Aug 31, 2012 - Rainbow Closes Financing, Continues Drilling at International Silver Property

TORONTO, ONTARIO, August 31, 2012:  Rainbow Resources Inc. (TSX VENTURE: RBW) "Rainbow" or the "Company") is pleased to report that a series of initial angled and vertical diamond drill holes, completed to depths of as much as 130 metres, have intersected the International vein system at a shallow dip from a prominent roadside showing.  The number of drill site locations is being expanded from three to eight, and two separate shipments of core have already been submitted to the lab for assaying using multi-element analysis.

Rainbow's International Silver Property, part of the Company's 13,000 hectare Big Strike Project in the prolific West Kootenay region of southeast British Columbia, has never been previously drilled despite a significant high-grade silver discovery in the early 1900's.  The property features numerous historical adits, and recent Fugro airborne geophysical data shows the northwest trending structure could extend for as long as 7 kilometres.

Rainbow Closes Financing For $1,079,820

Rainbow has completed a non-brokered private placement financing consisting of 2,754,556 units at $0.18 per unit and an additional 2,920,000 flow-through units at $0.20 per unit for total gross proceeds of $1,079,820.

Each of the units and flow-through units comprise one common share and one-half of a share purchase warrant.  Each full warrant will entitle its holder to acquire one additional common share of Rainbow at a price of $0.25 for 24 months.

Rainbow has the option to accelerate the warrant expiry date in the event that the closing price of the Company's shares on the TSX Venture Exchange is greater than $0.50 for a period of 10 consecutive trading days at any time after December 31, 2012, and in such case the warrants will expire at 5:00 pm (Toronto time) on the date which is the earlier of: (a) the 30th day after the date on which such notice is given by the Company; and (b) 24 months from the closing date.

In connection with the financing, Rainbow paid finders' fees totalling $29,080 and issued 152,800 finders' warrants.  Each finder's warrant is exercisable into a common share of the Company for a period of 24 months at an exercise price of $0.25 per share.

The gross proceeds from the sale of the flow-through units will be used for drilling at the Company's Big Strike Project in the West Kootenays. The proceeds from the units will be used for Rainbow's Jewel Ridge Project in Nevada and for general corporate and administrative purposes.

The financing is subject to the final approval of the TSX Venture Exchange.

All securities issued pursuant to the financing will be subject to a four-month hold period.

Decker Appointed Vice-President, Operations & Technical Services

Rainbow is also pleased to report that Mr. Jim Decker (P.Eng.) has been appointed Vice-President, Operations and Technical Services.  Mr. Decker has 40 years of experience in senior management, consulting, mine operations and engineering.  He was also one of the original founders of Grande Cache Coal.  His company, Jim Decker & Associates Inc., provides operations management input (audits, due diligence for sales and acquisitions, and feasibility study reviews) for operating mines and mining projects with major producers throughout the world.

"We are delighted to have Jim much more involved with Rainbow, beginning immediately, beyond his role as a director," stated Rainbow President David W. Johnston.  "As we continue to grow this company, his hands-on involvement and expertise will be critical.  Together with Moose Mountain Technical Services, our geological consultants, we have the right people on our team to unlock the value of our silver, gold and flake graphite projects in British Columbia, and our gold-silver project along the Battle Mountain Trend in Nevada."

Stock Options Granted

Rainbow has agreed to issue a total of 1,100,000 stock options to officers, directors and consultants of the company with an expiry date of two to five years at a price of $0.25.

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

Visit our website at www.RainbowResourcesInc.com

Qualified Person

Rainbow's disclosure of a technical or scientific nature in this news release has been reviewed and approved by Mr. Robert Morris, P.Geo., of Moose Mountain Technical Services, who serves as a Qualified Person under the definition of National Instrument 43-101.

About Rainbow Resources

Rainbow is a newly-listed Canadian based junior exploration company focused on building shareholder wealth through aggressive exploration in two favorable and proven mining jurisdictions - the West Kootenays in southeast British Columbia (silver, gold and flake graphite), and Nevada where Rainbow's Jewel Ridge Gold-Silver Project is in

the heart of a major producing district. Rainbow's shares are listed for trading on the TSX

Venture Exchange under the symbol RBW.V, and on the OTC Pink Sheets under the symbol RIINF.  Prior to the just-completed financing, Rainbow had 35,553,163 common shares issued and outstanding.

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.