KFG Resources Ltd. wishes to announce that it has closed a brokered private placement of convertible debentures aggregating $1,900,500, in 1,267 units, each consisting of $I,500 principal amount, 8% convertible notes and 5,000 common share purchase warrants. The notes have a three- year term, and the principal amount of the notes may be converted into common shares of the Company at $0.30 per share during the first year, $0.35 per share during the second year, and $0.40 per share during the third year. The warrants have a term of two years and each entitles the holder to purchase one common share at a price of $0.30 in the first year and $0.35 in the second year. The Company will have the right to require conversion of the notes in certain circumstances. Union Securities Ltd. acted as agent for the Company in connection with certain of the placements. In addition, the Company placed $599,500 of the debentures with Mr. Robert A. Kadane, President and CEO of the Company. The issuance of the debentures to Mr. Kadane is subject to shareholder approval and will be presented at the annual general meeting of the Company to be held in September, 2000. Mr. Kadane stated that the Company will use the net proceeds from the placement of the debentures for the development of gas properties and working capital.

Union Securities Ltd. wishes to announce that pursuant to the private placement, it has purchased 319 units comprised of $478,500 principal amount of the convertible notes and warrants to purchase 1,595,000 common shares in the capital of KFG. The notes are convertible into a maximum of 1,595,000 common shares. Union received a commission of $143,000 and agent's warrants to purchase 833,333 common shares of KFG which are exercisable on the same terms and conditions as the private placement warrants, as compensation for its services. As a result of the securities of KFG previously acquired by Union through the market and as agent's compensation pursuant to a previous private placement, Union at present owns 319,500 common shares, warrants to purchase 2,578,333 common shares and promissory notes convertible into 1,595,000 common shares, representing, to the Union's knowledge, if all of the securities were exercised or converted, 36.9% of the then outstanding common shares of KFG. Union has acquired the additional securities of KFG for investment purposes only. Union has no present intention to acquire further securities of KFG, but may acquire additional securities in the market from time to time.

The Company's common shares are listed on the Canadian Venture Exchange, trading symbol "KFG". For additional information, please contact Mr. Robert A. Kadane, President, at (303) 825- 7080.

The Canadian Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release."