June 15, 2009
Vancouver, British Columbia: Red Hill Energy (TSX-V symbol RH) announced today that it has signed an agreement with Falcon Mining AG of Zug, Switzerland whereby Falcon Mining will acquire a 100% interest in Red Hill Mongolia LLC, a wholly owned subsidiary of Red Hill Energy, which owns a 100% interest in Red Hill’s Ulaan Ovoo coal project in northern Mongolia. Hereafter Falcon Mining LLC will assume operational activities and incur 100% of all costs pertaining to pre-production, coal mine development and managing all coal production activities at Ulaan Ovoo. Launching of the Ulaan Ovoo coal project by Falcon Mining will facilitate the supply of coal to support
The Mongolian government has granted the Ulaan Ovoo coal project the major pre-requisite approvals required prior to commencing with coal mining operations in
Under the terms of the agreement Falcon Mining has agreed to pay Red Hill Energy US$30,000,000 with the first US$3,000,000 due within 14 days of Red Hill Energy receiving both shareholder and TSX-V regulatory approval. Eight months thereafter an additional payment of US$7,000,000 will be made, followed by a further US$10,000,000 within 12 months and finally, three annual payments of US$3,333,333 totaling US$10,000,000. Pursuant to the agreement, the shares of Red Hill Mongolia LLC will be transferred to Falcon Mining following receipt by Red Hill of US$10,000,000 of the purchase price, but will be held in escrow, along with other documentation, until such time as the full $30,000,000 has been paid. All payments are non-refundable once made, provided however that in the event Red Hill is unable to complete the transfer of the shares upon the date Falcon Mining is to pay the US$7,000,000 payment due to certain specific circumstances, Red Hill will refund the US$3,000,000 cash payment previously made by Falcon Mining or will grant to Falcon Mining a 2% net smelter return royalty over the Ulaan Ovoo project, which may be purchased by Red Hill at any time for US$3,000,000. In conjunction with the aforementioned transaction, Red Hill Energy has secured an option to purchase the outstanding NSR for a period of 90 days from the NSR holder for a price of US $1.350 million. No finder’s fees are payable in respect of the transaction and the transaction is at arm’s length.
Ranjeet Sundher, President of Red Hill, stated today that:
“We are very happy to have Falcon Mining advance Ulaan Ovoo to production for the benefit of all Mongolians”
The Ulaan Ovoo /Falcon transaction represents less than 20% of Red Hill Energy’s combined measured and indicated tonnes of thermal coal. (see Red Hill news October 25, 2007). Red Hill Energy retains in 100% ownership of both the Chandgana Tal and Chandgana Khavtgai coal projects, located in the
The following tables outline the individual tonnage and quality of remaining Red Hill Energy coal including average stripping ratios and seam thicknesses.
|
PROJECT/ BASIN |
MEASURED Tonnes |
INDICATED Tonnes |
MEASURED & |
INFERRED |
|
CHANDGANA TAL |
141.3 million |
(none) |
141.3 million |
(none) |
|
CHANDGANA |
188.7 million |
489.7 million |
678.4 million |
440 million |
|
TOTAL |
330.0 million* |
489.7 million* |
819.7 million* |
440 million* |
|
PROJECT |
ASH (%) |
SULFUR (%) |
BTU/lb |
Kcal/kg |
STRIPPING RATIO (Avg) |
SEAM THICKNESS |
|
CHANDGANA TAL |
12.49 |
0.68 |
7,628 |
4,238 |
0.53:1 |
40 metres |
|
CHANDGANA KHAVTGAI |
10.34% |
0.53% |
7,645 |
4,358 |
2.1:1 |
45.4metres |
* NI 43-101 mineral resources on Red Hill Energy’s coal were previously reported/published as follows: Ulaan Ovoo – please see September 06, 2006 Red Hill press release & subsequent October, 2006 SEDAR Filing: “Red Hill Energy, Inc. Scoping Study Ulaan Ovoo Coal Deposit”/ Chandgana Tal – please see September 10, 2007Red Hill press release & subsequent September 11, 2007 SEDAR filing: “Technical Report on the Coal Resources of the Chandgana Tal Coal Project Khentii Aimag (Province) Mongolia” / Chandgana Khavtgai – please see October 5, 2007 Red Hill press release & subsequent January 09, 2008 SEDARR filing: “Technical Report on The Coal Resources of The Chandgana Khavtgai Coal Resource Area, Khentii Aimag, Mongolia” – The Company reminds shareholders that all Red Hill coal is classified as “Resources” and not “Reserves” under N1 43-101 reporting requirements, and specifically that mineral resources that are not mineral reserves do not have demonstrated economic viability.
Falcon Mining has indicated that it fully intends to continue supporting initiatives of Mongolian communities and projects sponsored and assisted by Red Hill Energy including the Dolma Ling Community Centre which provides medical services, meals, education and other vital services to an impoverished neighborhood of
Red Hill Energy remains active in
Shareholder approval for Falcon Mining transaction will be sought during the Company’s forthcoming Annual and Special General Meeting.
Glenn S. Griesbach (P.Geo.), Geologist, is the Company’s qualified person as defined by National Instrument 43-101 and has reviewed and approved the technical information contained in this press release.
ABOUT RED HILL ENERGY INC.
Red Hill Energy Inc. is a junior resource company trading on the TSX-Venture Exchange under the trading symbol RH. The Company is advancing over one billion tonnes of 100% owned coal from two Mongolian coal basins towards production. Red Hill has a full-time office in
Red Hill Energy Inc.
G.
For further information:
Telephone 604.642.COAL (2625)
Email: info@redhillenergy.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.