Robert A. Kadane, President of KFG Resources Ltd., reported today that KFG Resources Ltd. has exercised its option to convert the Company's 8% convertible notes issued on October 29, 1999, having an aggregate value of $375,000, into common shares of the Company at a conversion rate of $0.25 per share, for a total of 1,500,000 common shares, to 28 individuals and entities. Following this conversion, the Company has issued and outstanding 10,264,168 common shares.

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."