Red Hill Energy Inc. and Prophecy Resource Corp.: Preparations Underway for Mongolian Coal Production Red Hill Negotiates Purchase of Ulaan Ovoo N.S.
Red Hill Energy has engaged Wardrop Engineering Inc., a leading international mining engineering company,
March 18, 2010: 09:00 AM ET
Red Hill Energy has engaged Wardrop Engineering Inc., a leading international mining engineering company, to conduct a Preliminary Economic Assessment ("PEA") on the 208 million tonne Ulaan Ovoo coal project (174.5 Measured, 35.9 Indicated and 34.3 Inferred). The new study will incorporate project economics based on current substantial increases in international coal prices since the project's Pre-feasibility Study was completed over 10 months ago. The PEA will also emphasize an immediate production scenario that will utilize truck transport on existing roads to the central railroad thereby deferring the construction of a 120km spur line. Wardrop personnel are currently in Mongolia undertaking the PEA.
Red Hill Energy is in discussions with international mining contractors, including those with extensive experience operating inside Mongolia. Red Hill and Prophecy intend to finalize mine plans and a turn-key contract to bring the Project into production this year. Specific details will be provided in a forthcoming Red Hill-Prophecy news release.
Red Hill is also pleased to have entered into a royalty purchase agreement with Dunview Services Limited, a private British Virgin Islands company, whereby Red Hill will acquire a 2% net smelter returns royalty held by Dunview over the mining licenses forming part of the Ulaan Ovoo project for the payment of USUSD130,000 in cash and 2,000,000 Class A Shares. The completion of the royalty purchase is conditional upon the completion of the merger with Prophecy. The royalty purchase is subject to regulatory approval, including the approval of the TSX Venture Exchange.
Arnold Armstrong, Chairman and CEO of Red Hill, stated that: "We intend to transform Red Hill from a junior company to a producer in 2010, and together with Prophecy we will have a strong pipeline of resource projects from which to build a company with a diversified revenue generating base."
Additional project information is available at www.redhillenergy.com and www.prophecyresource.com.
Red Hill Energy Inc.
G. Arnold Armstrong - Chairman and CEO
Prophecy Resource Corp.
John Lee - Chairman and CEO
This news release includes certain statements that may be deemed "forward-looking statements". All statements in this release, other than statements of historical facts, including, without limitation, statements regarding potential mineralization, the estimation of mineral resources, the realization of mineral resource estimates, interpretation of prior exploration and potential exploration results, the timing and success of exploration activities generally, the timing and results of future resource estimates, permitting time lines, metal prices and currency exchange rates, availability of capital, government regulation of exploration operations, environmental risks, reclamation, title, and future plans and objectives of the companies are forward-looking statements that involve various risks and uncertainties. . Although Red Hill and Prophecy believe the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Forward-looking statements are based on a number of material factors and assumptions. Factors that could cause actual results to differ materially from those in forward-looking statements include unsuccessful exploration results, changes in project parameters as plans continue to be refined, results of future resource estimates, future metal prices, availability of capital and financing on acceptable terms, general economic, market or business conditions, risks associated with operating in foreign jurisdictions, uninsured risks, regulatory changes, defects in title, availability of personnel, materials and equipment on a timely basis, accidents or equipment breakdowns, delays in receiving government approvals, unanticipated environmental impacts on operations and costs to remedy same, and other exploration or other risks detailed herein and from time to time in the filings made by the companies with securities regulators. Readers are cautioned that mineral resources that are not mineral reserves do not have demonstrated economic viability. Mineral exploration and development of mines is an inherently risky business. Accordingly the actual events may differ materially from those projected in the forward-looking statements. For more information on Red Hill and Prophecy and the risks and challenges of their businesses, investors should review their filings that are available at www.sedar.com.
"Neither The TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release."
Contacts:
Red Hill Energy Inc.
Paul McKenzie
President
604.642.COAL (2625)
info@redhillenergy.com
www.redhillenergy.com
Prophecy Resource Corp.
John Lee
1.800.851.1528
john@prophecyresource.com
www.prophecyresource.com
