Kootenay Accelerates Work Programs; Results Pending

Shares Outstanding: 37,226,600

VANCOUVER, July 14 /CNW/ - Kootenay Gold Inc. ("Kootenay") (KTN: TSX.V) is pleased to provide a report on concurrent work programs underway.

WORK PROGRAMS UNDERWAY

    
    Promontorio Silver Project

    -   Resource Calculation
    -   Surface Sampling Results
    -   Drill Program Target Evaluation

    Joint Ventures Drill Programs

    -   Jumping Josephine, Canada - Underway
    -   Deer Creek, Canada - Set to Commence
    -   Santa Lucia, Mexico - Scheduled
    -   Additional $6 million in JV expenditures over the next three years

    Generative Exploration Portfolio

    -   Eight drill ready Discoveries marketed for Joint Venture

    Acquisition Review

    -   Focused on Multi-Million Ounce Precious Metal Deposits
    

$8 Million in Treasury (mar 31/10); No Debt

James McDonald, CEO and President of Kootenay commented, "The Promontorio with its demonstrated potential for multiple open pit scenarios remains a top priority for the company. Step-out drilling has identified areas with similar characteristics to the past producing Pit Zone which contain grades of 950 g/t Silver over 18.4 m. Continuous high IP chargeability between the mineralized Pit Zone and the Northeast Zone underlines the projects large-scale potential. Moreover, multiple untested priority drill targets suggest strong potential for a host of new discoveries within the property." (To view an EM Drill Target map visit http://www.kootenaygold.ca/s/exploration.asp)

Kootenay continues to strengthen its Joint Venture model by securing partnerships on its generative property portfolio. This strategy leverages high-reward exploration expenditures by drill testing multiple projects. In addition, management is reviewing undervalued, near-term producing assets when available.

HIGHLIGHTS OF WORK CONDUCTED

In fulfilling its mandate to develop high potential precious metal discoveries, the company incurred $21.1 million in exploration expenditures of which $3.7 million in expenditures were billed to Joint Venture Partners over three year period.

Achievements include:

    
    -   48,850 meters of HQ Diamond Core Drilling
    -   8,488 kms of Airborne Electromagnetic Survey
    -   185 kms of 3D Ground Induced Polarization Survey
    -   Staking of 756,066 sq. kms in Mexico and Canada
    -   54,900 of Assay samples analyzed
    -   Review of 40+ potential Acquisitions; resulting in 3 Bids
    

ADDITIONAL INFORMATION

Promontorio - (100% Kootenay)

Work at Promontorio is focused on three things: 1) a resource calculation of the Pit Zone; 2) the evaluation (by mapping and sampling) of more than 24 airborne geophysical anomalies having "look alike" electromagnetic responses to the Pit and Northeast zones; and 3) the next phase of drilling.

    
    Resource Calculation

    The first resource calculation on the Pit Zone is approaching completion
    and will be released in the near term. This resource will provide us with
    a quantification of the Pit Zone, help identify areas where the zone can
    be expanded and define the next steps for the project.

    Surface Sampling Results

    Mapping and sampling work on the numerous promising targets with similar
    electromagnetic signatures to the Pit and northeast zones is progressing
    well with the first phase completed. The survey area encompasses a 15 by
    20 kilometer area. The objective is to determine which of the targets are
    caused by mineralized areas and which are not and then to advance and
    drill those areas that have potential for hosting additional mineralized
    breccias and stockwork zones. Results of this program will be received
    and released throughout the remainder of the summer months.

    Next Phase of Drilling

    Follow-up program plans will reflect results from both the resource
    calculation and the assessment of look-alike anomalous zones. The
    possibilities include: another phase of drilling to increase the resource
    size; a phase of drilling testing look-alike targets for new mineralized
    zones, find a partner to advance to feasibility or some combination. We
    stress until the current work is done and we are not committed to any
    specific option and some new ones could arise.
    

