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Kootenay Joins Alberta Star Bid To Acquire One Of The Worlds Largest Producers Of Silver The Sunshine Mine


March 8, 2010

Kootenay Gold Inc. ("Kootenay") (KTN-TSX.V) and Alberta Star Development Corp. ("Alberta Star") (ASX-TSX.V) are pleased to announce that Kootenay has entered into a letter agreement (the "Agreement"), pursuant to which Kootenay will join Alberta Star in a joint bid (the "Bid") to acquire 100% of the shares of Sterling Mining Co. ("Sterling"). Pursuant to the Agreement, Kootenay and Alberta Star have agreed to a joint plan, whereby each party will participate equally in the Bid to acquire a joint 100-per-cent interest in Sterling and its assets, and provide for financing of Sterling's continuing operations and development.

THE SUNSHINE MINE 

Sterling's "Sunshine Mine" located near Coeur d'Alene, Idaho, USA, has been one of the world's largest producers of silver, having recorded production of over 360 million ounces of silver since 1904. A 2007 Canadian "National Instrument 43-101 - Standards of Disclosure for Mineral Projects" report by Behre Dolbear & Co. estimated remaining resources as follows: 

  • Measured and Indicated resources of 31.51 million ounces of silver in 1.43 million tonnes at 21.8 ounces of silver per tonne
     
  • Inferred resources of 231.5 million ounces of silver in 2.28 million tons at 101.6 ounces of silver per tonne. 

The report can be found under Sterling's profile with the U.S. Securities and Exchange Commission and available in Canada on SEDAR.

THE GROUP

Kootenay and Alberta Star maintain strong balance sheets, seasoned and qualified management, and seek to fulfill a mandate of acquiring a world-class, advanced-stage, exploration and production project.

THE BID

Timing of the decision of the U.S. Bankruptcy Court, District of Idaho (the "Court") on a successful bid for Sterling is April 6, 2010. Key dates in advance of a decision include:

  • Deadline to become a qualified bidder on February 15, 2010; and
  • Deadline for offers on March 31, 2010.

Alberta Star announced a US$11.75M offer to acquire Sterling on December 1, 2009. Minco Silver Corporation announced on December 9, 2009 an offer which was filed with the Court to acquire Sterling for US$12.5M. There can be no assurance that the proposed transaction will be completed as proposed or at all. The proposed transaction is an "arm's-length transaction" as defined in TSX Venture Exchange ("TSX-V") Policy 1.1. and remains subject to TSX-V approval.

The foregoing geological disclosure has been reviewed and verified by Kootenay's President and Chief Executive Officer, 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 the Company. 

ABOUT KOOTENAY

Kootenay is developing the former producing Promontorio Silver Mine in Sonora State, Mexico. Significant intercepts such as KP-25 with 386.64 meters of 46.15 g/t silver, 0.44 g/t gold & 1.54% lead/zinc -- including 97.67 meters of 100.4 g/t silver, 0.77 g/t gold & 3.24% lead/zinc. Significant intercepts encountered in KP 25 are associated with sulfides hosted in breccias and stockwork veining (see new feb 5, 2009 news release). Since 2006 Kootenay has systematically advanced the Promontorio Silver Project with a 3D Induced Polarization Study, an Electromagnetic Airborne Study, Surface Sampling, Satellite Imagery, Trenching, Sampling, Mapping and more than 20,000 metres of Diamond Core Drilling. In addition, Kootenay has a portfolio of mineral projects in Sonora, Mexico and in British Columbia, Canada.