Drilling Success Continues at Promontorio as Kootenay Hits 205 Meters of 117 gpt Silver Equivalent in Step-Out Drilling in Southwest Zone That Includes 169 gpt Silver Equivalent Over 50 Meters

VANCOUVER, August 23, 2011 -

- Shares Outstanding: 44,958,100

Kootenay Gold Inc. (TSX VENTURE: KTN.V) is pleased to announce assay results from the first seven holes of its ongoing 25,000 meter multi-phase drilling program on its Promontorio Silver project in Sonora, Mexico.

Results include three holes (DH 54 to 56) of in-fill drilling of the Pit Resource and four holes (DH 58 to 61) into the Southwest Zone outside of the Pit Resource designed to confirm continuity between the two mineralized areas. Results from the first seven holes demonstrate widely disseminated Zones of silver mineralization extend beyond current resource boundaries and continuation of higher grades within the Pit Resource.

States Kootenay President and CEO James McDonald “We are very pleased with results from the first seven holes of our 25,000 meter drill program. Not only is diamond drilling continuing to hit higher grades of silver at depth where previous drilling bottomed out in silver mineralization within the Pit resource itself, equally important to our resource expansion program, we are seeing continuity of silver mineralization developing in the Southwest Zone from step-out drilling that returned impressive intervals and grades of widespread silver mineralization extending to depth”.

Highlights from the seven holes include:

DH 54

• 80 gpt Silver Equivalent over 103 meters including 105 gpt Silver Equivalent over 68 meters.
• DH 54 tested 120 meters down dip of DH 53 (146 gpt Silver Equivalent over 234 meters announced May 31, 2011).

DH 56

• 116 gpt Silver Equivalent over 251 meters including 186 gpt Silver Equivalent over 66 meters.
• DH 56 is on section with DH 55 and 57 and is in-fill drilling of the Pit Resource and an approximate 25 meter step out to the Northeast of DH 53 and 54.

DH 61

• 96 gpt Silver Equivalent over 182 meters including 290 gpt Silver Equivalent over 24 meters.
• DH 61 drilled outside of the Pit Resource shows mineralization continuing about 50 meters into the Southwest Zone.
• DH 58, 59 and 60 are on section with DH 61.

DH 60

• 71 gpt Silver Equivalent over 107 meters including 237 gpt Silver Equivalent over 12 meters.
• 85 gpt Silver Equivalent over 58 meters with 129 gpt Silver Equivalent over 23 meters in a second deeper interval.

DH 58

• 117 gpt Silver Equivalent over 205 meters including 169 gpt Silver Equivalent over 50 meters and 152 gpt Silver Equivalent over 48 meters.

*See initial 25,000 meter drill highlights below - Visit www.kootenaygold.cafor complete Drill Results and Map

Outlined in the following table are the full results:

                                                  *AgEq
                          From    To  Interval (Ag,Pb,Zn) Ag   Pb   Zn  Pb+Zn
     Hole ID  Target       (m)    (m)    (m)      (gpt)  (gpt) (%)  (%)   (%)
              Pit

              In-fill/SW
    DH-054-11 Extension  269.00 280.00   11        48      17  0.38 0.35 0.73
              Pit
              In-fill/SW
    DH-054-11 Extension  334.00 437.00  103        80      26  0.39 0.88 1.28
              Pit
              In-fill/SW
    including Extension  351.00 419.00   68       105      32  0.49 1.21 1.71
              Pit
              In-fill/SW
    DH-054-11 Extension  535.00 537.00    2        82      41  0.93 0.01 0.95
              Pit
              In-fill/SW
    DH-054-11 Extension  615.00 621.00    6        29      29  0.00 0.01 0.01

              Pit
    DH-055-11 In-fill    92.00  94.00     2       429     149  2.51 4.06 6.57
              Pit
    DH-055-11 In-fill    143.00 189.00   46        89      36  0.57 0.67 1.24
              Pit
    including In-fill    173.00 185.00   12       142      58  0.83 1.14 1.97
              Pit
    DH-055-11 In-fill    282.00 288.00    6       185      86  1.29 0.99 2.28
              Pit
    DH-055-11 In-fill    314.00 320.00    6        79      43  0.38 0.46 0.84

