Homeland Energy to Reacquire Full Ownership of South African Subsidiary
Homeland Energy Group Ltd., announces that GMR of India has elected not to exercise the third of three options to purchase 40% of Homeland Mining & Energy, South Africa for US$135 million. Homeland intends to repurchase GMR’s current 10% ownership in accordance with the terms of the option agreement, a value of US$30 million.
With this repurchase, Homeland Energy Group Ltd. retains 100% of Homeland Mining & Energy, South Africa (HEMSA), which is comprised of several projects. Homeland maintains a focus on ramping up Kendal Colliery to full production of 150,000 tonnes per month of run-of-mine coal by early 2009 and on advancing the geological and economic assessment work on the large-tonnage Eloff project. The repurchase of this 10% stake gives Homeland Energy Group Ltd. 100% of Homeland Mining & Energy, South Africa (HMESA), including a 74% interest in the Kendal Colliery, a 50% interest in the Eloff Project and interest in several additional exploration and development projects. The company is confident that the South African assets will continue to appeal to strategic investors who are able to recognize the long-term intrinsic value and steady cash flow that these assets provide.
In addition to the South African operations, Homeland has entered into an agreement to purchase privately-owned Appolo Fuels and associated coal marketing division, Diversified Energy, both located in the Central Appalachian Region of the United States for US$105-million to close at the end of November. Homeland is in advanced negotiations with several traditional debt providers and strategic industry partners. Appolo Fuels comprises four mining operations, a resource of more than 103-million measured & indicated tonnes (114-million short tons) and a reserve of 41-million clean recoverable tonnes (45-million short tons) of thermal coal. Diversified Energy is the exclusive marketing firm of Appolo coal and brokers approximately 400,000 additional tons per year in addition to the Appolo production.
Exploration and mine development programs are carried out under the supervision of Mr. Mike Nell, Chief Operating Officer, Homeland Energy Group Ltd. Mr. Nell, a professional mining engineer and “Qualified Person” as defined under National Instrument 43-101, has reviewed and verified the technical content in this press release.
Homeland Energy Group Ltd. (Toronto:HEG.TO) is a coal producer with operations the Witbank area of South Africa. The company also has a large-scale development property in South Africa and exploration interests in Southern Africa. Homeland is currently negotiating to acquire interests in a number of additional coal properties in eastern South Africa and neighbouring countries as well as in the United States. Homeland is a significant shareholder in Homeland Uranium Inc., a Canadian uranium exploration and development focused on projects in Niger and the United States. Homeland also has an aggressive global acquisition strategy with a focus on energy resources.
Homeland Energy Group Ltd. is currently traded on the Toronto Stock Exchange under the symbol “HEG” with 150,079,642 common shares issued and outstanding. www.homelandenergygroup.com.