Kalimantan Acquires 100% Ownership of KSK Contract of Work

Kalimantan Gold Corporation Limited has completed the acquisition of the remaining 25% interest in its KSK Contract of Work that it did not already hold. This follows the recent receipt of approvals from the Indonesian regulatory authorities for the transaction that was initially announced on October 16, 2007.

Rahman Connelly, Deputy Chairman and CEO of Kalimantan Gold, commented, “Owning 100% of the KSK COW greatly simplifies what was a complex corporate structure of this valuable mineral asset. The structure acted as a barrier in attracting a major mining company to assist in moving this project forward. In anticipation of the PCK acquisition completing, a confidentiality agreement has been executed with a major mining company and a detailed data review is currently underway as the first step towards a possible joint venture agreement.”

The holder of the KSK COW is PT Kalimantan Surya Kencana (“KSK”) that is 75% owned by Indokal Limited, a wholly owned subsidiary of Kalimantan Gold. The remaining 25% is owned by PT Pancaran Cahaya Kahaya (“PCK”) which was a wholly owned subsidiary of Kalimantan Investment Corporation (“KIC”). The acquisition of PCK was approved by the regulatory authorities and the shareholders of Kalimantan Gold and KIC in December 2007. The transfer of the shares of PCK to Indokal was approved by the Indonesian regulatory authorities and completed on October 6, 2008. As consideration for the acquisition Kalimantan Gold issued 20 million of its common shares to KIC so that KIC now holds a total of 31,802,329 common shares representing 33.4% of Kalimantan Gold’s issued and outstanding shares. KIC is a private British Virgin Islands company with about 400 shareholders many of whom hold shares of both Kalimantan Gold and KIC. It is the understanding of Kalimantan Gold that KIC will dissolve itself and distribute its only asset, being the shares it owns of KLG to its shareholders.

KSK COW is a 941 sq km 6th generation Contract of Work comprising a total of 38 mineral prospects located in Central Kalimantan, Indonesia. Of the 38, Kalimantan Gold has identified several of which it considers to have the potential to host world class copper-gold porphyry deposits.

Dr. Peter Pollard was asked to produce an independent report on the KSK COW following the completion of a drill programme by previous joint venture partner Oxiana Ltd in December 2007. Dr Pollard’s report highlighted the “untested potential” in several areas which is currently attracting interest from a number of potential joint venture partners. Dr Pollard’s report states that there are a number of untested targets at the Beruang prospect where previous drilling results include 167 meters @ 0.59% copper and at Baroi where previous results include 83 meters @ 2.64% copper. As a result Kalimantan Gold believes that promising targets remain to be tested within the KSK COW prospect area and is seeking a partner that will commit to a work program that will enable this potential to be thoroughly tested.

Kalimantan Gold Corporation Limited is a junior exploration company listed on both the TSX Venture Exchange in Canada and on AIM in London. The Company is focused on gold, coal and copper prospects in Indonesia and has exploration rights in three areas: the Jelai epithermal gold prospect in East Kalimantan, nine coal prospects, also in East Kalimantan, and porphyry copper and gold prospects located on the KSK COW in Central Kalimantan.

RFC Corporate Finance Ltd acts as KLG’s Nominated Adviser for the purposes of its AIM listing, contact Stuart Laing, ph: +618 9480 2506 or email: stuartl@rfc.com.au.