In reference to Kootenay Silver TSX.V – KTN Update August 22nd 2012

I’d like to talk about a few things in regards to KTN’s last news release:

Kootenay Silver Announces Results of Updated NI 43-101 Resource Estimate on its Flagship Promontorio Silver Project in Sonora, Mexico

When SRK does a resource estimate they use a mathematical modeling program to define potentially economic ozs at, and above, the cut-off grade.

A Whittle Pit would encompass all the ozs, (the ones with proper drill hole spacing allowing them to be used) above the cut-off grade in a certain area, all mining costs are considered. What we end up with is an extremely detailed first pass list of the economic viability of the deposit.

Currently, the drill hole spacing between the Pit Zone Resource and the NE Zone Resource is too far apart for a resource to be calculated, the company intends to infill drill the gap between the two resources in the upcoming 25,000 meter drill program. KTN also intends to drill towards the Dorotea Zone to potentially establish continuity.

At the same time Kootenay will continue, and start, the engineering studies required to evaluate what they have on an economic basis.

There have been many questioning why a $34 cut-off was used when First Majestic used $25. Well the difference is Majestic was doing a feasibility study on a mine for reserves. For reserves, mineable ore, you use a 36 month trailing average.

SRK was doing a resource calculation, potentially economic ore, for KTN and its perfectly acceptable to use an 18 month trailing average, which is where the $34 came from.

The updated Measured and Indicated resource contains an estimated 61,679,000 oz Ag Eq with another 14,469,000 oz Ag Eq categorized as Inferred. With just over 76m oz Ag Eq and looking at the above diagram it’s not hard to believe, imo, that Promontorio is going well over 100m oz Ag Eq.

Rick Mills