VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - June 27, 2006) - Red Hill Energy Inc. (TSX VENTURE:RH) announced today that its recently completed exploration drilling program at its Ulaan Ovoo Coal Deposit in northern Mongolia has increased Measured Coal Resources in the Northern Block of the deposit by 33 percent (17.9 million tonnes) and overall total coal resources by 13 percent. Results of exploration drilling in the Southern Block of the deposit are still being compiled and are expected to add further new coal resources to the deposit. Red Hill is also pleased to report that a detailed Scoping Study to assess the economic merits of this exceptional high-quality bituminous coal deposit is in final stages of editing.
The assessment of the new drilling results and new resource estimations are being done by Behre Dolbear & Company (USA), who also planned and supervised the drilling program. In March, 2006, Behre Dolbear completed a NI 43-101 Technical Report on the Ulaan Ovoo Coal Deposit and recommended a two-phase exploration drilling to confirm and upgrade the known coal resources in the northern half of the coal basin (Phase I), to define additional coal resources in the scarcely explored southern half of the coal basin (Phase II) and to collect samples for new stringent coal quality analyses.
The independent Qualified Person responsible for summarizing the technical material presented in this release is Mr. Gardar G. Dahl, Jr., P.Geo, 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.
Both Phases of exploration have now been completed with five core drill holes successfully completed in each of the Northern and Southern Blocks. Behre Dolbear has submitted an Interim Report on the Phase I confirmation drilling in the Northern Block. A new coal resource estimate for the Northern Block which incorporates the results of this new drilling are shown below. The revised estimate is contrasted with the previously reported 43-101 estimate:
Previous estimate Revised estimate
(million tonnes) (million tonnes)
------------------------------------
Measured Coal
Resource Northern Block 53.6 71.5
Southern Block 23.4 23.4
Total Measured Resource 77.0 94.9
Indicated Coal
Resource Southern Block 59.4 59.4
Total Coal Resource 136.4 154.3
Results from the Southern Block drilling are still being compiled. Preliminary observations of the Phase II drill core and down-hole geophysical logs indicate that coal resource estimates in the southern block may be substantially increased as well resulting in an overall increase in Ulaan Ovoo coal resources.
Existing data and analyses from core hole drill samples collected in the 1970s and 1990s indicate that Ulaan Ovoo is a high quality, hard bituminous coal deposit, high in volatiles, low in sulfur and ash, with an average heating value of 6,990 kcal/kg (12,600 BTU). New samples from Red Hill's Phase I and Phase II drilling program, in which recoveries averaged an excellent 98 percent, have been transmitted to SGS Laboratories in Denver, Colorado (USA) for stringent analyses to confirm the quality of the Ulaan Ovoo coal. In addition to proximate and ultimate analysis of the coal core, other analyses of special interest will be to assess the coal's coking/semi-coking qualities that had been indicated in previous studies of Ulaan Ovoo coal.
The Ulaan Ovoo Coal Deposit appears attractive for potential mine development because it consists mainly of a massive, very thick, high-quality, essentially flat-lying complex coal seam. One of the recommendations of the Behre Dolbear 43-101 Technical Report on Ulaan Ovoo was for a detailed Scoping Study to determine the economic viability of this exceptional deposit. The Scoping Study, initiated in April 2006 by Behre Dolbear, is in the process of final edit and will to be released upon its completion.
- ABOUT RED HILL
Red Hill Energy Inc. is a junior resource company trading on the TSX-Venture Exchange under the trading symbol "RH". In addition to its extensive portfolio of uranium properties Red Hill is also developing the 154.3 million tonne Ulaan Ovoo Coal Project in northern Mongolia. Red Hill is also developing the Chandgana Tal Coal Project in Eastern Mongolia and has 14 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
FOR FURTHER INFORMATION PLEASE CONTACT:
Red Hill Energy Ltd.
Paul McKenzie
Director
(604) 642-COAL (2625)
info@redhillenergy.com
www.redhillenergy.com
Fuller Fletcher & Associates Ltd. of London, UK
Nick Fuller
European Investor Inquiries
+44 (0) 20 7256 5204
Fuller Fletcher & Associates Ltd. of London, UK
Samantha Fletcher
European Investor Inquiries
+44 (0) 20 7256 5204
