KOOTENAY ANNOUNCES RESULTS FROM FIRST 11 HOLES OF DRILL PROGRAM ON LA NEGRA BEING CONDUCTED AND OPERATED BY PAN AMERICAN SILVER CORP. Highlights Include 363 gpt Silver over 44.5 Meters including 720 gpt Silver over 19 Meters

October 25, 2016

Kootenay Silver Inc. (TSXV: KTN) (the “Company” or “Kootenay”) is pleased to announce results from the first 11 holes of the ongoing 3,400 meter drill program on its La Negra silver discovery in Sonora, Mexico currently being conducted and operated by Pan American Silver Corp. (TSX: PAA, NASDAQ: PAAS) (“Pan American”). The current definition drill program on La Negra is part of an option agreement completed in February 2016 between Kootenay and Pan American that provides Kootenay with a series of work and cash commitments and a carried to production interest on La Negra.

A series of deeper infill drill holes from the current program have confirmed the results from previous drilling conducted by Kootenay on La Negra (See Kootenay “High-Grade Results” news release issued on April 30, 2015), as well as the presence of a second breccia zone further to the south, which currently remains open at depth and to the east.

Kootenay President and CEO James McDonald states: “We are very pleased with Pan American’s work and the results to date from the first 11 holes of the program. The confirmation of multiple high-grade intercepts of silver mineralization at depth is a significant development and further indicates potential for the silver resources to be amenable to both open pit and underground exploitation. We are also very pleased that based on the encouraging results achieved to date, Pan American is extending the program by a full 2,000 meters until the end of the year.”

Drill highlights include:

LN 42-16

  • returning three high grade intervals within 122.5 meters of 124 gpt silver and 0.15 gpt gold including:
  • 693 gpt silver and 0.39 gpt gold over 6.25 meters;
  • 672 gpt silver and 0.13 gpt gold over 4.65 meters; and
  • 631 gpt silver and 0.18 gpt gold over 3.45 meters.

LN 43-16

  • returning from a new more southerly breccia 720 gpt silver and 0.13 gpt Au over 19 meters within 44.5 meters of 363 gpt silver and 0.12 gpt gold.
  • Higher in the hole the previously known breccia graded 1,226 gpt silver and 0.28 gpt gold over 6.15 meters within 235 gpt silver and 0.09 gpt gold over 38 meters.

These two holes are from infill drilling and identified a second more southerly breccia. The zone remains open at depth and along strike to the east. Click to view: geologic maps, drill plan and cross sections.

A summary of the infill drilling within the mineralized zone is provided in the table below:

Drill hole

From (m)

To (m)

Interval (m)

Ag gpt

Au gpt

Cu ppm

Pb ppm

Zn ppm

LN-42-16

16.7

138.85

122.15

124

0.15

189

4,730

146

Incl.

35.65

41.90

6.25

693

0.39

123

29,902

68

Incl.

46.45

51.10

4.65

672

0.13

65

1,042

51

Incl.

69.75

73.20

3.45

631

0.18

998

1,524

185

LN-43-16

88.20

89.10

0.90

373

0.22

860

3,606

178

and

92.60

93.20

0.60

161

0.09

1,005

1,649

212

and

95.35

95.85

0.50

146

0.04

408

22,900

148

and

102.40

140.40

38.00

235

0.09

374

2,260

164

Incl.

133.70

139.85

6.15

1,246

0.28

1770

1,099

439

and

171.30

215.80

44.50

363

0.12

670

1,009

208

Incl.

177.45

196.45

19.00

720

0.13

1,176

594

300

LN-44-16

103.90

109.00

5.10

109

0.08

175

2,813

600

and

135.10

136.20

1.10

138

0.04

306

37,000

4,709

and

140.35

144.45

4.10

105

0.07

193

16,768

943

and

210.25

264.70

54.45

137

0.14

210

10,789

174

Incl.

212.25

219.95

7.70

543

0.19

692

66,890

372

LN-45-16

82.20

102.40

20.20

73

0.01

361

7,283

1347

and

120.30

147.80

27.50

59

0.07

96

247

151

Incl.

120.30

121.40

1.10

951

0.19

1,531

1,005

803

LN-46-16

151.80

212.55

60.75

76

0.05

180

3,246

92

Incl.

178.40

192.00

13.60

137

0.05

200

7,435

90

LN-47-16

165.20

182.25

17.05

65

0.01

71

5,221

378

Incl.

165.20

170.80

5.60

116

0.02

128

11,804

174

and

205.50

206.50

1.00

158

0.07

244

7,163

131

LN-48-16

108.55

116.05

7.50

81

0.02

174

10,916

1156

Incl.

109.30

114.10

4.80

109

0.02

244

15,128

1654

and

142.9

147.70

4.80

113

0.14

472

30

111

Incl.

146.40

147.70

1.30

305

0.32

1,281

32

219

and

165.70

193.75

28.05

97

0.05

168

1,229

100

Incl.

179.85

193.75

13.90

141

0.06

234

2,310

122

Incl.

180.75

182.60

1.85

648

0.10

1,105

192

210

LN-50-16

39.05

73.00

33.95

66

0.03

154

6,782

257

Incl.

43.70

56.05

12.35

81

0.03

101

9,086

136

Incl.

