Kimberly Gold Mines Signs Letter of Intent to Lease ''Lady of the Lake'' Property in Montana.

COEUR D'ALENE, Idaho -- Kimberly Gold Mines (OTC:KMGM) announced today the signing of a letter of intent with Childs and Associates for lease of the Lady of the Lake property centered on Mount Bradley, in the Tobacco Root Mountains of southwestern Montana.

Property Description

The property is underlain by a layered mafic-ultramafic complex (MUM), Archean gneisses and schists, and phases of the Tobacco Root batholith of Cretaceous age. The area has seen limited past production from narrow, high-grade gold veins. Mine dump sampling conducted by Childs returned assays of greater than 10 parts per million (ppm) gold and silver. Similar gold veins have been identified on the property, and select samples taken by Childs returned assays up to 1.3 ounces per ton (oz/t) gold. Geological mapping indicated that these veins are hosted in broad (up to 200 meters) shear zones that appear to control gold mineralization.

Platinum Group Element (PGE) mineralization is associated with a glomeroporphyritic phase of the MUM, cut by hydrothermal veins. Select samples of the vein mineralization in the MUM have yielded up to 0.55 ppm platinum, 0.41ppm palladium.

An additional target area is the Central Workings Zone, which consists of a series of prospects that explore a vein within a 150-ft-wide shear zone near the contact between the MUM and the adjacent amphibolites and schists. In 2003, grab sampling conducted by Childs included returns of 0.147 oz/t, 0.243 oz/t, 1.318 oz/t, and 0.027 oz/t gold.

Kevin Shiell, President of Kimberly stated, "The presence of high-grade gold mineralization hosted within wide shear zones indicates the potential for the shears to host bulk-tonnage gold deposits. Additional targets are provided by the presence of PGEs within these veins, and may indicate a PGE-bearing zone that is awaiting discovery. We hope to expand on the surface work conducted by Childs and Associates to identify a number of exploration targets."

Terms of the Agreement

This Letter of Intent provides a three-phase property option arrangement:

Phase-One

Kimberly may earn-in up to a 51% interest in the Lady of the Lake property in exchange for $80,000 cash and expending $921,800 in exploration over a five-year earn-in period.

Phase-Two

Kimberly may earn an additional 35% interest by paying $60,000 cash and completing a bankable feasibility and/or expending an additional $640,000 in exploration.

Phase-Three

Childs and Associates may elect to maintain their 14% interest by participating and covering their share of costs or to forego participation and be diluted down to a 2% NSR. In the event C & A chooses the latter, Kimberly would be required to expend a further $300,000 to dilute them.

This agreement is subject to approval of board of directors of both companies and to become binding must be contained in a complete and definitive agreement.

Mr. Shiell noted that Kimberly recently entered into a joint venture agreement on three of its properties with International Arimex Resources of Canada for the purpose of propelling these projects forward more rapidly.

"Our plan to enter into this new agreement on the Lady of the Lake is for the express purpose of growing the base of Kimberly Gold Mines and increasing our resource potential," Mr. Shiell said. "We believe the addition of the "Lady of the Lake" property to the Kimberly portfolio greatly enhances the Company's potential for considerable growth."

Kimberly Gold Mines is an aggressive gold exploration company focused on the historic mining districts of the Pacific Northwest. Active Kimberly projects include the Kimberly and Rescue Gold Mines in central Idaho, the Matthews property in the Wenatchee Gold Belt of central Washington, and the Empire Creek Project in the Republic Graben of northeastern Washington. Kimberly stock trades on the OTC Market under the symbol "KMGM".

Certain statements contained in this press release are "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based on beliefs of management, as well as assumptions made by and information currently available to management. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from expected results.

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