Red Hill Energy Inc.

Red Hill Energy Inc.

August 13, 2008 09:00 ET

Red Hill Energy Inc.: Bulk Sample Coal Tests Being Conducted on Ulaan Ovoo Coal, Expansion of Mining Pit in Progress

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 13, 2008) - Red Hill Energy (TSX VENTURE:RH) is undertaking a 5-tonne bulk sampling and open pit expansion program at its Ulaan Ovoo coal project in northern Mongolia. The program, which will be carried out under the supervision of Minarco-MineConsult Ltd. of Australia (MMC), will remove an approximate 5-tonne working section representative sample from the mine's open pit. Prior to coal extraction, the coal seam's full thickness will be exposed along the entire width of the surface outcrop. Then the open pit will be excavated to a depth sufficient to expose bright, unweathered coal. All coal sampling procedures, along with those used to store and transport the bulk samples, will follow international best practice to ensure that the samples are representative of the final as-mined products.

The bulk sample will be exported to the coal facilities of SGS Laboratories in Tianjin, China, for detailed analysis. A comprehensive range of chemical and physical tests shall be undertaken to accurately characterize the performance of Ulaan Ovoo coal in modern power plants.

Red Hill Energy has been approached by a number of interested coal consumers with an expressed interest in reviewing Ulaan Ovoo coal quality data prior to entering possible product purchase negotiations. Some of the interested parties have indicated a desire to receive additional bulk samples whereby they can conduct their own tests specific to their individual requirements. These are necessary steps prior to Red Hill bringing Ulaan Ovoo in production. A full suite of analyses are therefore being performed to extend and expand upon the Company's previous analyses of Ulaan Ovoo coal.

It is anticipated that the new tests will reconfirm Ulaan Ovoo coal types as low ash, low sulphur, and high energy content. These characteristics make Ulaan Ovoo coals ideal for clean and high efficiency coal-fired power generation in the East Asian markets. The sampling and analysis are expected to take three to four weeks to complete.

Red Hill Energy's President Ranjeet Sundher stated that:

"Extensive coal analysis on this scale will help give Red Hill more confidence in the types of coal products that are likely to be produced from Ulaan Ovoo, while continuing in our primary objective of bringing Ulaan Ovoo into production in as timely a manner as possible."

Meanwhile, progress on the Ulaan Ovoo prefeasibility study continues. MMC is nearing completion of the detailed geological model necessary for advanced mine planning. Work on the other aspects of the study has now commenced.

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. The final pre-feasibility study is anticipated within four months.

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 railroads. The railroads offer transportation options to the world's 3 largest coal importing markets of Japan, Taiwan and South Korea. Ulaan Ovoo's coal quality is particularly desirable in these markets due to its low ash, low sulphur, 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. At an annual production capacity of 6 million tonnes, this 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.

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.

Minarco-MineConsult Ltd., 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. As part of the global Runge Group, MMC has access to a team of over 300 professionals working in 17 offices across 10 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.


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.

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