Galway Resources - Colombian Coal

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The demand for global coal has risen by more than 50% in the last 25 years, and as a source of energy, coal is second in importance after petroleum. Colombia has estimated coal resources of over 20 billion metric tons or just under 5.0% of the total global coal reserves. At present Colombia is the world's largest exporter of coal to the United States, and is the 5th largest exporter of thermal coal in the world. As stricter environmental regulations continue to go into effect in places like the United States, where annual coal consumption is greater than 1 billion tons, Galway management believes that high quality coal (high energy and low level of contaminants) from Colombia will garner an even greater premium in the global coal markets than at present. The country has taken considerable step forward with higher levels of spending on the country's infrastructure from both the private and public sector.

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Colombia Has Abundant High Quality Open- Pittable Coal Resources

In Latin America, Colombia is the leader in reserves and resources of high quality bituminous coal renowned globally for being high in energy (btu) content and low in contaminants (sulfur and ash). The vast majority of the current 70 million metric tons of annual coal production come from two States, Guajira and Cesar, and the coal is produced from open pit mines.

A few salient facts about the Colombian Coal industry would include:

Annual production of 70 Million metric tons, a 300 % increase in the past decade.
Estimated resources well over 20 Billion metric tons, of which 85% are located in Guajira and Cesar.
Recent transactions (US$3/ton) suggest strong demand for high quality open-pittable Colombian coal

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Galway Has Applied for Thermal and Metallurgical Coal Concessions...

The initial focus has been to apply for concessions close to existing coal operations. Thus far, Galway, has applied for several concessions in both Guajira and Cesar States, directly adjacent to existing coal operations with existing infrastructure. Additionally, after extensive geological work the Company has also identified a new area "GALCA:" that is located in the state of Cesar, with a rail line intersecting the property and adjacent to the Magdalena river where coal is also transported. Management believes this new area has the potential of being a new thermal coal basin in Colombia. Lastly, applications for metallurgical coal concessions have been submitted in the State of Cudinamarca.

The Possibility of Discovering A New Significant Coal Basin Also Exists

Studying the regional geology of Colombia, Galway concluded that Guajira, Cesar and a new basin we call GALCA were formed in one, extensive coal basin, and then dismembered in these three major units. The location of GALCA basin is between the towns of Aguachica and San Alberto in the state of Cesar, with an area of 42 x 12 miles.

The Coal potential of GALCA is estimated to be of 30 - 100 million tons in each of the two sub basins forming GALCA using a minimum thickness of 40 meters and 10 kilometers strike length. The resource potential could be as large as the resource at the existing in La Jagua Basin (in excess of one billion tons). The anticipated coal quality is also comparable with La Jagua basin with more than 12,000 btu and less than 0.6% sulphur. Galway submitted concessions for 333,500 acres in the GALCA area during October, 2007.

Galway is developing Phase I exploration in the area that has a significant amount of historical seismic surveys and drilling data to be completed by Februray 15th, 2008. Phase II and subsequent drilling program to be developed in the second half of 2008

Coal Exploration is Cost Effective and Has The Ability to Fast Track Projects

A major attraction of establishing an initiative in Colombia was driven by a combination of a long history of high quality coal reserves coupled with improving macro economic and political conditions as evidenced by a continual increase in foreign direct investments in Colombia over the past decade. More specifically, foreign direct investment in the mining sector in 2006 of $1.6 billion represents an all time high in terms of investment in the country's mining sector.

Mining Policies Amended to Attract Investment in the Sector

From 1994 to 2007, Mining policies in Colombia experienced exciting changes: in 1997, the National Council of Social and Economic Politics CONPES approved the document "Strategies for Strengthening the Colombian Mining Sector", whose objective was to favor a structural change that would lead to the modernization of the sector. The new Code of Mines, issued in 2001, increased transparency and flexibility in an effort to begin to more seriously attract large scale investments in the Colombian mining industry, to create a level playing field with respect to the rest of Latin America.

Essentially, the major change was within the concept of the State as a facilitator; as it strengthened its role as manager of the country's resources. As part of the general policy is that of decentralization, whereby the Department of Mines and Energy has delegated some functions of mining authority to six local governments and also to Ingeominas. Efforts have been underway to streamline the concessions process, to simplify and reduce permitting procedures. As per 2007, 100% of coal mining in Colombia is in private hands.