Balloch Obtains Option To Acquire 75% Interest In Kamoto Joint Venture In The Democratic Republic Of Congo.

TORONTO -- Balloch Resources Ltd. (TSX VENTURE:BAH) announced today that it has been granted an option to purchase 100% of the outstanding shares of Kinross Forrest Ltd. ("KFL"), the owner of a 75% interest in the Kamoto joint venture (the "Kamoto JV") by the shareholders of KFL, pursuant to an option agreement dated July 29, 2005 (the "Option Agreement"). The shareholders of KFL (the "Optionors") are George Forrest International Afrique S. PRL ("GFI") as to 40%, Kinross Gold Corporation ("Kinross") as to 35% and Tain Holdings Limited ("Tain") as to 25%. Balloch must obtain all requisite shareholder and regulatory approvals, including the approval of the TSX Venture Exchange (the "TSXV"), prior to exercising the option or making any payments provided for in the Option Agreement.

The Kamoto JV was formed in February 2004 by KFL and La Generale des Carrieres et des Mines ("Gecamines"), the state owned and operated mining enterprise of the Democratic Republic of Congo (the "DRC"). The Kamoto JV is owned as to 75% by KFL and as to 25% by Gecamines. The Kamoto JV holds the Kamoto concentrator, the Luilu metallurgical plant, the Kamoto underground mine and various oxide open pit resources, in the Kolwezi area of the DRC (the "Kamoto JV Assets").

Original mining activity in the Kolwezi area was performed by Union Miniere du Haut Katanga and then following independence of the DRC by Gecamines. At its peak in 1986, Gecamines produced 476,000 tonnes of copper and 14,500 tonnes of cobalt, 63,900 tonnes of zinc, 34.3 tons of silver plus cadmium and other minor metals, with the majority of production from the Kolwezi area. In the Kolwezi area, combined average production grade from the underground and open pit mines feed to the concentrators was slightly above 4% copper and 0.35% cobalt. By 1993, production had fallen to 45,900 tonnes of copper, 2,920 tonnes of cobalt, 4,100 tonnes of zinc and no reported silver. Currently, there is virtually no production. It is estimated that the cost to rehabilitate the Kamoto JV mining property will be in excess of US$200 million.

The Kamoto JV was formed in order to hold, redevelop, rehabilitate and operate the Kamoto JV Assets. The Kamoto JV received the approval of the Conseil des Ministres du Government de Transition of the DRC (the Congolese Government) on July 15, 2005. The Kamoto JV requires that a feasibility study be delivered by KFL to Gecamines within eight months after the Kamoto JV has received all required regulatory approvals. The feasibility study will be deemed to be positive if it projects a discounted rate of return on total capital invested to achieve a minimum of 150,000 tones of sulfide ore processed each month of not less than 20%. If the feasibility study is positive, KFL and Gecamines will incorporate and organize a DRC company, Kamoto Copper Company SARL ("KCC") to hold the Kamoto JV Assets. KCC will be owned as to 75% by KFL and as to 25% by Gecamines.

KCC will have a six person board, four members of which will be nominees of KFL. KFL will be the operator of the Kamoto JV Assets. Under the Kamoto JV, KFL must provide all funding to conduct operations.

Under the Option Agreement, Balloch has agreed to fund all costs incurred by KFL associated with completing the feasibility study. It is estimated that the costs associated with the completion of the feasibility study will be approximately US$7.0 million.

Balloch may exercise its option to acquire KFL within six months following the delivery of the feasibility study by: (i) satisfying the Optionors that it has, or it has commitments for the funding for the exploration, development and mining work during the first stage of the Kamoto JV, estimated to be approximately US$120 million; and (ii) issuing common shares pro rata to each of the Optionors in proportion to their holdings in KFL. The issue price of the common shares will be based on the then current trading price of the common shares, subject to applicable discounts of the TSXV. The number of common shares of Balloch to be issued to the Optionors will be based on the following calculation: the product of the sum of (i) all of the then issued and outstanding shares of Balloch and (ii) all of the issued and outstanding in the money derivative shares (including unexercised options, warrants and rights to acquire common shares of Balloch) multiplied by a fraction, the numerator of which is the KFL Target Fraction and the denominator of which is 1 minus the KFL Target Fraction.

The KFL Target Fraction is equal to the KFL Net Present Value divided by: (i) the KFL Net Present Value; plus (ii) Balloch's net working capital; plus (iii) all cash payments from Balloch to KFL to the date of exercise of the option; plus (iv) the gross cash proceeds received or to be received by Balloch from all equity offerings undertaken to provide funding for the Kamoto JV during its first stage of redevelopment; plus (v) the exercise price payable under all in the money derivative shares of Balloch, calculated as if all such shares had been issued. The KFL Net Present Value is equal to 75% of the net present value of the Kamoto JV (calculated as of the last day of the month immediately prior to the month in which the option is exercised), determined by discounting to such calculation date the projected cash flows of the Kamoto JV as set forth in the Feasibility Study for the 20 year period commencing on the production commencement date, using a discount rate of 15% per annum.

The issuance of common shares of Balloch to the Optionors upon exercise of the option may result in the Optionors owning a controlling interest in Balloch. Kinross is a publicly traded Canadian gold mining company. GFI is a company controlled by Mr. George Forrest. Tain is a private company, the shares of which are held beneficially for Mr. Arthur Ditto. Messrs. Ditto and Forrest collectively own 35% of the issued and outstanding shares of Balloch. For the purposes of Ontario Securities Commission Rule 61-501, the entering into of the Option Agreement is considered a "related party transaction". Balloch will therefore seek the approval of a majority of the disinterested shareholders prior to proceeding with the Option Agreement.

Balloch intends to advance up to CDN$500,000 to KFL, to permit KFL to commence work on the preparation of the feasibility study. Balloch also intends, subject to receipt of requisite regulatory approval, including the approval of the TSXV, to raise CDN$10.0 million by way of a private placement financing. On closing of the private placement, Messrs Arthur Ditto and Robert Buchan will be elected to the board of directors of Balloch. Mr. Ditto will be appointed as the President and Chief Executive Officer of Balloch and Mr. Buchan will be appointed as the non executive Chairman of Balloch. Mr. Ditto is a retired mining executive, who previously acted as the Vice Chairman of Kinross Gold Corporation. Mr. Buchan is the recently retired President and Chief Executive Officer of Kinross Gold Corporation. Mr. Buchan has recently been appointed as the executive Chairman of Quest Capital Corp. As more information becomes available, Balloch will issue a press release outlining further details of the private placement financing.

Balloch is a mineral exploration company with a 10% net profits interest in the El Molino mining concession owned by Lumina Copper Corp. The El Molino project lies contiguous to Lumina's El Galeno mining concessions in the Yanacocha district in Peru.

Investors are cautioned that, except as disclosed in the materials to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Balloch Resources Ltd. should be considered highly speculative. The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Balloch Resources Ltd. (TSX VENTURE:BAH)