Finland Gold Update

Kolar Gold Limited

("Kolar Gold" or the "Company")

Finland Gold Update

Issue of Equity

Kolar Gold Limited (LON: KGLD), the AIM-quoted India-Finland gold explorer and trading exchange provider, announces that it has issued 8,500,000 new ordinary shares ("New Shares") to Mineral Exploration Network (Finland) Limited ("MENF") in return for 150 shares in Kalevala Gold Oy ("Kalevala"), the recently incorporated Finnish company established to develop the various licences subject to the joint venture with MENF (the "JV") announced on 13 October 2016 (the "Announcement").

The New Shares have been issued at an implied price of 1.6p per share by reference to the consideration of €150,000 as detailed in the Announcement. The New Shares are locked in for a period of six months from today's date. Application will be made for the New Shares to be admitted to trading on AIM with admission expected to occur on 10 January 2017.

JV Summary and Update

· Kalevala Gold Oy has been incorporated in Finland as the JV operating company;

· Following payment made of €150,000 in cash as detailed in the Announcement and the issue of the New Shares, Kolar currently owns 15.4% of Kalevala;

· Kolar has fully budgeted commitment of €350,000 to increase its stake in Kalevala to 28.3% by 28 February 2017;

· Kolar has the option to increase equity holding in Kalevala up to 50% by the end of Q2 2017;

· Kolar Gold CEO, Cameron Parry, has been appointed to the board of Kalevala;

· Kalevala targeting production of 100 kilogrammes of gold through bulk sampling in Q3 2017

· MENF's interest in Kolar circa 4% of the enlarged issued share capital.

Cameron Parry, Kolar Gold CEO, commented: "We are pleased to report that Kolar Gold now owns 15.4% of the newly established Finland operating company, Kalevala, with high grade gold targets within licences covering 24km2 in central East Finland.

"Should 100 kilos or more of gold be produced from our planned 10,000 tonne gold ore bulk sampling campaign in Q3 this year, Kalevala will generate material revenues, based on today's gold price with the potential for such sums to be reinvested into further exploration or the possible return of capital to Kalevala shareholders through dividends. 

"We look forward to progressing our work in Finland over the coming months and updating the market accordingly as we head towards our planned first gold production."

Updated Total Voting Rights

Following the admission to trading of the New Shares, the Company's enlarged issued ordinary share capital will comprise 204,211,719 ordinary shares of no par value. This is the total voting rights figure that may be used by shareholders as the denominator for the calculations by which they will determine whether they are required to notify their interests in, or a change to their interest in, the Company.

For further information, please visit www.kolar-gold.com or contact:

Emily Fenton