Homeland Energy Group Ltd.

Homeland Energy Group Ltd.

October 14, 2008 02:00 ET

Homeland Energy Confirms 114 Million Ton Coal Resource and 45 Million Ton Reserve for Appolo Fuels Mines in Central Appalachian Region of United States

- Independent technical report supports valuation of US$353 million for Appolo mines

TORONTO, ONTARIO--(Marketwire - Oct. 14, 2008) - Homeland Energy Group Ltd. (TSX:HEG) ('Homeland' or 'the Company'), announces the results of an independent technical report (ITR) confirming resources and reserves for the Appolo Fuels mines, located along the Kentucky/Tennessee border in the United States. The report, undertaken by Norwest Corporation for Homeland Energy Group, confirms a measured and indicated mineral resource of 114 million short tons (103 million metric tonnes) with a saleable mineral reserve of 45 million short tons (41 million metric tonnes).

The technical report was compiled by Norwest as the culmination of Homeland's due diligence efforts in the acquisition of Appolo Fuels and associated coal marketing company, Diversified Energy. The report used a number of assumptions to arrive at a reasonable valuation for Appolo mines. Assumptions include:

- Long term coal price of US$90 per short ton (Free on Board rail car),

- Cash operating costs ranging from US$60 per short ton in the early years to $70 and $80 per short ton in the latter years,

- Capital expenditures ranging from $2.3 million in the earlier years to $10 million in mid years and decreasing again towards the end of the mine life, and

- 15% discount rate and a zero rate of inflation applied to both costs and coal prices.

Based on these assumptions, (outlined in greater detail in the report filed on www.sedar.com) Norwest's technical report supports a net present value of US$353 million for the Appolo mines, pretax constant dollar as at January 1, 2009.

The resource estimate (see Table 1) in the Norwest report is based on recent and historic drilling done on the Appolo mines properties.

Table 1 - Summary of estimated in-situ mineral resources

Inferred Measured Indicated M+I
Surface (M short tons) 5.4 26.1 14.3 40.4
Underground (M short tons) 12.3 55.2 18.77 74.0

Total (M short tons) 17.7 81.3 33.0 114.4

To estimate proven and probable mineral reserves (see Table 2), Norwest applied a 25-year mine plan to both the surface and underground Measured & Indicated resources. This mine plan was based on current operations and does not take into account the plans of Appolo management, endorsed by Homeland Management, for increased production in coming years.

Table 2 - Summary of estimated clean, recoverable mineral reserves for
Appolo coal mines

Proven Probable P+P
Clean surface reserves (M short tons) 14.0 6.4 20.4
Clean underground reserves (M short tons) 18.2 6.2 24.4
Total clean reserves (M short tons) 32.2 12.6 44.8

Appolo Fuels' headquarters are located on the outskirts of Middlesboro, Kentucky, a town with a population of about 12,000, while Diversified Energy's office is located in Knoxville, Tennessee. The Appolo mining operations are situated west of Middlesboro on property leaseholds totalling approximately 33,000 acres, and are located in both Bell County, Kentucky and Claiborne County, Tennessee. Appolo's operations consist of three company operated surface mines equipped with highwall miners; one surface mine operated by a contractor with a highwall miner; one contractor operated underground mine; and a preparation plant and rail load-out facility. Appolo has been operating on these properties since 1972, with total production in 2005, 2006, and 2007 being 1.3 million (M), 1.3M, and 1.2M clean short tons, respectively.

Within the Appolo property there are approximately nine coal zones. These coal zones are further divided into major and minor coal horizons. Overall resources were estimated for 29 different coal horizons. Coals on the Appolo properties are ranked High Volatile Bituminous A and generally utilized as thermal coal in the industrial and electric utility industries. Appolo currently produces two high grade thermal coals that are sold into the industrial market: a generally less than 1% sulphur product and an over 2.5% sulphur product. Numerous companies have conducted exploration programs on the current Appolo and adjoining properties. Appolo has drilled 478 holes since 1977. Drilling data from other local sources were also made available to Norwest. In total, data for 748 holes were provided to Norwest for evaluation.

The Qualified Persons for the preparation of the independent technical report, under the definition provided by Canadian National Instrument 43-101, are Mr. Warren A. Evenson, P. Geol. a senior geologist with Norwest,; Mr. R. Kevin Whipkey P.E., a professional mining engineer employed by Norwest, and David Miller, P.E. a professional mining engineer employed by Norwest. Mr. Evenson, Mr. Whipkey and Mr. Miller have reviewed and verified the technical content of this press release.

A copy of Norwest's Independent Technical Report on Appolo Fuels' properties has been filed on SEDAR and may be accessed at www.sedar.com.

Homeland Energy Group Ltd. (TSX:HEG) is a coal producer with operations the Witbank area of South Africa. The company also has a large-scale development property in South Africa and exploration interests in Southern Africa. Homeland is currently negotiating to acquire interests in a number of additional coal properties in eastern South Africa and neighbouring countries as well as in the United States. Homeland is a significant shareholder in Homeland Uranium Inc., a Canadian uranium exploration and development focused on projects in Niger and the United States. Homeland also has an aggressive global acquisition strategy with a focus on energy resources.

Homeland Energy Group Ltd. is currently traded on the Toronto Stock Exchange under the symbol "HEG" with 150,079,642 common shares issued and outstanding. www.homelandenergygroup.com.

Forward-Looking Statements

"This press release contains forward-looking statements. All statements, other than statements of historical fact, that address activities, events or developments that the Company believes, expects or anticipates will or may occur in the future (including, without limitation, statements regarding potential mineralization, potential mineral resources and mineral reserves and the Company's exploration and development plans with respect to Appolo mines) are forward-looking statements. These forward-looking statements reflect the current expectations or beliefs of the Company based on information currently available to the Company. Forward-looking statements are subject to a number of risks and uncertainties that may cause the actual results of the Company to differ materially from those discussed in the forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on the Company. Factors that could cause actual results or events to differ materially from current expectations include, among other things, failure to establish estimated mineral resources or mineral reserves (the mineral resource and mineral reserve figures for Appolo are estimates and no assurances can be given that the indicated levels of coal will be produced), the possibility that future exploration results will not be consistent with the Company's expectations, coal recoveries for Appolo mines being less than those indicated by the drilling carried out to date, fluctuations in coal prices and operating costs, changes in world coal markets and equity markets, political developments in the United States, fluctuations in currency exchange rates, inflation, changes to regulations affecting the Company's activities, uncertainties relating to the availability and costs of financing needed in the future, the uncertainties involved in interpreting drilling results and other geological data and the other risks disclosed under the heading "Risk Factors" in the Company's quarterly Management Discussion and Analyses filed on SEDAR at www.sedar.com. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, The Company does not intend and does not assume any obligation to update these forward-looking statements. Shareholders are cautioned not to put undue reliance on such forward-looking statements."

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