J4 Zone Strike Length Extended to 200 Metres;
Initial 2012 Results Reported from Drilling in Lac Cinquante Resource Area

July 25, 2012

Kivalliq Energy Corporation (�Kivalliq�) (TSX-V: KIV) today announced extending the strike length of the highly radioactive J4 Zone, initial 2012 drill results from testing below the Lac Cinquante Uranium Deposit, and new drilling at the Pulse Zone. Drilling is now focused on shallow targets within three kilometres of the Lac Cinquante Deposit that include the radioactive J4 and Ray Zones discovered earlier in the 2012 exploration campaign. This release summarizes the drill program to date, and includes assays from the Western Extension Zone of the Lac Cinquante Deposit and the Pulse Zone.

Key Point Summary:

• Drilling at the one kilometre long J4 electromagnetic (�EM�) conductor intersected significant radiation in 15 of 15 holes, extending the drilled strike length of mineralization to 200 metres
• Hole 12-LC-007 at the Western Extension intersected 0.33% U3O8 over 3.1 metres width, at 365 metres vertical depth. This is the deepest known uranium intercept reported on the Angilak Property to date.
• Two Diamond drills will focus on new discoveries and priority targets within three kilometres of the Lac Cinquante Deposit
• A third Diamond drill and a reverse circulation (�RC�) rig will test additional targets across the Angilak Property

2012 Angilak Property Exploration Program

Drilling on the 252,830 acre Angilak Property as part of the 2012 exploration program now totals 19,457 metres in 106 Diamond drill holes, plus an additional 4,645 metres in 31 exploratory holes using an RC drill rig. Drilling to date has focused on evaluating linear EM conductors occurring within three kilometres of the Lac Cinquante Deposit and testing below the current resource. With the recent discovery of the J4 zone, Kivalliq has made four new discoveries in 2012 thus far.

Prospecting, mapping and ground geophysical surveying are ongoing and will continue to advance targets near Lac Cinquante and property wide.

J4 Zone

Significant radioactivity has now been intersected in 15 of 15 holes drilled from five sites along 200 metres of strike length at the J4 Zone. J4 is a one kilometre long EM conductor located roughly 2.3 kilometres east of the Lac Cinquante Deposit and about 300 metres north of the Ray Zone (see June 25, 2012 news release).

J4 commonly hosts up to two sub-parallel mineralized horizons, 20 metres to 30 metres apart, referred to as the J4 Upper Zone and the J4 Lower Zone. The J4 Upper Zone has been intersected at depths between 49 and 123 vertical metres. The J4 Lower Zone has been intersected between 63 metres and 183 metres vertical depth. Radioactivity is hosted in narrow quartz-carbonate veins in sheared sulphidic, graphitic tuff within a larger sequence of basalt. Radioactive readings between 170 and a peak of 39,000 counts per second (�cps�) were measured over down hole intervals 0.3 to 1.5 metres in the J4 Upper Zone. Radioactive readings between 170 and a peak of 27,000 cps were measured over 0.3 metre intervals in the J4 Lower Zone. Drilling continues at the J4 Zone.

Western Extension

The first nine of 13 holes drilled at the Western Extension in 2012 are disclosed in this news release. 4,213 metres in 13 Diamond drill holes from seven sites intersected the deposit�s host shear zone using 100 metre hole spacing. Of these, seven intersected uranium or anomalous radioactivity, including the deepest intercept on the property to date at 365 metres (hole 12-LC-007 with 0.33% U3O8 of 3.1 metres estimated true width). The 2012 drilling confirmed an intermittent mineralized shear zone and quartz-carbonate veining between 0.3 and 5.2 metres estimated true width, below the current resource. Further assays from the Western Extension are pending.

Western Extension Assay Results

*All samples subject to ICP1 Analysis by SRC in Saskatoon, SK. ICP1 results >1000 ppm U are subject to SRC U3O8 Assay; ICP1 results for Cu, Mo and Ag are reported by SRC in parts per million (ppm).  1 ppm = 1gm/t, 10000 ppm = 1%; Intervals include ICP U analysis in ppm converted to U3O8%.  Conversion to U3O8% = ppm x 0.01179.

Two drill holes; 12-LC-003 and 011 intersected no significant mineralization.

Lac Cinquante Main Zone

New drilling targeted below the Lac Cinquante Main Zone in an attempt to trace plunging uranium mineralization below the current resource. 4,053 metres in 14 holes from nine sites were drilled over 1.3 kilometres of strike, using a minimum of 100 metres hole spacing. Of these, six intersected weakly anomalous radioactivity between 228 metres and 350 metres vertical depth. Anomalous gamma values range from 200 to a peak of 5,200 cps, with down hole intercepts of 0.3 to 1.5 metres wide. Assay results will be released when available.

Eastern Extension

Drilling also tested the gap between the Eastern Extension and the Lac Cinquante Main Zone. Four holes were drilled from two sites spaced 50 metres apart at the west side of the Eastern Extension. Of these, one hole (12-LC-001) intersected a radioactive mineralized, brecciated tuff at 82 metres vertical depth, having a peak of 7000 cps over 0.4 metres. This hole extends known mineralization at the Eastern Extension by 50 metres westward. Assay results will be released when available.

