Hillsborough Resources Limited

Hillsborough Resources Limited

January 11, 2006 13:49 ET

Hillsborough Resources: Hillsborough Announces Letter of Intent to Develop Oklahoma Underground Coal Mine

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Jan. 11, 2006) - Hillsborough Resources Limited (TSX:HLB) is pleased to announce the execution of a non-binding Letter of Intent ("LOI") with Farrell-Cooper Mining Company ("FCM") of Fort Smith, Arkansas, to develop the underground Heavener Mine in Heavener, Oklahoma. A considerable amount of engineering work and planning has already been performed by Norwest Engineering, a leader in coal mining engineering, and it is based on the strength of this work that Hillsborough has moved forward in discussions with FCM. The transaction envisaged by the LOI remains subject to extensive due diligence in areas such as resource estimation, environmental permitting and formal mine planning, as well as preparation of a definitive agreement and approval by the respective boards of Hillsborough and FCM. Further details of the proposed transaction will be released once a definitive agreement is signed.

The proposed underground coal mine, like Hillsborough's Crossville Mine in Tennessee, is a logical extension of open-cut mining which FCM has recently completed in the area. The coal is a low-volatile, low sulphur, high BTU metallurgical coal that is in demand by steel manufacturers, both in the United States as well as internationally.

"The Hillsborough team is very excited about the prospects of working with Farrell-Cooper Mining to bring this mine into production," stated David Slater, President and C.E.O. of Hillsborough Resources Limited. "The experience at our Tennessee mine leads us to believe that Hillsborough has significant value to add in the area of steep-dip underground mining. The quality of the product, its proximity to rail transportation routes to the gulf sea-ports, and the quality of the Farrell-Cooper team lead us to believe that this will be an excellent addition to the Hillsborough portfolio."

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, and the Crossville underground coal mine in Tennessee serving the regional power utility and industrial markets. We are also developing substantial metallurgical coal properties near Tumbler Ridge in the Northeast of British Columbia, as well as the Bingay Creek metallurgical coal project 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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