Homeland Energy Group Ltd.
TSX : HEG

Homeland Energy Group Ltd.

June 15, 2010 09:49 ET

Homeland Energy Provides Update on Kendal

TORONTO, CANADA--(Marketwire - June 15, 2010) - Homeland Energy Group Ltd. (TSX:HEG)("Homeland" or the "Company") is pleased to report that it has now completed its coal sales contracts. Consequently, coal dispatched for May was 121,000 tonnes, which was the highest since the mine began operations.

The Company has now reached its target of 70% of washed product and 100% of low grade coal, which consists of No. 4 seam run of mine ("ROM") and Discard, being sold on contract. The contracts vary from 6 month agreements, to 1 year and 3 year agreements.

At a current ROM production rate of 100,000 tonnes per month the Company is yielding an average of 45% which equates to 45,000 tonnes of product. The targeted yield is 55% and the new plant contractor is implementing plant modifications to increase the yield. About 31,500 tonnes are sold on contract, and 13,500 tonnes are sold through traders who take coal from Homeland on a consistent basis. Stockpiles are rapidly reducing to more acceptable levels.

The Company currently has approximately 700,000 tonnes of discard on stock which will be sold off over the next 7 months at the rate of 100,000 tonnes per month. There is currently approximately 180,000 tonnes of 4 seam ROM on stock which will be sold over the next 3 months at 50,000 tonnes per month. A 40,000 tonne stock of large and small nuts will be reduced to about 15,000 tonnes.

A recent strike by Transnet, the main rail freight transport company, affected the mine significantly by the loss of at least 6 trains, and by preventing the delivery of Magnetite which is used in the coal processing plant. The strike has now ended. Production was also affected by excessive rain during the first week of the month of May.

Homeland re-tendered the plant operation and a new contract was awarded. The new operator has improved the standards and state of the plant allowing for a ramp up in production. This, combined with the coal sales contracts now in place, will allow the Company to increase total production to 140,000 tonnes (including 20,000 tonnes low grade coal) of ROM per month during the third quarter of 2010.

The average Cost of production for 2009 was R159/ROM tonne, which has reduced to R151/ ROM tonne for the first 4 months of 2010. Price realization has increased from an average of R340/ tonne sold for Q4 2009, to R385/tonne for 2010.

Homeland will be holding its Annual General Meeting on Tuesday June 29 at 10:00am (Toronto time) in the offices of Gardiner Roberts LLP, Suite 3100, Scotia Plaza, 40 King Street West, Toronto, Ontario. Homeland's interim CEO, Ashis Basu, and COO, Hentie Hoffmann, will be in attendance at this meeting.

Qualified Person

Hentie Hoffmann, a Fellow with the South African Institute of Mining and Metallurgy, is the Qualified Person for the information contained in this press release and is a Qualified Person within the meaning of National Instrument 43-101.

Homeland Energy Group Ltd. (TSX:HEG) is a coal producer with operations in 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 will continue to seek out interests in additional coal projects in South Africa and neighbouring countries as well as internationally. Homeland is a shareholder in Homeland Uranium Inc., a Canadian uranium exploration company focused on projects in Niger and the United States. Homeland Energy Group Ltd. is currently traded on the Toronto Stock Exchange under the symbol "HEG" with 302,115,756 common shares issued and outstanding. www.homelandenergygroup.com.

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