Drilling Commences on Deer Creek Gold Property

Shares Outstanding: 37,226,600

VANCOUVER, July 26 /CNW/ - Kootenay Gold Inc. ("Kootenay") (KTN: TSX.V) and Northern Vertex (NEE: TSX.V) are pleased to announce the commencement of a drill program on the Deer Creek Gold Property located in the West Kootenay region of British Columbia, Canada. Systematic soil geochemistry, airborne geophysical survey, mapping and trenching have identified a gold mineralized structural zone measuring 3km in length.

Drilling

Initial drilling will focus on an open-ended soil anomaly adjacent and parallel to previously discovered gold bearing quartz veins. The soil anomaly measures about 1km in length, runs north to south and occurs obliquely across two lines implying a width of approximately 100 meters. Grab sample values as high as 23g/t gold were found along east trending, crosscutting faults.

Joint Venture

Kootenay has granted Northern Vertex the right to earn a 60% undivided interest in the Deer Creek Gold Property. Northern Vertex must spend $1 million on exploration over five years and issue up to 400,000 shares over a three-year period. Should the property go into commercial production Kootenay will receive an additional 250,000 shares of Northern Vertex. Subsequent to exercise of the earn-in, Northern Vertex and Kootenay will form a 60/40 joint venture.

The foregoing geological disclosure has 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.

Sampling, Assaying and QA/QC

Samples were analyzed by Acme Laboratories in Vancouver, British Columbia. All analysis were conducted by Acme Laboratories using an Agua Regia ICP-MS analysis with Fire Assay Fusion Gold by ICP-ES.A QA/QC program was initiated which involved insertion of standards, blanks and duplicates into the sample stream.

ABOUT KOOTENAY

Kootenay is an emerging exploration Company actively developing several mineral projects in the Sierra Madre Region of Mexico and in British Columbia, Canada. Numerous joint-venture partnerships maximize the potential for new discoveries. The Company's top priority remains the ongoing development of its Promontorio Silver project in Sonora State, northwest Mexico, which encompasses the former producing Promontorio Silver Mine.

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.

For further information: James McDonald, CEO and President at 403-238-6986; Ken Berry, Chairman at 604-601-5652, 1-888-601-5650, www.kootenaygold.ca