Kootenay's Expanding Generative Program Reaches Milestone as Prospective Copper/Gold/Silver Concessions Optioned to Pinecrest Resources

Shares Outstanding: 44,373,100

VANCOUVER, Feb. 28 /CNW/ - Kootenay Gold Inc. (TSXV: KTN) ("Kootenay") is pleased to announce that it has entered into an Option Agreement with Pinecrest Resources Ltd. (TSXV: PCR.P) ("Pinecrest") whereby Kootenay grants Pinecrest the right to earn an undivided 50% interest in the Espiritu property located in Sahuaripa, Sonora State, Mexico.

The Option Agreement allows Pinecrest to acquire a 50% undivided interest by issuing an aggregate 750,000 common shares of Pinecrest, over 3 years, with 200,000 issuable within 5 business days after receipt of approval by the TSX Venture Exchange ("TSXV") and spending US$1 million on the property over 4 years.  At completion of the earn-in a JV Agreement will be formalized. 

States Kootenay President and CEO James McDonald, "We are pleased to have Pinecrest as a partner to begin exploration of the Espiritu Concessions. The numerous showings identified on the property to date, combined with overall size and strength of the mineral system bode well for the discovery polymetallic deposits at Espiritu".

The J/V agreement with Pinecrest represents another milestone development for Kootenay and its generative team as the Company continues to assertively form J/V agreements on its stable of prospective properties that have been under development in Canada and Mexico over the past four years.

Adds Kootenay Chairman Ken Berry, "In keeping with Kootenay's generative model to develop near term discoveries and long-term sustainable growth, the Espiritu is a large-scale target that warrants immediate further investigation and drill testing. The J/V with Pinecrest will allow Kootenay to fast-track exploration on Esiritu as we continue to prioritize the aggressive ongoing development of our core asset the Promontorio Silver Project in Sonora, Mexico".

With the completion of the Pinecrest Joint Venture, Kootenay has now successfully joint ventured 19 of their 100% owned precious metals properties in Canada and Mexico. Collectively, these strategic partnerships afford Kootenay minimal financial exposure and up to $21 million in exploration and drilling expenditures over the next 5 years."

The Espiritu polymetallic vein/breccia porphyry Property is made up of two mineral concessions called Tarachi 2 and Tarachi 3 which total approximately 10,000 hectares, located in Sahuaripa, Sonora Mexico.  Minera J.M., S.A. de C.V., a wholly owned subsidiary of Kootenay incorporated under the laws of Mexico, is the sole legal and beneficial owner of the Espiritu Property.

On the Espiritu Property two zones of precious and base metal mineralization have been recognized; the Northeast zone dominated by a copper-gold-molybdenum porphyry setting is separated by a major fault from the Southwest zone dominated by veins and stockworks of precious and base metal mineralization.

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.

Ten wide-spaced diamond drill holes totalling 2,135 meters of HQ core were completed by Kootenay Gold in the Northeast Zone in 2009-2010. Highlights include: 220.5 meters grading 0.15% copper and 0.14 gpt gold in diamond drill hole ESP 06-10, including 12 meters grading 0.25% copper and 0.42 g/t gold.In addition, significant molybdenum grades were encountered by Kootenay Gold in drill hole ESP 04-09 which intersected 18 meters of 0.113% Mo and 9 meters of 0.133% Mo and in ESP 06-10 returning 18 meters of 0.114% Mo and 9 meters of 0.133% Mo.

Additional drilling will be required to follow-up on the significant molybdenum intercepts discovered in the initial drill program as well as to test for higher grades of porphyry related copper and gold mineralization.

Southwest Zone

The southwestern part of the system is represented by veins, breccias and stockworks anomalous in silver, gold, copper, lead and zinc. The main mineralization in the southwest is defined by several zones spread out along a 2 km length.  Fifty-eight grab samples were collected by Kootenay Gold in 2009-2010 within the west, central and eastern parts of the southwest polymetallic vein/breccia 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 by Kootenay Gold in 2009-2010 from the polymetallic vein system, 29/35 assayed greater than 30 gpt silver and 18/35 were greater than 0.100 gpt gold. The PS-1 area returned assays of 277 and 217 gpt silver associated with anomalous lead (to 6%) and zinc(to 1.5%).  The PS-2 zone gave values of 686, 644 and 487 gpt silver and anomalous copper, lead and zinc from thirteen rock samples. 

The foregoing geological disclosure has also 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 Kootenay.

About Kootenay Gold

Kootenay Gold is actively developing mineral projects in the Sierra Madre Region of Mexico and in British Columbia, Canada. The Company's flagship property is the former producing Promontorio Silver mine in Sonora State, Mexico. The Company's objective is to develop near term discoveries and long term sustainable growth. Kootenay's management and technical team are proven professionals with extensive international experience in all aspects of mineral exploration, operations and venture capital markets. Multiple, ongoing J/V partnerships in Mexico and Canada maximize potential for additional, new discoveries while maintaining minimal share dilution.

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

SOURCE Kootenay Gold Inc.

For further information:

James McDonald, CEO and President at 403-238-6986
Ken Berry, Chairman at 604-601-5652; 1-888-601-5650

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

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Kootenay Gold Inc.

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