Red Hill Energy Inc.
TSX VENTURE : RH

Red Hill Energy Inc.

June 18, 2008 09:00 ET

Red Hill Commissions a Full Pre-Feasibility Study on the Ulaan Ovoo Project to Minarco-Mineconsult of Australia

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 18, 2008) - Red Hill Energy (TSX VENTURE:RH) announced today that it has entered engaged Minarco-MineConsult (MMC), based in Sydney, Australia, to prepare a comprehensive pre-feasibility study on Red Hill's fully-owned Ulaan Ovoo coal project in northern Mongolia.

The pre-feasibility study will substantially enhance data generated during a prior scoping study prepared by Behre Dolbear Inc. (USA) and several detailed transportation and economic studies prepared earlier this year by a Mongolia university. It will significantly extend these earlier studies by examining in detail the following key items:

- Geology and Reserves

- Market Analysis

- Mining Engineering

- Transportation and Infrastructure

- Hydrology

- Economic Analysis

- Environment

- Labour and Community Relations

The study will prepare detailed mine plans for each year of operation and will expedite Red Hill's production plans at Ulaan Ovoo. The study will rely on MMC's experience with the latest mining technology to determine the most profitable mining and transportation scenarios. The study will consider all aspects of the coal's journey from the ground to the East Asian markets and will include an extensive section on rail transport and costs that will expand transportation studies begun last year.

Red Hill Energy's President Ranjeet Sundher stated that:

"We are pleased to have a firm as qualified and regionally experienced as Minarco to work with. The completion of this extensive study will go a long way towards our production and partnership goals."

"Ulaan Ovoo's size, product quality, proximity to rail & major world markets as well as its abundant water source and anticipated ease of mining bodes well for the viability of the project."

Ulaan Ovoo contains 208.8 million tonnes of high quality thermal coal (174.5 Measured, 34.3 Indicated) with an additional 35.9 million tonnes inferred. The project has been granted a 30-year mining license by the Mongolian government with a 40 year extension option. It is situated approximately 17 kilometres (km) south of the Russian/Mongolian border and is located within 120 km of either Russia's (north) or Mongolia's (east) central (main) railroads. The railroads offer transportation options to the world's 3 largest coal importing markets including Japan, Taiwan and South Korea. Ulaan Ovoo's coal quality is particularly desired in these markets due to its low ash, low sulfur, low nitrogen, high volatile matter and its high calorific value averaging 5,092 kcal/kg or 9,165 BTU/lb (on an as-received moisture basis).

These markets can be accessed via either of Russia's massive coal exporting centers, Vladivostok or Vanino. On the other hand China's vast coal markets and Mongolia's main domestic coal market are accessible by rail to the south. Mongolia's Zelter River is in immediate proximity to Ulaan Ovoo and assures the project of abundant water. Ulaan Ovoo coal is carried primarily in a single, near surface coal seam averaging approximately 60 meters in thickness. The stripping ratio on the first 120 million tonnes of Ulaan Ovoo coal averages less than 1.4:1 which at 6 million tonne annual production would support a 20-year mine life. Seven exploration licenses 100% controlled by Red Hill Energy are in adjacent and/or surrounding basins and may lead to a significant increase to the resource base.

The study will be performed by MMC's team of professional geoscientists and engineers, several of whom have extensive prior experience in Mongolia and China. MMC will prepare the study in compliance with NI 43-101 requirements and has designated a Qualified Person as its principal signatory. The final pre-feasibility study is anticipated within four months.

Red Hill Energy's total 100% owned, high quality thermal coal resources in Mongolia, located in 2 coal basins, presently stands at over 1 billion tonnes (503.5 Measured, 503.6 Indicated) with an additional 444.9 million tonnes inferred. Red Hill's Chandgana coal projects are located in east/central Mongolia 160 km east of Mongolia's central railroad. CVRD of Brazil also controls an independent and very large coal project in this basin which is contiguous to Red Hill's resource properties.

Full details of the above disclosure, including the Qualified Person, is available in the Company's press releases of April 9 and March 26, 2008, October 25, 2007 and November 9, 2006.

Minarco-MineConsult, part of the Runge Group, is a premier international consulting and engineering firm, with specialist expertise in mining engineering, geology, and environmental economics. Their main office is located in Sydney, Australia, with satellite offices in Beijing and Jakarta. MMC's core business is technical mine planning with particular expertise in coal mining. They have organized a team of over 300 professionals in over 12 countries, working in each of the global mining exchanges. MMC has recently completed coal projects in Mongolia and is familiar with the country's vast untapped resources and market potential.

ABOUT RED HILL ENERGY INC.

Red Hill Energy Inc. is a junior resource company trading on the TSX-Venture Exchange under the trading symbol RH. The Company is advancing over one billion tonnes of 100% owned coal from two Mongolian coal basins towards production. Red Hill also has multiple 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.

Red Hill Energy Inc.

G. Arnold Armstrong - Chairman and CEO

Ranjeet Sundher - President

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

Contact Information

  • Red Hill Energy Inc.
    Paul McKenzie
    Director
    (604) 642-COAL (2625)
    Email: info@redhillenergy.com
    Website: www.redhillenergy.com
    or
    Fuller & Associates Ltd. of London, UK
    Nick Fuller
    European Investor Inquiries
    +44 (0) 20 7256 5204