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Thursday,
February 05, 2009
Galway Reports Prodeco Signs Agreement For Galca Coal Project In
Colombia
Toronto, Ontario: February 5, 2009 - Galway Resources
Ltd. (GWY: TSX-V)
is pleased to announce today that it has entered into an exploration and
joint venture agreement with Prodeco for Galway's GALCA coal project in
Colombia. The GALCA coal project comprises 132,000 hectares that Galway
believes could host a new undiscovered coal basin that occurs close to
surface. A 19-hole drilling program has been designed for the first phase
of exploration. This drilling program will be focused on two areas (the
northern flank and the southeastern portion) that appear to have the
highest prospect of coal near the surface.
"We are very pleased to have Prodeco as a joint venture partner and to
aggressively explore and realize the full potential of GALCA. This area has
the potential to host several new coal deposits with great existing infrastructure.
The upside could be tremendous," cites Robert Hinchcliffe, President
and CEO of Galway Resources.
Terms of the Transaction
The terms of the GALCA exploration and joint venture agreement include the
following: Prodeco will fund the first 19 drill holes, and in consideration
for agreeing to fund the feasibility drilling program, thereafter will earn
60% of the project. Prodeco will then earn the remaining 40% in the project
by paying Galway an already agreed value per tonne of economically mineable
open-cut reserves determined in accordance with the JORC Code. The
feasibility costs that are not associated with drilling will be spent based
on a pro rata basis.
GALCA Project
The GALCA project comprises 77 concessions (132,000 hectares) and is located
in the Cesar State. The project has very favorable infrastructure, with the
Fenoco rail line running through the middle of the concession area, and the
Rio Magdalena river and the National Road to the Caribbean coast and ports
running along the western edge of the project.
Extensive analysis has been conducted over several months studying various
seismic data and other geological analysis derived from petroleum drilling
carried out over the years. Geological analysis indicates the presence of
coal and this land package was put together targeting the areas where it is
believed that coal is closest to the surface. As such, the focus for the 19
hole drilling program will be on the more prospective northern and
southeastern flanks.
Colombian Coal Overview
After doubling the production and exports of coal in recent years, Colombia
is the largest exporter of coal to the United States and is by far the
largest coal producer in Latin America. More specifically, the total annual
coal production is currently about 70 million tons and that figure is
expected to double by 2015 as levels of foreign direct investments continue
to increase with high energy prices. Colombia is recognized for its vast
high grade coal resources along with its highly motivated and skilled labor
force.
About the Company
Galway Resources is also focused on commercializing the Victorio Project (a
molybdenum-tungsten project located in south western New Mexico), whose
positive Scoping Study results were reported on earlier this year. John Tumazos
of Very Independent Opinion has been engaged to assess Galway's strategic
alternatives. Mr. Tumazos has more that 25 years working on Wall Street in
the mining and steel sectors, providing strategic and transactional advice
to companies and financial institutions. Galway will look to secure joint
venture partners to advance Galway's different projects. Management
believes that its strategic portfolio of properties offers investors an
interesting and attractive exposure to a unique blend of commodities
(molybdenum, tungsten, metallurgical and thermal coal) in varying stages of
development.
For further information contact:
Galway Resources Ltd.
Robert Hinchcliffe
President and Director
1-800-475-2412
www.galwayresources.com
Neither the TSX
Venture Exchange nor its regulation services provider (as that term is
defined in the policies of the TSX Venture Exchange) accepts responsibility
for the adequacy or accuracy of this release.
Forward
Looking Statements:
Some statements in this
news release contain forward-looking information. These statements include,
but are not limited to, statements with respect to the completion of
transactions, the possibility of coal deposits, future exploration, development
and production activities, future expenditures and forecast Colombian coal
production. These statements address future events and conditions and, as
such, involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements to be
materially different from any future results, performance or achievements
expressed or implied by the statements. Such factors include, without
limitation, the timing and success of contemplated transactions and
exploration, development and production activities, the realization of coal
deposits, the timing and amount of expenditures and actual realized
Colombian Coal production. See the "risk factors" set out in
Galway's management's discussion and analysis files on the SEDAR website.
You can also view this News Release on our website
at:
http://www.galwayresources.com/s/NewsReleases.asp?ReportID=337122
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