Kootenay Silver Announces Closing of $7.0 Million Equity Private Placement

Kootenay Silver Announces Closing of $7.0

Million Equity Private Placement

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UNITED STATES

NEWSWIRE SERVICES OR FOR

DISSEMINATION IN

THE UNITED STATES

./

VANCOUVER, BC

,

Aug. 25, 2020

/CNW/ - Kootenay Silver Inc. ("

Kootenay

" or the "

Company

")

(TSXV: KTN), is pleased to announce that it has closed its previously announced private placement

of units of securities of the Company ("

Units

") pursuant to which the Company issued 17,500,000

Units at a price of

$0.40

per Unit (the "

Offering Price

") for aggregate gross proceeds of

approximately

$7,000,000

(the "

Offering

"). The Offering was led by Mackie Research Capital

Corporation, as lead agent and sole bookrunner, on behalf of a syndicate which also included PI

Financial Corp. (together, the "

Agents

").

Eric Sprott

, through 21764123 Ontario Ltd., participated in

the Offering to maintain his proportionate equity interest in the Company by acquiring 2,500,000

Units.

Each Unit is comprised of one common share of the Company (a "

Common Share

") and one-half of

one Common Share purchase warrant (each whole warrant, a "

Warrant

"). Each Warrant is

exercisable to acquire one Common Share at a price of

$0.55

per share until

August 25, 2022

. The

securities issued under the Offering are subject to the four month hold period prescribed under

Canadian securities laws expiring on

December 26, 2020

.

The Company intends to use the net proceeds from the Offering for exploration and development

activities, working capital requirements and other general corporate purposes.

In connection with the Offering, the Agents received an aggregate cash fee equal to 6.0% of the

gross proceeds from the Offering (other than in respect of certain subscribers on which a cash fee

equal to 3.0% was paid). In addition, the Company issued to the Agents 1,050,000 non-transferable

broker warrants (the "

Broker Warrants

"). Each Broker Warrant entitles the holder to purchase one

Unit at an exercise price equal to the Offering Price until

August 25, 2022

. The Offering is subject to

the final acceptance of the TSX Venture Exchange (the "

Exchange

").

The securities described herein 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

accordingly, may not be offered or sold within

the United States

except in compliance with the

registration requirements of the U.S. Securities Act and applicable state securities requirements or

pursuant to exemptions therefrom. This press release does not constitute an offer to sell or a

solicitation to buy any securities in any jurisdiction.

Mr. Sprott is an insider of the Company and, as such, his participation in the Offering is a related

party transaction under the policies of the Exchange and Multilateral Instrument 61-101

Protection of

Minority Security Holders in Special Transactions

("

MI 61-101

"). The Company is relying on

exemptions for the minority shareholder approval and formal valuation requirements applicable to

related party transactions under sections 5.5(a) and 5.7(1)(a) of MI 61-101, as neither the fair

market value of the Units beneficially purchase by him nor the price paid for such Units exceeds 25%

of the Company's market capitalization. The Company did not file a material change report in

respect of this related party transaction at least 21 days before closing as a result of the customary

timing for closing such financings.

About Kootenay Silver Inc.

Kootenay Silver Inc. is an exploration company actively engaged in the discovery and development

of mineral projects in the Sierra Madre Region of

Mexico

and in

British Columbia, Canada

.

Supported by one of the largest junior portfolios of silver assets in

Mexico

, Kootenay continues to

provide its shareholders with significant leverage to silver prices. The Company remains focused on

the expansion of its current silver resources, new discoveries and the near-term economic

development of its priority silver projects located in prolific mining districts in

Sonora

, State and

Chihuahua, State,

Mexico

, respectively.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS:

Certain statements in this news release, referred to herein as "forward-looking statements",

constitute "forward-looking statements" under the provisions of Canadian provincial securities laws.

These statements can be identified by the use of words such as "expected", "may", "will" or similar

terms. Forward-looking statements in this press release include, but are not restricted to,

statements regarding the intended use of proceeds of the Offering and receipt of regulatory

approvals required for completion of the Offering.

Forward-looking statements are necessarily based upon a number of factors and assumptions that,

while considered reasonable by Kootenay as of the date of such statements, are inherently subject

to significant business, economic and competitive uncertainties and contingencies. Many factors,

known and unknown, could cause actual results to be materially different from those expressed or

implied by such forward-looking statements. Readers are cautioned not to place undue reliance on

these forward-looking statements, which speak only as of the date made. Except as otherwise

required by law, Kootenay expressly disclaims any obligation or undertaking to release publicly any

updates or revisions to any such statements to reflect any change in Kootenay's expectations or any

change in events, conditions or circumstances on which any such statement is based.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as defined in the policies of

the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of the contents of

this news release.

SOURCE

Kootenay Silver Inc.

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For further information:

James McDonald, CEO and President at 403-880-6016; Raj Kang, CFO

at 604-601-5653; 1-888-601-5650, or visit: www.kootenaysilver.com

CO: Kootenay Silver Inc.

CNW 09:34e 25-AUG-20