Kootenay Announces Three Diamond Drill Rigs Now Operating on Promontorio

VANCOUVER, June 29, 2011 -

Shares Outstanding:
44,958,100

Kootenay Gold Inc. (TSX VENTURE: KTN.V) is pleased to
announce it now has three core drills operating at the Company’s
Promontorio Silver Project in Sonora, Mexico with the recent
commencement of drilling of the third diamond drill rig.

As previously announced on May 31, 2011, the drills are
executing a 25,000 meter diamond drill program to follow up on the
success of the Company’s recently concluded 10,000 meter drill
program on Promontorio. The current drill program represents the
single largest and most expansive drilling campaigns conducted on
Promontorio to date. The multi-phase step out and in-fill drilling
program at Promontorio will be ongoing for the next several
months.

The three core drills will be concentrating on step out holes
and in-fill drilling to determine continuity between the numerous
medium to high-grade silver intercepts encountered along
Promontorio’s 1.0 kilometer mineralized corridor. This corridor
includes the Pit Resource, Pit NE zone, Northeast Zone and the
Southwest zone.

The objective of the program is to define Promontorio’s
mineralized boundaries and to determine the continuity and grade of
silver mineralization between individual drill intercepts at
surface and at depth to begin establishing the overall size and
scope of the contained silver resource.

The Company plans to provide an updated NI 43-101 resource
calculation at the conclusion of the program. To further accelerate
the future permitting and feasibility process on Promontorio,
preliminary work for baseline, further metallurgical and technical
studies have been initiated in conjunction with the current
drilling program.

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 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.

2011 number 14

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:  href="www.kootenaygold.ca">www.kootenaygold.ca

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