Lionsgold Regulatory News (LION)

15 August 2011

Kolar Gold Limited

South Kolar licence area - drilling update

Highlights

·; 13 drill holes completed in Chigargunta NE deposit

·; Over 1,749 metres drilled of a 27,000 metres South Kolar drilling programme

·; Mineralisation includes four contiguous intersections with visible gold associated with sulphides over 10 g/t Au:

o KCN-02: 4.74m at 24.7g/t gold from 79.74m to 84.48m*

o KCN-05: 0.50m at 160.2 g/t gold from 117.14m to 118.89m

o KCN-10: 1.00m at 12.1g/t gold from 45.65m to 46.65m

o KCN-14: 1.10m at 16.4g/t gold from 45.29m to 46.39m

*previously reported

·; Two previously unidentified gold bearing lodes revealed, key mineralisation include:

o KCN-05: 3.65m at 4.6g/t gold from 20.54m to 24.19m (HW lode)

KCN-05: 2.60m at 6.0g/t gold from 134.04m to 136.64m (FW lode)

Kolar Gold Limited ("KGL" or the "Company"), the Indian focussed gold exploration and development company, announces that it has intersected high-grade gold mineralisation after surface drilling at the Chigargunta NE deposit in the South Kolar licence area (GP 13), India. The 13 holes (totalling 1749 metres) were independently verified by the Competent Person, Mining Associates Pty Ltd ("MA") and all work has been conducted under JORC guidelines. The Chigargunta NE has an indicated resource of 13,200oz at 15.1g/t based on historic drilling.

The current drilling by KGL has validated the historic results previously carried out by the Geological Survey of India ("GSI") and provided fresh geological data on the host rocks and structural controls to mineralisation.

The mineralisation and alteration within this area appears to be extensively developed and could represent a substantial hydrothermal system.

Commenting today, Nick Spencer, Chief Executive Officer of Kolar Gold Limited, said:

"These are very good drill results following our successful admission to AIM on 17 June 2011. We have diamond drilled the first 13 holes for 1,749m at the Chigargunta NE deposit in the South Kolar prospecting licence. It is encouraging that 4 holes intersected high grades with visible gold assaying up to 160 g/t gold. We believe we have a large hydrothermal system here with the potential to make significant discoveries. The Chigargunta NE deposit represents only the first of more than 10 targets in the Chigargunta North prospect area which will be drilled as part of our planned 27,000m drill programme."

The Chigargunta NE deposit is approximately 3km north of the historic Chigargunta Mine previously operated by Bharat Gold Mines Limited (BGML). Please click on the following link to view the geological map http://www.rns-pdf.londonstockexchange.com/rns/3250M_-2011-8-12.pdf

Gold mineralisation at the western lodes of the nearby Chigargunta Mine is of a similar style and location to that at the Chigargunta NE deposit. The western lodes predominantly occur within the mafic rock units and at times along the contact with felsic volcanics. The eastern lodes are hosted within the felsic volcanics (known locally as Champion Gneiss). Gold mineralisation is localised along shear zones, characterised by strong mylonitic fabric, profuse quartz veining and hydrothermal alteration.

The lode systems have been traced north from the Chigargunta Mine lease area for approximately 3km into PL-GP13, in the Chigargunta North block, by surface mapping, trenching and sampling with limited geophysics and drilling. All along this 3 kms long tract, a number of prospects have been identified along the western and eastern lode system warranting detailed exploration.

 The Chigargunta NE deposit is in the same geological setting typical of the western lodes.

Table 1. Chigargunta NE Drill Results - Intercepts >1.0g/t Au on all lodes

*KCN-12 has been excluded as it is not part of the Chigargunta NE programme

The drilling by KGL has been successful in delineating 3 mineralised zones of which the Main Vein mineralised zone (ML) as outlined by the results in Table 1 has been traced for 250m along strike and to a depth of around 150m below the surface with significant grades. The zone is still open on strike and down dip. The drilling at Chigargunta NE has:

·; confirmed the reliability of the historical drilling,

·; provided valuable understanding of structural controls to mineralisation, and

·; confirms the high potential for further discoveries within the Chigargunta North block subject to ongoing exploration

The company considers that there are a number of targets in this area that warrant detailed exploration including ground geophysical IP survey, geochemical exploration and drilling. (Refer Figure 1). The mineralisation and alteration within the Chigargunta North block indicates that the area represents a substantial hydrothermal system although only very limited drilling has been carried out. It presents KGL with the opportunity for an economic gold discovery as demonstrated in the historic Chigargunta Mine.

The data acquired during this programme relating to lithology, structure, alteration styles and base metals as indicators to gold mineralisation are being reviewed and interpreted. From this, a geological model js being developed in order to plan the next campaign of drilling at the Chigargunta NE deposit. A further drilling campaign is planned to extend the currently delineated limits of the deposit and to undertake an updated resource estimate.

About Kolar Gold Limited

Kolar Gold Ltd (KG) is an Indian gold exploration and development company, listed on AIM London (KGLD), that has an experienced international board and strong local partners. KG has rights to explore and develop one prospecting licence and 13 further licence applications in the Kolar Gold Belt, an 80 kilometre long Archaean Greenstone Belt, in Southern India. The Kolar Gold Belt is one of the most prospective underdeveloped Archaean Greenstone Belts in the world and is regarded by Mining Associates Pty Limited, the Competent Person, as comparable to the Archaean Greenstone Belts of South Africa, Canada and Western Australia which have similar geology, structure and style of mineralisation. This project area includes 32 known mineralised prospects and covers 568 square kilometres in the southern states of Andhra Pradesh, Karnataka and Tamil Nadu. KG commenced exploration on the first Prospecting Licence in South Kolar in February 2011. KG is also jointly pursuing, with the mine employee unions, the acquisition and revival of the neighbouring historic Kolar Gold Fields which has produced 25 million ounces of gold at 15.9 grams per tonne over 120 years until closure in 2001.

Qualified Persons

The summary review of geology and drilling results was conducted by Mr Andrew Vigar who has sufficient experience which is relevant to the Archaean gold style of mineralisation and deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' (Australia) and is a Qualified Person as defined in NI43-101 (Canada). He is a Fellow of The Australasian Institute of Mining and Metallurgy (Melbourne) and a Member of the Society of Economic Geologists (Denver). Mr Vigar is employed by Mining Associates Pty Ltd of Brisbane, Australia. Mr Vigar conducted a site visit to the Kolar Gold Projects and adjacent properties from 28 June to 2 July 2010. Mr Vigar does not have any interest (current or past) in any of the assets covered by this report.

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