Hillsborough Resources Limited

Hillsborough Resources Limited

November 30, 2006 08:57 ET

Hillsborough Resources Announces: Hillsborough, Anglo Coal and NEMI Complete Consolidation of Northeast BC Coal Properties Into "Peace River Coal LP"

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 30, 2006) - Hillsborough Resources Limited (TSX:HLB) ("Hillsborough", or the "Corporation") is pleased to announce the establishment of the Peace River Coal Limited Partnership ("Peace River Coal"), into which the north-eastern British Columbia metallurgical coal assets of Hillsborough, Anglo Coal Canada Inc. ("Anglo Coal", indirectly a wholly-owned subsidiary of Anglo American plc (LSE:AAL)) and NEMI Northern Energy and Mining Inc. (TSX:NNE.A) ("NEMI") have been consolidated. Anglo Coal receives a 60% interest and Hillsborough and NEMI each receive a 20% interest in Peace River Coal. Anglo Coal will be the operating manager of the partnership, and the entire production of Peace River Coal will be marketed by Anglo Coal as well.

David Slater, President and CEO, said "Hillsborough's strategic goals have included diversifying its product and moving into commercial production within the Canadian metallurgical coal market. The establishment of Peace River Coal and the benefits realized from the crystallization of Anglo Coal's interests in our properties are examples of Hillsborough's follow-through to meet these objectives and maximize our north-east metallurgical coal assets. This consolidation represents an important step in the development of the north-east coal fields, and Hillsborough is pleased to be part of this strong partnership". He further stated that "The combined reserves and resources and obvious operational and logistical synergies demonstrate a long-term and viable strategy providing Hillsborough with a real opportunity to see its metallurgical coal asset base brought to commercial production".

Each of Hillsborough and Anglo Coal has contributed their respective interests in their north-east British Columbia metallurgical coal assets, being the Horizon property group and the Murray River property group plus Hillsborough's Bickford property, and Anglo Coal has crystallized the full vesting of its interests in the Horizon and Murray River groups for the consideration outlined in its original coal projects agreement with Hillsborough. Anglo Coal has crystallized its 60% interest in the Horizon property group as full and final settlement of the approximately $4.7 million principal plus accrued interest on its loan to Hillsborough, and has crystallized its 70% interest in the Murray River property group for approximately $10.7 million, comprised of the unspent portion of its $8 million exploration expenditure obligation required to earn a 60% interest plus a $5 million amount required to vest to 70%.

Hillsborough's contribution for its 20% interest in Peace River Coal was comprised of its 40% interest in the Horizon group, 30% interest in the Murray River group and 100% interest in Bickford, plus payment of $6.9 million to NEMI. The payment to NEMI has been made from the $10.7 million received from Anglo Coal. Of the remaining $3.8 million, Hillsborough has received $1.8 million in cash and the balance of $2.0 million has been paid into Peace River Coal for application against Hillsborough's share of future cash calls that may be made to the partners.

Anglo Coal's contribution for its 60% interest in Peace River Coal was comprised of its 60% interest in the Horizon group, 70% interest in the Murray River group, plus $76.1 million in cash and payments consideration to NEMI.

NEMI's contribution for its 20% interest in Peace River Coal was comprised of its Trend coal property and related assets, including coal preparation plant and rail load-out, and its 50% interest in the Belcourt Saxon limited partnership, plus receipt from the other partners of cash and third party payments totalling $83 million as well as additional consideration in the form of a carry of up to $18 million for any cash calls required of the partners until December 31, 2007.

As a consequence of the above and as required under the terms of the agreements by which it acquired the Horizon and Murray River properties, Hillsborough has issued 1,500,000 and 1,250,000 common shares respectively to the vendor of those properties as consideration payments. In addition, to complete the vesting of its 100% interest in the Bickford property, Hillsborough has issued 325,000 common shares to the vendor of that property. Subsequent to entering into the original purchase agreements for these properties, the primary vendor was hired by Hillsborough in, and continues to hold, a senior management position.

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.

David J. Slater, President & Chief Executive Officer

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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