ONA Energy Inc.

ONA Energy Inc.

November 05, 2007 11:21 ET

ONA Energy Announces Signing of Fuel Supply Contracts for Its Coal-Fired Power Plant in China

Yongxing Power Plant Project Update

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 5, 2007) - ONA Energy Inc. (CNQ:OEIX)(FRANKFURT:O3X) is pleased to announce that the Company's 60% owned subsidiary, the Yongxing Power Plant Corporation (YPPC), has signed three annual fuel supply contracts with local coal mines for its 390 Mega-Watt (MW) coal-fired power plant in Yongxing County, in the Hunan province of China. The contracts will supply the power plant with up to 280,000 to 330,000 tonnes of coal per year. The price of coal will be based on a formula related to the heat value (kilo-joules) per kilogram as established in accordance with the State Development and Reform Commission and the State Pricing Bureau.

The project is an environmentally friendly power plant predicated upon the combustion of coal tailings in high pressure circulating fluidized bed boilers (CFB) to produce electricity. Coal tailings are waste residuals resulting from the mining of coal. For every four tonnes of coal mined, one tonne of coal tailings is produced. Landfill is the current method of disposal for tailings in the area. This will continue to represent a major environmental issue affecting ground water and local vegetation in Yongxing County without a proper handling of the tailings. The Yongxing Power Plant Project offers a solution to reduce, utilize and manage the coal tailings produced from the local coal mines.

Construction on the first 60 MW unit of the power plant is scheduled to be completed by the end of December, 2007. It is estimated that this first 60 MW unit will consume a total of 200,000 tonnes of coal and coal tailings per year. The mixture is anticipated to be a combination of one third coal to two thirds coal tailings. The pricing of coal will vary between winter and summer (winter being the highest) with the average delivered coal price of approximately 300 RMB (US$40) per tonne and the average delivered coal tailings price of 60 RMB (US$8) per tonne. The all-in cost for coal and coal tailings is expected to be 0.22 RMB (US$ 0.029) per Kilo-Watt-hour.

The Hunan Province Price Bureau has now set an initial electricity tariff for this power plant. YPPC will be paid for electricity generated during the testing/break-in period of the first 60 MW unit, which is anticipated to begin by the end of December 2007 and will last for approximately 30-45 days. Hunan Province Grid Authority will pay YPPC 0.420 RMB (US$0.06) per Kilo-Watt-hour. Yearly gross revenue of YPPC, based on the current tariff and 7,000 operating hours per year, is estimated to be 189 million RMB (US$ 25.2 million). The on-grid electricity tariffs applicable to power generating enterprises in the province will be implemented by Hunan Provincial Grid Authority in accordance to the State Development and Reform Commission and the State Pricing Bureau. Upward adjustments to the on-grid electricity tariffs are expected to be made early next year. Full operation of the power plant's first 60 MW unit is expected to be in February, 2008.

ONA Energy Inc. (www.onaenergy.com) is a Canadian-based international energy company focused on the acquisition and development of power generation projects.

This document contains certain forward looking statements which involve known and unknown risks, delays, and uncertainties not under the corporations control which may cause actual results, performance or achievements of the corporation's to be materially different from the results, performance or expectation implied by these forward looking statements. In particular the ability of Ona to fund construction of the first phase of the YPPC power plant is subject to numerous risks, including its ability to raise funds pursuant to this offering, the ability of YPPC to obtain additional debt financing, and market conditions in general. Accordingly there is no guarantee that YPPC will be able to successfully complete construction of phase one of the YPPC power plant, or if completed, that Ona will not have its interest diluted due to its inability to raise sufficient funding. The timing of completion of Phase I and commencement of commercial sales are subject to possible delays due to various risks, including the inability to raise funding in the times required, regulatory issues and other risks. In addition, forecast prices for coal and coal tailings supplies, as well as for the sale of electricity, are based on information as at the date of this document, and are subject to change.

Contact Information