KLM Kermode Resources Ltd

Kermode Resources Ltd. (TSX VENTURE:KLM) is pleased to announce that the Company
has entered into an exclusive Mineral Property Option and Joint Venture
Agreement with Blue Ridge Gold LLC, (a private Nevada company). Kermode can
acquire up to a 100% interest in the Eastgate Gold Property, comprised of 31
contiguous mineral claims located approximately 25 miles (40.2 km) northeast of
the Rawhide Mine, 55 miles (88.5 km) east of Fallon in Churchill, County,
Nevada. The property is less than 5 miles (8 km) south of U.S Hwy 50, and is
accessible year round via dirt road. The Agreement is subject to TSX Venture
Exchange approval.


The Eastgate Gold Property features a well-developed hydrothermal system, and
Kermode's target is to define a high-grade, low sulphidation epithermal
gold-silver deposit. There are multiple sub-parallel quartz-adularia veins
throughout the property. Small-scale historic production, as well as work
carried out by various groups over the past 30 years, has established that
significant gold and silver are present in the system. Several historic mines
exist on the property including: Gold Ledge, Double Eagle, Eastgate, Sunny Jim,
and Central. The main Eastgate Vein has been traced for over 2000 feet (610 m)
along strike and 29 selected historic surface grab samples over the southern
1,100 feet (335 metres) of strike range from 0.03 to 3.19 opt (1.0 to 109.0 gpt)
Au and average 0.584 opt (20.02 gpt) Au. A chip sample at shallow depth in the
Gold Ledge Mine is reported to assay 0.876 opt Au over 4.5 feet (29.73 gpt Au
over 1.37 metres). A limited number of RC drill holes resulted in notable,
high-grade intersections. Highlights from historic RC Drilling include: 45 feet
of 0.21 opt (13.72 m of 7.2 g/t) Au, 15 feet of 0.34 opt (4.75 m of 11.66 g/t)
Au, 10 feet of 0.22 opt (3.05 m of 7.54 g/t) Au, 15 feet of 0.30 opt (4.75 m of
10.30 g/t) Au, 10 feet of 0.25 opt (3.05 m of 8.57 g/t) Au. The majority of work
on Eastgate had taken place in times of low gold prices and tough market
conditions. Furthermore, Eastgate has been privately held and has not been
available for option during the recent (last 10 years) buoyant gold markets. As
a result, the target has never been fully and systematically tested at depth,
and core drilling has never been carried out on the project.


Kermode - Blue Ridge Option Details

The option may be exercised in stages as follows; however Kermode has the right
to accelerate exercise of the option in whole or in part at any time.


Kermode may acquire up to 100% interest.

In order to acquire its initial 30% interest, Kermode shall make the following
payments to Blue Ridge:




--  $100,000 cash and 2,000,000 shares of Kermode upon receipt of TSX
    Venture Exchange approval (the "Approval Date") 
--  $200,000 and 500,000 shares of Kermode within 12 months following the
    Approval Date 
--  $200,000 within 24 months following the Approval Date



The following payments are required to earn further 15% incremental interests:



--  $200,000 within 36 months following the Approval Date for an aggregate
    45% interest 
--  $200,000 within 48 months following the Approval Date for an aggregate
    60% interest 
--  $200,000 within 60 months following the Approval Date for an aggregate
    75% interest



Once Kermode has earned a 75% interest, Blue Ridge shall elect to either (a)
enter into a joint venture with Kermode and maintain a 25% interest in the
Property; or (b) grant Kermode the option to acquire the remaining 25% interest
in the Property through the payment of $200,000 or 200,000 shares of Kermode (at
Blue Ridge's election) for each additional 5% interest, exercisable over 5
years.


If Kermode acquires at least a 75% interest and no joint venture is formed,
Kermode will issue an additional 3,000,000 shares to Blue Ridge upon the earlier
of (a) commencing commercial production; or (b) disposing of the majority of its
interest in the Property to a third party purchaser pursuant to an asset sale,
merger, amalgamation, take-over or similar corporate reorganization.


Blue Ridge will retain a 3% NSR royalty, which Kermode can buy down to 2% for
$1,000,000.


Eastgate History

The Eastgate property is situated just a short distance from the Middlegate US
Pony Express Station, along the US Pony Express Line. Prospectors scouring a
west spur of the Desatoya Mountains discovered the Eastgate Vein in the late
1800's and small scale mining at Eastgate began roughly around the turn of the
20th century. Small scale mining at Eastgate resulted in the discovery of a
number of mines including the Gold Ledge, Double Eagle, Eastgate, Sunny Jim, and
Central. The main Eastgate Vein was partially opened up and intermittently mined
at shallow depths for approximately 1500 feet (457 m) along strike and
vertically for 300 feet (91.4 m). By the time production ceased around 1920,
miners had reportedly extracted roughly 20,000 oz of gold from workings on two
main levels. A small amount of production was carried out between 1935 and 1957,
and according to a 1998 report 3,247 oz of gold and 38,152 oz of silver were
produced during that time. The property then lay dormant for many years until
interest in exploring the region increased again in the late 1980's.


