"Tuesday, June 17, 2003

Mr. Robert A. Kadane, President of KFG Resources Ltd. announced today that the Company's subsidiary , KFG Petroleum Corporation, Natchez, Mississippi, has set production casing in its Board of Education #3 well located in Section 30, T6N, R2S, Franklin County, Mississippi. As previously reported, the #3 well was drilled as an offset to the Company's Board of Education 30-14 well. The #3 well was perforated in the McShane Sand of the Wilcox formation for 6,371 ½ feet to 6,376 feet. On a 24 hour test, the #3 well made 128 barrels of oil and no water through a 12/64^th choke, flowing tubing pressure 80 psi. It is anticipated that the well will flow for a few months before being put on pump. The Company has an 18.43% working interest (13.826% net revenue interest) in the well and surrounding 120 acres. After extensive production testing of the #3 well, the Company will decide whether to drill additional offset wells on this acreage.

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

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