KLG

Kalimantan Gold Corporation (KLG) is pleased to provide an update on the exploration program at the KSK Copper Project in Kalimantan, Indonesia, that is being sole funded by Surya Kencana LLC (SK LLC), a subsidiary of Freeport-McMoRan Exploration Corporation.

Highlights:

• Surya Kencana LLC elects to continue to sole fund exploration and feasibility
• 5,418m of drilling currently completed with an additional 2,373m in progress. Results include:

- BK031-01: 28.9m @ 0.61% Cu, 0.06g/t Au, 1.27 g/t Ag from 16m

- BK032-01: 60.6m @ 0.74% Cu, 0.02g/t Au, 0.67g/t Ag from 14.8m

• 675 Rock Chip and 730 soil samples collected

Sole Funding Election by SK LLC

Having completed sole funding exploration to $7,000,000, SK LLC has notified KLG that SK LLC has elected to continue to sole fund all remaining exploration and feasibility study expenditure under the Earn-In Agreement, subject to SK LLC’s right to withdraw from the Joint Venture in accordance with the terms of the Agreement. “We have reached an historic milestone in the life of this project now that SK LLC has exercised its option to continue sole funding during the Feasibility Study period," said Faldi Ismail, CEO of KLG.

Drilling Program Update

Two Duralite drill rigs have been utilized on the deep porphyry copper program and two smaller Jackro rigs have been assigned to the Beruang Kanan near-surface delineation drilling program. Two deep and six delineation holes have been completed and a further two deep holes (BTD06-01 and BKD02-02) are nearing completion. Drill hole statistics are presented below.

KSK Drilling Statistics:

Hole ID   Incl.   Planned depth (m)   Date started   Date completed   Current depth (m)   Remarks BTD05-01 -70 1200 23 May 2012 28 May 2012 97.30 Completed BTD05-02 -75 1200 6 Jun 2012 13 Aug 2012 1,389.00 Completed BKD01-01 -70 1200 7 Jun 2012 3 Aug 2012 1,169.50 Completed BK030-01 -60 300 3 Jul 2012 29 Jul 2012 301.00 Completed BK029-01 -60 300 6 Jul 2012 1 Aug 2012 300.00 Completed BK032-01 -60 300 3 Aug 2012 23 Aug 2012 300.20 Completed BK031-01 -60 300 5 Aug 2012 23 Aug 2012 300.50 Completed BKD02-01 -70 1000 12 Aug 2012 27 Aug 2012 377.80 Completed BTD06-01 -60 1200 30 Aug 2012 16 Oct 2012 1,200 In Progress BK033-01 -60 300 31 Aug 2012 21 Sep 2012 282.10 Completed/Assays Pending BK034-01 -60 300 31 Aug 2012 17 Sep 2012 300.70 Completed/Assays Pending BKD02-02 -70 1200 5 Sep 2012 16 Oct 2012 1149.20 In Progress BK035-01 -60 300 27 Sep 2012 14 Oct 2012 300 Completed/Assays Pending BK036-01 -60 300 23 Sep 2012 12 Oct 2012 300.20 Completed/Assays Pending BK037-01 -60 300 16 Oct 2012 - 45.15 In Progress BK038-01 -60 300 16 Oct 2012 - 152.80 In Progress TOTAL (m) 8,005  

Beruang Tengah Deep Holes

Assays received from BTD05-02 at the Beruang Tengah Prospect show an even distribution of weak copper-gold mineralization from surface to 986m depth, with an average grade of 739 ppm Cu and 0.09 g/t Au -. The ratio of Au:Cu is also very consistent at around 1:1. This result, while not returning economic grades, does suggest that a porphyry system is present. The second (BKT06 -01) of at least 4 holes planned at the prospect is located 400 meters south of BKT05-02 and currently at a depth of 1200m. The hole comprises variably stockwork veined, medium to fine grained diorite and medium to coarse grained equigranular granodiorite with overprinting phyllic alteration. The veins are comprised of quartz-sericite-pyrite+/- chalcopyrite+/- molybdenite All subsequent drill holes at Beruang Tengah will be directed at locating the potential high grade portions of this porphyry system.

Beruang Kanan Deep Holes

The first drill hole (BKD01-01) within the main zone at Beruang Kanan did not produce any significant intercepts, although several small zones with minor copper mineralization were encountered. A second drill hole, BKD02-02 in the southern part of Beruang Kanan, is currently at 1200m. A third planned deep drill hole at Beruang Kanan (BKD03-01) will test the central zone where the delineation drilling is currently underway.

Drill location of the two Duralite drill rigs at KSK Copper Project:

To view the graphic KLG1, please click on the following link:

http://www.fscwire.com/pr/KLG1.jpg

Beruang Kanan Shallow Delineation Drilling

The operation of the two shallow-level drill rigs continued on the central mineralized zone of Beruang Kanan. Seven holes have been completed and a further two are in progress (BK037 and BK038).

