News | General | Nov 2nd 2009

Hillsborough and Vitol execute definitive Arrangement Agreement

Vancouver, British Columbia – Hillsborough Resources Limited (HLB-TSX) (“Hillsborough” or the “Company”) and Vitol Anker International B.V. (“Vitol”), a member of the Vitol Group, announced today that they have entered into a definitive arrangement agreement (the “Arrangement Agreement”) providing for the acquisition by Vitol of all of Hillsborough’s issued and outstanding common shares (the “Hillsborough Shares”) and 10% convertible debentures due and payable in February 2013 (the “Hillsborough Debentures”) not already owned by Vitol by way of a plan of arrangement under the Canada Business Corporations Act (the “Arrangement”).

The Agreement follows the announcement by Vitol on July 20, 2009 that it intended to make an offer to acquire all of the Hillsborough Shares by way of a take-over bid. The cash consideration of Cdn$0.50 per Hillsborough Share under the Arrangement represents an increase of approximately 11.1% per Hillsborough Share over Vitol’s previously announced intended offer price of Cdn$0.45 per Hillsborough Share and a premium of approximately 58.7% per Hillsborough Share based on the closing price of the Hillsborough Shares on the Toronto Stock Exchange on July 17, 2009.

The Hillsborough Debentures outstanding and not otherwise converted at the effective time of the Arrangement will be repaid in full and retired by Hillsborough by way of a cash payment from Hillsborough of Cdn$1,000 for each Cdn$1,000 in principal amount outstanding, together with any accrued interest thereon that remains unpaid as of the effective time.

The special committee comprised of independent directors of Hillsborough (the “Special Committee”) has received a fairness opinion from TD Securities Inc. (“TD Securities”) which provides that, subject to the assumptions and limitations contained therein, the consideration to be received by Hillsborough’s shareholders per Hillsborough Share and Hillsborough’s debentureholders per Hillsborough Debenture pursuant to the Arrangement is fair, from a financial point of view, to the holders of Hillsborough Shares and Hillsborough Debentures (other than Vitol and its affiliates).

In accordance with Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”), the Special Committee received from Salman Partners Inc. (“Salman”) a formal valuation of the Hillsborough Shares, which provided that, in Salman’s opinion, as of October 2, 2009, and subject to the assumptions, limitations and qualifications set out therein, the fair market value of the Hillsborough Shares was in the range of Cdn$0.45 to Cdn$0.75 per Hillsborough Share. The consideration per Hillsborough Share payable by Vitol under the Arrangement is within this range.

Acting on the unanimous recommendation of the Special Committee, and consideration of the advice from its financial advisor, TD Securities, and the valuation by Salman, among other things, the Company’s board of directors (the “Board”) has determined that the Arrangement (including the consideration payable per Hillsborough Share and the consideration payable for the Hillsborough Debentures) is fair to the holders of Hillsborough Shares and Hillsborough Debentures (other than Vitol and its affiliates) and the Arrangement is in the best interests of the Company.  Accordingly, the Board has approved the Arrangement and has resolved to recommend that Hillsborough’s shareholders and debentureholders vote in favour of the Arrangement.

Each of the directors of Hillsborough (other than the nominee of Vitol), as well as certain securityholders, have entered into support agreements. Pursuant to these agreements, holders of Hillsborough Shares representing approximately 18.0% of the outstanding Hillsborough Shares and holders of Hillsborough Debentures representing approximately 43.1% of the outstanding  aggregate principal amount of Hillsborough Debentures have agreed to support, and vote in favour of, the Arrangement. Vitol currently holds an aggregate of 16,555,300 Hillsborough Shares and Hillsborough Debentures in the principal amount of Cdn$2,061,000, representing approximately 20.6% of the currently outstanding Hillsborough Shares and 26.9% of the aggregate principal amount of Hillsborough Debentures.

“We are pleased to have reached this agreement with Vitol that gives Hillsborough shareholders an opportunity to realize cash proceeds for their investment at a significant premium to where Hillsborough shares were trading before Vitol announced its intention to acquire the company”, commented Emmet McGrath, a member of the Special Committee of Hillsborough.

Jacobus Sterken, Director of Vitol, commented: “We are very pleased to have reached an agreement with Hillsborough. This acquisition will provide Vitol with a strong portfolio of assets in a prolific resource province in Western Canada, while providing Hillsborough with the capacity to grow.”

