Red Hill Energy Inc.
TSX VENTURE : RH

Red Hill Energy Inc.

June 12, 2007 09:30 ET

Red Hill Energy Confirms Large Coal Resource at Chandgana Tal Coal Project, Mongolia

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 12, 2007) - Red Hill Energy Inc. (TSX VENTURE:RH) announced today that it has increased the extent of its second substantial Mongolian coal deposit located in eastern Mongolia. Red Hill Energy has two advanced coal projects inside Mongolia, Ulaan Ovoo (208.8 million tonnes) located in north Central Mongolia and Chandgana Tal, located in mid-eastern Mongolia. Results from a recent drilling program at Chandgana Tal confirm the existence of a 30-50 m coal seam over nearly the entire deposit. Two additional coal seams 0.5-1.5 m thick are locally present and are close enough to the thick seam to be of economic interest. The new drilling significantly expands the resource in the western half of the property, where no holes had previously been drilled. Except at the outcrop, the seam is nearly flat and remains shallow over the entire license area, making it ideal for open pit production. The average stripping ratio is less than 1:1.

Eight core holes were completed for total of 730 total meters. Drilling was spaced closely enough to completely categorize the resource as Measured, following NI 43-101 and JORC reporting standards. Two holes were drilled as twins to historical drill holes and confirm the seam thicknesses reported previously. One twinned hole more than doubled the reported coal thickness because the historical drill hole was terminated before the full interval was penetrated. Historical drilling used the Russian resource reporting system to define a total reportable coal resource of 90 million tonnes. The resource will likely increase because the recent drilling demonstrated that very thick coal continues outside the boundaries defined by the historical drill holes and across the entire license area. A NI 43-101 compliant resource report is being prepared now and will be finished later this summer.

Over 200 core samples were taken from all drill holes, and these will be subjected to a full suite of assays over the next few weeks, with final results expected in about a month. Assays will be analyzed at SGS's internationally certified laboratory in Tianjin, China. Samples were sealed immediately upon retrieval and packed in wooden boxes to prevent damage during transport. Reserves from each sample will be kept at the laboratory. Historical assays indicate that the Chandgana coal is a low-ash, low-sulfur subbituminous coal with potential for power generation and coal-to-liquids generation. The new assays are designed to test all of the parameters necessary to determine the markets for this coal.

Chandgana Tal is located approximately 300 km east of Mongolia's capital Ulaanbaatar and 145 km east of the Mongolian Railroad. The Chinese/Mongolian border is 300 kilometers to the south.

Mr. Ranjeet Sundher, president of Red Hill Energy, stated today that:

"These results verify that Red Hill Energy now potentially has a second world class coal discovery inside Mongolia."

He added:

"We will continue to advance the Ulaan Ovoo coal project towards production while simultaneously building on recent successes at Chandgana Tal."

The independent Qualified Person responsible for summarizing the technical material presented in this news release is Gardar G. Dahl, Jr., CPG, a Senior Associate of Behre Dolbear. Mr. Dahl is an established coal consultant with more than 35 years experience in coal exploration, mining and sales, both in surface and underground operations. Behre Dolbear is one of the oldest, continually operating minerals industry consulting firms in the world, offering fully integrated management consulting and technical advisory services specializing exclusively in the minerals industries from offices around the world. Behre Dolbear has performed numerous coal assignments globally for major and junior mining companies alike.

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". 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.

RED HILL ENERGY INC.

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