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Kestrel Gold Inc. Progress Update For Huachi Property, Argentina

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 9, 2012) -

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.

Kestrel Gold Inc. ("Kestrel" or the "Corporation") (TSX VENTURE:KGC) is pleased to announce that the Corporation has completed approximately 4,000 metres of a phase one diamond drilling program on its 540 hectare Huachi property in San Juan Province, Argentina ("Huachi"). Almost 3 kilometres of road construction has also been completed and surface sampling of road cuts and trenches is ongoing.

The results from six of ten holes (totalling 2,788 metres) have been processed and compiled by Kestrel.

Highlights

Significant new drill intersections include:

  • 1.02 g/t Au over 36.0 metres from hole 11-HU-20
  • 0.80 g/t Au over 70.0 metres from hole 11-HU-18

Kestrel's 2011 diamond drilling program has focussed on determining the extent of gold vein mineralization at Huachi and follows up on previous diamond drilling conducted in 2006/2007 (Cardero Resources Corp.) that concentrated on the porphyry copper-gold component of the system.

Kestrel's 2011 diamond drill results demonstrate a widespread distribution of gold mineralization with all diamond drill holes encountering intersections of greater than 0.5 g/t Au. Drill hole 11-HU-20 has produced the best gold intersection to date at Huachi with 95 metres of 0.51 g/t Au including 36 metres of 1.02 g/t Au within and part of an intersection of 150 metres returning 0.40 g/t Au.

Previously it was thought that the main high grade gold mineralization at Huachi was concentrated around the 'Sentazon Structure', a steeply dipping fault that can be traced for hundreds of metres. It is now thought that additional steeply dipping faults are important conduits for high grade gold mineralization, with the 'Sanjuanina Structure' to the south east of the 'Sentazon Structure' being a new and important gold bearing zone defined by drill hole 11-HU-20 and recognizable surface features.

Drill hole 11-HU-18 collared approximately 200 metres north of drill hole 11-HU-20 illustrates the near surface potential at Huachi, with 70 metres of 0.80 g/t Au intersected within the first 81 metres of the hole. Drill hole 11-HU-16 collared over 800 metres to the north of drill hole 11-HU-20 defines another more distal gold bearing 'North East Structure' with 20 metres of 0.66 g/t Au including 9 metres of 1.41 g/t Au. Generally silver values are higher in the upper 60 metres of the holes (with values up to 142 g/t Ag in drill hole 11-HU-20).

Geological Setting

Host rocks include gabbros and gabbroic breccias and heterolithic breccias as well as a number of porphyritic rocks of felsic to intermediate composition. Gold bearing hydrothermal quartz veins are often associated with fault structures and fractured and brecciated zones with strong silicification and pyritization. Silica (fracture filled quartz veinlets and stockwork), propylitic, potassic, phyllic, clay, gypsum, carbonate and secondary biotite alteration also occur in varying levels depending on the type of host rock, level of fracturing and positioning within the mineralizing system.

Beyond the 'Sanjuanina Structure' to the south east, is the relatively unexplored Agua Dulce area where rock surface samples assaying greater than 5 g/t Au have previously been collected over 300 metres away from the 'Sanjaunina Structure' intersected by drill hole 11-HU-20 (with values up to 52 g/t Au - See Kestrel Gold News Release dated February 24, 2011). In this region, a large mass of gabbro is cut by later intrusions. The Corporation intends to focus further exploration on road construction and surface sampling towards this area and down into the Huachi Canyon to facilitate further drilling in areas believed to host both gold and copper mineralization. Importantly, the mineralized system at Huachi still remains open at depth and in all directions.

William Taylor, V.P. Exploration of the Corporation comments: "Considering our early stage of exploration at Huachi, we are most encouraged to be discovering new zones of gold mineralization in areas once largely inaccessible. We are now logistically well placed for finding additional structurally controlled hydrothermal gold veins extending from depth to surface in a number of highly prospective areas as well as the 'sweet-spot' for what could potentially be a major and sizeable copper - gold porphyry feeder at depth."

Results for the remaining drill holes including those targeting the 'Sentazon Structure' as well as results from the surface trench sampling of the road cuts are pending and will be released shortly, following QA/QC procedures. Maps relating to the content of this news release will be posted on Kestrel's website.

