KGL RESOURCES LIMITED — Capital/Financing Update 2008

Jul 30, 2008

ASX / MEDIA RELEASE

31st July 2008

==> picture [89 x 82] intentionally omitted <==

KENTOR GOLD LTD

ACN 082 658 080

Kentor Gold MOU secures significant Iron Oxide Copper Gold project in Kazakhstan

Key Points

• MOU executed for Khantau magnetite/copper/gold project (“Project”) in Southern Kazakhstan

• Project has a 40km strike length and the Exploration Area covers 276km[2] in the Khantau area of the Zhambyl Oblast

• Six month exclusivity period for due diligence, appraisal work and execution of JV agreement

• Consideration for the right to earn a controlling interest in the Project is $US30m

• Kentor Gold will earn up to a 51% equity interest in the Project by funding an agreed exploration program and arranging finance for the Project

• Project is close to key infrastructure including rail, power, roads and water

Kentor Gold Limited (“Kentor”) is pleased to announce the proposed Joint Venture of an advanced Iron Oxide Copper Gold (IOCG) project in the Khantau area of the Zhambyl Oblast of Southern Kazakhstan.

Managing Director Mr Simon Milroy said the Company had entered into a Memorandum of Understanding with Arya Overseas Ltd (having 100% interest in the Exploration Area and the Project) enabling Kentor to earn up to 51% equity by undertaking an agreed exploration program and arranging finance for the project.

Kentor will pay US $30 million in exchange for the right to earn up to a controlling interest in to the Project.

“The Khantau Project represents a significant near-term opportunity for the Company to build a substantial minerals business within Central Asia,” Mr Milroy said.

“We believe that our joint venture partner has discovered a significant new mineral province. The Exploration Area covers a 40 km strike length of high intensity magnetic anomalies which are correlating well with magnetite, copper and gold mineralisation.”

Under the Memorandum of Understanding, Arya Overseas Ltd and Kentor have a six-month exclusivity period to execute a Joint Venture agreement.

Kazakh law prevents the release of geological data relating to resource projects until a waiver has been obtained from the Kazakh government. Kentor currently expects this waiver to be obtained within the next two weeks.

The Khantau Project

The Khantau Project is located in Southern Kazakhstan and is positioned three hours by sealed road from the Kyrgyz Republic capital of Bishkek where Kentor’s Central Asian headquarters are located.

Registered Office Level 36 Riparian Plaza, 71 Eagle St Brisbane 4000 Phone: 61 (0) 7 3121 3206

Kyrgyz Republic Office 235/2 Erkindik Prospect, Bishkek Kyrgyz Republic 720739 Phone: +996 312 621 389

1

www.kentorgold.com.au

The Khantau area is well serviced by infrastructure. The regional administrative centre of Moinkum which has a population of about 5,000 is 20km from the main camp. A sealed highway connects Moinkum with the town of Chu, a major rail junction 110km from Khantau. An electrified railway runs north from Chu to the Mittal steelworks at Karaganda and east from Chu to the border crossing with China. The Khantau exploration camp is on mains electricity and there is a plentiful supply of water available on the contract area.

The licence for this area, covering 276 square kilometres, was originally acquired in January 2008 and since that time the current owner has recruited a team of highly experienced engineers and geologists and commenced drilling. Six diamond drill rigs are currently working at the Project site, completing around 3,000m per month. Two large reverse circulation drill rigs have recently been purchased to increase the rate of drilling and to lower the cost per metre.

Kentor plans to undertake a scoping study within the first six months and this will be followed by a feasibility study to a standard required to attract project finance. It is currently envisaged that the Project will include a large tonnage underground mine feeding a processing plant consisting of crushing, milling, flotation and magnetic separation to produce a magnetite concentrate and a separate copper-gold concentrate for sale to third party smelters.

Khantau Project

Summary of the Transaction

• The MOU is exclusive for a period of six months and allows Kentor one month to conduct its due diligence;

• Upon completion of due diligence, and subject to satisfactory findings, Kentor will commence funding of all exploration activities for the following 6 months (expected to total US$4-5million);

• The vendor will be providing a bank guarantee to Kentor to ensure the return of invested funds to Kentor in the event of the joint venture does not proceed;

• A shareholders agreement must be entered into within 6 months of the signing of the MOU. Within this time Kentor will procure any approvals necessary from the Kentor shareholders;

• The consideration for the right to earn up to a controlling interest in the Project is US$30million payable as follows:

• US$15million payable within 3 months following the execution of the shareholders agreement and granting of any Kazak Government approvals; and

• US$15million payable in 12 equal monthly instalments of US$1.25M following the first payment.

