FAYETTE FIELD UPDATE

Mr. Robert Kadane reports KFG Resources Ltd.'s wholly owned subsidiary, KFG Petroleum Corp., is continuing to produce net to the company, before royalty and severance taxes, 135 barrels of oil per day from the Fayette field, Jefferson county, Mississippi.  December, 2010, was the best month in the company's history, grossing approximately $277,000 (U.S.).  KFG owns a 100-per-cent working interest (79.16 per cent net) in all of the Spring Hill wells and surrounding acreage, reverting to a 74.6-per-cent working interest (59.1 per cent net) after payout of all seismic, drilling, land, exploration, development, taxes and operating costs, currently $1.6-million (U.S.).

The company is currently re-entering the Smith No. 30 well, about 1.5 miles southwest of Spring Hill, in an attempt to put the well on production from the 4,600-foot sand – the zone cored virgin oil sand between shale but was never produced.  Also, the company has staked location and will drill, when weather permits, another shallow Wilcox test at Spring Hill – the Spring Hill No. 7.  At present, a deep test (10,000 feet) is planned to test the lower Tuscalossa formation in the late spring of 2011.

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

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

FOR MORE INFORMATION:
Robert A. Kadane, President of KFG Resources Ltd., +1-303-825-7080