For full descriptions and disclosure regarding the Western Extension, Main Zone, and Eastern Extension of the Lac Cinquante Uranium Deposit, please see Kivalliq�s NI 43-101 Technical Report from March 1, 2012.

Pulse Zone

Pulse is a three kilometre long EM conductor located roughly 700 metres north of the Lac Cinquante Deposit. 3,829 metres in 27 holes drilled in 2012 tested 1.3 kilometres of this three kilometre long EM trend. Anomalous radioactivity was encountered in 14 of 27 core holes and assay results for the first seven of these are reported herein. Intermittent uranium mineralization, that includes significant copper, molybdenum and silver values, is hosted in narrow carbonate-quartz-hematite veins in steeply dipping sheared basalt or sulphidic tuff. Drilling was from nine sites with varying spacing along strike and to a maximum depth of 170 metres. Radioactivity ranged from 200 to a high of 10,000 cps with downhole intercepts up to 1.1 metres wide. Initial assay results from 2012 drilling at Pulse are detailed in the table below.

Pulse Zone Assay Results

*All samples subject to ICP1 Analysis by SRC in Saskatoon, SK. ICP1 results >1000 ppm U are subject to SRC U3O8 Assay; ICP1 results for Cu, Mo and Ag are reported by SRC in parts per million (ppm).  1 ppm = 1gm/t, 10000 ppm = 1%; Intervals include ICP U analysis in ppm converted to U3O8%.  Conversion to U3O8% = ppm x 0.01179%.

Two drill holes; 12-PL-003 and 006 intersected no significant mineralization.

All holes were drilled to the northeast with azimuths bearing 26 degrees, at inclinations between minus 45 and 90 degrees. For cross sections with assays and drill plan maps, please visit
http://www.corebox.net/properties/angilak/ or www.kivalliqenergy.com/projects/angilak/program_images

QA/QC

Natural gamma radiation in drill core was measured in cps using a hand-held Radiation Solutions Inc. RS-121 scintillometer or RS-230 spectrometer. Kivalliq cautions that scintillometer readings are not directly related to uranium grade and are only used to indicate zones of radioactive material.

Half-spilt NQ core samples from holes drilled at the Angilak Property, with anomalous radioactivity levels above 170 cps have been sent to Saskatchewan Research Council Geoanalytical Laboratories (�SRC�) for analysis. All samples were analyzed for U3O8 and a multi-element suite. The SRC facility 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. The samples are first analyzed by SRC's ICP-OES multi-element Uranium exploration ICP1 method. The method analyzes for multi-elements including Ag, Mo, Cu, Pb, Zn and a suite of rare earth elements. ICP results U>1000 parts per million (ppm) are analyzed using SRC's ISO/IEC 17025:2005-accredited U3O8 Assay method. Laboratory quality control (QC) includes a repeat analysis on every 20th sample. Repeat samples had good reproducibility. Kivalliq�s quality assurance and quality control procedures include the systematic insertion of blanks and standards into the drill core sample string. All QA/QC results were within expectations.

Jeff Ward, P.Geo. and President of Kivalliq has reviewed and approved the scientific and technical information contained in this news release and is the Qualified Person as defined under National Instrument 43-101 for this news release.

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 to explore for uranium on Inuit Owned Lands in Nunavut.
Kivalliq's 252,830 acre Angilak Property hosts the high-grade Lac Cinquante Uranium Deposit, along with multiple highly-mineralized target areas. With an NI 43-101 Inferred Mineral Resource of 1,779,000 tonnes grading 0.69% U3O8, totalling 27.13 million pounds U3O8, (15.2 pounds 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.
Since acquiring the Angilak Property in 2008, Kivalliq has invested approximately $30 million conducting systematic exploration, including ground and airborne geophysics, geological mapping, prospecting and approximately 48,000 metres of RC and Diamond drilling.

On behalf of the Board of Directors

James R. Paterson, CEO

Kivalliq Energy Corporation

For further information about Kivalliq Energy Corporation or this news release, please visit our website at www.kivalliqenergy.com.

Kivalliq Energy Corporation is a member of the Aurora Resource Group of companies. For more information please visit www.auroraresource.com.

Certain disclosures in this release, including management's, intentions with respect to use of proceeds, the 2012 Angilak exploration program and future exploration programs, constitute forward-looking statements that are subject to numerous risks, uncertainties and other factors relating to Kivalliq's operations as a mineral exploration company that may cause future results to differ materially from those expressed or implied in such forward-looking statements, including risks as to market price of the Company�s securities and the market for securities of resource exploration companies in general; commodity prices and, in particular, the price of uranium and the completion of the Company�s plans and projects. Readers are cautioned not to place undue reliance on forward-looking statements. Other than as required by applicable securities legislation, Kivalliq expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.

FOR FURTHER INFORMATION PLEASE CONTACT:

Kivalliq Energy Corporation
James R. Paterson CEO
604.646.4527 or Toll Free:

1.888.331.2269
info@kivalliqenergy.com
www.kivalliqenergy.com

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