KGL RESOURCES LIMITED — Capital/Financing Update 2012

Oct 18, 2012

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Kentor Gold Ltd

ACN 082 658 080

19 October 2012

Australian‐based Kentor Gold Limited (ASX: KGL)has entered the ranks of operating gold mining companies in 2012. The Company is progressing a pipeline of advanced projects in Australia and the Kyrgyz Republic. The Murchison Gold Project in Western Australia ‐ commenced production in mid‐2012, with the potential to add gold‐copper production from the neighbouring Gabanintha deposit.

The high grade, very low cost Andash Gold‐Copper Project in the Kyrgyz Republic – development‐ ready, awaiting site access and targeting production at 70,000 oz gold and 7,400 tonnes copper pa for an initial six years, with high potential for expansion.

The Jervois Copper‐Silver‐Gold Project in the Northern Territory – targeting 2014 start‐up following current studies into developing the high grade copper‐silver resource with potential for gold, magnetite and other base metals.

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Issued capital:

140.0 million ordinary shares 5.8 million unlisted options

Kentor Gold to increase production and reduce costs at Murchison Gold Operation

Murchison 5 Year Plan

Kentor Gold Limited (Kentor or the Company) is pleased to announce that production will be increased and costs reduced under a revised five year plan for the Murchison Gold operation in Western Australia.

Resource estimates are expected to be increased shortly as updates for a number of the pits at the Murchison Project are finalised following completion of the 20,000m drilling program.

The new five year plan (summarised in Table 1 below), includes an increase in forecast average annual gold production from 24,000 to 30,700 ounces per year and a reduction in average cash costs of production from $1,223 to $1,075 per ounce of gold and strong cash flow at a range of gold prices.

Announcing the new plan, Kentor Gold Managing Director Simon Milroy said:

“The revised five year plan has considerably strengthened the technical and financial aspects of the Murchison operation. At the same time, cost pressures for equipment, contractors and consultants in mining appear to be starting to reduce. This bodes well for improving performance as the Murchison operation continues to ramp up to full capacity.”

The forecast performance improvements at Murchison follow completion of pit optimisation and design work and the revised mining schedule (see Figure 1 below).

The key change in the schedule is the incorporation of the high grade primary ore identified at NOA7 & 8 which will be sourced from underground and the incorporation of open pit mining at the Alliance pit. The underground mine at NOA7 & 8 will provide a longer term source of high grade ore thereby lowering cash costs.

Further drilling is being planned at Authaal and New Alliance pits to target an increase in the low grade oxide resources that testwork has demonstrated are suitable for heap leaching.

19 October 2012

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Kentor Gold Ltd ACN 082 658 080

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The addition of a heap leaching circuit and an expansion of the CIL circuit remain as expansion options to this five year plan. Drilling to upgrade the resources suitable for heap leaching is expected to be completed in Q1 [CY]2013. Permitting for construction of the heap leach pad has commenced.

Additional drilling is also being planned at NOA2.and NOA7 & 8 targeting additional high grade ore.

Table 1 Five Year Plan

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Figure 1 Pit scheduling in the revised five year plan

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Murchison Start Up

Commissioning of the Murchison processing plant was commenced in late June 2012, milling of ore began during the first week of July and first gold production was achieved in early August. To date approximately 1,350 ounces of gold have been shipped from the Murchison plant and approximately 1,160 ounces of gold added to the gold in circuit.

Whilst lower than forecast grades were achieved from historical ore stockpiles, processing costs and mill availability were on budget during August and September 2012 and performance of the mill confirms that plant throughput rates exceed design parameters.

The grade of the ore feed to the CIL plant will increase as high grade ore from underground is blended with the lower grade ore from the open pits. The quarterly production schedule for the remainder of 2012 and 2013 is shown in Table 2.

Table 2 Quarterly production schedule

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19 October 2012

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Kentor Gold Ltd ACN 082 658 080

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Figure 2 The first gold bar from the Murchison CIL circuit

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Mining costs in the initial phase of the Lewis and Reward pits have been higher than forecast, principally due to the earlier than planned interception of primary rock, resulting in higher drill and blast costs.

Delays in the availability and supply of explosives suitable for wet blasting also led to reduced mining rates and higher fixed costs. An explosives storage facility has now been established on-site and a longer term explosives supply contract is being negotiated. The current mining contractor finishes at site at the end of October and a new mining contractor will commence at site on the 1[st] of November. The new contract is structured with 100% variable rates which will result in a lower cost of mining.

Production and net cash flow from the operation to date has been lower than planned in the initial months as a result of lower grades from historical stockpiles and higher initial mining costs. The open pit mining to date has been slower than planned resulting in the need to feed ore from low grade stockpiles to the plant. This will improve going forward as the majority of the waste from the Lewis pit has been mined and the stripping ratio reduces. As anticipated the grade is improving with depth and mining will be moving into the best grade ore in the next few weeks. Murchison’s working capital requirements have been funded by the recent equity issue and necessary adjustments to expenditure (refer to section 1.3 of the rights offer booklet for further detail). Any further expenditure requirements are currently expected to be met by production cash flow, expenditure adjustments or additional corporate working capital facilities.

Dewatering of the NOA2 underground mine, a significant source of high grade ore planned for 2013 and 2014, is proceeding well with the mine portal now exposed and the water in the underground workings pumped down to approximately fifty metres below the level of the portal. Inspections have confirmed that ground support in the decline is in good condition. Access to the first ore level is anticipated to be in the next two weeks with underground mining planned to commence in November.

19 October 2012

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Kentor Gold Ltd ACN 082 658 080

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Figure 3 Underground mining fleet is being progressively mobilised to site

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Figure 4 Portal of NOA2 underground mine

Mr Simon Milroy Mr David Waterhouse Managing Director Investor Relations Phone: (07) 3071 9003 Phone: (03) 9670 5008 Email: info@kentorgold.com.au Email: dwaterhouse@waterhouseir.com.au

19 October 2012

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Kentor Gold Ltd ACN 082 658 080

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DISCLAIMER

The 5 year plan includes the mining and processing of resources in some areas which are still classified as inferred. Further drilling is planned to upgrade these resources prior to mining.

This Announcement includes certain “Forward-Looking Statements”. All statements, other than statements of historical fact, included herein, including without limitation, statements regarding forecast cash flows and potential mineralisation, resources and reserves, exploration results and future expansion plans and development objectives of Kentor Gold Limited are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.

19 October 2012

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