Homeland Energy Group Ltd.
TSX : HEG

Homeland Energy Group Ltd.

February 11, 2010 15:23 ET

Homeland Energy Group Files Preliminary Rights Offering Prospectus

TORONTO, CANADA--(Marketwire - Feb. 11, 2010) - Homeland Energy Group Ltd. (TSX:HEG) ("Homeland" or the "Company") is pleased to announce that it has filed a preliminary short form prospectus relating to a rights offering to issue share capital and raise approximately CAD$8,750,000.

The company's largest shareholder, GMR Energy Limited ("GMR") has agreed to provide a standby commitment equivalent to approximately CAD$8,000,000 that represents over 90% of the total rights offering. GMR Energy (Mauritius) Limited (the "Affiliated Lender") has provided this to the Company as a shareholder loan that is intended to significantly support this transaction. On January 15, 2010, the Affiliated Lender advanced to the Company a further sum of approximately CAD$3,000,000 as an addition to the loan announced on January 8, 2010, bringing the total advanced to the Company to just under CAD$8,000,000. Documentation for this second tranche is currently being finalized.

Given the above, the TSX is requiring Homeland to discount this rights offering by 25% from the 5 day value weighted average price that is to be determined on the day the final prospectus is approved. The Company wishes to point out that the pricing methodology as proposed is based on this TSX requirement and is not intended to reflect the underlying value of the business.

The net proceeds of this rights offering will be used to repay this outstanding shareholder loan and for general working capital purposes.

Furthermore, the proceeds from (i) the private placement of 27,465,068 common shares of the Company to GMR (see Press Release dated December 7, 2009) and (ii) the aggregate loan amount as above, has fully satisfied the fund infusion requirement under the Nedbank credit facility (see Press Release dated November 18, 2009).

The record date and the expiry date for the Offering will be determined at the time of filing of a final short form prospectus. Holders of units of the Company that fully exercise their rights will be entitled to subscribe for additional units, if available, that were not subscribed for by other rights holders. The rights will be exercisable for at least 21 days following the date of mailing of the final prospectus. The Offering is subject to regulatory approval, including the approval of the TSX.

Homeland Energy Group Ltd. (TSX:HEG) is a coal producer with operations in the Witbank area of South Africa. The company also has a large-scale development property in South Africa and exploration interests in Southern Africa. Homeland will continue to seek out interests in additional coal projects in South Africa and neighbouring countries as well as internationally. Homeland is a shareholder in Homeland Uranium Inc., a Canadian uranium exploration company focused on projects in Niger and the United States. Homeland Energy Group Ltd. is currently traded on the Toronto Stock Exchange under the symbol "HEG" with 302,115,756 common shares issued and outstanding. www.homelandenergygroup.com.

Please visit www.homelandenergygroup.com

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