KOOTENAY ANNOUNCES UPDATED NI 43-101 RESOURCE CALCULATION COMMISSIONED ON PROMONTORIO TO INCORPORATE AND QUANTIFY GOLD CONTENT IN THE CURRENT SILVER-LEAD-ZINC RESOURCES

SRK Consulting Inc. of Lakewood, Colo., has been commissioned to provide an updated, independent resource calculation on Kootenay Silver Inc.'s flagship Promontorio silver project in Sonora, Mexico.

The Company reports the decision to include gold assay results in the updated resource estimation follows extensive metallurgical testing and technical analysis by ALS Minerals of Kamloops, British Columbia that confirmed up to 94.5% recovery of gold from pyrite concentrates from the Promontorio resource can be achieved using a post pressure oxidation treatment process.

States Kootenay CEO James McDonald "We are very pleased to proceed with an updated resource calculation on Promontorio and to include the extensive gold assays found to be contained within the Promontorio diatreme system as part of our updated resource estimation. The gold in Promontorio is found to be evenly distributed throughout the silver resources and as such holds potential to further boost and enhance the value of the contained mineral resource going forward."

Metallurgy Testing Conducted by ALS Minerals of Kamloops, B.C.

Kootenay recently concluded through metallurgical testing and technical analysis that the gold contained within the Promontorio diatreme system can be effectively recovered following a pressure oxidation process. After pressure oxidation, 94.5% of the gold was extracted from a pyrite concentrate.

The testing was conducted on a pyrite concentrate derived from flotation testing completed by ALS Minerals in Kamloops British Columbia. The pyrite concentrate had a head assay of approximately 3.0 gpt Au and approx. 98% of the pyrite was oxidized. The pyrite concentrate was treated through a batch pressure oxidation testing unit at approx. 200 degrees Celsius and a pressure of 2000 kPa for 2 hours. Post oxidation, the residue was further treated through a standard bottle roll cyanidation test.

After 48 hours of direct cyanidation leaching, 94.5% of the gold contained in the pressure oxidation residue was leached into the solution phase. Results from the testing indicate that the gold in the pyrite concentrate can be effectively recovered through post pressure oxidation treatment.

The Company reiterates that it is important to note that the economics and capital costs of recovering the gold resources in this stream using pressure oxidation (or oxidation of any type)/cyanidation will require further evaluation and assessment, which is currently underway on Promontorio. There is no assurance to what the extent of the net benefit will be resulting from this work.

Current 30,000 Meter Drill and Resource Expansion Program

At present, three core drills are operating on Promontorio. The current 30,000 meter, multi-phase drill and resource expansion program is the largest and most expansive drilling campaign conducted on the Promontorio Silver Project to date.

Current NI 43-101 Compliant Silver Resource

The most recent updated NI 43-101 mineral estimate on Promontorio (See KOOTENAY News Release--August 21, 2012) contains a combined Measured and Indicated silver resource of 61,679,000 silver equivalent ounces (37.5M oz's Silver, 372M lb's Lead, 436.9M lb's Zinc). In addition to the Measured and Indicated silver resources, there are an additional 14,469,000 silver equivalent ounces in the Inferred category (9.6M oz's Silver, 77.6M lb's Lead, 85.3M lb's Zinc). (Measured and Indicated resources are contained in open pit resources of 36,018,000 tonnes grading an average of 51.35 gpt silver equivalent (31.18 gpt Ag and 0.98% Pb+Zn) and underground resources of 2,216,000 tonnes grading an average of 48.75 gpt silver equivalent (30.15 gpt Ag and 0.98% Pb+Zn). Inferred resources within open pit resources of 9,136,000 tonnes grading an average of 42.86 gpt silver equivalent (28.32 gpt Ag and 0.17% Pb+Zn) and underground resources of 3,077,000 tonnes grading an average of 53.90 gpt silver equivalent (35.94 gpt Ag and 0.88% Pb+Zn).

All holes reported here were drilled with HQ sized diamond drill core with some sections reduced down to NQ sized core. Core samples were cut using a core saw with 1 to 2 meter long sample intervals. All mineralized intercepts are drill core length drilled across a vertically inclined breccia system at angles of 45 to 70 degrees. Further Quality Assurance and Control procedures and details are disclosed on the Kootenay Silver Inc. website.

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.