Kootenay Silver Announces 30,000 Meter, Multi-Phase, Drill and Resource Expansion Program Continues at Promontorio. First 8 Holes Completed. Camp Facilities Upgraded

Shares Outstanding: 56,488,850

VANCOUVER, Jan. 17, 2013 /CNW/ - Kootenay Silver Inc. (TSX VENTURE: KTN.V) is pleased to announce following a scheduled two-week seasonal break, drilling has recommenced on its 30,000 meter, multi-phase drill and resource expansion program on its flagship Promontorio Silver Project in Sonora, Mexico. At present, a total of three core rigs are operating on site.

Prior to the break a total of 8 core holes were completed with all 8 holes being drilled in the NE zone area. The holes were step out holes looking for extensions to known mineralization. Samples from the 8 holes have been taken and submitted for assaying and will be reported upon once received and compiled. Multi-phase drilling will now expand to the Dorotea area and southwest of the Pit Zone. The current 30,000 meter drill program, which is the largest drill campaign conducted on Promontorio to date, is designed to substantially increase the overall size of Promontorio's contained silver resource and to expedite the path to a production decision.

States Kootenay CEO James McDonald "We are very pleased to ramp up drilling again at Promontorio and to report the first 8 drill holes of our program have been completed and sent for assaying. It promises to be a very exciting year ahead. Due to the accelerated nature of the program, shareholders can expect a steady stream of upcoming drill results coming from the Promontorio camp as our drill and resource expansion program reaches full capacity over the coming weeks and months."

In other news, Kootenay's ground exploration team reports a promising new area of mineralization has recently been discovered in outcrops on the main northeast to southwest trending structure that hosts the NE and Pit resources. The new mineralization is considered important as it adds significantly to the strike extent of mineralization in the Diatreme Breccia Corridor, adding an additional 3 kilometers of potential to the mineralized trend. (For a map view: Click here or visit www.kootenaysilver.com)

In conjunction with the multi-phase drill and resource expansion program, the Company further reports it has finalized the expansion of its on-site camp facilities at Promontorio to accommodate the recent increase in camp personnel and work force. Additions to the 3-shift, 24 hour per day fully serviced camp, include an upgraded cook house, new air-conditioned bunk houses and a fully equipped medical room.

Current NI 43-101 Compliant Silver Resource

The most recent updated NI 43-101 mineral estimate on Promontorio (See KOOTENAY News Release—August 21, 2012) contains a combined measured and indicated silver resource of 61,679,000 silver equivalent ounces. In addition to the measured and indicated silver resources, there are an additional 14,469,000 silver equivalent ounces in the inferred category. (Measured and Indicated resources are contained in open pit resources of 36,018,000 tonnes grading an average of 51.35 g/t silver equivalent and underground resources of 2,216,000 tonnes grading an average of 48.75 g/t silver equivalent. Inferred resources are within open pit resources of 9,136,000 tonnes grading an average of 42.86 g/t silver equivalent and underground resources of 3,077,000 tonnes grading an average of 53.90 g/t silver equivalent).

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.                                                                                                                                                

SOURCE Kootenay Silver Inc.