UGL Enterprises Ltd.
TSX VENTURE : UGS

UGL Enterprises Ltd.

April 03, 2006 09:00 ET

UGL to Acquire the Chandgana Tal Coal Project, Eastern Mongolia

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - April 3, 2006) - UGL Enterprises Ltd. (TSX VENTURE:UGS) announced today that it has entered into a binding agreement to acquire a 100% interest in two licenses covering the major part of the Chandgana Tal Coal Project in the northeast part of the Nyalga coal basin, approximately 290 km east of Mongolia's capital, Ulaanbaatar. The project is reasonably close to good infrastructure - towns, roads, power lines - and contains a substantial quantity of historically-defined shallow, thick, good quality sub-bituminous coal which UGL believes might be amenable to a large-scale, low cost bulk mining operation.

Chandgana Tal coal was first discovered by Russian surface reconnaissance in 1941 and subsequently explored in detail in 1962-1963. Exploration during this period consisted of digging 116 shafts and drilling 24 holes spaced on a 300-400 metre (m) x 150-400m grid to depths of 29 to 109m. In 1967, a small mine was opened to supply heating coal for local consumption and the mine has operated more-or-less continuously since, producing up to 20,000 tonnes of coal per year. The 1962-1963 Russian detailed exploration campaign defined coal resources, registered with the Mongolian States Reserve Council, using resource categories different from those currently accepted under Canadian National Instrument 43-101 (NI 43-101), but incorporating resource parameters - minimum coal thicknesses and maximum included parting thicknesses - generally consistent with those used today.

Using the Russian resource terminology, the area covered by UGL's two licenses contains a historical estimated coal resource of 31.0 million tonnes classified as categories "A" and "B", 59.6 million tonnes classified as category "C1", and 42.7 million tonnes classified as category "C2." According to recent published articles, such as that by S. Henley in the April 20, 2004, issue of the Mining Journal, the Russian resource categories "A and B" can generally be considered roughly equivalent to the "measured" resource category recognized by JORC (and accepted under NI 43-101), category "C1" is roughly equivalent to "indicated" resources and "C2" to "inferred" resources. UGL emphasizes that these resource estimates are reported for historical purposes only and cautions that the veracity of this historical data has not yet been checked in detail and the compliance of the historical resource estimates with current NI 43-101 resource standards and acceptable categories has not yet been verified. Therefore, the historical coal resource estimate cannot be relied upon.

The Chandgana Tal coal seams are Early Cretaceous in age and occur in an oval-shaped synclinal sub-basin, approximately 5 km x 7 km in size. Much of this coal-bearing sub-basin has not been explored in detail. It is apparently underlain by at least 5 known coal seams, with most of the coal resource carried by a single shallow thick seam. This seam is from 30 to 50m thick, is essentially flat-lying, and is overlain by no more than 34 m of overburden, a favorable situation for a potential future large-scale open-pit operation having a very low stripping ratio.

Results on core samples (411 total) collected by the Russians suggest that the Chandgana coal is a high volatile subbituminous A or B coal of good quality. The heating values range from 5,277 kcal/kg (9,499 BTU/pound) to 6,182 kcal/kg (11,129 BTU/pound) with an average volatile matter yield of 51.38%. The coal is desirably low in ash (average 11.67%), low in moisture (9.77% to 14.33%) and relatively low in sulphur (average 0.92%).

The Russian drilling was too limited to define the full lateral extent of the Chandgana coal seams and was also too shallow to fully test the 3 coal seams which are known to lie below the thick seam. UGL plans to examine this project in greater detail with a drilling program designed to define the extent of the coal on strike and to depth.

To earn a 100% interest in the Chandgana Tal Coal Project UGL will pay US$400,000 plus 250,000 common shares of UGL Enterprises. A finder's fee of 50,000 common shares is payable to a third party by UGL in respect of the Chandgana Tal Coal Project purchase. The transaction is subject to regulatory approvals.

In other news, the Company has granted incentive options for a total 130,000 shares to directors and employee. The options are exercisable at a price of $1.10 per share for a period of five years, subject to regulatory approval.

The Qualified Person responsible for summarizing the technical material presented in this news release is Mel Klohn, L.P.Geo, a director of UGL and a Senior Consulting Geologist with 40 years industry experience.

ABOUT UGL

UGL Enterprises Ltd. is a junior resource company trading on the TSX-Venture Exchange under the trading symbol "UGS". In addition to the newly acquired Chandgana Tal Coal Project, UGL has an option to purchase 100% of the 136.4 million tonne high-volatile bituminous Ulaan Ovoo Coal Project in addition to 14 uranium properties and several gold and copper exploration projects located throughout Mongolia. UGL has a strategic alliance with Mega Uranium Ltd. to jointly develop its uranium assets, and with Mine Info Ltd., a leading Mongolian exploration service company. UGL has a full time office in Mongolia's capital, Ulaanbaatar.

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 has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • UGL Enterprises Ltd.
    Paul McKenzie
    Director
    (604) 642-COAL (2625)
    info@uglenterprises.com
    www.uglenterprises.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