Homeland Energy Group Ltd.
TSX : HEG

Homeland Energy Group Ltd.

May 08, 2008 02:00 ET

Homeland Energy's Eloff Project Increases Coal Resources by 30%

- GEMECS reports a Measured & Indicated Mineral Resource of 452 million tonnes and an Inferred Resource of 58 million tonnes - Thickness in the prominent coal seam - the Number 2 Seam - ranges up to 14 metres and to a maximum depth below surface of 123 metres

TORONTO, ONTARIO--(Marketwire - May 8, 2008) - Homeland Energy Group Ltd. (TSX:HEG) ('Homeland' or 'the Company') is pleased to announce the results of an independent technical report containing an updated mineral resource estimate for the Company's Eloff Mining Project. This project is located 50 km east of Johannesburg in the Witbank/Middlefield coal fields of Mpumalanga province in South Africa. This 43-101 compliant report was compiled by independent consultant Gemecs (pty) Limited of South Africa, based on information prepared in part by SRK Consulting (South Africa) (Pty) Limited. This estimate includes data from 18,154 metres of drilling from 301 drill holes.



Table 1 - Estimated Mineral Resource Summary

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Category Tonnage (tonnes)
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Measured 262 million
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Indicated 190 million
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Measured & Indicated Total 452 million
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Inferred 58 million
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An analysis of the washability has shown that the use of a simple de-stoning process it is possible to upgrade the product as shown in Table 2. This product could further be beneficiated through a washing process to improve qualities.



Table 2 - Upgrading raw coal quality through a simple de-stoning:

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Volatile Est. Saleable
Yield (%) CV (Mj/kg) Ash (%) Matter (%) Sulphur (%) tonnes
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70.41 20.91 27.87 21.59 0.69 359 million
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The resource consists of a series of individual blocks with varying qualities and geological characteristics. This lends itself to selective mining, both within the seams themselves as well as between the various blocks. Mine planning will be critical to the process as it is imperative to extract the maximum recovery in terms of tonnage and quality from this resource. While the greater proportion of this mineral resource is within the limits of open pit mining, there is a small portion that would require underground mining at some time in the future. Therefore, the Company estimates that approximately 85% of the gross in situ mineral resource is suitable for open pit mining.

"We are extremely pleased to announce that we have increased our gross in situ resource tonnage by 30% as well as increasing the confidence level in the mineral resource through the results of drilling and evaluation that were used to arrive at this estimate," commented Stephen Coates, President and CEO. "The Eloff Mining Project is one of the larger Greenfield projects remaining in the Witbank Coalfield. The scale of this project is such that the planning and execution of the mining as well as the beneficiation functions are well within the scope of the abilities of Homeland's technical team and will contribute significantly to the local and regional economies."

Coal Seams Evaluated

In the Witbank/Middleburg coalfield, there are two main economic coal seams - an 'upper' Number 4 seam and the 'lower' Number 2 seam. Generally the Number 2 seam is of better quality and more widespread than the Number 4 seam. Historically, the Number 2 seam has been selectively mined in the Witbank area to produce both blended metallurgical coal and power generation coal. The uppermost seam is Number 5 seam, which is very thin but of generally high quality.

Going Forward

With the completion of this Independent Technical Report, Homeland is in a position to proceed to the next stage of development, the compilation of a mining plan for Phase One of Eloff production; production anticipated at 6 million tonnes per year (500,000 tonnes per month) by 2010. Capital costs for Phase One will include the construction of crushing and screening facilities, washing facility and the infrastructure required to transport the final coal products. Homeland submitted the application for a mining licence for Eloff in January 2008 and anticipates a 12 to 15-month interval as the application is reviewed by the South African Department of Minerals and Energy (DME).

Qualified Persons

Mr. John Sparrow, Director and Principle Geologist with the firm Gemecs (Pty) Limited fulfils the requirement to be a "Qualified Person" for the purposes of Canadian National Instrument 43-101. This technical report has been prepared under the supervision of Mr. Sparrow in compliance with National Instrument 43-101 and Form 43-101F1.

Exploration and mine development programs are carried out under the supervision of Mr. Mike Nell, Chief Operating Officer, Homeland Energy Group Ltd. Mr. Nell, a professional mining engineer and "Qualified Person" as defined under National Instrument 43-101, has reviewed and verified the technical content of this press release.

Homeland Energy Group Ltd. is a public company trading on the Toronto Stock Exchange under the symbol "HEG" and is focused on energy exploration and development in Southern Africa. Homeland owns three advanced development and pre-development coal projects in South Africa and 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 also 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 a several other global strategic investments. Homeland Energy Group Ltd. began trading on the Toronto Stock Exchange on March 5, 2008 and has 146,041,117 shares outstanding.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This release contains certain forward-looking statements that may involve a number of risks and uncertainties. Actual events or results could differ materially from the Company's expectations and projections. Except for statements of historical fact relating to the Corporation, certain information contained herein constitutes "forward-looking statements". Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include the inherent risks involved in the exploration and development of mineral properties, the uncertainties involved in interpreting drilling results and other ecological data, fluctuating metal prices, the possibility of project cost overruns or unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future and other factors. Circumstances or management's estimates or opinions could change. The reader is cautioned not to place undue reliance on forward-looking statements.

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