January 23, 2012

Vancouver, B.C. - Kootenay Gold Inc. TSX.V: KTN ("Kootenay") announces a warrant exercise incentive program (the "Program") designed to encourage the early exercise of up to 9,103,500 of its outstanding unlisted warrants (the "Warrants"), which excludes any Warrants held by insiders of the Company. There are currently three tranches of exercisable warrants, which are shown in the table below:

Warrants outstanding
















Pursuant to the Program, the Company is offering an inducement to each warrant holder that exercises their Warrants during a 21 calendar day early exercise period (the "Early Exercise Period"), consisting of an additional one half of one transferable share purchase warrant, with each whole warrant (the "Incentive Warrant") entitling the holder to purchase one additional common share for a period of 24 months from the date of issuance of such Incentive Warrant at a price of $1.50 per common share. The Early Exercise Period will commence tomorrow, Tuesday, January 24, 2012, at 9:00 a.m. PST and expire on February 13, 2012 at 4:30 p.m. PST (the "Early Exercise Expiry Date"). The Incentive Warrants will be subject to a four month hold period from the date of issuance.

Comments Kootenay CEO James McDonald "This is an opportunity for warrant holders to exercise their Warrants early and receive an incentive to do so which will strengthen the Company's current cash position and provide additional working capital to continue exploration of its Promontorio Silver Project. The Promontorio Project continues to report excellent grades of silver mineralizaton extending from the 43-101 Pit Resource to both the Northeast and South West Zone."

Depending upon the number of Warrants exercised during the Early Exercise Period, the Company expects to:

  • receive gross proceeds of up to $10.6 million on or before the Early Exercise Expiry Date;
  • issue up to 9,103,500 Shares pursuant to the exercise of Warrants by holders in accordance with the original and amended terms of the Warrants; and
  • issue up to 4,551,750 Incentive Warrants to Warrant holders pursuant to the early exercise of the Warrants on or before the Early Exercise Expiry Date.

The terms and conditions of the Program and the method of exercising Warrants pursuant to the Program are set forth in a letter which is being delivered to the registered address of each eligible warrant holder along with a representation and warranties confirmation confirming that the securities exemptions to be relied upon by the Company under the warrant holder's previous subscription agreement are still true in relation to the issuance of the Incentive Warrants. Warrant holders who wish to participate in the Program will agree to exercise their Warrants and deliver the other necessary documents in consideration of the issuance by the Company of the Incentive Warrants. The form of letter will be posted on the Company's profile on SEDAR at www.sedar.com and available on the Company's website at www.kootenaysilver.com.

Holders of Warrants who elect to participate in the Program will be required to deliver to the Company at Suite 920, 1055 West Hastings Street, Vancouver, British Columbia, Canada, V6E 2E9, by 4:30 p.m. (Vancouver time) on or before the Early Exercise Expiry Date, the following:

  1. a duly completed acknowledgement that the subscribers representation and warranties to the Company as per their original Subscription Agreement are still valid;
  2. a duly completed and executed Share Purchase Warrant Subscription Form attached as Schedule "A" to their Warrant certificate;
  3. the original Warrant certificate; and
  4. the applicable aggregate exercise price payable to the Company in Canadian Dollars by way of certified cheque, money order, bank draft or wire transfer.

Any Warrants that are not exercised prior to the Early Exercise Expiry Date will remain outstanding and continue to be exercisable for common shares of the Company on their current terms.

The Program is subject to the receipt of all final regulatory approvals, including the final approval of the TSX Venture Exchange.

The Incentive Warrants to be issued pursuant to the exercise of the Warrants have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. Persons (as defined in Regulation S promulgated under the U.S. Securities Act) unless registered under the U.S. Securities Act and any applicable state securities laws or an exemption therefrom is available. A U.S. Warrant holder may not exercise Warrants during the Early Exercise Period, or otherwise, unless such person provides either (i) a written certification that the holder is an "accredited investor" (as defined in Rule 501(a) of Regulation D under the U.S. Securities Act, and delivers a duly completed and executed Warrant exercise form as required by the Warrant certificate to the Company by the Early Exercise Expiry Date in order for such U.S. Warrant holder to exercise its Warrants and receive underlying common shares and Incentive Warrants; or (ii) a written opinion of counsel reasonably satisfactory to the Company to the effect that an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws is available for the issuance of the Incentive Warrants upon the exercise of the Warrants. Any U.S. Warrant holder who does not comply with such requirements will not be permitted to exercise its Warrants and obtain the Incentive Warrants, and such Warrants will remain outstanding following the completion of the Program. No Warrants owned by a Warrant holder (A) who is in the United States, or (B) who is a U.S. Person who holds a Warrant for the account or benefit of a U.S. Person or a person in the United States may be exercised through the facilities of CDS Clearing and Depository Services Inc. ("CDS") and no Underlying Shares and Incentive Shares will be exchanged for Warrants beneficially owned by such persons in CDS. All Warrants owned by such Warrant holders must be immediately withdrawn from CDS.


Kootenay Gold is actively developing mineral projects in the Sierra Madre Region of Mexico and in British Columbia, Canada. The Company's flagship property is the former producing Promontorio Silver mine in Sonora State, Mexico. The Company's objective is to develop near term discoveries and long term sustainable growth. Kootenay's management and technical team are proven professionals with extensive international experience in all aspects of mineral exploration, operations and venture capital markets. Multiple, ongoing J/V partnerships in Mexico and Canada maximize potential for additional, new discoveries while maintaining minimal share dilution.

For additional information, please contact:
James McDonald, CEO and President at 403-238-6986
Ken Berry, Chairman at 604-601-5652; 1-888-601-5650

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or the accuracy of this release
2012 number 02


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