Mr. Graeme O'Neill reports

BAYHORSE SILVER ENTERS OPTION AGREEMENT FOR 75% INTEREST IN THE GOVERNMENT GULCH SILVER/LEAD/ZINC PATENTED CLAIM GROUPS, COEUR D'ALENE MINING DISTRICT, IDAHO, USA

Bayhorse Silver Inc. has entered into an option agreement with Blackhawk Exploration LLC to acquire a 75-per-cent interest in the past-producing Government Gulch patented mining claims in the Coeur d'Alene mining district, Idaho, United States.

Highlights:

• Claim groups include six past-producing mines;
• Situated between Bunker Hill and Page Mines in Idaho's prolific Silver Valley;
• Bunker Hill and Page mined up to Government Gulch claim boundaries;
• Patented (private) ground. No permitting required in state of Idaho;
• Minimizes costly and time-consuming permitting for exploration/mining site operations;
• Free from environmental liabilities from prior production;
• Complete package of digitized underground mine plans/workings of all the mines.

Located in Idaho's highly prolific Silver Valley, the properties lie approximately one mile south of the towns of Kellogg and Smelterville off U.S. Interstate I-90. The Government Gulch property consists of approximately 500 acres of patented claims and mineral rights that abut the Bunker Hill mine to the east and the Page mine to the west. Mining operations were conducted by both the Bunker Hill mine and the Page mine right up to the east and west boundaries respectively of the Government Gulch group of claims.

The Government Gulch property includes Asarco's prior producing Blackhawk, Crown Point, Curlew, Ranger and Wyoming mines. In the state of Idaho, no costly and time-consuming permitting is required to conduct exploration or mining operations on existing private (patented) mining claims, realizing substantial cost savings in getting on-site operations under way.

Graeme O'Neill, president and chief executive officer of Bayhorse Silver, comments: "The acquisition of these world-class silver/lead/zinc properties on patented mining claims, strategically located in Idaho's Silver Valley, are a major addition to the company's prospects. The Government Gulch property is complementary to our near-to-test-production Bayhorse Silver mine, also on patented mining claims, off Interstate I-84 in Oregon."

Asarco's main production was from the Page mine with limited production from the Government Gulch mines. According to the U.S. Bureau of Mines production from the Government Gulch group of mines was over two million ounces of silver, 9.4 million pounds of zinc and six million pounds of lead while the Page mine produced 14.6 million ounces of silver, 541.5 million pounds of lead, 543.3 million pounds of zinc and 19 million pounds of copper. To the east, the Bunker Hill mine produced 156.5 million ounces of silver, five billion pounds of lead, 2.4 billion pounds of zinc, 23.6 million pounds of copper and 36,594 ounces of gold.

The Silver Valley silver/lead/zinc deposits are known to extend to over 10,000 feet in depth. Hecla's Lucky Friday mine is currently extending operations to that depth.

Blackhawk has digitized all the Government Gulch underground workings as well as the Page, Bunker Hill and Caledonia mines from the extensive data and records on file and has identified significant unmined mineralized zones within the Government Gulch mines.

Asarco deeded the Government Gulch claims to the U.S. Environmental Protection Agency (EPA) as part of its settlement with the EPA for the Silver Valley Superfund Cleanup. Blackhawk recently purchased the Government Gulch property from the EPA-established trust, free and clear of any and all environmental liabilities from the EPA, pursuant to the completion of the Super Fund Cleanup executed by the EPA in the Silver Valley.

Ron Kruzemark, PEng, a mining engineer with substantial underground experience from working in many of the Silver Valley's mines, including Hecla's Lucky Friday mine, and who digitized the entire package of Government Gulch underground workings, will join Dr. Clay Conway, PGeol, Dr. Stewart Jackson, PGeol, and Dr. Richard Jolk, PEng, all qualified persons as defined by NI-43-101, as a consultant to the company. Dr. G.E. Ray, PGeol, prepares NI 43-101 technical reports for the company.

To earn its 75-per-cent interest in and to the properties, Bayhorse is required to spend $600,000 (U.S.) per year over five years (inclusive of reimbursing Blackhawk for the $500,000 (U.S.) acquisition cost of the property), of which $1.2-million (U.S.) is a firm commitment.

The technical content of this press release has been reviewed by Dr. S.A. Jackson, PGeo, a qualified person and technical adviser to the company.