Kootenay Gold Inc. (TSX.V: KTN) is pleased to announce that it has entered into an Option Agreement with First Mexican Gold Corp (TSX.V: FMG) and International Millennium Mining whereby they can earn an undivided 60% interest in four properties, located in Sonora State, Mexico.

The Option Agreement allows First Mexican and IMI to acquire a 60% undivided interest by paying US$25,000 on signing, issuing an aggregate 1,200,000 common shares of FMG over 5 years and spending US$2 million on the property over 5 years. Plus Kootenay retains a 1% NSR interest which can be purchased for US$1 million. The earn-in period can be accelerated at the discretion of FMG. At completion of the earn-in a JV Agreement will be formalized.

States Kootenay President and CEO James McDonald, "We are very pleased to have First Mexican and IMI as a partner. Their aggressive consolidation of an 11,506 hectare land package contiguous with the Corex Gold Corp's Santana Property is an exciting development. Our exploration team has been diligent in advancing this prospect over recent months. The high grade gold results returned from assays and the multiple 1Kg+ Silver Targets identified to date supports that initiative and underlines the highly prospective nature of the prospect.

Adds Kootenay Chairman Ken Berry, "The First Mexican Gold joint venture provides our shareholders with multiple opportunities for new drill discoveries. As we continue to prioritize the aggressive ongoing development of our core asset the Promontorio Silver Project in Sonora, Mexico, we have now successfully joint ventured 18 of our 100% owned precious metals properties in Canada and Mexico. Collectively, these strategic partnerships afford Kootenay minimal financial exposure and up to $20.7 million in exploration expenditures over the next 5years."

The property package comprises 3,606 hectares and is considered very prospective for gold and silver mineralization with numerous historic workings present. The claims include La Cabana 1 Frac I, La Cabana 1 Frac II, La Cabana 1 Frac III and Cuatas which are 100% owned by Kootenay.

Sampling has been conducted by Kootenay Gold with over 120 samples assayed with the highlights listed below. The samples from the Minas Viejas area of the La Cabana Frac II property is on trend and very close to the recently reported samples (see FMG news release Feb 16, 2011) from Bailey zone of First Mexican.


Sample Highlights

• sample # FA1322G returned - 11.40 g/t gold, 92 g/t silver
• sample # LM1041D returned - 1.54 g/t gold, 672 g/t silver, .69% copper
• sample # CA1032D returned - 3.25 g/t gold, 4620 g/t silver, .698% copper
• sample # CA984D returned - 12.20 g/t gold, 877 g/t silver, 13.40% copper
• sample # LM1046G returned - 4.49 g/t gold, 504 g/t silver, 2.70% copper