SANTIAGO, Chile, May 21, 2009 (GLOBE NEWSWIRE) -- Southern Energy Company, Inc. (Pink Sheets:SOCI), a publicly traded resource exploration company, is pleased to announce it has entered into an agreement with a private Hong Kong investment firm for a non-brokered private placement whereby the Company will issue up to 4,000,000 shares of common stock of the Company at a price of $1.00 per share for aggregate gross proceeds of up to $4,000,000. The Company plans to draw from this subscription on an as needed basis. The Company plans to utilize the net proceeds from this private placement for the preparation of its properties for production, as well as for the general working capital of the Company. Under the terms of the non-brokered private placement, the Company plans to draw between $1,200,000 and $4,000,000 in aggregate funds, in keeping with its plan to commence production on the Lota Bay Coal Concessions and commence a major geological work program on the Catalina Silver, Copper, and Gold Property later this year.
About the Lota Bay Coal Concessions
The First Lota Bay Coal Concession is located in the harbor of Lota Bay, Chile. In March 2006 a drilling test was performed in this area. The net results of these tests show 275,000 proven tons 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. The rights to remove the Lota coal were granted through a Minor Maritime Concession On A Section Of The Sea Floor from the Chilean Government on August 20, 2008.
The Second Concession is adjacent to the First Lota Bay Coal Concession and has also been drilled with indicated reserves in excess of 200,000 tons of recoverable coal.
The combined total of the two concessions provides a known reserve in excess of 500,000 tons of recoverable coal. Upon completion of this acquisition, the Company plans to engage in further drilling, to be carried out over the course of the next several months, with a planned start to production to coincide with the South American spring season.
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.
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.
About the Catalina Silver, Copper and Gold Property
The Catalina property is comprised of 14 claims blocks totaling 1100 hectares. The claims are located 200 km northwest of Santiago, the capital of Chile, and 31 km from the mining town of Petorca. The area is a well-know district of copper, gold and silver mining, and the area is currently being staked and explored by several of Chile's larger mining producers with many small scale mining operation around the claims now acquired by Southern Energy.
The prospect itself has produced and shipped ore to Enami, the state owned custom smelter and refinery located 50 km from the property. The last shipment was 22.4 tons of ore to a locally owned custom mill and concentrator facility located 22 km from the mine.
Representative samples of the shipped ore and results from chip samples across the systems from the different "veins" range from 0.6 to 5.37 g/t gold,0.6 to 7.89 g/t copper, and 20 to 497 g/t silver. These "veins" run 3000 meters in length and 0.80 meters to 3.20 meters in width and appear to be increasing in grade and width at depth.
The Catalina main adit is drifted into the shear zone at an almost flat grade and south for about 110 meters. The wall rock is of sufficient stability that support beams and timbering is not required in the underground workings. The main tunnel outlines a clear, consistent and predictable structure that contains extremely high-grade copper, gold, silver, lead and zinc ore. The gold content is increasing further to the west. The main tunnel runs north to south with two shafts constructed downward to access additional ore below the main area.
The main mineralization is chalcopyrite, chalcocite, sphalerite, galena and bornite. In 2006, a Consulting Engineer estimated more than 250,000 tons of high-grade reserves. It is not currently known how much deeper this formation goes below the current workings, but due to the strength and competence of the structure, it is likely to carry on to much greater depth and distance.
Initial sampling and mapping of the claims has discovered a well mineralized area of 3 kilometers by 1 kilometer. The Company plans an extensive geological program to delineate the mineralized area and increase indicated reserves.
The Catalina project is in close proximity to several mining communities featuring an excellent work force and access to mining equipment with infrastructure comprised of nearby mills, concentrators and smelters for processing. Ore trucks are able to access the property and delivery ore directly to the mill.
Production can be quickly upgraded to provide both positive cash flow and exploration development for future benefit.
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. Currently, Southern Energy owns the Catalina Silver and Gold Property northwest of Santiago, Chile, and the Lota Bay Coal Concessions located in Lota, Chile.
Please visit http://www.southernenergycompany.com for more information.
Forward-Looking Statements
You should not place undue reliance on forward-looking statements in this press release. This press release contains forward-looking statements that involve risks and uncertainties. Words such as "will," "anticipates," "believes," "plans," "goal," "expects," "future," "intends," and similar expressions are used to identify these forward-looking statements. Actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including the risks we face as described in this press release. For further information about Southern Energy Company, Inc. please refer to its Web site at http://www.southernenergycompany.com.