In 1987 the property was acquired by Freeport McMoran. Freeport explored the
property with a goal of finding a large "Carlin Style" low grade, bulk tonnage
deposit. Freeport drilled 7 RC Holes with varied results. In 1988 Eastgate was
acquired by US Borax whose exploration was also focused on a low grade, bulk
tonnage model with exploration concentrated near the vein system. US Borax
drilled 10 RC Holes in 1988, and results included EG-4 - a 15 foot intersection
of 0.34 opt (4.75 m of 11.7 g/t) Au, and EG-6 - a 45 foot intersection of 0.21
opt (13.72 m of 7.2 g/t). Around this time US Borax reduced their focus on
exploration projects, and the Eastgate Property was acquired by Cabot Resources.
Cabot Resources was created by an ex-US Borax Geologist in order to continue to
pursue the potential of Eastgate. In 1989-90 Cabot drilled a fan of RC Holes
above and below US Borax's EG-4 - 15 feet of 0.34 opt (4.75 m of 11.7 g/t) Au.
Highlights from Cabot's RC program included CG-5 - 10 feet of 0.25 opt (3.05 m
of 8.6 g/t) Au, CG-3 - 10 feet of 0.11 opt (3.05 m of 3.8 g/t) Au, CG-2 - 15
feet of 0.30 opt (4.75 m of 10.3 g/t) Au and CG-1 - 10 feet of 0.22 opt (3.05 m
of 7.5 g/t) Au (not true thicknesses). Though Cabot was intent on carrying out a
core-drilling campaign to follow up these results, they were unable to secure
the necessary funding to do so. The property was held by Cabot for nearly 10
additional years, however the claims were eventually allowed to lapse near the
bottom of the gold market, without any further drilling being carried out.


After a lengthy period of inactivity, local prospectors staked the Eastgate
ground in 1998. Franco Nevada overstaked the ground at that time, however the
property ended up in the hands of a Vancouver based company called Fairmile
Gold, the eventual result being that Franco Nevada retreated. Fairmile then
joint ventured the project with Echo Bay Mines in 1999. Echo Bay were part
owners of the "Round Mountain" gold deposit; a very large, low grade gold
deposit also located in Nevada, under which very high grade epithermal gold
veins were discovered. Echo Bay applied their low grade, bulk tonnage model to
Eastgate and as a result 4 RC holes were drilled off the vein system. Once
again, the property eventually ended up back in private hands, where it had
stayed until Kermode and Blueridge Gold reached an agreement to option the
property.


Geological

The Eastgate project has high surface gold values with a large area of intense
alteration surrounding multiple veins thought to be of Miocene age. The known
deposits are quartz-adularia-sericite type veins hosted in a Tertiary volcanic
ashflow tuff. This vein system has important geologic similarities to
multi-million ounce, high-grade gold deposits of the northwestern Great Basin
that contain bonanza-grade veins, notably Midas (Ken Snyder mine; approx. 3.7
million mineable oz @ 1.3 ounces per ton (44.57 gpt) Au. There has been no
significant work at Eastgate since 1990, and historic drilling was limited in
scope. Eastgate exposes the upper parts of a volcanic-hosted low sulphidation
epithermal vein system. Eastgate offers the potential for discovery of
high-grade vein mineralization similar to Midas.


Faulting (northeast trending) has resulted in at least 3 subparallel shear zones
in the main mining area, and has provided avenues for subsequent mineralization
and alteration of the interbedded lithic tuffs and ash flows. Later faulting
along north-west and east-west trends have offset the main alteration zones.
Observed (surface/subsurface) cross-cutting structures (shears and faults),
quartz veining and silicification in the Double Eagle Mine area indicate that
mineralization continues to the east and west.


Drillhole data, surface and underground work indicates a relatively
well-developed hydrothermal system. There is potential to finding additional
ore-grade mineralization in the altered lithic tuffs extending to the north,
south and to the east of the main alteration area.


Historic information includes drilling summaries, assay laboratory reports,
surface sampling and mapping. Details of the sampling methods, handling, and
quality control methods are unknown, and the historic drilling results being
disclosed cannot be verified for the purposes of NI 43-101. Therefore this
information is not NI 43-101 compliant and should not be relied upon for
investment purposes. This information, however, is a useful guide for current
exploration by the Company's geologists.


Don White, P.Geo, is the qualified person who has reviewed the technical
information contained in this news release on behalf of the Company.


A finder's fee may be paid in connection with this transaction.

Further information is available at www.kermode.com.

ON BEHALF OF THE BOARD

ADRIAN O'BRIEN, PRESIDENT and DIRECTOR

Forward-Looking Statements: This Kermode Resources Ltd. news release may contain
certain "forward-looking" statements and information relating to Kermode which
are based on the beliefs of Kermode management, as well as assumptions made by
and information currently available to Kermode management. Such statements
reflect the current risks, uncertainties and assumptions related to certain
factors including, without limitations, exploration and development risks,
expenditure and financing requirements, title matters, operating hazards, metal
prices, political and economic factors, competitive factors, general economic
conditions, relationships with vendors and strategic partners, governmental
regulation and supervision, seasonality, technological change, industry
practices, and one-time events. Should any one or more of these risks or
uncertainties materialize or change, or should any underlying assumptions prove
incorrect, actual results and forward-looking statements may vary materially
from those described herein.

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