KAP RESOURCES ANNOUNCES AGREEMENT.

VANCOUVER, British Columbia--(BUSINESS WIRE)--Nov. 28, 1994-- Paul L. Deutz, Jr., Chairman of the Board for KAP Resources Ltd. (VSE:KAR) is pleased to announce that the Company has reached an agreement with a consortium of Canadian potash producers for their participation in the Yolanda Natural Nitrates Project in Chile.

The producers are members of Canpotex Ltd. and include Potash Corporation of Saskatchewan Inc., Cominco Fertilizers, Inc., International Minerals & Chemicals Corporation (Canada) Limited, Kalium Canada, Ltd.

The Vigoro Corporation, the parent of Kalium Canada, Ltd., which owns and operates a potash mine near Belle Plaine, Saskatchewan, has recently entered into a letter of intent to purchase the Central Canada Potash mine.

The participation will consist of an equity investment and the supply of potash feed stock required by the Yolanda Project, together with a subsidiary of Potash Corporation of Saskatchewan acting as exclusive sales agent outside Chile for all potassium nitrate produced by the Project.

The potash producers will in the aggregate invest U.S. $2.5 million for approximately 2,456,428 Common shares, and will receive warrants to acquire a further approximately 2,456,428 Common shares at CDN $ 1.40 per share. The Company will be able to compel the exercise of these warrants upon certain conditions.

Accordingly, the group's total commitment is U.S. $5 million and the total number of shares issuable represents approximately 19% of Kap's presently outstanding shares (after giving effect of the placement). PCS's investment is the largest of the investor group, representing approximately U.S. $2,875,000 million.

IMC will invest U.S. $800,000, Kalium U.S. $950,000, and Cominco U.S. $375,000. The investment proceeds will be used as part of the project financing required for the Yolanda Project, which is held by KAP's wholly owned subsidiary, Minera Yolanda S.A. The placement is subject to regulatory approval.

Potash Corporation of Saskatchewan Sales Inc., which is a wholly owned subsidiary of PCS, has agreed with KAP Resources to become the exclusive worldwide export marketing and sales agent for Minera Yolanda's potassium nitrate products. Potash Corporation of Saskatchewan produced and sold nearly 4 million tonnes of potash in the world market in 1993.

Approximately one-half of PCS's sales volume of potash is exported around the world. Minera Yolanda is expected to produce approximately 250,000 metric tonnes of potassium nitrate annually at full production. PCS Sales has agreed to sell minimum annual volumes of potassium nitrate, which satisfies the required financing conditions.

This agreement will provide for the further development of the market for a high value potash fertilizer, potassium nitrate, which will be of benefit to both companies.

Minera Yolanda will also produce sodium nitrate and iodine. It is anticipated that Minera Yolanda's sales staff will coordinate these sales, but, PCS Sales and Minera Yolanda may enter into further agreements for the sale of these products.

An agreement in principle has been reached with Canpotex Limited for a long term potash supply arrangement. Canpotex Limited is a Canadian export company owned by Canada's largest potash producers. Under this agreement, Minera Yolanda will purchase from Canpotex all of Yolanda's requirements of potassium chloride.

The agreement provides the Company with a long term, consistent, high quality supply of potassium chloride.

The combination of the equity investment, the sales representation agreement and arrangements relating to potash feed stock represents a significant step in the development of KAP's Yolanda Project. It is expected that this will allow Kap to secure commitments for the remaining financing components within a reasonable time. Kap expects to be in production by late 1996.

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Note to Editors: The Vancouver Stock Exchange has neither approved nor disapproved the information contained in this news release.

CONTACT: KAP Resources Ltd., Vancouver

Ted J. Roth, 619/943-0826