KGL RESOURCES LIMITED — Capital/Financing Update 2008

Mar 11, 2008

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12 March 2008

ASX ANNOUNCEMENT

PANAX GEOTHERMAL ENTERS INTO A JOINT VENTURE WITH KENTOR GOLD IN KYRGRZ REPUBLIC

Panax Geothermal Ltd (Panax) is pleased to announce that it has exercised its option to enter into a geothermal exploration joint venture with Kentor Gold Ltd in the Kyrgyz Republic.

This Central Asian country is endowed with widespread occurrences of thermal springs as well as high heat producing granites. It is a net exporter of hydro electric power to neighbouring countries and has a well developed high voltage transmission grid in close proximity to geothermal areas of interest.

Panax has completed a detailed six month evaluation programme including technical, regulatory and commercial assessments, as well as discussions with the regional head office of the International Finance Corporation in Istanbul, regarding support from the World Bank’s Geofund. The occurrence of extreme geothermal gradients (>100[o] C/km) has been confirmed in the Sary Jaz granite in eastern Kyrgyz Republic.

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Panax Geothermal Ltd ABN 89 122 203 196

Level 5, 11 Finchley Street PO Box 2142 Milton QLD 4064

Ph: 07 3512 7000 Fx: 07 3512 7099 www.panaxgeothermal.com.au

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The distribution of thermal springs in Eastern Kyrgyz Republic. Please note that the large fresh water lake (Issykkul) never freezes in winter despite temperatures reaching minus 40[o] C.

The Kyrgyz Republic has a recognised potential for the occurrence of:

• Hot fractured rock (HFR) geothermal resources;

• Himalayan style geothermal resources (e.g. China – Yangbajing, India – Puga); and

• • Low to medium heat geothermal resources applicable to district heating.

The country has low ambient temperatures and has ample water available for cooling purposes, factors favourable for geothermal power generation. In addition, based on our recent visit to the Kyrgyz Republic, we are encouraged by the very strong Government support for the project.

Panax has the right to earn up to 51% equity in Kentor Gold’s geothermal exploration licences by spending $5m over a four year period and an additional 10% by spending an extra $1m.

Panax will initially commit to a regional exploration programme comprising geological, geophysical and geochemical studies (including temperature logging of existing exploration holes and chemical analyses of hot spring waters), to identify commercially attractive exploration targets.

Panax’s interest in Kyrgyz Republic is based on the expectation that the world’s escalating quest for clean base-load power will be accompanied by increasingly attractive international carbon credit trading schemes.

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Schematic diagram of the haulage adit at Inylchek, elevation ±3,500 (Akshirak PL). Temperature measurements carried out by Panax show that the horizontal temperatures in the adit gradually increase from 0[o] C at the entrance to 78[o] C over a horizontal distance of 1,800m. The adit is ‘bone’ dry, thereby excluding the influence of hot spring waters in the observed gradient. Observations imply a vertical geothermal gradient in excess of 100[o] C/km, which is remarkable giving the absence of an insulating blanket in the form of low thermal conductivity rocks. This site is one of the few locations on Earth (the only?) where high heat producing granites can be directly observed at depth of 700m. The vertical geothermal gradient is extreme, with an implied temperature in excess of 300[o] C at less than 3km depth.

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Bertus de Graaf Managing Director

For further Information:

Dr Bertus de GraafManaging DirectorChief Executive Officerbdegraaf@panaxgeothermal.com.au61 7 3512 7000		Mr Kerry ParkerExecutive DirectorChief Financial Officerkparker@panaxgeothermal.com.au61 7 3512 7000

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ABOUT PANAX GEOTHERMAL LTD

The long term vision of Panax is to become a major participant in the geothermal industry, both nationally and internationally. The scope of our geothermal interests will be broad, including both conventional geothermal resources (volcanic related) as well as enhanced geothermal systems (EGS) such as hot fractured rock (HFR) geothermal systems. Panax’s key asset is the advanced and ready to drill-test Limestone Coast Geothermal Project in South Australia, which has an estimated generating potential of approximately 1,500 MWe, (i.e. the equivalent of two coal fired power stations or enough power for more than one million homes).

The nature of our business is the identification and exploration of prospective geothermal resources and to convert these into geothermal reserves for the production of commercial geothermal energy. Geothermal power generation is not dependent on new technology (i.e. no new technology risk). The risks of our endeavours are directly related to the conversion of geothermal resources to economic geothermal reserves, i.e. the economic extraction and utilisation of geothermal energy. In that sense it is very similar to risks associated with mineral or oil/gas exploration.

The Company will not only focus on clean power generation but will also embrace direct use of geothermal heat for use in e.g. industry, district heating (or cooling), and desalination.

The rationale for focusing on geothermal energy is directly linked to the threat of global warming as caused by CO[2] emissions from the continued use of fossil fuels. National and international momentum is building for a ‘climate change pact’ and this foreshadows that clean energy generation is the key to our future.

Geothermal energy is one of the very few sustainable sources of energy which can replace base load power from fossil fuelled power stations. Compared to other sustainable energy options, geothermal resources are still not valued according to their commercial potential for the long term generation of clean base-load power. This is the opportunity which Panax aims to turn to good account.

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