Red Hill Energy Inc.

Red Hill Energy Inc.

April 16, 2007 09:30 ET

Interest Increases in Red Hill's Two Leading Coal Assets

Development & Expansion Drilling and Drilling in New Regions to Commence Immediately

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - April 16, 2007) - Red Hill Energy Inc. (TSX VENTURE:RH) ("Red Hill" or the "Company") reports that interest in Red Hill Energy's two leading (and 100% owned) coal assets, Ulaan Ovoo and Chandgana Tal, continues to grow. Additional Confidentiality Agreements (CAs) have recently been signed with companies interested in one or both of the Company's two coal projects. Red Hill also continues to hold advanced negotiations with several other parties interested specifically in the Ulaan Ovoo Coal Project relating to potential development, production, merger and export and sale opportunities for its large assets of Mongolian coal. Red Hill and its consultants will continue to keep the best interests of shareholders in mind first and foremost.

An NI 43-101 and JORC compliant scoping study completed by Behre Dolbear USA of Denver Colorado in late 2006 outlined a potential 34 to 40 year economic mine life at the Company's 208 million tonne Ulaan Ovoo Coal Project and assigned it a Net Present Value (at 5% discount) of US $225.5 million. Ulaan Ovoo (translated as Red Hill) is located approximately 8 km from the Mongolian/Russian border in north central Mongolia. Additional information on the Ulaan Ovoo Coal Project can be found on the Company's website:

Multiple project expansion and drilling programs on the Company's coal properties are slated to commence immediately.

The 2007 coal exploration season will begin at Chandgana Tal, located approximately 300 km S/E of Mongolia's capital, Ulaanbaatar in Eastern Mongolia.

Drilling on Chandgana Tal will test historical resource reporting which applied the Russian resource reporting system to define a reportable (fully-explored) coal resource of 90 million tonnes. Of these, 31 million tonnes are of categories A and B and 59 million tonnes are of category C1. These roughly correspond to the Measured (A and B) and Indicated (C1) categories recognized by JORC. Historical assays indicate that the resource is a low-ash, low-sulfur thermal coal with an average as-received calorific value of 8,335 BTU/lb (4,631 kcal/kg). This resource calculation is not compliant with NI 43-101, and cannot be relied upon until the Company has had the opportunity to complete its confirmation work and issue an NI 43-101 report.

The Chandgana Tal Coal Project is made up of 2 licenses covering a small N/E portion of a large coal extent. The majority of the coal extent is covered by two large licenses held by Tethys Mining LLC a subsidiary of CVRD (Companhia Vale Do Rio Doce), of Brazil. The Tethys licenses are contiguous to Chandgana Tal. The coal extent has a maximum width of 9.8 km E-W and a NE-SW length of 14.5 km.

To bring to N1 43-101 reporting standards, confirmation of previously reported tonnes and expansion drilling in untested areas on Chandgana Tal will include drilling eight holes (totaling approximately 800 metres). The new holes will simultaneously check the quality of historical data and potentially expand the resource to the west and south where no holes have been drilled prior. Drilling in this area may significantly increase the resource base at Chandgana Tal. Drill hole spacing will be dense enough to assign Measured status to the entire resource. In addition, comprehensive coal assays will be taken from each drill hole in order to completely characterize the quality and marketability of the resource.

Following the completion of the exploration program, Behre Dolbear (USA) of Denver, Colorado will prepare a geologic model for Chandgana Tal based on drilling and assay data. The results from this model will be incorporated into a comprehensive, NI 43-101 compliant technical report to be released as early as June 2007.

Upon successful completion of the Chandgana Tal technical report, Red Hill will begin exploration of its licenses in the structural basins surrounding its 208.8 million tonne Ulaan Ovoo Coal project. Based on exploration done by Red Hill in 2006 the basins on licenses held 100% by Red Hill energy have the potential for coal deposit discoveries similar in size and quality to the Ulaan Ovoo deposit. The most prospective locations have been targeted for exploration this summer, with approximately five drill holes planned for each location.

Confirmation of additional coal resources in such close proximity to Ulaan Ovoo could significantly improve the value and feasibility of a large-scale mining operation in the region.

Mr. Ranjeet Sundher, President of Red Hill Energy Inc., stated:

"I am very pleased with the progress that the Red Hill team and its consultants have made since diversifying the Company into coal 17 months ago. Extensive third party interest in our projects is a testament to our coal quality and to the growing importance of Mongolia on the World's coal stage."

Interest in Mongolian coal by international coal buyers and producers is particularly strong and in addition to CVRD of Brazil other companies working on or interested in developing coal projects inside Mongolia include, BHP Billiton Ltd. of Australia, Macarthur Coal Ltd. of Australia, Itochu Corp of Japan., Peabody Energy Corp. of the United States and others. Strong interest in Mongolian coal is also being demonstrated by a number of leading Chinese and Russian companies. This interest is expected to continue as China' demand for imported coal increases and competition with other Asian countries for the region's (and the World's) depleting reserves of quality coal intensifies making Mongolia a rising leader in international coal importance.


Red Hill Energy Inc. is a junior resource company trading on the TSX-Venture Exchange under the trading symbol "RH". In addition to developing the 208.8 million tonne Ulaan Ovoo Coal Project in northern Mongolia Red Hill is also developing the Chandgana Tal Coal Project in Eastern Mongolia and has 11 uranium properties and several gold and copper exploration projects located throughout Mongolia. Red Hill has a strategic alliance with Mega Uranium Ltd. to jointly develop its uranium assets and has a full time office in Mongolia's capital, Ulaanbaatar


G. Arnold Armstrong - Chairman and CEO

Ranjeet Sundher - President

Forward-Looking Statements: Statements in this release that are forward-looking statements are subject to various risks and uncertainties concerning the specific factors disclosed under the heading "Risk Factors" and elsewhere in the Corporation's periodic filings with Canadian Securities Regulators. Such information contained herein represents management's best judgment as of the date hereof based on information currently available. The companies do not assume the obligation to update any forward-looking statement.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Red Hill Energy Inc.
    Paul McKenzie
    (604) 642-COAL (2625)
    Fuller Fletcher & Associates Ltd. of London, UK
    Nick Fuller
    European Investor Inquiries
    +44 (0) 20 7256 5204
    Fuller Fletcher & Associates Ltd. of London, UK
    Samantha Fletcher
    European Investor Inquiries
    +44 (0) 20 7256 5204