Homeland Energy Group Ltd.

Homeland Energy Group Ltd.

August 15, 2008 02:00 ET

Homeland Energy Provides an Update on Projects and Activities

TORONTO, ONTARIO--(Marketwire - Aug. 15, 2008) - Homeland Energy Group Ltd. (TSX:HEG) ("Homeland" or "the Company") would like to provide an update on its on-going projects and corporate activities in response to concern from stakeholders amidst the current market turmoil.

The company's cash position remains strong with approximately CAD$13.5 million cash on hand as at June 30, 2008. Additional funds may be required in the future, market conditions permitting, however, Homeland's South African subsidiary will begin cash-flowing in September with the sale of coal products from the production ramp up of the Kendal Coal Mine.

Kendal Coal Mine/Kendal Colliery

Homeland Energy announced first production at the Kendal Coal Mine in mid-July (see press release dated July 16, 2008: "Homeland Energy Groups Kendal Mine Produces First Coal") and is on schedule to complete first sales of coal to the export market. Run-of-mine production for August is anticipated to be in the range of 40,000 to 50,000 tonnes, growing to the full production rate of 150,000 tonnes per month by the end of this year.

The Company is holding coal sales contract discussions with several parties. Coal now being produced at Kendal is being sold into the spot market at current market prices. At steady-state production, cash operating costs for washed coal are expected to be less than US$30/tonne, based on saleable tonnage. Kendal Mine is scheduled to produce 1.8 million run-of-mine tonnes per year resulting in more than 850,000 tonnes per annum of saleable washed coal with the balance being Raw and Discard product.

Eloff Mining Project development on schedule

Progress on Homelands half-billion-tonne Eloff Mining Project continues on track with the completion of a pre-feasibility study anticipated for early September. The South African equivalent of an environmental impact assessment was filed with the Department of Minerals and Energy in mid-July. It is Homeland's intention to launch directly into a bankable feasibility study immediately following the completion of the pre-feasibility study.

GMR Third option in purchase of half of South African subsidiary

As has been reported, GMR Energy of Bangalore, India has completed the first two of three options to acquire 50% of Homeland Mining & Energy (Pty) SA. At this point, GMR has paid The Company CAD$30 million for a 10% ownership. GMR's third option allows for the purchase of an additional 40% for CAD$135 million by December 31, 2008 (discounted, as per the agreement, to CAD$125 million if exercised by September 2, 2008). Homeland continues to work closely with GMR as they complete their due diligence on the subsidiary's projects in South Africa.

US Acquisition proceeding to completion

On June 3, 2008, Homeland announced its intention to acquire a thermal coal producer in the Central Appalachian region of the United States. Homeland continues to work with the vendors of this operation and anticipates bringing this deal to a close within the next several weeks. The current delay in closing this deal can be attributed to due process.

Homeland Energy Group Ltd. is a producing coal company, traded on the Toronto Stock Exchange under the symbol "HEG". The company is focused on energy exploration and development in Southern Africa. Homeland owns two producing operations - the Kendal Mine near Witbank, South Africa and the Northfield site reclamation project near Dundee, South Africa; an advanced development coal project in South Africa (Eloff Coal Mining Project) as well as a number of early-stage exploration properties in the provinces of Mpumalanga and Kwa-Zulu Natal. The Company is currently negotiating to acquire interests in a number of additional coal properties in eastern South Africa and neighbouring countries. Homeland is a significant shareholder in Homeland Uranium Inc., a Canadian uranium exploration and development company focused on projects in Niger and the United States, and has several other global strategic investments. Homeland Energy Group Ltd. began trading on the Toronto Stock Exchange on March 5, 2008 and has 150,079,642 common shares issued and outstanding.

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