2011 RC Exploration Strategy Yields New Discoveries

October 3, 2011
Vancouver, B.C. � Kivalliq Energy Corporation (KIV: TSX-V) (the "Company" or "Kivalliq") today provided an update from property-wide exploratory reverse circulation ("RC") and diamond drilling proximal to and along strike of the structure hosting the high grade Lac Cinquante Uranium Deposit. The RC strategy in 2011 was designed to advance prospecting and geophysical targets, across the 225,000 acre Angilak Property in Nunavut, Canada, to a level where diamond drill testing is warranted.

• Three zones discovered by RC drilling within three kilometres of the Lac Cinquante resource area were  corroborated by diamond drilling: Eastern Extension; Pulse Zone; and Spark Zone
• Two priority targets tested warrant diamond drilling in 2012, based on similarities to the geological and geophysical signatures of "unconformity related" targets: YAT Zone and VGR Zone
• Over 22 targets were tested by RC drilling property-wide in 2011, with 45 of 88 RC holes drilled generating anomalous radioactivity greater than 500 cps
• Assays from diamond drill core samples are pending from Eastern Extension, Pulse, and Spark zones

"This year�s RC drilling exploration strategy has been very productive; enabling us to rapidly test multiple drill targets at a greatly reduced cost in advance of diamond drilling," stated CEO Jim Paterson. "The confirmation of two "Athabasca-style" targets, YAT and VGR, underscores the exploration potential of the broader Angilak Property. RC drilling has also demonstrated that multiple zones proximal to Lac Cinquante are highly prospective for growing the Company�s mineral resource base in future seasons."
To view a drill plan map related to this news release and all cross sections and maps from the 2011 exploration program please visit http://kivalliqenergy.com/projects/angilak/program_images/   

Eastern Extension, Pulse, and Spark

Three zones discovered by 2011 RC drilling, within three kilometres of Lac Cinquante resource area, have been corroborated by core drilling. Assays from this diamond drilling at the Eastern Extension, Pulse and Spark zones are pending. These results are significant as they demonstrate the very real potential of identifying multiple mineral deposits within a concentrated area around Lac Cinquante. The Company hopes to incorporate diamond drill intercepts from the Eastern Extension into an updated resource calculation for the Lac Cinquante deposit by end Q1 2012.

The initial discovery of the Eastern Extension was previously reported by Kivalliq on August 17, 2011. Six RC holes were drilled from three setups located along the Lac Cinquante structural trend. All six holes intersected anomalous radioactivity, and 44 core holes from 13 setups were subsequently drilled at the Eastern Extension. The Eastern Extension displays similar geology to the Lac Cinquante Main Zone, with uranium mineralization developed in narrow, sheared and brecciated tuff layers adjacent to a sulfide-bearing tuff horizon.

The Pulse and Spark zones were identified as linear geophysical targets, located 0.8 kilometres north and 3 kilometres west respectively from the Lac Cinquante resource area. At the Pulse zone, anomalous radioactivity was intersected in nine of ten RC holes. Two core holes drilled as subsequent follow-up intersected radioactivity at 47 and 80 metres vertical depth.  At the Spark zone, six of seven RC and a single diamond drill hole intersected anomalous radioactivity at variable depths down to 65 metres vertically. The Spark zone is located approximately 500 metres west of the high-grade Blaze zone.

The Pulse zone is comprised of one to two metre wide carbonate-quartz-pitchblende veins in sheared and altered basalt, which correspond to a weak to moderate conductive trend identified by ground VLF-EM surveys. The Spark zone appears similar to the Blaze zone in that mineralization is hosted in one to two metre wide fracture controlled veins associated with a VLF-EM conductor. The geometry of the mineralized veining remains undetermined at this early stage.

YAT and VGR

Two priority targets that were tested by RC drilling in 2011 warrant follow up next year. The YAT zone is located 16 kilometres southwest of Lac Cinquante and central to the Angilak property. The VGR zone is situated on the west side of the property approximately 25 kilometres northwest of the resource area. Both zones are of great interest due to similarities with "unconformity related" targets.

