May 17, 2012 - Rainbow Secures Strategic Position in Slocan Valley Flake Graphite Region

GOLD VIKING DRILLING PREPARATIONS UNDERWAY

TORONTO, ONTARIO, May 17, 2012 -- Rainbow Resources Inc. (TSX VENTURE: RBW) ("Rainbow" or the "Company") is pleased to report that it has acquired, through staking, a strategic land position consisting of two claim blocks covering over 40 square kilometres in the heart of the Valhalla high-grade Metamorphic Complex (see attached map).  This under-explored area in the Slocan Mining Division of southeast British Columbia, west and south of the Company's flagship Big Strike Gold-Silver Project, hosts the only producing natural flake graphite mine in western North America.  The mine is operated by privately-held Eagle Graphite Corporation which has recently added to its large claim holdings in the Valhalla region.

Prospecting has already commenced on Rainbow's graphite claims in conjunction with prospecting on nearby Big Strike areas.  Rainbow is also in possession of historical airborne survey information which will be of immense help in exploration of the graphite claims.

"From Eagle Graphite's potential world-class deposit, 21 km due west of our soon-to-be-drilled Gold Viking Property where we have numerous gold and silver targets, flake graphite occurrences have been reported over a broad area stretching nearly 30 km north-south," stated Rainbow President David W. Johnston.  "It appears that this part of the West Kootenay region has undergone some very unique geological processes that have created extremely favourable conditions for high quality, near-surface flake graphite. The host rocks are ideal.  There is strong potential for additional flake graphite deposits throughout this area, and Eagle Graphite's processing plant is already in place.

"Rainbow has the boots on the ground and the right geological team to take advantage of this graphite opportunity very close to our flagship Big Strike Gold-Silver Project where our near-term focus is on advancing several key holdings - past high-grade producers that have never been previously drilled," continued Johnston. "The strategic steps we've just taken have further solidified our position as an exploration leader in the Slocan Valley-

West Kootenay region with excellent opportunities for significant gold, silver and graphite discoveries."

Rainbow Graphite Claim Block #1

Rainbow holds a strategic 12.5-km-long claim block, totalling 2,100 hectares, beginning 5 km northeast of Eagle Graphite's mill site (14 km southeast of the mine site) and immediately north of Anglo-Swiss Resources' Blu Starr Property.  Anglo-Swiss reported May 9, 2012, that up to 15% graphite has been mapped in outcrop over the northern part of Blu Starr and appears to be associated with a 3-km-long electromagnetic (EM) anomaly identified in an airborne geophysical survey completed in 2010. Less than 25% of the property was covered by the airborne survey.

Rainbow Graphite Claim Block #2

Rainbow holds another strategic claim block, 9-km-wide and also totalling 2,100 hectares, contiguous to the southern boundary of the Blu Starr Property.

Gold Viking and International Property Updates

Ground conditions are now favourable for drilling and initial site preparations are underway for a first-ever drill program at Rainbow's highly prospective Gold Viking Property adjacent to the Village of Slocan.  Gold Viking, one of several Big Strike Project properties that Rainbow will be focusing on over the coming months, is part of the same geological system as the contiguous Ottawa Mines which produced 1.8 million ounces of silver in the 1900's at an average grade of 2,113 g/t or 61.6 ounces per ton.

Rainbow's Gold Viking and Ottawa properties have never been previously drilled despite historical high-grade production from both.  A total of nine drill sites have been proposed for the north side of Springer Creek at Gold Viking to test coincident strong airborne conductors and soil geochemical anomalies across the central portion of the property where a geological contact for silver and gold mineralization trends in a north to northwesterly direction.  Each of the drill sites will allow for multiple holes to be completed.  Drilling will commence immediately upon receipt of permits.

Rainbow has also staked an additional 60 hectares to extend the western boundary of the Gold Viking Property which is situated at the eastern extremity of the Valhalla Metamorphic Complex, 21 km due east of Eagle Graphite's deposit.  Eagle Graphite  holds claims contiguous to the southwest portion of Gold Viking.

Ground conditions are gradually improving at Rainbow's International Silver Property, 70 km north of Gold Viking, where upcoming drilling will explore a potentially rich vein system dominated by quartz with irregular massive sulphide bodies of galena, pyrite and sphalerite that could extend near-surface for several kilometres.

Qualified Person

Rainbow's disclosure of a technical or scientific nature in this news release has been reviewed and approved by Mr. Jim Decker, P.Eng., a Director of Rainbow Resources, who serves as a Qualified Person under the definition of National Instrument 43-101.

Rainbow's shares are listed for trading on the TSX Venture Exchange under the symbol

RBW.V.  Rainbow currently has 33,923,163 common shares issued and outstanding.

For further information:  President David W. Johnston -  (403) 701-2781.

Visit our website at www.RainbowResourcesInc.com.

Caution Regarding Forward-Looking Information

This news release includes certain information that may constitute "forward-looking information" under applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements about strategic plans, future work programs and objectives and expected results from such work programs. Forward-looking information is necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information and the risks identified in the Company's continuous disclosure record. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. All forward-looking information contained in this news release is given as of the date hereof and is based upon the opinions and estimates of management and information available to management as at the date hereof. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy of this news release.

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