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Updates Operations and Sales

posted on Jan 15, 09 06:12AM

January 15, 2009

Hillsborough Resources Limited Updates Operations and Sales

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 15, 2009) - Hillsborough Resources Limited (TSX:HLB) (the "Corporation") provides an operations and sales update to its shareholders to address concerns with respect to the current uncertainty in the coal markets and various announcements by other coal operators.

As a result of favourable sales contracts and operational improvements, Management believes that Hillsborough is positioned to do well during 2009.

Hillsborough has budgeted to produce 520,000 tonnes of Quinsam products during calendar year 2009, all of which has been contracted for. Our upwardly revised projections for 2009 call for an average blended sales price of CDN$125/tonne, which includes 300,000 tonnes into the international market at US$137/tonne with an assumed average exchange rate of CDN to US of $0.838. Management expects that any additional production would be readily sold at market prices.

For the first half of 2009, Vitol has requested the next shipments for mid-March and mid-June.

Hillsborough also advises that new pricing with one of its cement customers will take effect April 1st with a substantial increase due to adjustments based on the contracted producer price index. Sales to other domestic customers are already at or above market prices.

Although Quinsam had higher than forecast production costs through 2008, the mine is much better positioned to improve productivity, to meet production targets, and to reduce costs during 2009. New equipment has been added, the new workforce has become more experienced, and the mine plan has a good balance of development and depillar coal. Blended FOB cash costs are budgeted at CDN$73/tonne. If above noted improvements are achieved, production costs will reduce.

The impact of the downturn in the steel industry and demand for metallurgical coal is being monitored closely by Management at Peace River Coal (PRC). The Trend transition project which is well underway is expected to bring PRC greater capital and management control as well as to deliver a reduced operating cost environment. Options around optimal production will be assessed as more clarity emerges from the customers and market sector.

Further, subject to regulatory and shareholder approval, the directors of the Corporation have approved a new employee share purchase plan to replace its former plan which terminated in accordance with its terms on December 31, 2008, permitting participants to be issued up to a maximum of 2,000,000 common shares, with the Corporation effectively matching 50% of their contributions.

About the Corporation

Hillsborough Resources Limited is a coal mining company that:

- Operates the 500,000 tpy Quinsam underground thermal mine near Campbell River, British Columbia, serving the local and west-coast U.S. cement industry with increasing sales into the export market.

- Is a limited partner in the Peace River Coal Limited Partnership (with 14.1%), which has substantial metallurgical coal properties both in production (Trend Mine) and under development near Tumbler Ridge, British Columbia.

- Owns the Crossville Mine in Tennessee on which options for new mine development are being evaluated but the mine remains in reclamation at this time.

- Holds the Wapiti thermal coal property north of Tumbler Ridge, and is planning development of a mine.

- Holds the Bingay Creek metallurgical coal property located in the Elk Valley region of southeast British Columbia.

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