Hillsborough Resources Limited

Hillsborough Resources Limited

March 21, 2005 08:07 ET

Hillsborough Resources: Hillsborough Closes Acquisition of Northeast Coal Properties


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: HILLSBOROUGH RESOURCES LIMITED

TSX SYMBOL: HLB

MARCH 21, 2005 - 08:07 ET

Hillsborough Resources: Hillsborough Closes
Acquisition of Northeast Coal Properties

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - March 21, 2005) -
Hillsborough Resources Limited (TSX:HLB) is pleased to announce that it
has closed the acquisition of the northeastern British Columbia coal
holdings controlled or under application by Mr. David Fawcett.

The 11 properties covered by the transaction are located southwest of
Tumbler Ridge, BC, and cover almost 40,000 hectares. Eight of the
properties contain coking coal from the Gates formation, two contain PCI
and coking coals from the Gething formation, and one, known as the
Wapiti property, contains thermal coal.

Five Cabin Property

The primary focus property is the Five Cabin syncline, which forms part
of the Murray River group of properties. The Five Cabin was explored by
Denison Mines Limited in the 1970's, which filed Coal Assessment Report
# 601, dated March 15, 1972, with the BC Government. This filing
reported a resource estimate of 450 million tonnes of coal in the Gates
formation and 160 million tonnes in the Gething formation, based on a
cumulative coal seam thickness of 15.2 metres in the Gates formation and
4.6 metres in the Gething formation. Further support to the resource
estimate was provided by work done by Crowsnest Resources in the 1980's,
described in Coal Assessment Report #718 filed in March 1986 with the BC
Government. Readers must be cautioned, however, that these resources are
historical estimates which have not been confirmed by Hillsborough, and
the resource estimation procedures and classification criteria may not
have been in accordance with those now prescribed under National
Instrument 43-101 ("NI 43-101"). While Hillsborough considers these
historical estimates to be relevant to the property, exploration work
must be carried out by the company before current resource estimates can
be made in accordance with NI 43-101.

An initial drilling program is now underway on the northwest third of
the main deposit to confirm stratigraphy, seam thickness and coal
characteristics. With this program, Hillsborough is targeting early
definition of an initial resource amenable to open-pit mining. A NI
43-101 report will be prepared upon completion of the initial
exploration, expected by June 30, 2005. An extensive follow-up drilling
and sampling program is planned for the summer of 2005 to delineate a
resource estimate within the total deposit area.

The property lies some 15 kilometres southwest of the now-closed
Quintette mine, close to railhead and easily accessed by all-weather
gravel roads via the Murray River valley.

Murray River Group

The remainder of Murray River group comprises five additional
properties, with three having known presence of the Gates and Gething
coal measures and two having exploration potential. Production from
these properties would likely be processed through the centrally located
Five Cabin wash plant given their proximities. Initial mapping and
drilling programs will be conducted on these properties during summer
2005 to outline major structures and to identify resource blocks for
further exploration and development.

Consideration

The initial payment for the property acquisitions by Hillsborough has
been $300,000 for the Murray River Group and two additional
metallurgical coal and PCI properties known as the Reesor and Mesa, plus
$100,000 for the Wapiti, Bickford and Bullmoose properties. Further
consideration is payable as follows:

Five Cabin property

1. 800,000 Hillsborough shares upon completion of an acceptable NI
43-101 report on the Five Cabin property;

2. $500,000 and 1,000,000 Hillsborough shares upon completion of an
acceptable pre-feasibility study on the Five Cabin property;

3. $500,000 and 1,000,000 Hillsborough shares upon completion of an
acceptable bankable feasibility study and submission of mine plan and
permit applications; and

4. $1,000,000 and 1,500,000 shares upon commencement of commercial
production.

Other Murray River Group properties and Reesor and Mesa

1. In respect of each property, 2,000 Hillsborough shares for each
100,000 tonnes of measured, indicated and inferred resources defined
under an acceptable NI 43-101 report where a minimum 10 million tonnes
on the property is so identified; and

2. In respect of each property, a further 3,000 Hillsborough shares per
100,000 tonnes of resources upon completion of an acceptable
pre-feasibility study.

Wapiti property

1. 225,000 Hillsborough shares upon completion of an acceptable NI
43-101 report; and

2. Upon completion of an acceptable pre-feasibility study, 625,000
shares plus an additional 1,250 shares for each 100,000 tonnes of coal
resource identified in excess of 20 million tonnes.

Bickford property

1. Where a minimum 5 million tonnes of measured, indicated and inferred
resources are defined under an acceptable NI 43-101 report, 2,000
Hillsborough shares for each 100,000 tonnes of coking coal or PCI
resource identified and 1,200 shares for each 100,000 tonnes of thermal
coal identified; and

2. Upon completion of an acceptable pre-feasibility study, a further
3,000 shares per 100,000 tonnes of coking coal or PCI resource
identified and 1,800 shares for each 100,000 tonnes of thermal coal
identified.

With respect to each property, Hillsborough has the right to return the
property to the vendors at any time, and any consideration remaining to
be paid in respect of that property would no longer be payable.
Hillsborough has granted to the vendors a 1% mine gate royalty in
respect of all eleven properties acquired.

David Slater, President & CEO of the company stated, "This acquisition
gives Hillsborough a major position in the Northeast coalfields, with
well-located properties and the opportunity to become a major coking
coal producer. We have already had a number of meetings with major
international companies interested in partnering with us on the
development of these properties and establishing a market for the coal,
and discussions are ongoing."

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
Crossville underground thermal coal mine in Tennessee which is currently
being brought into commercial production, and the Bingay surface
metallurgical and PCI coal project in the Elk Valley region of British
Columbia for which a small-mine permit application is currently being
processed.

David J. Slater, President & Chief Executive Officer

This release may contain forward-looking statements regarding the
Company's business or financial condition. 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; 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.

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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Hillsborough Resources Limited
    David Slater
    President & CEO
    (604) 684-9288
    (604) 684-3178 (FAX)