              Pit
    DH-056-11 In-fill    73.00  93.00    20        52      52  0.00 0.01 0.01
              Pit
    DH-056-11 In-fill    156.00 407.00  251       116      47  0.78 0.82 1.60
              Pit
    including In-fill    259.00 325.00   66       186      77  1.29 1.24 2.54

              Pit SW
    DH-058-11 Extension  132.00 337.00  205       117      49  0.76 0.83 1.59
              Pit SW
    including Extension  156.00 204.00   48       152      62  0.91 1.20 2.11
              Pit SW
    including Extension  230.00 280.00   50       169      74  1.15 1.06 2.21
              Pit SW
    DH-058-11 Extension  347.00 352.00    5       134      50  1.03 0.93 1.96
              Pit SW
    DH-058-11 Extension  364.00 371.00    7       112      43  0.80 0.82 1.61

              Pit SW
    DH-059-11 Extension  114.00 174.00   60        41      21  0.21 0.24 0.45
              Pit SW
    including Extension  147.00 149.00    2       340     166  1.96 2.11 4.06
              Pit SW
    including Extension  171.00 174.00    3       136      67  0.71 0.90 1.61
              Pit SW
    DH-059-11 Extension  214.00 269.00   55        27      13  0.17 0.15 0.33
              Pit SW
    including Extension  266.00 269.00    3       130      63  1.05 0.49 1.53

              Pit SW
    DH-060-11 Extension  94.00  201.00  107        71      31  0.40 0.52 0.92
              Pit SW
    including Extension  153.00 165.00   12       237     116  1.15 1.68 2.83
              Pit SW
    DH-060-11 Extension  245.00 258.00   13       284     116  2.00 1.91 3.91
              Pit SW
    DH-060-11 Extension  280.00 338.00   58        85      35  0.58 0.58 1.16
              Pit SW
    including Extension  284.00 307.00   23       129      51  0.89 0.92 1.81

              Pit SW
    DH-061-11 Extension  157.00 161.00    4        96      43  0.60 0.64 1.23
              Pit SW
    DH-061-11 Extension  178.00 217.00   39        83      34  0.52 0.62 1.14
              Pit SW
    DH-061-11 Extension  279.00 375.00   96       182      72  1.27 1.30 2.58
              Pit SW
    including Extension  318.00 342.00   24       290     114  2.01 2.09 4.10

At present three diamond drill rigs are operating on Promontorio with two stepping out in a systematic manner outside of the Pit Resource to the Southwest and Northeast. The third rig is working on stepping out from PC 28 in the Northeast Zone which previously bottomed in 237 gpt Silver Equivalent over 51 meters. (See news release April 4, 2011). PC 28 sits 700 meters outside and on strike to the current 43-101 Pit Resource.

The Company reports 10 additional drill holes have been completed with samples sent to the lab for assaying. Three additional holes are currently in progress on Promontorio.

Upcoming drilling will continue to concentrate on step out and in-fill drilling offsetting the numerous silver intercepts concentrated along a 1.0 kilometer long mineralized corridor that includes the Pit Resource, Pit NE Zone, Northeast Zone and Southwest Zone.

The current 25,000 meter in-fill drilling and resource definition program represents the single largest and most expansive drilling campaigns conducted by Kootenay on the Promontorio Silver project to date.

Updated NI 43-101 Resource Calculation to Commence at Conclusion of Program

Kootenay reports an updated NI 43-101 resource calculation on Promontorio is planned to commence at the conclusion of the program. In anticipation of further advancing the development of Promontorio, the Company reports preliminary work for baseline, further metallurgical and scoping studies will be initiated concurrent with the drilling program.

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 posted on the Kootenay Gold Inc. website.

The foregoing geological disclosure has also been reviewed by Mr. James McDonald, P. Geo (a qualified person for the purpose of National Instrument 43-101 Standards of Disclosure for Mineral Projects). Mr. McDonald is the President and CEO and a director of Kootenay.

ABOUT KOOTENAY

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.

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.

For further information:
James McDonald, CEO and President at +1-403-238-6986
Ken Berry, Chairman at +1-604-601-5652; +1-888-601-5650
or visit:  www.kootenaygold.ca

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