• Kentor will earn 51% of the equity as follows:-

• First Stage: 26% upon completion of 130,000 meters of drilling (of any type) in the Exploration Area, to be transferred as follows:

  • 5% upon completion of each 26,000 meters of drilling until 104,000 meters; and

  • 6% upon completion of the final 26,000 meters of drilling and agreement on the drilling program for the following 12 months.

• Second Stage: 14% upon completion of a bankable feasibility study acceptable by both parties;

2

• Third Stage: 10% upon committed finance for the Khantau Project being received; and

• Final Stage: 1% upon completion of construction of a mine and processing facility.

• Kentor will fund the exploration and development of the project by way of an interest free loan to the Project, repayable once production of concentrate commences;

• 70% of the project cash flow available after the servicing of third party project finance will be used for the repayment of the loan to Kentor, the other 30% will be distributed as dividends to the shareholders (Kentor 51%);

• Conditions precedent for the Joint venture include, amongst others:

• Statutory approvals required by the laws of the Republic of Kazakhstan;

• Kentor being satisfied with the results of the due diligence;

• Any third party, regulatory or tax consents required by law or contract; and

• Completion of the definitive shareholders agreement.

Kazakhstan

Kazakhstan is situated in Central Asia and is the second largest among the CIS states with a surface area of 2,724,900km[2] . The country borders China, Kyrgyzstan, Turkmenistan, Uzbekistan and the Russian Federation. Average temperature in January varies between - 19°C and -4°C, while average July temperature fluctuates between 19°C and 26°C.

Politically, Kazakhstan is the wealthiest and most stable of the Central Asian countries. President Nazarbaev has been in office since the country became independent in 1991, and appears to have maintained popularity because of the country’s consistent economic growth over the past decade. President Nazarbaev's 2030 Plan to have Kazakhstan recognised as a first-world country by the year 2030 appears to be on track. Kazakhstan is scheduled to take the Chair of the OSCE (Organisation for Security and Cooperation in Europe) in 2010.

Major western companies active in the minerals industry in Kazakhstan include BHP-Billiton, Rio Tinto, and Ivanhoe Mines. Mittal Steel operates a steel mill and some 15 coal and ironore mines throughout the country. Former Kazakh state-owned enterprises Kazakhmys, which produces around 400,000 tonnes of copper per year, and Kazakhgold, which produces around 250,000 ounces of gold per year, are both listed in London.

About Kentor Gold

Kentor Gold Ltd (ASX Code: KGL) is an Australian-based company formed in 1998 as a specialist gold explorer. The Company was listed on the Australian Securities Exchange (ASX) in March 2005 and today is a diversified, international explorer with gold, geothermal and base metals exploration assets in the Kyrgyz Republic in Central Asia.

For further information contact:

Mr Simon Milroy Managing Director Phone: (07) 3121 3206 or 0448 851575 Email: info@kentorgold.com.au

Media:

Anna O’Gorman Principal Consultant – Three Plus Phone: (07) 3503 5700 Email: annao@threeplus.com.au

David Waterhouse Waterhouse IR Level 1, 120 Collins Street, Melbourne 3000 Ph (03) 96399099 dwaterhouse@waterhouseir.com.au

3

Picture 1 – Drill Rigs on site

Khantau Project, Kazakhstan Site Photographs

Picture 2 - Chalcopyrite and Magnetite in core

==> picture [248 x 42] intentionally omitted <==

==> picture [248 x 42] intentionally omitted <==

==> picture [248 x 42] intentionally omitted <==

==> picture [248 x 42] intentionally omitted <==

Picture 4 – Rail Siding at Chu

==> picture [250 x 89] intentionally omitted <==

==> picture [250 x 90] intentionally omitted <==

==> picture [241 x 80] intentionally omitted <==

==> picture [241 x 80] intentionally omitted <==

Picture 3 - Grid power on site

==> picture [241 x 82] intentionally omitted <==

==> picture [241 x 82] intentionally omitted <==

Picture 5 – Site Offices

==> picture [236 x 23] intentionally omitted <==

==> picture [236 x 23] intentionally omitted <==

==> picture [236 x 23] intentionally omitted <==

==> picture [236 x 23] intentionally omitted <==

==> picture [236 x 23] intentionally omitted <==

==> picture [236 x 23] intentionally omitted <==

==> picture [236 x 23] intentionally omitted <==

==> picture [236 x 23] intentionally omitted <==

4