Positive drill results at Mallappakonda Deposit

Kolar Gold Limited

("KGL" or the "Company")

Mallappakonda Exploration Update

Positive drill results at the Mallappakonda Deposit, South Kolar Licence Area (GP13).

Kolar Gold Limited ("KGL or the "Company"), the Indian focused gold exploration and development company, today announces significant results at its Mallappakonda deposit (GML 18) in the South Kolar licence area (GP 13) in India. Modelling is under way in preparation for a resource upgrade from a combination of validation drilling, historic data and new drilling at the Mallappakonda deposit as part of an 8,000m drill programme completed over the South Kolar licence area.

Highlights

·; Historic gold resource of 61,527 oz;

·; Drilling at Mallappakonda has validated historic Mineral Exploration Corporation Limited (MECL) data;

·; Drill Hole KMK-02 intercepted a 21.5m wide mineralised zone from 98maveraging 5.5 g/t;

·; Drill Hole KMK-03 intercepted a 19m wide mineralised zone from 121.5maveraging 2.7 g/t;

·; Modelling is underway in preparation for a gold resource upgrade at Mallappakonda.

Commenting today, Richard Johnson, Chief Operating Officer of Kolar Gold Limited, said:

"We are very pleased to announce these 2 quality shallow intercepts at our Mallappakonda deposit. The historic gold resource at Mallappakonda was 61,527 oz gold as defined by the MECL in 1984. There remains scope to add additional ounces to the resource statement and drilling at the deposit will continue once resource modelling is completed. To date 8,000m of drilling in the South Kolar block has been successfully completed and we look forward to updating investors with further operational updates in H1 2012 once additional assays results are received."

Mallappakonda Gold Deposit

The Mallappakonda deposit ("Mallappakonda") was first identified during regional exploration conducted by the Geological Survey of India (GSI) to the south of Kolar Gold Fields in 1975-79. The gold mineralisation occurs on both limbs of an anticlinal axis and dips steeply to the west. It consists of multiple zones associated with banded iron formation within mafic units. Mineralisation occurs over 800m of strike length at the end of the prominent Mallappakonda Hill with only 150m having been evaluated with drilling and three levels of exploration development. Several prospective ancient workings have also been identified at surface.

Underground work by MECL and BGML included two adits, three drives, limited rise development and approximately 380m of underground diamond drilling. The historical data was sourced from the original documents by Mining Associates Ltd ("MA" or "Mining Associates") and entered into a Gemcom Surpac resource and mining data set with drill and channel sample database, scanned surface and level plans, digitised mine workings, interpreted resource domains and resource estimation block model. Higher grade zones are defined as over 2.5 g/t Au and located in tight isoclinals folds within a well mineralised area 150m long, 30m wide and to a depth in excess of 300m.

Other South Kolar (GP13) Exploration Targets

Since the Company joined AIM in June 2011, 8,000m of Reverse Circulation ("RC") and diamond drilling has been conducted as part of a two rig 27,000m drill programme over the South Kolar licence area. With regard to the ongoing exploration programme on the main targets at South Kolar an intensive data review is underway. This comprises:

a) An interpretation of all drill data generated during the Company's current exploration programme combined with historic data;

b) Detailed mapping of the Chigargunta block (GML 6) with a focus on detailed structural and alteration interpretation to understand controls to mineralisation;

c) A complete re-interpretation of all geophysical data including aster imagery, close spaced ground magnetics and IP surveys again with an emphasis on structural controls and alteration footprints;

d) Further mapping and soil geochemistry in the remainder of GP13;

e) The integration of geological, geophysical and geochemical data sets to assist identification of larger structural anomalies and mineralisation control trends.

About Kolar Gold Limited

Kolar Gold Limited is an Indian gold exploration and development company, listed on the AIM market (KGLD), which has an experienced international board and strong local partners. KGL 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 Mr Andrew J Vigar of Mining Associates 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. KGL commenced exploration on the first Prospecting Licence in South Kolar in February 2011. KGL 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 J 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 Limited of Hong Kong. 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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