Mineral Hill Update. Production from Red Terror lodes has commenced with important production improvement over Parkers Hill ore from:

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1 ASX RELEASE Mineral Hill Update Prductin frm Red Terrr ldes has cmmenced with imprtant prductin imprvement ver Parkers Hill re frm: Higher grades (head grade target f 2.5% Cu and 2g/t Au) Imprved recveries f Cu (+90% cmpared with 80%) and Au (50-60% cmpared with 30-40%) Lwer prcessing csts (minimal reagent requirements) Cnsistent mined re quality with minimal dilutin New three mnth rlling mine plan nw incrprates 50:50 Red Terrr prductin with Parkers Hill frm 15 December 18,000 tnnes frm first Red Terrr stpe fired n 8 December Expanded access t Red Terrr ldes frm secnd decline Onging surface RC and undergrund diamnd drilling prgram expands Red Terrr ldes, with high grade intersectins including: 2% Cu & 15.3g/t Au (in hle KUPH025) includes 3.9% Cu & 29.3g/t Au and 3.8% Cu & 37g/t Au 3.7% Cu & 13g/t Au (in hle KUPH034) 5.3% Cu & 1.3g/t Au (in hle KUPH036) 4.2% Cu & 1.1g/t Au (in hle KMHRC126) includes 12.4% Cu & 1.1g/t Au 10.7% Cu & 0.4g/t Au (in hle KMHRC128) KBL Mining Limited (ASX: KBL and KBLGA) is pleased t annunce the cmmencement f cmmercial prductin frm the recently discvered, high grade Cu-Au Red Terrr Ldes tgether with further high grade intersectins f the Ldes at its Mineral Hill Mine in Central New Suth Wales. Prductin update at Mineral Hill On 15 August 2012, KBL annunced the discvery f a new style f gld-rich mineralisatin directly belw and adjacent t current mining peratins at the Mineral Hill Mine. Since 15 August, cntinued explratin success has enabled cmmencement f develpment t access the ldes. On 8 December 2012, the first stpe f 18,000 tnnes (75% f the mnthly re budget) within the Red Terrr Ldes was fired, which will allw the cmmencement The cmmencement f prductin frm the high grade Cu-Au Red Terrr ldes tgether with its superir metallurgical recveries relatively t previusly mined re is an imprtant milestne fr the transfrmatin f Mineral Hill Mine int a highly prfitable cpper and gld mine. Onging drilling success cntinues t deliver exceptinal high-grade cpper-gld results, expanding the dimensins f the Red Terrr Ldes and highlighting the ptential fr further explratin successes. Trangie Jhnstn Chief Executive Officer

2 f mining frm Red Terrr. T date, develpment material frm a drive thrugh the high-grade suthern area f Red Terrr has been prcessed thrugh the plant with a material imprvement in prductin characteristics ver current re frm the Parkers Hill re bdy. Prir t the develpment and cmmencement f stping f the Red Terrr Suthern Lde, cpper cncentrate prductin in Octber and Nvember was frm Parkers Hill Stpes 7 and 8, lcated within sedimentary hst rcks, was pr due t internal stpe dilutin and the presence f significant quantities f talc which reduced cpper recveries. Figure 1: Massive Chalcpyrite Ore in the face f the 1373S drive Suthern Lde (3/12/2012) Key imprvements include: Higher head grades Targeted head grades f +2.5% Cu and +2g/t Au The Au grade is mre than fur times higher than Parkers Hill Reserve grades (0.43g/t Au). Imprved recveries Develpment prductin frm Suthern Lde Red Terrr material prduced a high quality, gld-rich cpper cncentrate with cpper recveries exceeding 90%. Lwer prductin csts The Red Terrr re has very favurable fltatin characteristics, prducing high quality Cu-Au cncentrates with lw reagent usage and high cpper recveries. The immediate three mnth rlling mine plan will surce apprximately 50% f the re feed frm the Red Terrr 1190/795W stripping, level develpment and stpes. Figure 2 utlines the 1190/795W stripping which is currently underway and Figure 3 apprximates the stpe shapes at depth with drilling pierce pints.

3 The remaining 50% f re thrugh t February 2013 (ttal is 80,700 tnnes at +2% Cu and +1g/t Au) is planned t be mined frm Parkers Hill stpes 9 and 10, which lie within the vlcanic hst rcks rather than the sediments which hsted Stpe 8. Figure 2: Designed stripping n the 1190/795W Red Terrr Suthern Lde, accessing the east-west structure t a height f 12.7m. Figure 3: Suthern Lde stpe blcks belw the existing 1190/795W develpment, with drillhle pierce pints.