 YAT is a zone of significant polymetallic carbonate veining on surface, containing Cu, U, Pb, Au, Ag, (See Kaminak Gold Corporation news release November 5, 2007), developed above a strong magnetic low, and interpreted basement faults. A 2011 gravity survey indicates a broad zone of weak low gravity with at least one significant "bullseye" gravity low. Two of four RC drill holes tested the bullseye gravity low, suggesting that it is caused by strong clay alteration of underlying lithologies down to at least 50 metres vertical depth.

The VGR zone is a 5 kilometre long conductive trend along a reactivated basement fault, displaying elevated radioactivity and favourable clay-silica alteration along its length. A gravity survey completed in 2011 shows the presence of at least one significant gravity low along the structure, possibly associated with clay alteration of underlying lithologies. One RC drill hole, inclined at minus 60 degrees under a historic trench across the conductor, contained elevated radioactivity (1000-4800 cps) in the upper 65 metres. Three additional holes were abandoned due to poor ground conditions related to clay alteration at down hole depths from 24 to 65 metres.

Based on the encouraging results of RC drilling, the YAT and VGR showings warrant follow-up with diamond drilling in 2012. In both areas, low gravity signatures correspond to areas of strong clay and silica alteration, possibly associated with reactivated basement structures. Mineralized surface showings at YAT and VGR are found in clastic and volcanic rocks of the Kazan and Christopher Island Formations, which overlie Archean basement in an unconformable relationship. The geology and mineral occurrences observed in these areas are comparable to high level alteration associated with unconformity-type mineralization in the Athabasca Basin of Saskatchewan. As such, both are considered highly prospective for uranium mineralization near the basement-cover interface. None of the RC holes completed in 2011 intersected the unconformity contact below these showings, thus these zones warrant further drill-testing in 2012.

Property-wide Success

The 2011 RC drill program at Angilak is now complete, totalling 6,411 metres in 88 exploratory holes. Of the 88 RC holes drilled this year, 45 holes generated anomalous radioactivity greater than 500 cps.
Three discoveries made with the RC rig were corroborated by diamond drill core holes, with additional targets set for diamond drilling as part of the 2012 drilling campaign. In all cases, RC hole locations were determined and prioritized after review of data from Kivalliq�s previous geophysical surveys and prospecting results.

QA/QC 

Split drill core samples from 47 holes at the Eastern Extension, Pulse, and Spark zones have been sent to Saskatchewan Research Council Geoanalytical Laboratories (SRC) for analysis. SRC operates in accordance with ISO/IEC 17025:2005 (CAN-P-4E), General Requirements for the Competence of Mineral Testing and Calibration laboratories, and is accredited by the Standards Council of Canada. Kivalliq�s quality assurance and quality control procedures include the systematic insertion of blanks and standards into the drill core sample string. Chemical assay results from this drill program will be reported by Kivalliq upon receipt.

Natural gamma radiation in drill core and RC chips was measured in counts per second (CPS) using a hand-held Radiation Solutions Inc. RS-121 gamma ray scintillometer. Readings are considered anomalous above the 250 cps background recorded in adjacent rocks. The Company cautions that scintillometer readings are not directly related to uranium grade and are only used to indicate zones of radioactive material.

Disclosure of a technical nature contained in this release has been reviewed and approved by Kivalliq�s president, Jeff Ward, P.Geo. Mr. Ward is the Qualified Person for the purposes of National Instrument 43-101.

About Kivalliq Energy Corporation

Kivalliq Energy Corporation is a uranium exploration and development company, and the first company in Canada to sign a comprehensive agreement with the Inuit of Nunavut to explore for uranium on Inuit Owned Lands in Nunavut.

With an NI 43-101 compliant Inferred Mineral Resource of 810,000 tonnes grading 0.79% U3O8, totaling 14.15 million lbs U3O8 (17.5 lbs U3O8/tonne) at a 0.2% U3O8 cut-off grade, the Lac Cinquante Deposit is Canada�s highest grade uranium deposit outside of the Athabasca Basin. Kivalliq�s flagship project, the 225,000 acre Angilak Property in Nunavut, hosts the high-grade Lac Cinquante deposit, along with nine additional high priority target areas. Since acquiring the Angilak Property in 2008, the Company has invested approximately $25 million conducting systematic exploration, including ground and airborne geophysics, geological mapping, prospecting and approximately 48,000 meters of RC and diamond drilling.