VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 26, 2008) - NOT FOR
DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION VIA US
NEWSWIRE SERVICES

Kootenay Gold Inc. ("Kootenay") (TSX VENTURE: KTN) is pleased to
announce a brokered private placement led by PI Financial Corp. (the
"Agent") of up to 5 million units at a purchase price of $2.20 per
Unit, for aggregate gross proceeds to Kootenay of up to $11 million.
Kootenay intends to increase the current 10,000 meter drill program
to include an additional 100 drill holes which will test the large 3D
IP Chargeability Anomaly described in the May 14th, 2008 news
release. In addition an expanded IP survey, mapping, trenching and
surface sampling program will test new mineralized zones in the
surrounding area on its Promontorio Silver Discovery.

Expanded Exploration Program at Promontorio Discovery

To date, the 3D IP chargeability anomaly at Promontorio has proven to
be an exceptionally accurate predictive tool for identifying
mineralization and drill targeting (view 3D model at
www.kootenaygold.ca). Given the large extent of this anomaly and
corresponding alteration at surface the pace of exploration will be
stepped up. A second drill rig will be sourced and added to the
program to assist in drilling an expanded program in the order of an
additional 35,000 meters or approximately 100 holes. Also detailed
mapping and sampling of the new mineralized zones discussed in the
May 14th, 2008 news release is under way. This will be followed by
trenching and likely further geophysical surveys, additional targets
will be drill-tested where warranted. Kootenay will also initiate a
regional exploration program on the 90,000 hectare Promontorio
property where a third drill rig will be added to drill test these
targets based on results of the preliminary work.

Private Placement

Each Unit will consist of one common share ("Common Share") of
Kootenay and one-half of one transferable share purchase warrant
("Warrant"). Each whole Warrant will entitle the holder to acquire
one Common Share at an exercise price of $2.75 for a period of 24
months from the closing date of the Private Placement. As
consideration to the agents, Kootenay has agreed to pay a commission
of 6.5 per cent of the total raised upon closing, which may be
payable in cash or units, on the same term as the Units of the
offering at the election of the Agent and issue agent warrants equal
to 6.5 per cent of the units issued pursuant to this offering. Each
agent warrant will be exercisable to acquire one common share at
$2.50 expiring 24 months after the closing date. All of the
securities issued pursuant to the Private Placement will be subject
to a minimum four month hold period. The company has granted the
agent an over allotment option to increase the offering by up to 1
million units, exercisable 48 hours prior to closing date. The net
proceeds from the Private Placement will be used to finance
additional work on Kootenay's Promontorio property, its other mineral
projects and for general working capital.

About Kootenay

Kootenay Gold Inc. is an exploration and mining Company actively
developing mineral exploration projects in British Columbia, Canada
and Mexico. The Company's top priority remains the ongoing aggressive
development of its rich Promontorio Silver project, which encompasses
the former producing Promontorio Silver Mine in Northwest Mexico.

Cautionary Note: 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 does not constitute an offer to sell or a
solicitation of an offer to sell any securities in the United States.
The securities have not been and will not be registered under the
United States Securities Act of 1933, as amended (the "U.S.
Securities Act") or any state securities laws and may not be offered
or sold within the United States or to U.S. Persons unless registered
under the U.S. Securities Act and applicable state securities laws or
an exemption from such registration is available.

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.
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or the accuracy of this release.

Contacts:
Kootenay Gold Inc.
James McDonald
CEO
(403) 238-6986

Kootenay Gold Inc.
Ken Berry
President
(604) 601-5652 or 1-888-601-5650
Website: www.kootenaygold.ca





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