First Mexican options Kootenay Au, Ag claims in Mexico

2011-02-17 09:20 ET - News Release

Also News Release (C-KTN) Kootenay Gold Inc

Mr. Jim Voisin of First Mexican reports

FIRST MEXICAN INCREASES LAND PACKAGE TO 15,112 HECTARES

First Mexican Gold Corp. has entered into an option agreement with Kootenay Gold Inc. which adds significantly to its property package at its Guadalupe property in Sonora state, Mexico. The company's current property package of 11,506 hectares is contiguous to Corex Gold Corp.'s Santana property where consistently good drilling results have been demonstrated to date.

The option agreement with Kootenay Gold continues the land package expansion strategy of First Mexican management. The property package comprises 3,606 hectares that are contiguous to the present landholdings and are 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 per cent owned by Kootenay.

The option agreement allows First Mexican 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. This property has been added to the existing Option Agreement with International Millennium Mining Corp. (TSX VENTURE: IMI).

Historic and recent non-compliant 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 (news release Feb 16, 2011) from the 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, 0.69% copper;
• sample # CA1032D returned 3.25 g/t gold, 4620 g/t silver, 0.698% 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.

Table of Key Sample Results

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LOCATION            SAMPLE NUMBER     AU (g/t) AG (g/t) CU (%) SB ppm PB ppm

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CUATAS

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Cruz de Mayo        FA1322G              11.4       94   .046    2080

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                    LM1041D              1.54      672    .69     620    510

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Urquidez

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                    LM1118F             0.179        2

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                    MK788               0.145        7

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                    MK796               0.128        4

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La CABANA FRAC II

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Minas Viejas        CA1032D              3.25     4620   .698   11500    860

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                    MK782                1.03      182    .08     370   2990

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                    CA1034D              0.45     1595   .645    4830  70000

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                    CA1028G             0.257     3050   .127    5410 116000

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                    CA1029G             0.176     2540   .091    3400 115000

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                    CA1038G             0.117     1560   .304    1040  15600

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Promontorio

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                    CA984D               12.2      877  13.40   15450  15650

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                    FA1323D              0.46       53   .295    1200  14050

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                    LM1045CH             5.42      119   .077    3710   3980

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                    LM1046G              4.49      504   2.70   11750  33500

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                    TR588               0.421        5   .070     120   2450

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                    TR589D               .017        3   4.50

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blanks = not significant

"The Kootenay Option Agreement allows First Mexican to acquire a significant interest in ground considered highly prospective and on trend with identified targets from our existing property package. Initial reconnaissance has already begun and we intend to pursue exploration in the immediate area of the Bailey zone, we look forward to working with Kootenay going forward," said Jim Voisin, President and Chief Executive Officer of First Mexican.

SJ Geophysics Ltd. of Delta, B.C., is currently on-site continuing with the extensive 3D IP survey totaling 45 kilometres of lines which includes the survey being extended towards the Bailey zone. This 3D IP program is designed to enhance the drill targeting over multiple identified target rich areas and provide follow-up data to assist in the next phase of drilling within our continually expanding property package.

We seek Safe Harbor.