PROMONTORIO UPDATE: NI 43-101 RESOURCE CALCULATION
CLOSE TO COMPLETION, MULTIPLE ADDITIONAL TARGETS IDENTIFIED
WITHIN DIATREME SYSTEM

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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. 

QA/QC

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.

ABOUT 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.

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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: www.kootenaysilver.com

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

Focus: China Gold Scam Could Translate Into Higher Demand

 

(Kitco News) - While this has not been widely reported in the Western media, news broke this week of a massive illegal gold-futures trading scam in China. Not only does it underscore the growing hunger for gold among the newly minted Chinese middle class, but also hits home the rationale for owning physical gold, according to one U.S. based asset manager.

Over 5,000 investors were bilked out of 380 billion yuan, or $59.62 billion in a scheme involving Loco London gold since 2008, according to a report in the China Daily.

While details are unclear how the scam worked, the implications could be bullish for gold in a number of ways. Perhaps gold prices could be at even higher levels than they are right now, if this money had been properly invested.

“That is obviously a very significant amount, this is an enormous scam,” said Adrian Day, president of Adrian Day Asset Management. Looking ahead, Day noted that “It might make Chinese investors turn towards the physical rather than esoteric contracts.”

“I don’t think it will make Chinese people not buy gold, it will just make them want to buy physical gold and keep it,” Day said.

The newly minted Chinese middle class has a natural cultural affinity towards gold, it is a cultural distinction that many Westerners underestimate and perhaps don’t appreciate.

Looking at the most recent physical demand information available, gold demand in China skyrocketed to record levels in the first quarter of 2012, according to a report from the World Gold Council.

Additionally, China is expected to overtake India as the largest market for gold this year.

Consumer demand in China surged by 10% to hit a new quarterly high of 255.2 tonnes, according to the World Gold Council’s Gold Demand Trends first quarter 2012 report.

Additionally, Chinese consumers were active buyers of gold jewelry in the first quarter, buying 156.6 tonnes, accounting for 30% of global jewelry demand, according to World Gold Council. That is an 8% year-over-year increase. Rising Chinese income levels are a key factor seen.

“Chinese gold demand is on track to expand by seven percent to 870 tonnes this year. On its current path, China will likely surpass India as the single largest market for gold in 2012,” said Marcus Grubb, managing director at the World Gold Council.

“Gold demand in China has grown consistently over the past several years driven by the liberalization of the Chinese gold investment market, the introduction of innovative gold savings accounts and a strong interest from Chinese citizens in buying gold to preserve wealth,” the World Gold Council’s Grubb added.

While physical demand had dropped off in the U.S. early in 2012—some gold watchers point to the higher price levels seen in the first quarter as a factor depressing coin demand. After all, August gold futures hit a peak at $1,797.70 in February of this year. Savvy traders don’t like to chase. Savvy traders like to buy on dips.

Looking ahead, Day highlights factors which will keep Chinese citizens headed to the gold dealer. “We think the Chinese yuan is undervalued, but for the Chinese, their currency isn’t rising. They have negative interest rates in a bank, and they don’t really trust banks anyways.”

While the summer doldrums may have hit the gold market and as gold lumbers along in fairly narrow ranges, gold is over $200 per ounce lower than in the first quarter. “I am using these dips to buy more,” concluded Day.

While there are many uncertainties in financial markets and trading—probably one certainty that investors can count on is that there will be another crisis and yet another. The human condition of greed and fear seems to propel that on-going cycle. Students of market history are well aware of the Tulip bubble in the 1600s and the South Seas Company bubble in the 1700s.

More recently, individual investors around the globe have lived through a number of financial crises. The U.S. technology dot.com bubble bust in the equity market, the U.S. real estate collapse, the collapse of Lehman Brothers and the global financial crisis in 2008, and the European sovereign debt crisis, which is still unfolding.

Unfortunately, scams, frauds, bubbles are unlikely to go away. Many investors feel that physical ownership of gold is one way to protect and preserve assets. Something to consider.

By Kira Brecht, contributing to Kitco News, kbrecht@kitco.com
Follow her on Twitter @KiraBrecht

Northern Vertex Aggressively Fast-Tracking Moss Gold-Silver Project in Arizona to Production

Northern Vertex is focused on the acquisition, development and advancement of precious of precious metals deposits in Canada and the U.S. In the last year Northern Vertex successfully negotiated the acquisition of two US based properties that fit within its mandate and implemented a strategy designed to convert historical resource estimates into 43-101 standards. Since the acquisition of the Moss Gold-Silver Project in Arizona in March 2011, Northern Vertex has completed an extensive 27,000 foot drill program, resulting in the delineation of a substantial NI 43-101 compliant gold-silver resource. The company recently announced it hit 17 metres of 1.03 gpt gold eqv and 15 metres of 1.04 gpt gold eqv as drilling continues to expand the western extension of the Moss Gold-Silver Project. Northern Vertex plans to mirror the success of the Moss at its Lemhi Gold-Silver Project in Idaho with a similar 30,000 foot program that will to begin aggressively validate the property's non-compliant historical gold resource.