VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 2, 2008) - Red Hill Energy (TSX VENTURE:RH) announced today that a Detailed Environmental Impact Assessment (DEIA) and Environmental Protection Plan (EPP) for its Ulaan Ovoo coal project have been approved by the Mongolian Ministry of Nature and the Environment. Under Mongolia's 2006 Minerals Law and 1995 Environmental Protection Law, approval of the DEIA is required before the project can be developed. The Ulaan Ovoo Project is now fully compliant with all necessary environmental legislation.
The Ulaan Ovoo Coal Project has already been granted a fully transferable mining licence from the Mongolian government. The mining license is valid for 30 years and is extendible for an additional 40 years. Upon receipt of the project's forthcoming prefeasibility study (see June 16, 2008 press release) the Company will be well positioned for rapid advancement.
The environmental study was prepared by Ecos LLC, an independent Mongolian environmental consulting company. Ecos LLC is one of the companies licensed by the Ministry of Nature and Environment to conduct environmental impact statements on behalf of large mining projects. The studies considered social and labour issues, climate and environmental circumstances of the project area, and potential environmental impacts of a full mining operation, among other things. The study concluded that there are no major impediments to mining Ulaan Ovoo and provided recommendations on best practices for conservation of the environment and community.
The DEIA also assessed the local public opinion of the project. It found that a large majority of the local residents and soum (township) government support the project. Opening of the Ulaan Ovoo Mine is highly anticipated because of its potential to bring new jobs and industries to the local economy. The long-term economic boost to the region will be high, spanning an approximately 20- to 40-year mine life.
Red Hill Energy's President Ranjeet Sundher stated that:
"The granting of government environmental approvals is a very significant step forward on our path to development and operations at Ulaan Ovoo and it is equally good news for the people of Mongolia. Regionally the project will provide many good quality and high paying jobs and nationally it will generate revenues to benefit all Mongolians."
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. 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.