Hillsborough Resources Limited

Hillsborough Resources Limited

January 12, 2007 13:14 ET

Hillsborough Resources Provides Company Update for Beginning of 2007

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Jan. 12, 2007) - Hillsborough Resources Limited (TSX:HLB) ("Hillsborough", or the "Corporation") is pleased to provide a corporate update as it begins the 2007 year. The flagship Quinsam mine had another successful year, with all key domestic contracts renewed for multi-year terms and with pricing reflective of the strength in the thermal coal markets. In northeast British Columbia, significant successes were met with respect to Hillsborough's development projects:

- Metallurgical coal holdings were converted into a 20 per cent interest in the Peace River Coal Limited Partnership between Hillsborough, Anglo Coal Canada Inc. with 60% and NEMI Northern Energy and Mining Inc. ("NEMI") with 20%, combining the Horizon and Murray River Group properties with the Trend mine, including its coal preparation plant and rail load-out, and a 50% interest in the Belcourt Saxon limited partnership

- 30 year power supply contract was awarded by BC Hydro to AESWapiti Energy Corporation, with power to be generated by a 184 megawatt coal-biomass facility to be located on Hillsborough's Wapiti property, and Hillsborough's planned Wapiti mine to be the facility's exclusive supplier of coal.

Quinsam Mine

The Quinsam mine has increased its rate of production for 2007 to 600,000 clean tonnes per annum to meet increased demand both in its traditional west-coast markets and its overseas export market, and with the next international shipment scheduled for March 2007. During 2006, Quinsam renewed all of its key domestic contracts for multi-year terms, with pricing reflective of the strength in the thermal coal markets and annual price escalators tied to the Producer Price Index included in each. In addition, GH Fuels, a wholly owned subsidiary of Hillsborough that markets coal direct to greenhouse and small industrial operations, continued to expand sales of Quinsam's stoker coal on Vancouver Island and the lower mainland.

At the Quinsam North property, located immediately north of and adjacent to the Quinsam mine, an in-fill drilling program is being planned for the first half of 2007 in the area closest to the Quinsam mine to support mine design and reserve development. Incorporation of Quinsam North into the Quinsam mine's long-term operational plan will not only formally support the extension of the current mine life but would form the basis for possible mine expansion as well.

Peace River Coal Limited Partnership ("PRC")

The first priority for PRC is to achieve the immediate re-opening of the Trend mine and the ramp up to its full production rate of 1.6 million tonnes per annum in the first half of 2007. The modifications to Trend's coal preparation plan undertaken in late 2006, including completion of the fines wash circuit, have now been completed, on-time and on-budget. Anglo Coal, a division of Anglo American plc, markets over 90 million tonnes of coal worldwide, and Anglo Coal Canada Inc. ("Anglo Coal Canada") (indirectly a wholly-owned subsidiary of Anglo American plc) is PRC's operational manager.

The PRC team continues to grow with each of Anglo Coal Canada, NEMI and Hillsborough contributing personnel. While the operating group focuses on the re-opening of the Trend mine, PRC's development group will continue the exploration and development of its other projects, including continued development of the Horizon mine plan and exploration and in-fill drilling on several of the other Tumbler Ridge area properties. Exploration and field programs will continue as well on the properties held by the Belcourt Saxon limited partnership in which PRC holds a 50% interest. PRC is currently preparing its detailed operating and development plans for 2007 and the partners will provide particulars on those plans as they are finalized in early 2007.

Wapiti Project

AESWapiti Energy Corporation ("AESWapiti") (a Canadian subsidiary of The AES Corporation) and Hillsborough are now in the process of obtaining regulatory and permit approvals for the 184 megawatt power generation facility and the Wapiti thermal coal mine. Subject to these approvals, construction of the power generation facility is expected to commence in the fourth quarter of 2007 with primary mine development beginning one year prior to the opening of the power generation facility, expected in 2010.

Currently, Hillsborough is completing a full resource update at Wapiti to incorporate the results from its 2006 drill program, under which holes were drilled on all existing resource blocks. This update is expected to significantly increase resources on the property and to support evaluation of production expansion for the regional market, the export market or both. In the latter half of 2006, GH Fuels undertook an assessment of the regional greenhouse and small industrial markets in northeastern British Columbia and northwestern Alberta, with very encouraging results. Hillsborough, through GH Fuels, will continue to develop these markets using the model of GH Fuels' success on Vancouver Island with Quinsam coal.

David Slater, President and C.E.O., states, "I am pleased that Hillsborough met its 2006 goal of diversifying its product base, through our 20 per cent interest in PRC and the success of the AESWapiti project. We are now both a thermal and metallurgical coal producer: a multi-mine, multi-projects company. This next year will see several large projects move through the development stages and closer to fruition."

Hillsborough Resources Limited is a coal mining company that operates the Quinsam underground thermal coal mine in Campbell River, British Columbia serving the local and west-coast U.S. cement industry. The Corporation holds a 20% interest in the Peace River Coal Limited Partnership, which has substantial metallurgical coal properties both in production start-up and under development near Tumbler Ridge, British Columbia. In addition, the Corporation is developing the Wapiti thermal coal mine in the same region to be the exclusive supplier commencing in 2010 for a power generation plant to be constructed and operated on the property by AESWapiti Energy Corporation. Hillsborough also holds the Bingay Creek metallurgical coal property located in the Elk Valley region of Southeast British Columbia.

This release may contain forward-looking statements regarding the Company's business or financial condition. All statements in this release, other than statements of historical facts, that address future production, reserve potential, exploration drilling, exploitation activities and events or developments that the Company expects are forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. 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 exploration or development results; 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. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements.

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