KFG Resources Ltd. was founded in 1994 and is headquartered in Natchez, Mississippi USA. The Company trades on the Canadian Venture Exchange under the symbol KFG. The Company is an independent company engaged in the exploration, developrnent and production of onshore oil and gas reserves in the United States. The Company's business operations are carried out by its wholly owned subsidiary KFG Petroleum Corp, which was founded in 1987. Drilling is centered in Kansas, Concordia and Catahoula Parishes, Louisiana and Adams and Wilkinson Counties, Mississippi. Shamrock Drilling, a wholly owned subsidiayY, was acquired in 1997 and through it, the Company engages in contract oil and gas well drilling for third parties in Louisiana and Mississippi.

The Company currently owns and operates wells in the proximity of its Natchez headquarters. Its Kansas gas exploration operations are handled by two partner companies. A total of eleven wells have been drilled in Kansas; seven are now producing and four are awaiting pipeline connection. Further projects include property in Louisiana. Completed agreements will allow the Company to explore and develop 31,000 acres in Catahoula Parish, Louisiana. An additional agreement has recently been signed allowing the Company to purchase a 75% interest in land located in East Feliciana Parish, Louisiana. Both of these properties have much potential but were prematurely abandoned due to the poor inftastructure and improper completion techniques at that time. An excellent production inftastructure in now in place and the Company has the proper technology to attempt to successfully complete these wells. Success in Louisiana will transform the Company into a mid sized oil and gas exploration and development company.

The Company was founded by Robert Kadane, a veteran in the oil and gas exploration business with nearly thirty five years of experience. Mr. Kadane now heads the Company's management team and serves as President. In 1972 he founded a firm, Prime Energy Corp., which now trades on NASDAQ. The shares of this firm, which originally began trading at US$I , rose to a high of US$17 .KFG's initial success in Kansas was largely due to Mr. Kadane and his extensive geological knowledge of oil and gas wells. The Kansas gas drilling has proven very productive to the Company. The Company will continue its successful Kansas strategy while exploring the exciting possibilities present in Louisiana.

Selected Financial Data

Conversion rate US$O.677S as per June 9, 2000 .

The Company has a history of successful operations. The Company has enjoyed great success with its Kansas gas operations as well as its present oil drillings. The Company's has several new drilling projects which should prove to be highly profitable. For the first 9 month of fiscal year 2000, the Company reported a profit of C$0.058 per share.

The potential of the East Feliciana Parish tract is quite significant. If successful, the Company expects to have at least 21 productive wells by the year 2002 and additional revenues of approximately US$3.5 million. This project could transform the Company into a mid sized oil company with a significant market presence.

The Company is largely undiscovered by investors. The Company has a NAV of C$0.50 which is only 0.8 times the current share price. KFG is undervalued by approximately 80% compared to its peer group in NAV comparisons. In our view, the appropriate valuation should be a NAV multiple of 3. Therefore, the fair market value for the stock is $0.81 or C$1.20. For FY 2001, ended April 2001, we estimate a profit per share of C$0.22 and C$0.487 in 2002. Using an 18 times multiple, this gives us a price target ofC$3.95 based the 2001 EPS and a price target of C$8.87 based on the 2002 EPS. In order to keep in mind future uncertainty we have taken a conservative approach and have discounted 50% of our expected share price for 2001 and 2002 and arrived at an intermediate-term (6-9 months) price target of C$1 15/16 and a long-term (9-18 months) price target of C$4 7/16.

Telephone: ++41 (1) 881 2020 Facsimile: ++41 (1) 881 2024
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