Silver Price Sensitivity Analysis Further Supports 60+ Million Ounce Silver Equivalent Resource on Promontorio Silver Project in Sonora, Mexico

VANCOUVER, September 6, 2012 /PRNewswire/ --

Shares Outstanding: 48,383,850

Kootenay Silver Inc. (TSX VENTURE: KTN.V) is pleased to report the Company has completed a sensitivity analysis of varying metal prices at 18, 24 and 36-month trailing averages, further supporting the recent updated NI 43-101 resource estimate conducted on the Company's flagship Promontorio Silver Project in Sonora, Mexico.

An industry standard, 18 month trailing average was used in the NI 43-101 Resource estimate recently completed by SRK Consulting (U.S.) Inc. as reported August 21, 2012.

States Kootenay President and CEO James McDonald "When you apply even the most conservative metal prices observed during the 18 to 36 month period, there is less than a 4% variance in Promontorio's measured and indicated resource. This is due to the impact of the high silver grades in the diatreme system, which is also exciting as it has a positive impact on the economic dynamics of the resource. Moreover, using the lowest metal prices observed over the three-year period, Promontorio still maintains a benchmark measured and indicated silver equivalent resource totaling over 60 million ounces."

Sensitivity Table for 18, 24, and 36 month metal prices*
Total M+I Resource: Open Pit and Underground

    Metal    Prices    Used*       AgEq  Ag   Pb    Zn   Tonnes               Grade                M Oz M Oz M Lbs M Lbs   Mt   AgEq (gpt) Ag (gpt) Pb (%) Zn (%)    18 Month    61.7 37.5 372.9 436.9  37.4      51        31     0.45   0.53    24 Month    62.8 36.9 368.1 430.9  35.9      54        32     0.46   0.54    36 Month    65.6 36.1 360.0 421.1  33.8      60        33     0.48   0.56     Total Inferred Resource: Open Pit and Underground    Metal    Prices    Used*       AgEq  Ag   Pb    Zn   Tonnes               Grade                M Oz M Oz M Lbs M Lbs   Mt   AgEq (gpt) Ag (gpt) Pb (%) Zn (%)    18 Month    14.5 9.6  77.6  85.3   9.7       46        31     0.36   0.40    24 Month    14.3 9.2  73.9  81.4   9.0       49        32     0.37   0.41    36 Month    13.5 8.3  64.7  71.7   7.4       56        35     0.39   0.44

* Refer to News Release from August 21, 2012. SRK calculated silver equivalencies using these 24 and 36 month metal prices. Kootenay conducted a study of the effects of these different equivalencies on the cutoff grades and mineral resources contained within the break-even pit shell based on the 18-month metal prices.
* 18 Month Prices Used: Ag $34/oz, Pb $1.07/lb, Zn $0.97/lb, Open Pit Cutoff 15 gpt AgEq, Underground Cutoff 35 gpt AgEq
* 24 Month Prices Used: Ag $31/oz, Pb $1.04/lb, Zn $0.97/lb, Open Pit Cutoff 17 gpt AgEq, Underground Cutoff 38 gpt AgEq
* 36 Month Prices Used: Ag $26/oz, Pb $1.01/lb, Zn 0.96/lb, Open Pit Cutoff 20 gpt AgEq, Underground Cutoff 45 gpt AgEq
* Silver equivalency is based on unit values calculated from the above metal prices, and assumes 100% recovery of all metals.
* Mineral resource tonnage and contained metal have been rounded to reflect the accuracy of the estimate, and numbers may not add due to rounding

The following table shows the impact of varying cutoffs on the Promontorio Resource at 10, 15, 20 and 25 gpt silver equivalent ounces with 15 gpt silver equivalent ounces being the cutoff used in the resource estimate.

Impact of Varying Cutoffs on Promontorio Resource*
Total Measured and Indicated Resource: Open Pit and Underground

      AgEq Cutoffs    Used* (Open Pit     / Underground)  AgEq  Ag   Pb    Zn   Tonnes            Grade                                                  AgEq                     M Oz M Oz M Lbs M Lbs   Mt   (gpt) Ag (gpt) Pb (%) Zn (%)    10 gpt / 22 gpt  65.9 40.1 397.3 466.7  45.4   45      27     0.40   0.47    15 gpt / 35 gpt  61.7 37.5 372.9 436.9  37.4   51      31     0.45   0.53    20 gpt / 45 gpt  58.0 35.2 351.9 411.2  31.9   57      34     0.50   0.59    25 gpt / 58 gpt  54.3 32.9 330.1 384.8  27.2   62      38     0.55   0.64     Total Inferred Resource: Open Pit and Underground      AgEq Cutoffs    Used* (Open Pit     / Underground)  AgEq  Ag   Pb    Zn   Tonnes            Grade                                                  AgEq                     M Oz M Oz M Lbs M Lbs   Mt   (gpt) Ag (gpt) Pb (%) Zn (%)    10 gpt / 22 gpt  19.5 12.7 108.9 119.3  16.4   37      24     0.30   0.33    15 gpt / 35 gpt  14.5 9.6  77.6  85.3   9.7    46      31     0.36   0.40    20 gpt / 45 gpt  11.7 7.9  60.4  67.2   6.7    54      36     0.41   0.45    25 gpt / 58 gpt  9.9  6.7  50.3  56.5   5.1    61      41     0.45   0.51

* Refer to News Release from August 21, 2012.
* 18 Month Prices Used: Ag $34/oz, Pb $1.07/lb, Zn $0.97/lb
* Silver equivalency is based on unit values calculated from the above metal prices, and assumes 100% recovery of all metals.
* Mineral resource tonnage and contained metal have been rounded to reflect the accuracy of the estimate, and numbers may not add due to rounding

http://www.kootenaysilver.com/i/pdf/Prom-2012-08-31v3.pdf

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.

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.

This press release uses the terms "Measured", "Indicated", and "Inferred" resources. United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. "Inferred Mineral Resources" have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of Measured or Indicated Mineral Resources will ever be converted into Mineral Reserves. United States investors are also cautioned not to assume that all or any part of a Mineral Resource is economically or legally mineable.

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: http://www.kootenaysilver.com