KFG Resources Ltd. - News Release

    Trading Symbol: KFG
    TSX Venture Exchange

    NATCHEZ, MS, Sept. 7 /CNW/ - KFG Resources Ltd. (the "Company") is
pleased to announce that it has entered into an agreement with Union
Securities Ltd. of Toronto, Ontario ("Union"), whereby Union will act as its
agent to sell through a private placement, on a best efforts basis, up to
20 million units (the "Units") at a price of Cdn.$0.10 per Unit (the
"Offering"). Each Unit will consist of one common share in the capital of the
Company and one common share purchase warrant (each whole warrant, a
"Warrant"). Each Warrant will entitle the holder to subscribe for one
additional common share of the Company at a price of Cdn.$0.20 per share for a
period of two years from the date of issue. The Company has granted Union an
over-allotment option to increase the size of the Offering by five million
Units, which must be exercised within five business days after the closing of
the Offering and closed within ten business days after the closing of the
    Total gross proceeds of the Offering, including the over-allotment
option, will be up to Cdn.$2,500,000. The proceeds of the Offering will be
used for exploration and development of the Company's property in Mississippi
and for general working capital purposes.
    As consideration for acting as agent, Union will receive a cash
commission equal to 8% of the aggregate gross proceeds of the Offering, a work
fee of Cdn.$10,000 and options entitling Union to purchase that number of
units (the "Agent's Units") equal to 10% of the aggregate number of Units sold
pursuant to the Offering, including the over-allotment option. The Agent's
Units will have the same terms as the Units. The Offering is subject to
certain conditions, including the approval of the TSX Venture Exchange.

                                                      "James F. Gilbert"
                                                 James F. Gilbert, Secretary

    This news release does not constitute an offer to sell or a solicitation
of an offer to buy any of the securities in the United States. The securities
have not been and will not be registered under the United States Securities
Act of 1933, as amended (the "U.S. Securities Act") or any state securities
laws and may not be offered or sold within the United States or to U.S.
Persons unless registered under the U.S. Securities Act and applicable state
securities laws or an exemption from such registration is available.

    This press release contains "forward-looking information" that is based
on the Company's current expectations, estimates, forecasts and projections.
This forward-looking information includes, among other things, statements with
respect to the Company's plans, outlook, business strategy and exploration and
development of the Company's properties. The words "may", "would", "could",
"should", "will", "likely", "expect," "anticipate," "intend", "estimate",
"plan", "forecast", "project" and "believe" or other similar words and phrases
are intended to identify forward-looking information.
    Forward-looking information is subject to known and unknown risks,
uncertainties and other factors that may cause the Company's actual results,
level of activity, performance or achievements to be materially different from
those expressed or implied by such forward-looking information. Such factors
include, but are not limited to: the ability to raise sufficient capital to
fund exploration and development; the quantity of and future net revenues from
the Company's reserves; oil and natural gas production levels; commodity
prices, foreign currency exchange rates and interest rates; capital
expenditure programs and other expenditures; supply and demand for oil and
natural gas; schedules and timing of certain projects and the Company's
strategy for growth; competitive conditions; the Company's future operating
and financial results; and treatment under governmental and other regulatory
regimes and tax, environmental and other laws.
    This list is not exhaustive of the factors that may affect our
forward-looking information. These and other factors should be considered
carefully and readers should not place undue reliance on such forward-looking
information. The Company disclaims any intention or obligation to update or
revise forward-looking information, whether as a result of new information,
future events or otherwise.


For further information:

For further information: Robert A. Kadane, President, (303) 825-7080

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