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CEO Update September 2014

September 2, 2014

Dear Shareholders,

In the nine months since my last CEO Update, our entire team has been focused on increasing the value of Kivalliq, despite the continued challenging market environment for uranium explorers and TSX-Venture listed companies. We feel our work related to the Angilak Property has continued to reduce project risk, while our acquisitions of the Baker Basin1 (Q4 2013) and Genesis (Q1 2014) Properties have added significant value to our portfolio of high quality uranium assets. In particular, the Genesis Property is an excellent case study of how Kivalliq has provided our shareholders with exposure to exploration, news flow, and potential mineral discoveries, without significant share dilution. A recently closed financing also gives Kivalliq additional capital for strategic exploration activities in Nunavut and Saskatchewan.

Answering Important Questions - On February 27, Kivalliq provided an Angilak Property project update which summarized ongoing results from metallurgical and beneficiation testing performed on Lac 50 Trend uranium mineralization, including locked cycle alkaline leach tests, yellowcake precipitation, and a radiometric ore sorting study.2 We noted that the combination of high uranium recoveries and low reagent consumption will have a positive impact on any future project economics.

Genesis Property – Kivalliq’s New Exploration Project in Saskatchewan, Canada
Low-Cost Acquisition - In January, Kivalliq staked a 100% interest in the 491,154 acre “Genesis Property.”3 Northeast of Saskatchewan’s Athabasca Basin and along the Western Wollaston Tectonic Domain, the Genesis Property boundary commences 25 kilometers northeast of the Eagle Point uranium mine operated by Cameco Corporation and extends 90 kilometers to the northeast along this prospective geological and structural domain to the Manitoba border. In terms of exploration, the surrounding area has become increasingly active since Kivalliq staked Genesis.

Deal Signed - In May, Kivalliq signed a Letter of Intent with a company now named Roughrider Exploration Limited, “Roughrider.”4 The agreement grants Roughrider an option to acquire an 85% interest in the Genesis Property in exchange for 20% of the issued and outstanding shares of Roughrider on a post-transaction/post-financing basis; $1 million in cash payments; and $5 million in exploration expenditures over four years. Upon acquisition of an 85% interest in Genesis by Roughrider, Kivalliq’s remaining 15% interest in Genesis will be carried through to the completion of a bankable feasibility study and a recommendation from Roughrider’s board to proceed to commercial production. Kivalliq will be project operator for at least the first year of the agreement.

Initial Return on Investment - In July, pursuant to the Mining Option Agreement between Kivalliq and Roughrider, Kivalliq received an initial cash payment of CDN$125,000 and acquired ownership of 1,969,828 common shares of Roughrider (TSX-V: REL).5 The REL shares issued to Kivalliq are subject to a 12-month hold period. As a result of this share acquisition, Kivalliq presently owns 10% of the issued and outstanding shares of Roughrider.

Additional Upside - On August 7, Kivalliq and Roughrider announced the commencement of the 2014 exploration program at the Genesis Property.6 Budgeted at CDN$1 million, the proposed program will be operated by Kivalliq and fully funded by Roughrider, and will consist of the following: 6,000 kilometres of helicopter borne geophysical surveying; lake sediment sampling; and, prospecting, mapping and geochemical soil sampling. The program is expected to run until late September or early October, with a goal of advancing a number of uranium targets for drill testing.

Better Times Ahead
As an industry, we continue to await clarity on the timing of restarts of Japanese nuclear reactors, as this may provide a catalyst for a reversal in the three year trend of pricing weakness in the uranium spot market. Generally, we have found an improving “mood” amongst industry participants and a corresponding increase in staking activity and financings for uranium exploration in Canada. On August 1, Kivalliq closed a private placement of 5,172,728 units at a price of $0.22 per unit for total gross proceeds of $1,138,000.7 Kivalliq will use the net proceeds from this financing to fund mineral exploration in Saskatchewan and the Nunavut Territory, Canada.

We look forward to providing you another CEO update early in the New Year, this time with initial results from our 2014 exploration campaign at the Genesis Property, and our plans for the Company in 2015.

On behalf of the entire Kivalliq Team, thank you for your continued support.

Best regards,

"Jim Paterson"
James R. Paterson, CEO
Kivalliq Energy Corporation


Jeff Ward, P.Geo, President of Kivalliq and a Qualified Person for Kivalliq, has reviewed and approved the scientific and technical information contained in this release. For disclosure related to the inferred resource for the Lac 50 Trend uranium deposit, please refer to Kivalliq’s news release of March 1, 2013.

About Kivalliq Energy Corporation

Kivalliq Energy Corporation (TSX-V:KIV) is a Vancouver-based company exploring for uranium on the 491,154 acre Genesis Property located northeast of Saskatchewan’s Athabasca Basin. In addition, Kivalliq holds Canada’s highest-grade uranium resource outside of Saskatchewan. Its flagship project, the 304,257 acre Angilak Property in Nunavut Territory, hosts the Lac 50 Trend with a NI 43-101 Inferred Resource of 2,831,000 tonnes grading 0.69% U3O8, totaling 43.3 million pounds U3O8. Kivalliq’s comprehensive exploration programs continue to advance the Lac 50 Trend and demonstrate the “District Scale” potential of the Angilak Property.

Kivalliq’s team of northern exploration specialists recently entered into a property option agreement with Roughrider to explore the Genesis uranium property in Saskatchewan. Kivalliq has also forged strong relationships with sophisticated resource sector investors and Angilak Property partner Nunavut Tunngavik Inc. (“NTI”). Kivalliq was the first company to sign a comprehensive agreement to explore for uranium on Inuit Owned Lands in Nunavut Territory, Canada and is committed to building shareholder value while adhering to high levels of environmental and safety standards and proactive local community engagement.

For further information about, Kivalliq Energy Corporation, please visit our website at www.kivalliqenergy.com or contact Investor Relations toll free at 1.888.331.2269, at 604.646.4527, or by email at [email protected].

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

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Certain disclosures in this release 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 the completion of the plans and projects. Readers are cautioned not to place undue reliance on forward-looking statements. For disclosure related to the inferred resource for the Lac 50 Trend uranium deposit, please refer to Kivalliq’s news release of March 1, 2013. 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.

Related 2014 News Releases

1 October 15, 2013: Kivalliq Acquires Baker Basin Uranium Property in Nunavut Territory, Canada
2 February 27, 2014:Kivalliq Announces Additional Positive Results From Metallurgical Tests and Radiometric Ore Sorting Study
3 January 13, 2014: Kivalliq Acquires Genesis Property in Northeastern Saskatchewan, Canada
4 May 21, 2014: Kivalliq Partners with Westham to Explore Genesis Property in Northeastern Saskatchewan
5July 16, 2014: Kivalliq Acquires Shares of Roughrider Exploration Limited
6 August 7, 2014: Kivalliq and Roughrider Commence Exploration Program at Genesis Property
7 August 1, 2014: Kivalliq Closes Final Tranche of $1.138 Million Non-Brokered Private Placement

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