Quality Control

HQ and NQ diamond drill core (drilled by Major Drilling, Argentina) was submitted to Alex Stewart Assayers Argentina S.A. in Mendoza, Argentina an ISO 9000-2000 accredited laboratory. Gold and silver results were determined using standard fire assay techniques on a 30 gram sample with a gravimetric finish for gold and silver. In addition to this, ICP-AR (Aqua Regia digestion) analysis was performed on 38 elements. QA/QC performed by Kestrel included the collection of core duplicate samples, coarse reject samples and the insertion of certified reference samples (standards) and blanks. Gustavo Fernandez P. Geo of UAKO Geological Consultants supervised and assessed the QA/QC procedures and data in compliance with National Instrument 43-101 requirements.

Drill Assays

All intersections stated are drill core interval lengths. True widths are not known at this stage. All six diamond drill holes were drilled with a 60 degree dip angle. Significant gold values for all six holes are shown in the table provided.

Table: Significant Gold Intercepts from diamond drill holes 11-HU-15 to 11-HU-20

HOLE
INTERVAL (m)
INTERVAL
LENGTH (m)
Au g/t
From
to
11-HU-15
22.0
27.0
5.0
0.30
11-HU-15
70.0
108.0
38.0
0.30
  including
84.0
92.0
8.0
0.88
11-HU-15
342.0
347.0
5.0
0.61
11-HU-15
363.0
366.0
3.0
0.62
11-HU-16
24.0
43.0
19.0
0.34
  including
28.0
38.0
10.0
0.54
11-HU-16
184.0
204.0
20.0
0.66
  including
189.0
198.0
9.0
1.41
  also including
191.0
195.0
4.0
2.87
11-HU-16
451.0
463.0
12.0
1.06
  including
454.0
458.0
4.0
2.74
11-HU-16
481.0
493.0
12.0
0.38
  including
485.0
493.0
8.0
0.50
11-HU-16
527.0
541.0
14.0
0.39
11-HU-17
63.0
73.0
10.0
0.35
  including
63.0
68.0
5.0
0.54
11-HU-17
211.0
218.0
7.0
0.33
11-HU-18
11.0
81.0
70.0
0.80
  including
19.0
61.0
42.0
1.27
  also including
54.0
57.0
3.0
10.58
11-HU-18
196.0
207.0
11.0
0.31
11-HU-18
222.0
241.0
19.0
0.35
  including
237.0
241.0
4.0
0.61
11-HU-18
248.0
259.0
11.0
0.61
  including
250.0
254.0
4.0
1.16
11-HU-18
271.0
273.0
2.0
0.52
11-HU-19
31.0
36.0
5.0
0.46
11-HU-19
68.0
74.0
6.0
0.60
11-HU-19
554.0
564.0
10.0
0.47
  including
559.0
563.0
4.0
0.78
11-HU-20
0
8.0
8.0
0.43
11-HU-20
13.0
19.0
6.0
0.34
11-HU-20
307.0
554.0
247.0
0.28
  including
381.0
531.0
150.0
0.40
  also including
384.0
479.0
95.0
0.51
  which also includes
391.0
427.0
36.0
1.02
  which in turn includes
400.0
408.0
8.0
2.66


About Kestrel Gold Inc.

Kestrel is a gold exploration company headquartered in Canada. Its two principal projects are the King Solomon Dome property in Canada's Yukon Territory and the Huachi property in Argentina. Kestrel (KGC) is listed on the TSX Venture Exchange.

Technical aspects of this news release have been reviewed and approved by W.A. Taylor, P.Geo., hereby designated as a qualified person under National Instrument 43-101.

Cautionary Statements

This news release contains "forward-looking information" within the meaning of applicable securities laws, including but not limited to, statements with respect to future exploration plans and possible future exploration of the Huachi property and the upcoming reporting of additional drilling results. Readers are cautioned to not place undue reliance on forward-looking statements. Forward-looking statements are based on certain key assumptions made by the Corporation, including assumptions based on the Corporation's current exploration results, assumptions related to obtaining sufficient financing and other resources to carry out any future exploration and the timing of completion of QA/QC procedures. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the inherent risks involved in the exploration and development of mineral properties, the uncertainties involved in interpreting exploration results and other geological data and the ability of the Corporation to obtain the funds and resources required to carry out further exploration. The forward-looking statements in this press release are made as of the date of this release and the Corporation undertakes no obligation to update publicly or revise any forward looking statements whether as a result of new information or otherwise, except as required by applicable securities laws. The Corporation undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of the Corporation or its financial or operating results or (as applicable) its securities

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

Contact Information

Kestrel Gold Inc.
Kevin Nephin
604-824-6056 or 604-799-2456
kvnephin@telus.net
www.kestrelgold.com