Kootenay Gold Inc.

Kootenay Gold Inc.

January 29, 2008 10:18 ET

Kootenay Announces 10,000 Meter Drill Program and Non-Brokered Private Placement of Up to $8,250,000

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 29, 2008) - Kootenay Gold Inc. ("Kootenay") (TSX VENTURE:KTN) is pleased to announce a 10,000 meter drill program on its Promontorio Silver Project and a non-brokered private placement (the "Private Placement") of up to 5.5 million units (each a "Unit") at a purchase price of $1.50 per Unit, for aggregate gross proceeds to Kootenay of up to $8,250,000.

Private Placement

Each Unit will consist of one common share ("Common Share") of Kootenay and one-half of one non-transferable share purchase warrant ("Warrant"). Each whole Warrant will entitle the holder to acquire one Common Share at an exercise price of $1.80 for a period of 18 months from the closing date of the Private Placement. Finder's fees in cash or units and finder's warrants may be paid in connection with the Private Placement. All of the securities issued pursuant to the Private Placement will be subject to a minimum four month hold period. The Private Placement and payment of any finder's fees are subject to acceptance by the TSX Venture Exchange.

The net proceeds from the Private Placement will be used to finance additional work on Kootenay's Promontorio property, its other properties and for general working capital.

Phase II Drilling at Promontorio

A 10,000 meter diamond drill program is planned to follow up on the successful Phase I Adobe Discovery and to test several additional targets along the mineralized trend. A drill rig has been contracted and mobilized onto the site; with start up expected this week.

Continued testing of the broad mineralized intercepts discovered in the Adobe Breccia-Stockwork system will be the focus of the program. Results from this discovery were reported in the news release dated December 10th, 2007.

Highlights of Phase I drill results include:

Drill Hole From To Interval Ag Au Pb Zn
Number (m) (m) Width (m) (g/t) (g/t) (%) (%)
KP-02-07 71.15 94.40 23.25 233.5 1.47 1.02 2.77
KP-05-07 66.37 80.78 14.41 338.9 1.80 1.85 2.69
including 74.87 80.78 5.91 664.0 2.65 3.04 4.94
KP-09-07 61.85 80.25 18.40 366.0 3.54 2.92 3.82
including 61.85 68.55 6.70 671.2 3.46 3.29 4.58
KP-17-07 8.38 86.15 77.77 30.9 0.43 0.59 0.70
including 47.66 63.20 15.54 56.4 0.84 1.29 1.58
including 27.40 38.85 11.45 55.5 1.12 1.18 1.28
including 27.4 63.2 35.8 48.4 0.77 1.01 1.18
KP-22-07 45.47 196.85 151.38 46.0 0.48 0.63 0.93
including 144.43 196.85 52.42 86.1 0.83 1.11 1.62
including 172.17 196.85 24.68 117.4 1.34 1.44 2.16
including 190.85 195.77 4.92 210.5 3.32 2.76 4.43

Alteration patterns are indicative that mineralization is in a breccia-stockwork complex within the upper levels of a porphyry system. The wide and evenly disseminated mineralization encountered in the Adobe Breccia-Stockwork and occurrence of copper and tourmaline mineralization in intrusives some 2,000 meters away also point to such an environment. The deepest test to date was in hole KP-22-07 which was mineralized through its entire length starting from surface and bottoming in mineralization at 198 vertical meters.

Airborne geophysics indicates the mineral bearing trend may continue along strike for 5 kilometers. These surveys have identified 3 other areas of interest to be drilled in the current program in addition to the Adobe Breccia-Stockwork system. A 3D Induced Polarization survey is currently underway along a 2.5 kilometer segment of the trend mapped out by the airborne geophysics centered over the Adobe Breccia-Stockwork. There are several other areas of interest identified by the airborne survey and by satellite aster imagery that will be mapped and sampled during the course of the year. These lie within a large property package which has been expanded with the recent receipt of new mineral titles. The property now covers more than 90,000 hectares.

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.

About Kootenay

Kootenay Gold Inc. is an exploration and mining Company actively developing mineral exploration projects in British Columbia, Canada and Mexico. The Company's top priority remains the ongoing aggressive development of its rich Promontorio Silver project, which encompasses the former producing Promontorio Silver Mine in Northwest Mexico.

To view a live interview with James McDonald visit: www.kootenaygold.ca

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 TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or the accuracy of this release.

Contact Information

  • Kootenay Gold Inc.
    James McDonald
    (403) 238-6986
    Kootenay Gold Inc.
    Ken Berry
    (604) 601-5652 or 1-888-601-5650
    Website: www.kootenaygold.ca