Kestrel Gold Inc. Announces Additional Exploration Results For King Solomon Dome Property, Yukon Territory

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 16, 2011) -

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Kestrel Gold Inc. ("Kestrel" or the "Corporation") (TSX VENTURE:KGC) is pleased to announce that results now compiled from trench sampling at the King Solomon Dome property ("KSD Property"), south of Dawson City, Yukon Territory, confirm the existence of high grade gold mineralization on the known Sheba-Mitchell vein trend and beyond.

Twenty-three samples (including field twins) obtained from Kestrel's 1,000 m (linear length) 2011 summer trenching program (consisting of 22 trenches) (the "2011 Trenches"), returned gold values above 2 g/t Au (several with silver values above 50 g/t Ag) and are well distributed over a large area. The highest gold value obtained was17.1 g/t Au (chip sample over 0.19 metres) in Trench 2-U approximately 135 metres south east of the Mitchell Shaft.

Based on the 2011 trench sampling alone, the estimated strike length of the structurally controlled discordant quartz vein system thought to be responsible for the presence of this high grade gold, is over 1.7 kilometres long with a width of at least 400 metres. This width is measured from gold mineralization in Trench 12-D south of the Sheba workings to a newly defined 'Sheba West' zone crossed in part by Trenches 11-V and 9-W.

North-north west trending brittle 'D4' structures that cut through existing structural fabrics of the Klondike Schist host rocks, are believed to be the dominant gold bearing conduits and can be traced from trench 16-L (north of the Mitchell shaft where a select sample of 8.19 g/t Au was obtained) a distance of 1.7 km south-south east, to trench 12-D (south of the Sheba showing) where values of up to 5.17 g/t Au were obtained in selected samples.

In the 2011 Trenches, the 'D4' veins are up to a metre in thickness and are generally vertical to moderately dipping to the east. Numerous <1 metre wide 'D4' veins (0.03m to 0.25m) which collectively can make up much of the rock mass in certain areas, often have associated high grade gold values along their margins.

Associated gold bearing hydrothermally altered wall rock zones of +/- quartz / chlorite / muscovite / sericite / epidote altered schist, often gouge-like with abundant pyrite cubes, are an important component of the system, giving economic gold potential up to several metres from the larger and more obvious quartz veins. In this regard, weighted averages of chip samples across vein and wall rock in Trench 9-W returned 11.0 metres of 0.57 g/t Au, in Trench 8-B returned 14.0 metres of 0.42 g/t Au and in Trench 12-D returned 8.0 metres of 0.48 g/t Au. All three trenches are spaced several hundred metres from one another but are considered to be part of the main Sheba-Mitchell gold system. In other areas, high grades of gold have been obtained from relatively 'unmineralized rock' (i.e., Trench 6-X 70 metres northeast of the Mitchell shaft returned 2.0 m of 5.40 g/t Au). Such areas require further re-examination.

No trenching was conducted on the eastern part of the property including the Orekon Vein area, some 400 metres east of the main Sheba-Mitchell trend where a number of >2 g/t Au rock samples (non NI 43-101 confirmed) have been obtained by previous workers. One selective grab sample from a road trench over 450 metres south east of the Sheba showing, was however collected and returned 4.41 g/t Au and 78.1 g/t Ag.

In addition, a 0.25 metre chip sample taken in an existing cut near the fork of the headwater tributaries of Dominion Creek, some 1100 metres south east of the main Sheba-Mitchell zone (at Trench 12-D), returned 2.02 g/t Au. The Corporation believes this is significant, as the sample was taken on a 'D4' type vein similar to those sampled in the main zone to the north. It is believed that this 'new zone' is a continuation of the north-north west trending Sheba-Mitchell gold trend, but is perhaps sinistrally offset by later structures similar to what have been observed in some trenches. The Corporation believes this gives an estimated strike length of the (offset) mineralizing gold system on the KSD Property, to be in excess of 2.6 km. Relatively little exploration has been conducted in this southern portion of the property and the system remains open along strike.

Elevated arsenic, lead and silver values correlate (either all or in part) with higher gold values (with silver seemingly more concentrated at the Sheba end of the Sheba-Mitchell trend). Galena was commonly observed in the gold bearing veins.

The discordant and extensive gold bearing system at the KSD Property appears to be open in all directions. The results are particularly encouraging as the orogenic gold model that is being applied at the KSD Property is consistent with the size and continuity of what has been discovered to date on the ground. The model incorporates the reasoning that analogous orogenic gold deposits in other parts of the world often have sizable depth and strike lengths. These results do not preclude this possibility at the KSD Property.

586 rock samples (including field twins) were collected in the trenching program and subsequent cursory regional sampling program. A comprehensive QA/QC procedure was put in place involving the random insertion of known standards, blanks and field twins (collectively comprising 20% of submitted samples). Randomly selected coarse pulps and reject fractions were re-analysed by a second lab, along with standards and blanks. All analytical work was completed at Eco Tech Laboratory Ltd (Stewart Group Geochemical and Assay), in Whitehorse, Yukon and Kamloops, B.C. and at ALS Canada Ltd. in North Vancouver, B. C. (both registered for ISO 9001:2008). The bulk of the samples were submitted to Echo Tech with ALS Canada acting as the second lab. Both laboratories used their own internal QA/QC check regimens. Samples were submitted for 30 g fire assay with AA finish for gold and 35 element ICP-AES (Aqua Regia digestion). No metallic screening was conducted on any of the samples but is being considered for future submissions in an attempt to address nugget effects.

Maps illustrating the content of this release are to be posted on the company website.

Technical aspects of this news release have been reviewed and approved by W.A. Taylor, P.Geo., hereby designated as a qualified person under National Instrument 43-101.

About Kestrel Gold Inc.

Kestrel is a gold exploration company headquartered in Canada. Its two principal projects are the King Solomon Dome property in Canada's Yukon Territory and the Huachi property in Argentina. Kestrel (KGC) is listed on the TSX Venture Exchange.

Cautionary Statements

This news release contains "forward-looking information" within the meaning of applicable securities laws, including with respect to the potential mineralization of the KSD Property and possible future exploration of the KSD property. Readers are cautioned to not place undue reliance on forward-looking statements. Forward-looking statements are based on certain key assumptions made by the Corporation, including assumptions based on the Corporation's current exploration results, and assumptions related to obtaining sufficient financing and other resources to carry out any future exploration. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the inherent risks involved in the exploration and development of mineral properties, the uncertainties involved in interpreting exploration results and other geological data and the ability of the Corporation to obtain the funds and resources required to carry out further exploration . The forward-looking statements in this press release are made as of the date of this release and the Corporation undertakes no obligation to update publicly or revise any forward looking statements whether as a result of new information or otherwise, except as required by applicable securities laws. The Corporation undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of the Corporation or its financial or operating results or (as applicable) its securities.