KGL RESOURCES LIMITED — Capital/Financing Update 2012

Sep 23, 2012

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Kentor Gold Ltd

ACN 082 658 080

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24 September 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 high grade gold mining at the Burnakura plant 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 2013 to commence 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:

140.4 million ordinary shares

5.8 million unlisted options

Market Capitalisation:

$80 million (21 Sept 2012)

Update on the Andash Gold Copper Project

New laws to improve mining industry development

Kentor Gold Limited (“Kentor Gold” or “the Company”) is pleased to provide an update on recent activity towards finalising local approval for the development of the Andash Gold-Copper Project in the Kyrgyz Republic.

The international environmental audit has concluded that the Andash Project as designed is environmentally sound.

The Russian environmental auditing organisation EMAS was commissioned in mid-July to review the Andash project. Kyrgyz Government authorities will now coordinate public presentations of the EMAS findings.

The report has been provided to the Interdepartmental Commission on Andash.

As Kentor Gold advised last month, the Kyrgyz Government established a Commission to resolve the issue of expediency of development of Andash.

The seven member Commission comprises one representative from each of the Ministry of Economic and Antimonopoly Policy, the State Agency for Environmental Protection, the State Environmental Inspectorate, the State Agency for Geology and Mineral Resources and the three levels of local government.

Kentor Gold has provided the Commission with information about the technical, environmental, and economic aspects of the project, as well as a detailed rebuttal of criticisms of the project from the small number of opponents of the development.

The new Prime Minister will personally participate in a widely representative meeting that has been called to consider issues adversely affecting the development of the mining industry.

Following the re-alignment of parties in coalition in Parliament earlier this month and the formation of a new Government on 12 September, the new Prime Minister, Jantoro Satybaldiev, undertook to strengthen central power in the Kyrgyz Republic and to address the problems of the mining sector.

It was subsequently announced that the Prime Minister will participate in an expanded meeting specifically to address mining problems on 25 September.

Kentor Gold Limited

www.kentorgold.com.au

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The meeting will be attended by:

• oblast (regional) governors,

• akims (heads) of problem districts and districts of specific interest to the mining sector,

• the Prosecutor General

• the Minister of Internal Affairs

• chiefs of police of all oblasts

• major mining companies (including Kentor Gold)

• heads of village administration of problem districts

• representatives of interested international organisations, donor agencies and non-government organisations

New laws that will have a positive impact on the Andash Project and the mining industry generally came into force on 17 September.

The new legislation comprised a new Law on Subsoil, and amendment to the Land Code, the Tax Code and the Law on Non-Tax Payment. The Minister of Economy and Antitrust Policy Temir Sariyev said that the new legislation had been designed expressly to improve the investment climate in the Kyrgyz Republic. The legislation’s general thrust is that it reduces administrative regulation and introduces economic methods of regulation.

The pertinent aspects of the legislation are:

Security of Tenure

• A licence may be terminated by the state only in the event of:

  • unauthorised pledging or transfer of the licence,

  • the late payment of taxes and charges,

  • undertaking of unauthorised work.

  • prolonged failure to rectify breaches of laws and regulation, after due notice and suspension

• A discoverer of a deposit has the exclusive right to apply for a mining licence.

Access to Land

• A new classification of land has been created for areas deemed to be of mineral interest. This classification overrides all other uses.

• Applications for land use permits must be processed by local government within 30 days

• Local government is responsible for providing unhindered access to licence areas

• Local government is charged with working with local communities to prevent arbitrary interference in the activities of licensees.

Taxation

• Gold production is now exempt from income tax. Instead, gold production will be subject to a sliding scale of revenue tax ranging from zero at gold prices below US$1,200 per ounce to 20% at gold prices above US$2,500.

• A contribution to local government budgets of 2% of gross revenue is now mandatory. Kentor had already volunteered 1%.

• Royalty of 5% on gold production and 3% on copper production remains unchanged.

For Kentor Gold’s Andash project, the overall impact of the new legislation should be positive, balancing the increased tax burden at higher gold prices. The increased security of tenure and guarantees of access to land give significant comfort.

Kentor Gold Managing Director Simon Milroy said: “We look forward to such a demonstration of resolve from the new Prime Minister immediately on taking office resulting in the effective application and enforcement of the laws throughout the Kyrgyz Republic, and a new era in cooperation between mining companies and local communities.”

24 September 2012

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Kentor Gold Limited

www.kentorgold.com.au

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Mr Simon Milroy Managing Director Phone: (07) 3071 9003 info@kentorgold.com.au

Mr David Waterhouse Investor Relations Ph (03) 9670 5008 dwaterhouse@waterhouseir.com.au

24 September 2012

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