Completion of the Arrangement is subject to customary conditions, including, among other things, receipt of required regulatory approvals, court approvals and, subject to the court’s approval, approval of the Arrangement at a special meeting of holders of Hillsborough Shares and holders of Hillsborough Debentures by not less than: (i) two-thirds of the votes cast by holders of Hillsborough Shares present in person or represented by proxy at the meeting, voting as a single class; (ii) the votes cast by holders of Hillsborough Debentures representing two-thirds of the aggregate principal amount of Hillsborough Debentures outstanding present in person or represented by proxy at the meeting, voting as a single class; and (iii) a majority of the votes cast by holders of Hillsborough Shares present in person or represented by proxy at the meeting in accordance with the minority approval requirements of applicable Canadian provincial securities laws, voting as a single class.

The Company anticipates that the special meeting will be held on or before December 22, 2009 and the Arrangement will be completed shortly thereafter. Pursuant to the Arrangement Agreement, among other things, Hillsborough has agreed to pay Vitol a termination fee in the amount of Cdn$1,125,000 if the Arrangement Agreement is terminated in limited circumstances, which include the acceptance of a “superior proposal”, as defined in, and subject to the conditions of, the Arrangement Agreement, subject to Vitol’s right to match any such superior proposal.

The factors considered by the Special Committee and the Board, a copy of TD Securities’ fairness opinion, a copy of Salman’s independent valuation, and other relevant background information will be included in the information circular to be mailed to the holders of Hillsborough Shares and Hillsborough Debentures in advance of the special meeting of such securityholders. A material change report, which provides more details on the Arrangement and the Arrangement Agreement, will be filed with the Canadian securities regulators shortly and will be available at www.sedar.com.

About Hillsborough:

Hillsborough Resources Limited is a Western Canadian coal mining company.

For further information from Hillsborough, please contact:

Hillsborough Resources Limited, David Slater, President & C.E.O., Ian Kirk, C.A., C.F.O.
Telephone: (604) 684-9288
Telephone: (604) 684-9288
Fax: (604) 684-3178/ Fax: (604) 684-3178
www.hillsboroughresources.com

For further information from Vitol, please contact:
Vitol Anker International B.V.
Cohn and Wolfe
Victoria Dix
Geneva, Switzerland
+41 22 908 4071
www.vitol.com

Caution Concerning Forward-looking Statements: This news release contains forward-looking statements relating to the proposed acquisition of Hillsborough, including statements regarding the completion of the proposed Arrangement. Any statements that are not statements of historical fact (including statements containing the words ‘believes,’ ‘intends’, ‘plans,’ ‘anticipates,’ ‘expects,’ ‘estimates’ or similar expressions) and refer to management’s expectations or plans and should be considered to be forward-looking statements. Such forward-looking statements are subject to important risks, uncertainties and assumptions. The results or events predicted in these forward-looking statements may differ materially from actual results or events. As a result, you are cautioned not to place undue reliance on these forward-looking statements. The completion of the proposed Arrangement is subject to a number of terms and conditions, including, without limitation: (i) approval of applicable governmental authorities, (ii) required Hillsborough shareholder and debentureholder approval, including approval by a “majority of the minority” in accordance with MI 61 101, (iii) necessary court approvals, and (iv) certain termination rights available to the parties under the Arrangement Agreement. These approvals may not be obtained, the other conditions to the Arrangement may not be satisfied in accordance with their terms, and/or the parties to the Arrangement Agreement may exercise their termination rights, in which case the proposed Arrangement could be modified, restructured or terminated, as applicable. The forward-looking statements are based on a number of assumptions which may prove to be incorrect including, but not limited to, Vitol and Hillsborough being able to successfully complete the transaction referred to herein within the timeframe generally as anticipated and without unforeseen significant costs or delays and there being no material adverse changes in the affairs of Hillsborough. Readers are cautioned that the foregoing list is not exhaustive. The forward-looking statements contained in this news release are made as of the date of this release and, accordingly, are subject to change after such date. Except as may be required by Canadian securities laws, Hillsborough and Vitol disclaim any intention and assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, Hillsborough and Vitol undertake no obligation to comment on expectations of, or statements made by, third parties in respect of the proposed Arrangement.

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