Kootenay Gold Inc.
TSX VENTURE : KTN

Kootenay Gold Inc.

June 19, 2008 03:01 ET

Kootenay Announces Closing of $12.4 Million Private Placement

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 19, 2008) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

KOOTENAY GOLD INC. (TSX VENTURE:KTN) (the "Company") is pleased to announce the completion of its previously announced brokered private placement raising gross proceeds of $12,425,600 (the "Private Placement"). The Private Placement was oversubscribed, reflecting both the institutional and retail investor demand for the issue. PI Financial Corp. (the "Agent") acted as agent for the Private Placement.

Each unit (a "Unit"), priced at $2.20 per Unit, consists of one common share of the Company (a "Share") and one-half of one transferable common share purchase warrant (each whole warrant, a "Warrant"). Each Warrant will entitle the holder to acquire, at any time within 24 months from the date of closing of the Private Placement (the "Closing"), one additional common share of the Company at an exercise price of $2.75 per share. A total of 5,648,000 Shares and 2,824,000 Warrants were issued to investors under the Private Placement.

Proceeds from the private placement will be used to finance further exploration of the Company's principal asset, the Promontorio property in Sonora, Mexico, and for general working capital purposes. Drilling at the Promontorio silver project has encountered widespread mineralization to a depth of 444 metres. Highlights include 97.67 metres grading 144 gpt silver equivalent and 3.24% combined lead-zinc. Kootenay intends to increase the current 10,000 metre drill program to 45,000 metres (approximately 100 drill holes), which will test the large 3D IP Chargeability Anomaly described in the May 14th and May 22nd, 2008 news releases. Additional work planned includes an expanded IP survey, mapping, trenching and surface sampling program to test newly discovered mineralized zones in the surrounding 90,000 hectare Promontorio property. To view the Promontorio 3D Model of drill results visit www.kootenaygold.ca.

In consideration for its services, the Agent has received a commission equal to 6.5% of the gross proceeds of the Private Placement, consisting of $458,524 paid in cash and 158,700 units (the "Agent's Units"), having the same terms as the Units sold under the Private Placement, except that the common share purchase warrants comprising part of the Agent's Units are non-transferable. The Agent also received 367,120 options (the "Agent's Options"), equal to 6.5% of the number of Units sold under the Private Placement. Each Agent's Option is exercisable at any time up to 24 months following the Closing to acquire one common share of the Company at an exercise price of $2.50 per share. All securities issued under the Private Placement are subject to a four-month hold period under applicable Canadian securities laws expiring on October 19, 2008.

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

The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or the securities laws of any state of the United States and may not be offered or sold within the United States or to or for the account or benefit of U.S. persons unless the securities have been registered under the U.S. Securities Act and the applicable securities legislation of any such state or an exemption from such registration requirements is available. This release does not constitute an offer for sale of securities in the United States.

ABOUT KOOTENAY

Kootenay is an emerging exploration company actively developing mineral projects in British Columbia, Canada and the Sierra Madre Region of Mexico. The Company's top priority remains the ongoing development of its 100% owned Promontorio silver project, which encompasses the former producing Promontorio Silver Mine in Northwest Mexico.

Cautionary Note: 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 does not constitute an offer to sell or a solicitation of an offer to buy any securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available. 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
    CEO
    (403) 238-6986
    or
    Kootenay Gold Inc.
    Ken Berry
    President
    (604) 601-5652 or 1-888-601-5650
    Website: www.kootenaygold.ca