Hillsborough Resources Limited
TSX : HLB

Hillsborough Resources Limited

March 31, 2009 21:33 ET

Hillsborough Resources Limited Announces Agreement With Vitol

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 31, 2009) - Hillsborough Resources Limited (TSX:HLB) (the "Corporation" or "Hillsborough") is pleased to announce that it has reached agreement with the Vitol Group of Companies to remove the fixed price component of their off-take agreement in respect of the remaining 520,000 MT of Quinsam thermal coal which had been scheduled for shipment during 2009 and 2010. In consideration, Vitol will pay Hillsborough USD $17,500,000, of which approximately USD $5.74 million will be used to repay term debt plus related interest owed to Vitol by Quinsam, and approximately USD $10.18 million will be used to repay convertible debt plus related interest owed to Vitol by Hillsborough. These sums had been used to cover cash calls for Hillsborough's investment in Peace River Coal.

"The Vitol agreement will give immediate release to Hillsborough of a good portion of the profits inherent in the fixed price coal sales agreement which we signed with Vitol early in 2008 when coal prices were near all time highs," says David Slater, President & CEO. "As we expect to favourably negotiate the timing of the future shipments, it may also reduce production risk associated with meeting very tight deadlines for coal shipments under the contract, it also mitigates the very significant penalties associated with not meeting the stringent quality specifications included in the off-take contract."

The Corporation is also please to announce that it has filed its December 31, 2008 Financial Statements, Management Discussion & Analysis and Annual Information Form on SEDAR (www.sedar.com).

About the Corporation

Hillsborough Resources Limited is a coal mining company that:

- Operates the 500,000 tpy Quinsam underground thermal mine near Campbell River, British Columbia, serving the local and west-coast U.S. cement industry with increasing sales into the export market.

- Is a limited partner in the Peace River Coal Limited Partnership (with 13.4%), which has substantial metallurgical coal properties both in production (Trend Mine) and under development near Tumbler Ridge, British Columbia.

- Owns the Crossville Mine in Tennessee, which remains in reclamation at this time.

- Holds the Wapiti thermal coal property north of Tumbler Ridge, and is planning development of a mine.

- Holds the Bingay Creek metallurgical coal property located in the Elk Valley region of southeast British Columbia.

Certain statements and information herein, including all statements that are not historical facts, contain forward-looking statements and forward-looking information within the meaning of applicable securities laws. Such forward-looking statements or information include but are not limited to statements or information as to estimates, forecasts, future financial or operating performance of the Corporation, future production, costs of production, capital requirements, operating expenditures, reserve potential, exploration drilling, exploitation activities and activities and events or developments that we expect to occur. Often, but not always, forward-looking statements and information can be identified by the use of words such as "may", "will", "should", "plans", "expects", "intends", "anticipates", "believes", "budget", "forecasted" and "scheduled" or the negative thereof or variations thereon or similar terminology.

With respect to forward-looking statements and information contained herein, we have made numerous assumptions including among other things, assumptions about prices, anticipated costs and our ability to achieve our goals. In particular, our statements regarding future production expectation is based on current existing current resource/reserve estimates, production contracts in place, historical costs and mining conditions.

Forward-looking statements and information are necessarily based upon a number of estimates and assumptions that, while considered by management to be reasonable and to be based on reasonable assumptions, are inherently subject to significant business, economic and competitive uncertainties and contingencies and involve known and unknown risks. Readers are cautioned that any such forward-looking statements and information are not guarantees and there can be no assurance that such statements and information will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Corporation's expectations include adverse exploration or development results; interruptions in the ability of the Corporation to produce coal from any of its mines; inability to meet production volumes required; 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. See our recent annual information form and quarterly and annual management's discussion and analysis filed on SEDAR for additional information on risks, uncertainties and other factors relating to the forward-looking statements and information.

Although we have identified factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements or information, there may be other factors that cause actual results, performance, achievements or events not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on the forward-looking statements or information. We expressly disclaim any intention or obligation to update or revise any forward-looking statements and information whether as a result of new information, future events or otherwise, except as required by law. All written and oral forward-looking statements and information attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements.

Contact Information

  • Hillsborough Resources Limited
    David Slater
    President & C.E.O.
    (604) 684-9288
    or
    Hillsborough Resources Limited
    Ian Kirk, C.A.
    C.F.O.
    (604) 684-9288
    (604) 684-3178 (FAX)
    Website: www.hillsboroughresources.com