This drilling continues to test the strong silica clay pyrite altered volcanic breccia that contains chalcopyrite and covellite mineralization in strongly sheared and silica flooded zones with irregular white quartz veining. Assays have been returned from holes BK029-01, BK030-01, BK031-01 and BK032-01 and are reported in the table below:

Table of significant intercepts from Beruang Kanan definition drilling*:

HOLE ID   FROM   TO   LENGTH/m   Cu/%   Au/ppm   Ag/ppm BK029-01 11 126.5 115.5 0.42 0.04 0.63 BK030-01 4.5 148.1 143.6 0.17 0.02 0.3 Including 4.5 37.7 33.2 0.23 0.02 0.5 BK031-01 16 110 94 0.31 0.04 1.55 including 16 44.95 28.95 0.61 0.06 1.27 BK032-01 0 220.5 220.5 0.42 0.02 0.69 including 14.8 75.4 60.6 0.74 0.02 0.67

*Low level analysis of gold in rocks and soils by 50 g fire assay fusion, AAS finish. Determination of base metals by Triple Acid digest, ICP-OES finish.

Delineation Drill Hole locations at Beruang Kanan Prospect:

To view the graphic KLG2, please click on the following link:

http://www.fscwire.com/pr/KLG2.jpg

Field Geology Programs

As part of a campaign to investigate all areas of interest in a systematic manner, field geology programs have been initiated at Focus 1 and Rinjen and extended at Beruang Kanan and Beruang Tengah. The programs included follow-up sampling, grid soil sampling, and geological mapping. The fieldwork in southern Beruang Tengah was done to close the mapping of the diorite intrusion to the south and also to extend the soil sampling grid in an effort to close the copper and molybdenum-in-soil anomaly to the SW.

Field geology programs have been completed or are ongoing at Beruang Tengah, Beruang Kanan, Low Zone, Focus 1, Ketambung and Rinjen and include follow-up sampling, grid soil sampling, and geological mapping. This activity is part of a campaign to investigate all areas of interest in a systematic manner to generate data to support defining additional drill holes targeting these prospects.

Map showing current exploration prospects:

To view the graphic KLG3, please click on the following link:

http://www.fscwire.com/pr/KLG3.jpg

These programs have produced a total of 730 soil and 675 rock samples.

Future detailed exploration activities will include geology, structure and alteration mapping, geochemistry and potentially geophysical surveys at these prospects plus the Mamuring, and Volcano prospects.

Additional Forestry Permits

The process of applying for additional ground under the Forestry Borrow to Use system (Pinjam Pakai) has been initiated to allow access to other priority areas within the KSK Contract of Work including Tumbang Huoi, Baroi and Mansur prospects.

Lab Facility for Preparation of Samples

The core sampling facility and sample prep lab commenced operation in early July and has processed around 1257 rock chip and soil samples and 2014 drill core samples to date.

Assays were carried out in Jakarta by PT Intertek (ISO certified) with sample checks by PT Geoassy. Both labs include routine Canadian Certified Reference Materials (CCRM), in-house standards and blank samples are inserted with each sample submission. Low level analysis of gold in rocks and soils was carried out by 50g fire assay fusion with AAS finish, and base metals were determined by triple acid digestion and ICP-OES finish.

Corporate Social Responsibility (CSR) Program

Yayasan Tambuhak Sinta (YTS) is working in 21 Dayak villages, located along the Kahayan River, just outside of the KSK concession area. YTS’s program is focused on strengthening governance in the area, and is helping communities take greater responsibility for their own development agenda through participatory planning, institution strengthening and economic development.

This initiative enables communities to engage more effectively with local government in order to access improved services and programs in education, health, infrastructure and economic livelihoods.

YTS provides training and technical assistance to improve the capabilities of villagers in growing crops, raising animals, and managing local resources. In 2012, this support concentrated on vegetables, fish, pigs and rubber.

In collaboration with the local credit union, YTS provided training on savings, credit, and small business development. By joining the credit union, people establish savings accounts and can access credit for their household or business.

At district level, YTS has a two-year program to improve the capacity of district staff to improve their annual planning and budgeting mechanism. This will result in delivering better support programs and services to communities.

The YTS Community Development Program accounted for 4% of expenditure and includes:

a. Village Development Planning

b. Village Development Fund & Technical Support for Economic Livelihoods

c. Village Institutional Development

d. Kalimantan Kids Club – a scholarship program

e. Information & Communication Media and Events

All data, as disclosed in this press release, has been reviewed and verified by the Company's Qualified Person for the KSK Project, Dr. Peter Pollard, who is a Member of the Australasian Institute of Mining and Metallurgy (Chartered Professional). Dr Pollard acts as a technical consultant to KLG and has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person under the JORC Code.

-Ends-

About Kalimantan Gold

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 has two exploration projects in Kalimantan: the Jelai epithermal gold project in East Kalimantan and the KSK Contract of Work in Central Kalimantan with potential for multiple porphyry copper and gold prospects. For further information please visit www.kalimantan.com

To view the graphic KLG4, please click on the following link:

http://www.fscwire.com/pr/KLG4.jpg

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

This news release contains forward-looking statements that are based on the Company’s current expectations and estimates. Forward-looking statements are frequently characterized by words such as “plan”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “suggest”, “indicate” and other similar words or statements that certain events or conditions “may” or “will” occur. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual events or results to differ materially from estimated or anticipated events or results implied or expressed in such forward-looking statements. Such factors include, among others: the actual results of current exploration activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; possible variations in ore grade or recovery rates; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing; and fluctuations in metal prices. There may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertaint