PROMONTORIO - Update: NI 43-101 Resource Calculation Close To Completion, Multiple Additional Targets Identified Within Diatreme System

July 25, 2012

Kootenay Silver Inc. (TSX VENTURE: KTN.V) is pleased to report that geologic modeling and a detailed drill hole analysis of over 40,000 meters of drilling that was completed at Promontorio's NE Zone, SW Zone and Pit Zone has been finalized and forwarded to SRK Consulting (U.S.) Inc. of Lakewood, Colorado ("SRK") for preparation of the current updated NI 43-101 resource estimate.

The comprehensive analysis was conducted by Kootenay VP of Exploration Dr. Tom Richards in conjunction with Kootenay's technical team and overseen by Kootenay President and CEO James McDonald. Included in the analysis was the separation and re-logging of core from a total of 191 individual drill holes and an in-depth geological interpretation of previous results and how the results pertain to a diatreme system.

Among the conclusions, the analysis determined that the gold component from the results at Promontorio represents a significant component of the diatreme system and therefore needs to be quantified and fully evaluated.

States Kootenay CEO James McDonald "We are very pleased to conclude the resource modeling and in-depth analysis of drill core from Promontorio. The successful conclusions drawn from the analysis is a testimony to the hard work and diligence of our entire technical team spearheaded by Dr. Tom Richards. This is undoubtedly an exciting time for Promontorio. Based on our findings, it is apparent the prospects for multiple, additional precious metal discoveries within Promontorio's diatreme system and lengthy mineralized trend are substantial."

Diatreme System
- The recent definitive recognition of Promontorio as a Silver, Gold, Lead and Zinc diatreme system led to Kootenay's re-evaluation and logging of drill core and geologic interpretation of the mineralized system. Several high priority existing and new drill targets have been identified within the diatreme system. This includes the Dorotea Zone which is situated approximately 1600 meters to the northwest of Promontorio's Pit Resource.

Dorotea Zone - The Dorotea Zone has been traced for more than 2 kms, surface sampling and trenching indicate mineralization along at least 1,000 meters of its length. Highlights from limited step-out drilling in 2009 included Hole KP-56-08 that returned 34.5 meters grading 1.73 gpt gold and 74.83 gpt silver and 2.42% Pb+Zn, including 9 meters grading 3.28 gpt gold and 173.40 gpt silver and 5.24% Pb+Zn

Promontorio updated NI 43-101 resource estimate. SRK Consulting Inc. is currently conducting the updated resource calculation for Promontorio. As a result of brief delays from Kootenay's recent core analysis and geologic interpretation of Promontorio's diatreme system, results from the SRK study are now expected to be completed in mid to late August 2012.

Update of Regional Exploration on 80,000 ha Promontorio Concession Block

Results from a regional exploration program run concurrent with resource expansion drilling resulted in the discovery of numerous anomalous to very highly anomalous gold/silver/polymetallic (lead, zinc, copper) mineralized systems that form a 25 x 15 km northwest trending belt (Promontorio Belt) with the Promontorio diatreme breccias, including the Pit Resource, SW and NE zones, marking its southeastern limit. Mineralization within the Promontorio Belt comprises breccias, veins, stock work and replacements associated with argillic, sericitic, hematitic and tourmaline alterations. Several new high priority zones and drill targets have been identified within this belt.

Priority targets include the Nopalera, Tordillo, La Negra and Leona zones.

Nopalera Area
- This prospect area comprises 10 showing areas located within a 5 x 6 km area, five of which are at or near drill-ready. The mineralized showings are typified by anomalous to highly anomalous gold, silver and copper in association with breccias, veins, stockworks and replacements. Assay highlights include veins and breccias along a 380 meter strike and widths to 10 meters where 19 grab samples average 4.78 gpt gold with values to 56 gpt gold and 197 gpt silver and separate veins and breccias in a 500 by 200 meter area with gold values to 9.5 gpt and silver to 2990 gpt.

Tordillo Area - The Tordillo area contains six areas of highly anomalous gold/silver mineralization, two of which are at or close to drill ready. Alteration is dominated by a regional hematite-sericite alteration in the sedimentary rocks, hosting many of the gold/silver anomalous areas with assay highs from grab samples of 71 gpt, 14.2, 11.3 8.0 and 6.1 gold in areas with visible gold noted. A 15 meter hand trench gave 1.0 gpt Au including 1.54 gpt Au over 9 meters. A 500meter diameter area of alteration returned highs to 547 gpt silver and 3.7 gpt Au in areas of tourmaline breccia from grab samples.

La Negra
La Negra zone represents a diatreme breccia noted during a regional reconnaissance program which gave values of 72, 29, 22, g/t silver with anomalous lead, and zinc. The breccias are very similar to the Promontorio diatreme breccias and airborne geophysics suggests it could be similar in size.

La Leona
Mineralization is hosted in veins, shears, veinlets, fractures and stockworks associated with intense hematite-sericite alteration. Mineralization zone trends northerly for 600+ metres and 30-80 metres width. Prospector grab samples highlights of 15.3, 11.3, 10.2, 8.2, 7.7, 6.6, 4.5, 4.2, 2.9 , 2.2 g/t gold and 7650, 6450, 3290, 961, 346, 306, 283, 266 and 205 g/t silver. The system is very highly anomalous in lead, copper, arsenic, antimony, tungsten and molybdenum.


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. Dimensions of the breccia system are being determined. The current resource sits approximately along 140 meters of strike by 60 meters of horizontal width in a range of 20 to 90 meters and to a 400 meter depth. Further Quality Assurance and Control procedures are disclosed on Kootenay's 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.

Kootenay Silver Inc. is actively developing mineral projects in the Sierra Madre Region of Mexico and in British Columbia, Canada. Its flagship property is the former producing Promontorio Silver mine in Sonora State, Mexico. Kootenay's objective is to develop near term discoveries and long-term sustainable growth. Its 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
or visit:

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

2012 number 12


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