66.65

73.00

6.35

103

0.05

204

4,199

311

Incl.

68.00

69.00

1.00

263

0.02

216

8,676

218

LN-52-16

116.70

117.70

1.00

163

0.01

44

61

191

LN-53-16

0.00

27.15

27.15

74

0.04

241

6,303

75

Incl.

10.70

15.35

4.65

131

0.07

334

17,308

89

Note: all intervals are downhole. Holes are oriented approximately perpendicular to the mineralized trends, and downhole lengths may be slightly shorter than the stated interval.

Pan American began managing the exploration program in April 2016 and commenced re-logging drill core, geological mapping and re-interpretation, and completed 62 km of magnetic ground surveys. Pan American initiated a 3,400 meter drilling program in July 2016 with the objective of infilling the La Negra drill coverage to 50 meter centres and testing the along-strike and down dip extents as well as following up on geophysical and geological anomalies elsewhere within the exploration concessions.

Pan American Silver geologists have increased the understanding of the La Negra breccia. There are three phases of hydrothermal magmatic development (La Negra, Gravilla and Rica breccias) emplaced within the host volcanic agglomerate (andesitic composition) Tarahumara Formation. The breccia has been controlled on a regional east-west structure. Epithermal Ag-Zn-Pb mineralisation has over printed the different phases of brecciation associated with illite and silicification; the mineralogy has currently been described as Ag sulphides (acanthite – tetrahedrite), galena and sphalerite; pyrite occurs as veinlets, matrix fill in breccia and dissemination.

QA/QC

Samples were assayed by Inspectorate of Hermosillo, Mexico, using four acid digestion 35 element ICP analytical methods with fire assay for Au and Ag with atomic absorption finish and gravimetric finish, respectively. Pan American has followed a Quality Assurance/Quality Control program comprised of the insertion of blank material and certified standard samples at a frequency of one each for every 20 samples. There are no known drilling, sampling, recovery, or other factors that could materially affect the accuracy or reliability of the data referred to in the table.

Qualified Persons

The Kootenay technical information in this news release has been prepared in accordance with the Canadian regulatory requirements set out in National Instrument 43-101 (Standards of Disclosure for Mineral Projects) and reviewed on behalf of Kootenay by James McDonald, P.Geo, President, CEO & Director for Kootenay, a Qualified Person.

About Kootenay Silver Inc.

Kootenay Silver Inc. is an exploration company actively engaged in the discovery and development of mineral projects in the Sierra Madre Region of Mexico and in British Columbia, Canada. The Company's top priorities are the advancement of the La Cigarra silver project and the Promontorio Mineral Belt, in Chihuahua, Mexico and Sonora, Mexico, respectively. The La Cigarra property is 26 kilometers from the historic mining city of Parral and boasts nearby power, good road access, gentle topography, and established infrastructure. La Cigarra currently hosts a resource estimate of 18.54 million tonnes containing 51.47 million ounces of silver in the Measured and Indicated categories grading 86.3 g/t silver and 4.45 million tonnes containing 11.46 million ounces of silver in the Inferred category grading 80 g/t silver. The mineralized system at La Cigarra has been traced over 6.5 kilometers and is defined at surface as a silver soil anomaly and by numerous historic mine workings. The La Cigarra silver deposit is open along strike and at depth and is approximately 25 kilometers north, and along strike, of Grupo Mexico's Santa Barbara mine and Minera Frisco's San Francisco del Oro mine. The Promontorio Mineral Belt includes the Company’s La Negra high-grade silver discovery and its Promontorio Silver Resource. The Promontorio Mineral Belt is under option to Pan American Silver whereby they can earn a 75% interest in the project with US$16 million of expenditures and payments with Kootenay retaining a 25% carried to production interest (see news release dated February 16 and March 4, 2016). The Promontorio Silver Resource currently hosts a resource estimate of 44.5 million tonnes containing 92 million ounces of silver equivalent in the Measured and Indicated categories grading 64.3 g/t silver equivalent and 14.6 million tonnes containing 24.3 million ounces of silver equivalent in the Inferred category grading 52 g/t silver equivalent. The Company's core objective is to create value by acquiring silver resources through discovery and acquisition and testing those resources with the ultimate goal of developing them into silver production if they are proven to be economically viable.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

For additional information, please contact:

James McDonald, CEO and President at 403-880-6016

Ken Berry, Chairman at 604-601-5652; 1-888-601-5650

or visit: www.kootenaysilver.com

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS:

The information in this news release has been prepared as at October 24, 2016. Certain statements in this news release, referred to herein as "forward-looking statements", constitute "forward-looking statements" under the provisions of Canadian provincial securities laws. These statements can be identified by the use of words such as "expected", "may", "will" or similar terms.

Forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by Kootenay as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Many factors, known and unknown, could cause actual results to be materially different from those expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Except as otherwise required by law, Kootenay expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in Kootenay’s expectations or any change in events, conditions or circumstances on which any such statement is based.

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.

This press release uses the terms "Measured", "Indicated", and "Inferred" resources. United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. "Inferred Mineral Resources" have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of Measured or Indicated Mineral Resources will ever be converted into Mineral Reserves. United States investors are also cautioned not to assume that all or any part of a Mineral Resource is economically or legally mineable.

2016 number 23