Coal

[johnlw]

Hillsborough Resources Ltd (C-HLB) - News Release

Hillsborough receives $4.5-million loan

2006-01-03 08:49 ET - News Release
Shares issued 45,534,416
HLB Close 2005-12-30 C$ 1.15

Mr. David Slater reports

HILLSBOROUGH RESOURCES: HILLSBOROUGH ANNOUNCES $4.5 MILLION LOAN AGREEMENT WITH ANGLO COAL

Hillsborough Resources Ltd. received $4.5-million on Dec. 30, 2005, under the terms of a loan agreement signed with Anglo Coal, a division of Anglo American PLC (LSE: AAL). This loan has been made in anticipation of a proposed definitive agreement regarding possible joint ventures between the companies in respect of Hillsborough's Five Cabin and ancillary coking coal properties located in northeast British Columbia. Though assurance cannot be given as to the successful conclusion of a definitive agreement, work on negotiation and finalization of the agreement continues to progress.

The loan agreement has been entered into as a form of transaction bridge financing. The terms of the agreement provide that unless and until a definitive agreement regarding the proposed joint venture has been signed and taken effect, Anglo Coal will have the right at any time after Jan. 20, 2006, to demand repayment of the loan and Hillsborough must make such repayment within 30 days thereafter. At such time as a definitive agreement is successfully concluded, the loan will become a long term facility and the manner of its repayment will form a part of the terms by which Anglo Coal may vest its interest in certain of the properties constituting the subject matter of the proposed definitive agreement. During the bridging period preceding the conclusion of a definitive agreement, interest on the loan is accruing at LIBOR plus 3 per cent per year and in addition to general recourse against Hillsborough the loan is secured by the coal licences that comprise the Horizon area. Upon conclusion of a definitive agreement, the loan interest rate will reduce to LIBOR plus 1 per cent and, subject to certain limited conditions, the loan will be with recourse only against the Horizon-area coal licences.

Anglo Coal is an international coal mining company, with interests in operations in South Africa, Australia, Venezuela and Colombia, producing in excess of 90 million tonnes of coal per year. The Anglo American group of companies is involved in the mining of, among others, gold, platinum, diamonds, iron ore and other industrial minerals.

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