Joint Venture Programs

Currently there are six joint ventures on Kootenay owned properties, namely; the Rosetta Stone, Jumping Josephine, Santa Lucia, Deer Creek, Connor Creek, and Espiritu. Drilling is planned for the Jumping Josephine, Deer Creek and Santa Lucia projects during the third quarter. All are gold or gold-silver projects with the potential to host high grade structurally hosted vein or vein stockwork type deposits.

    
    Jumping Josephine, Canada - Drilling Underway

    Gold mineralization has been traced 900 m along strike and to vertical
    depths up to 240m below surface; the zone is open on strike and at depth.

    Trenching is underway on four key early stage prospects. Drilling
    (2,500m) has commenced and will test the JJ Extension and three new
    targets. Drill results are expected in August/September.

    The TSX just accepted Astrals option to earn the remaining 40% of this
    property. Within the next year we will hold 4 million shares of Astral.
    They currently have approx 11.6 million shares outstanding.

    Deer Creek, Canada - Drilling Set to Commence

    The Deer Creek property comprises approximately 420 hectares. Several
    styles of mineralization have been recognized. Gold occurs within north
    trending shear zones in quartz veins, veinlets and irregular fracture
    zones, commonly with minor copper or other base metal sulphides; within a
    mapped and projected strike length of nearly 3km. Higher concentrations
    and better grades appear to be associated with small east-trending,
    crosscutting fractures or faults, with hand sample values containing up
    to 23 g/t gold.

    Santa Lucia, Mexico - Drilling Scheduled

    Kootenay has conducted extensive exploration on the Santa Lucia Property
    which includes prospecting, mapping, sampling, airborne mag and EM work.
    In addition, a complete historic data package was purchased in 2009. The
    data contains information from more than US$1 million of exploration
    expenditures conducted in the 1990's. Based on Kootenay's exploration and
    drill intercepts contained within the data package, several compelling
    Drill Targets have been identified. Planning and permitting is now
    underway for a comprehensive diamond drilling program at Santa Lucia (see
    News Release dated Dec 10, 2009).
    

Generative Exploration Program

A comprehensive work program is now underway to rapidly advance those generative properties that Kootenay owns to the joint venture/option stage and to secure partners to conduct drill testing. The goal is to drill test as many projects as possible. Discoveries are made by drilling and new discoveries have big impact on the valuations of junior companies.

    
    Mexico

    In Mexico there are currently three at the joint venture stage which are
    all gold or gold-silver projects. They are Male, Opochi and 2 R's.
    Potential for a large stockwork type of disseminated deposit exists at
    Male and 2 R's while Opochi has some potential for stockwork development
    it is primarily vein hosted.

    Canada

    In British Columbia there are five projects that are option ready or
    require a small amount of work to option. These are the GCP, Red Lobster,
    Big Kahuna, KLR, and Enigma. The GCP and Big Kahuna are structurally
    focused gold systems and have medium to low grade bulk tonnage potential
    and high grade underground potential respectively. The Red Lobster and
    KLR are Coeur D'Alene type high grade silver systems hosted in
    Proterozoic rocks similar to those hosting the famous Coeur D'Alene
    silver district. Enigma is a copper-gold massive sulfide target.
    

Acquisition Review

We continue to review undervalued near-term producing assets intended to add shareholder value to Kootenay and compliment our exploration properties. In February this year we entered into a joint bid with Alberta Star for one of the largest Silver Producers in US history, the Sunshine Mine. Through due diligence, we encountered issues with the Lease Holders buy-out clause. As a result we took the initiative to withdraw from the bid process.

In Conclusion

During the last four years we have developed an extensive deal flow network, property portfolio, exploration team, management team and finance network. We are confident these assets will yield strong returns for Kootenay shareholders.

We thank you for your support and will keep you apprised of new developments.

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 Silver Inc.

For further information: For further information: James McDonald, CEO and President at 403-238-6986; or Ken Berry, Chairman at 604-601-5652, 1-888-601-5650, www.kootenaygold.ca


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