Mr. Robert A. Kadane, President of KFG Resources Ltd., announced today that the Company has agreed to purchase a 43.75% working interest (32.81% net revenue interest) in the Fayette Field, Jefferson County, Mississippi, from Anderson Oil Company for a cash consideration of $100,000. At present, the Field is producing 30 barrels of oil per day and consists of three leases held by production covering 4,000 acres. Subject to equipment inventory and title examination, the transaction will be closed January 15,2001. Mr. Kadane noted that this acquisition is being made primarily for the remaining shallow gas potential in the Fayette Field, and following the closing of the transaction, the Company plans to drill three shallow 4,000 foot Wilcox test wells in February, 2001, to begin to develop the shall gas potential of the Field. The Company is acquiring all rights to the base of the Wilcox and 50% of the rights below the Wilcox, to 16,500 feet. The Field lies on top of a deep-seated salt dome and has produced oil and gas since 1951 from the Wilcox and Lower Tuscaloosa formations.

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."