4 High grade drill results Undergrund and surface drilling at the Red Terrr depsit t date has identified significant and high-grade cpper-gld intersectins. The drilling prgram is nging and is expected t expand the extent f mineralisatin, which at this stage, remains pen alng strike and at depth twards the east beneath the 1225 thrust (see figure 4). This drilling has identified a number f near vertical mineralised structures with the mst significant designated as Suthern Lde, Suth West Lde and Nrth East Lde. Ultimately, further drilling is expected t add significant tnnage t this cpper-gld system, currently with a target size f between 150,000 t 250,000 tnnes f re, grading at % Cu and g/t Au 1. This target size is bunded between 150 t 200m RL, which is the extent f current drilling. The mineralisatin is pen at depth. The latest results frm an nging undergrund diamnd drilling prgram include: 2.0% Cu & 15.3g/t Au (in hle KUPH025) includes 3.9% Cu & 29.3g/t Au and 3.8% Cu & 37g/t Au 2.7% Cu & 0.1g/t Au (in hle KUPH030) 3.7& Cu & 13g/t Au (in hle KUPH034) 4.2% Cu & 0.2g/t Au (in hle KUPH035) 5.3% Cu & 1.3g/t Au (in hle KUPH036) Results frm further surface RC drilling have als been received and include: - KMHRC % Cu & 1.1g/t Au) - KMHRC % Cu & 0.1g/t Au) - KMHRC % Cu & 0.4g/t Au) The Suthern Lde is the mst extensively drilled and develped t date and is the fcus f the next three mnths prductin. Recent results frm hles KUPH025 2% Cu and 15.3g/t Au), KUPH % Cu and 13g/t Au) and KUPH024 (annunced 9/11/12; 3.1% Cu and 4.9g/t Au) shw hwever that the Suth West Lde has higher gld characteristics and is pen t the nrth east. 1 This is an explratin target nt a Resurce r Reserve.

5 Figure 4: East-west crss sectin shwing the relatinship between the histrically mined Eastern Ore Zne (EOZ, which prduced 240,000 unces f gld), the current peratins at Parkers Hill, and the new Red Terrr cpper-gld ldes. The Red Terrr ldes are pen alng strike and dwn dip. Structural interpretatin highlights a new target zne twards the east beneath the 1225 Thrust where additinal parallel ldes may exist. Figure 5: Plan view f surface and undergrund (1190RL) drilling prgrams and Red Terrr cpper-gld ldes beneath current develpment at Parkers Hill. The Red Terrr ldes are nw knwn t ccur within a zne ver 200 metres in strike and greater than 30 metres vertically.

6 Table 1: Drilling results frm undergrund diamnd drilling int the Red Terrr ldes. Hle Interval (m) Cu % Au g/t Ag g/t Frm (m) KUPH includes and KUPH includes and KUPH KUPH includes KUPH KUPH includes KUPH includes KUPH

7 Table 2: Drilling results frm surface RC drilling int the Red Terrr ldes Hle Interval (m) Cu % Au g/t Ag g/t Frm (m) KMHRC includes KMHRC includes KMHRC includes Fr further infrmatin, please cntact: Anthny (Trangie) Jhnstn Chief Executive Officer KBL Mining Limited Ph: Will Beaurepaire Chief Financial Officer KBL Mining Limited Ph: Abut KBL Mining KBL Mining is an Australian resurce cmpany listed n the ASX (KBL and KBLGA) with a fcus n precius and base metals. KBL s main assets include the Mineral Hill cpper-gld-silver-lead-zinc prject near Cndblin in New Suth Wales and Srby Hills lead-silver-zinc depsit in Western Australia. The Cmpany has been perating the refurbished prcessing plant at Mineral Hill since Octber 2011 t prduce cpper cncentrates. Srby Hills (KBL hlds 75% with Henan Yuguang Gld & Lead C. Ltd (HYG&L) hlding 25%) is ne f the wrld s largest near surface undevelped silver-lead depsits, clse t prt infrastructure and a shrt distance frm Asian markets. Envirnmental apprvals are currently being sught fr develpment f the Srby Hills depsit and the PFS results were released n 6 December Mre infrmatin can be fund n KBL s website at Cmpetent Persns Statement The infrmatin in this reprt that relates t Explratin Results and Mineral Resurces is based n infrmatin cmpiled by Anthny Jhnstn, MSc (Hns), wh is a Member f the Australasian Institute f Mining and Metallurgy and is a fulltime emplyee f the Cmpany. Anthny Jhnstn has sufficient experience which is relevant t the style f mineralisatin and type f depsit under cnsideratin and t the activity which he is undertaking t qualify as a Cmpetent Persn as defined in the 2004 Editin f the Australasian Cde fr Reprting f Explratin Results, Mineral Resurces and Ore Reserves. Mr Jhnstn cnsents t the inclusin in the annuncement f the matters based n his infrmatin in the frm and cntext that the infrmatin appears.