Kestrel Gold Private Placement Use of Proceeds

KESTREL GOLD INC.

NEWS RELEASE

Kestrel Gold Private Placement Use of Proceeds

October 7, 2010 – Vancouver, British Columbia: Kestrel Gold Inc.(the “Corporation”) (TSXV: KGC) announces that, further to the news release of the Corporation dated September 21, 2010 regarding the non-brokered private placement of the Corporation, proceeds from the private placement shall be used only for general working capital purposes until such time as the Corporation has received TSX Venture Exchange approval regarding the previously announced loan arrangement and Option and Purchase Agreement relating to Rio Diablillos (S.R.L.).

About Kestrel Gold Inc.

Listed on the TSX Venture Exchange, Kestrel is committed to acquiring, exploring and development precious metal projects in North and South America. It has an experienced and committed board of directors and the financial ability to aggressively meet its objectives.

For further information, please contact Kevin Nephin at 604-824-6056 or 604-799-2456 Email: [email protected] or visit our website at kestrelgold.com

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

Not for distribution to U.S. Newswire Services or for dissemination in the United States. Any failure to comply with this restriction may constitute a violation of U.S. Securities laws.