SANTIAGO, Chile, March 10, 2009 (GLOBE NEWSWIRE) -- Southern Energy Company, Inc. (Pink Sheets:SOCI), a publicly traded resource exploration company, is pleased to announce that it has entered into a definitive agreement to acquire the Lota Bay coal concession located in Lota, Chile. Under the terms of the agreement, the Company will pay to the seller, Ms. Maria Latapiat, a total of $8,000,000, consisting of 5,000,000 shares of restricted common stock at a deemed price of $1.50 per share and a cash payment of $500,000, payable on or before March 31, 2009.
About the Lota Bay Coal Concession
Lota was a major coal-mining centre in southern Chile, situated on the Golfo (gulf) de Arauco. Although the city of Lota was founded in 1662, sustained development of coal mining did not begin until 1852, when the industrialist Matias Cousino started a coal-mining enterprise. Completion of a railway from Concepcion, 32 km north, in 1888 stimulated growth. In the 1990's Lota's coal resources became exhausted and cheaper Colombian coal began to compete in the market causing the coal mines to close after 145 years of continuous operations.
Over the 145 year span of Lota coal mine operation, many tons of coal was dumped or spilled into the harbor. Most of the spilled coal resulted from primitive shipping and conveying practices that were in use over the last 145 years.
In March 2006 a drilling test was performed in this area. The net results of these tests show 275,000 proven tones of recoverable bituminous thermal coal in the harbor with probable reserves of 90,000 tons. The coal within the boundaries of the concession is a layer averaging 2.26 meters in thickness in 10 meters of water with 1.7 meters of overburden.
Ms. Latapiat acquired the rights to remove the Lota coal through a Minor Maritime Concession On A Section Of The Sea Floor from the Chilean Government on August 20, 2008. As outlined above, Southern Energy has entered into an agreement with Ms. Latapiat to acquire this interest.
The operational plan is to dredge up the coal and process it in an adjacent industrial site. Lota has grid power, water, sewage, road and rail access. The coal will be marketed to nearby coal burning thermal electric generating plants which currently have to import to meet the growing electrical demands.
The projected economics is based on the current price for coal in Chile of $60 per ton. This price reflects the demand for coal in Chile as 84% of Chile's electrical production is from coal fired generation plants. At a median price of $60 per ton, the gross value of the project is $21.9 million, and with dredging and recovery costs of approximately $30 per ton, the gross profit is $11 million for the two year operating period.
About Southern Energy Company, Inc.
Southern Energy Company, Inc. is a publicly traded resource exploration company. From 2007 to the present the company has been active in seeking out resource opportunities in North and South America to explore, develop, and produce. The Company is currently focused on the acquisition, exploration and development of coal, gold and silver properties throughout South America.
Please visit http://www.southernenergycompany.com for more information.
Forward-Looking Statements
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