Hillsborough Resources Limited

Hillsborough Resources Limited

January 10, 2005 08:30 ET

Hillsborough Resources: Hillsborough Signs Letter of Intent to Acquire Major Land Position in Northeast Coal Fields


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: HILLSBOROUGH RESOURCES LIMITED

TSX SYMBOL: HLB

JANUARY 10, 2005 - 08:30 ET

Hillsborough Resources: Hillsborough Signs Letter of
Intent to Acquire Major Land Position in Northeast
Coal Fields

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Jan. 10, 2005) -
Hillsborough Resources Limited (TSX:HLB) is pleased to announce that it
has signed a Letter of Intent to acquire substantial coal interests in
Northeast British Columbia through the acquisition of a portfolio of
coking, PCI and thermal coal properties.

The properties are owned or controlled by Mr. David Fawcett, P.Eng., who
has extensive and successful experience in exploring and developing coal
properties in the Northeast coal fields. The acquisition is subject to,
among other things, the preparation of a definitive agreement, the
completion of due diligence and the approval of Hillsborough's board of
directors, and the Letter of Intent contains an exclusive dealings
provision in favour of Hillsborough. The terms of the acquisition will
be released on closing, and will include a mixture of cash and
Hillsborough common shares with payments conditional upon a number of
milestone achievements, including National Instrument 43-101 resource
determinations, pre-feasibility and feasibility reports and
commencements of commercial production.

Property Highlights

- Eleven properties in close proximity with a total area covering
approximately 38,500 hectares of coal licenses, both granted and under
application

- Large portion of properties is underlain by the coal-bearing Gates and
Gething metallurgical coal formations

- Large potential coal tonnage amenable to conventional open-pit and
underground mining methods

- Close to major infrastructure - CN Rail, power and the town of Tumbler
Ridge, and with access to the coal port of Ridley Terminals in Prince
Rupert

- Diversified coal product - coking, PCI and thermal coals

Details on the properties to be acquired will be the subject of future
press releases. However, summary descriptions of certain of the
significant properties are as follows:

Murray River Group

The Murray River group of properties includes properties known to
contain the Gates and Gething metallurgical coal formations, the Gates
coal measures being the source of the coal produced by the Quintette and
Bullmoose mines, as well as properties with additional exploration
potential. The group includes the rights to coal applications covering
about 22,000 hectares containing the large Five Cabin Syncline and other
coal bearing structures, and is centred about 15 kilometres southwest of
the Quintette plant-site and railhead.

Denison Mines Limited carried out early exploration work on the Five
Cabin Syncline in 1971 and 1972 and at that time reported large coal
tonnage in the Gates and Gething formations (Coal Assessment Report 601,
March 1972). Crowsnest Resources carried out further exploration work in
1981 and 1985 on several licenses in the middle of the main structure,
and based on drilling reported a cumulative coal seam thickness of about
24 metres (in 11 seams) in the Gates formation (Coal Assessment Report
718, March 1986). The Five Cabin Syncline runs the 17 kilometre length
of the Five Cabin Property and trends through the Prospect Property on
the north side of the Murray River, being two of the properties included
in the Murray River group.

An initial drill program on the Five Cabin Syncline is planned for
February through April 2005 to provide the basis for quantifying
resources and to allow preparation of a geologic report. Given
favourable results, a more extensive drill program will be undertaken
during the third quarter of 2005 to provide the design basis for a
preliminary feasibility study.

Reesor Property

The Reesor Property contains a four kilometre section of a structure
referred to as the Main Syncline, containing both the Gates and Gething
metallurgical coal formations. The syncline was explored north of the
property by Ranger Oil in the seventies, but no drilling was carried out
on the portion under application. Approximately 34% of the Gates
formation area within this syncline is held under license by another
coal developer.

The exploration potential of the property is of merit particularly given
the other developments planned in the area, the large tonnage potential
and its close proximity to the rail line running through the Wolverine
River Valley.

Bickford and Bullmoose Properties

The Bickford Property is located about 45 kilometres west of Chetwynd
and contains the Gething formation coal measures. The Bullmoose Property
is located immediately west of the former Bullmoose mine-site and also
contains the Gething coal measures. Seams in these measures are
currently being mined in the region for production of low-volatile PCI
coals with future production of coking coal products planned.

Wapiti Property

The Wapiti thermal coal property is centered about 40 kilometres north
of Tumbler Ridge, adjacent to the Heritage highway that connects the
town of Tumbler Ridge and the City of Dawson Creek. Gulf Canada
Resources Inc. carried out exploration in the area during the period
1979 through 1981, drilling 69 holes and opening 4 trenches and 2 adits.
The current Wapiti Property contains 34 of the original holes and the
two adits. The single flat-lying coal seam underlies flat-topped mesas
in situations well suited for area mining by drag-line or excavator and
truck, contour mining and high-wall mining. A drill program was recently
completed by the vendor on the Wapiti Property to provide the basis for
detail for mine design and feasibility. A complete geology report will
be prepared on this property in the first or second quarter of 2005 with
resources to be classified to National Instrument 43-101 standards.

David Slater, President & CEO, stated, "The acquisition of these
Northeast coal field properties will add tremendously to our resource
base, and allow Hillsborough to grow into a significant force within the
Canadian coal industry. The funds necessary for the first phase of
exploration have already been raised, and I am hopeful that by mid-year
we will be able to announce confirmation of a significant metallurgical
coal resource within the Murray River group. Much interest has been
shown in this coal by Indian and other Asian steel producers."

Hillsborough Resources Limited is a mining company with underground
thermal coal operations in Campbell River, British Columbia serving the
local and west-coast U.S. cement industry, a surface metallurgical and
PCI coal project in the Elk Valley region of British Columbia for which
a mine permit application is in process, and an underground thermal coal
mine in Tennessee which is in the final stages of acquisition.

"David J. Slater"

President & Chief Executive Officer

This release may contain forward-looking statements regarding the
Company's business or financial condition. Actual results could differ
materially from those described in this news release as a result of
factors including but not limited to the following: adverse due
diligence findings; re-assessments of corporate or development
objectives and requirements; additional technical developments and
considerations; unexpected increases in the costs of producing coal,
changes in international coal or transportation markets, a rapid change
in the value of the Canadian dollar particularly with respect to the US
dollar, a fundamental slow down in the North American, Asian or
worldwide economies; and other factors.

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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Hillsborough Resources Limited
    David Slater
    President & CEO
    (604) 684-9288
    (604) 684-3178 (FAX)