards of Disclosure for Mineral Projects). Mr. McDonald is a director of the Company.

The Company would also like to announce it has received approval from the TSX Venture Exchange to extend the term and reduce the exercise price of 5,178,301 warrants issued by the Company which expired on December 4, 2009 (the "Warrants"). The expiration date of the Warrants has been extended to December 3, 2012, and the exercise price reduced to $0.10.

The Company has also completed the private placement announced on October 27, 2009. The private placement consisted of 2,500,000 flow through units at a price of $0.065 per unit. Each unit consisted of one flow-through common share and one non flow through common share purchase warrant. Each common share purchase warrant will entitle the holder to purchase one common share at $0.10 per share until November 10, 2011, and $0.15 per share until November 10, 2014. Union Securities Ltd. was paid a cash commissions totaling $2,925. Shares issued are subject to a hold period expiring on March 12, 2010. Proceeds from the private placement will be used for exploration on the Company's British Columbia properties.

About Kootenay Gold
Kootenay is an emerging exploration Company actively developing mineral projects in the Sierra Madre Region of Mexico and in British Columbia, Canada. The Company is currently drill testing four separate projects. Kootenay's top priority remains the ongoing development of its Promontorio Silver project in Sonora State, Northwest Mexico, which encompasses the former producing Promontorio Silver Mine.

About Klondike Silver:
Klondike Silver is a member of the Hughes Exploration Group of Companies and is led by a team with a stellar track record of discovery and development in Canada.

Klondike Silver Corp. has assembled a quality portfolio of silver 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 local mines in the historic Slocan Silver Camp. As well, Klondike Silver entered into a joint venture with Kootenay Gold Inc. to explore a copper-porphyry property in the state of Sonoro in northern Mexico.

Visit Klondike Silver's web-site: www.klondikesilver.com to see Smartstox interviews with Company President, Richard Hughes.

Cautionary Note to US Investors: This news release may contain information about adjacent properties on which we have no right to explore or mine. We advise U.S. investors that the SEC's mining guidelines strictly prohibit information of this type in documents filed with the SEC. U.S. investors are cautioned that mineral deposits on adjacent properties are not indicative of mineral deposits on our properties. This news release may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, geological interpretations, receipt of property titles, potential mineral recovery processes, etc. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.

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 or contents of this news release.

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