Homeland Energy Group Announces Agreement for Sale of Kendal Property and Late Filing of Financial Statements

Homeland Energy Group Announces Agreement for Sale of Kendal Property and Late 
Filing of Financial Statements 
TORONTO, CANADA -- (Marketwire) -- 03/28/13 -- Homeland Energy Group
Ltd. (TSX:HEG) ("Homeland" or the "Company") wishes to announce that
it has entered into heads of agreement (the "HOA") with Joe Singh
Group of Companies (Pty) Ltd. (the "Purchaser") pursuant to which the
Purchaser will acquire a 100% interest in the Kendal Colliery,
including the wash plant and all mining rights, through the purchase
of all of the issued and outstanding common shares of Ferret Coal
(Kendal)(Pty)(Ltd.). The total purchase price for the assets is
ZAR235 million (approximately $25.7 million). ZAR110 million of this
amount has been advanced. A further ZAR55 million is payable on May
31, 2013 and the balance of ZAR70 million will be paid on receipt of
final approvals from applicable regulatory approvals in South Africa.
As part of this transaction, African Spirit Trading 307 (Pty) Ltd.,
Homeland's current BEE partner at Kendal, has agreed to sell its 26%
interest in Kendal to Homeland for transfer to the Purchaser in
consideration for the forgiveness of all loans owed to Homeland and
its subsidiaries and the payment of ZAR8 million by Homeland. The
proceeds from the sale of Kendal will be used to repay the balance of
the loan from ICICI Bank, to repay all outstanding third party
obligations and to provide some working capital during the transition
phase. The balance will be used to reduce the outstanding obligations
to GMR Energy Group Limited ("GMR") pursuant to loans advanced to the
Corporation starting in 2010. 
The sale of Kendal is subject to a number of conditions including
approval by applicable regulatory authorities in South Africa and by
the minority shareholders of Homeland. Shareholder approval must be
obtained by June 30, 2013 and will be sought at the upcoming annual
meeting of shareholders. The date of the meeting is still being
determined. All conditions must be met by August 31, 2013. If the
transaction is terminated, all advances against the purchase price
will be refunded. 
Following numerous operational setbacks over the past two years
including flooding in the mine, the significant incidence of dykes
and sills in the coal seams, the discovery that the underground
workings in the E Block had been mined to a more significant extent
than had previously been indicated and the difficulties in retaining
a mining contractor on a cost effective basis, management of the
Company was of the view that positive cash flow from operations would
not be achieved in the short or medium term. Rather than incurring
further losses, the decision was made to seek a buyer for the
property who could more effectively conduct operations as a result of
economies of scale. The Purchaser and its affiliates are already
active in the coal mining business in South Africa. Pursuant to the
terms of the HOA, the Purchaser has been retained to commence mining
operations at Kendal effective April 1, 2013. All costs and
liabilities associated with such operations will be on the
purchaser's account and the Purchaser will be entitled to all revenue
generated from such operations.  
As a result of this transaction and the previously announced sale of
the Eloff Property, the Company no longer has any operating assets.
All employees in South Africa are being terminated effective March
31, 2013.  
GMR has been very supportive of the Corporation historically and
continues to be so. The Corporation is considering what options are
available to it at this time to preserve value for the minority
Late Filing of Financial Statements 
As a result of the timing of the execution of agreements with respect
to both the sale of Kendal and the sale of the Eloff Property,
Homeland may not be able to complete its financial statements and
accompanying management discussion and analysis and annual
information form for the year ended December 31, 2012 (the "Financial
Disclosure") which are due to be filed on or before April 1, 2013
pursuant to relevant securities laws. Additional disclosures must be
included in the Financial Disclosure which is the cause of the delay. 
The Company intends to work diligently to file the Financial
Disclosure as soon as possible and it has applied for a Management
Cease Trade Order ("MCTO") under National Policy 12-203 (the
"Policy") pending the filing of the Financial Disclosure on SEDAR.
The Company is confident that the Financial Disclosure will be filed
by no later than April 15, 2013. The granting of an MCTO is at the
discretion of the Ontario Securities Commission and there can be no
guarantee that an MCTO will be granted. 
If an MCTO is granted under the Policy, it will be imposed against
some or all of the persons who have been directors, officers or
insiders of the Company instead of a cease trade order being imposed
against all securities of the Company. An MCTO would not generally
affect the ability of persons who have not been directors, officers
or insiders of the Company to trade the securities of the Company
pending the filing of the Financial Disclosure on SEDAR. 
If the MCTO is granted, the Company intends to satisfy the provisions
of the Alternate Information Guidelines as set out in the Policy for
as long as it remains in default, including the issuance of bi-weekly
default status reports, each of which will be issued in the form of a
press release.  
Homeland Energy Group Ltd. (TSX:HEG) is a company seeking out
interests in viable coal projects in South Africa and neighbouring
countries as well as internationally. Homeland Energy Group Ltd. is
currently traded on the Toronto Stock Exchange under the symbol "HEG"
with 472,204,149 common shares issued and outstanding.
Homeland Energy Group Ltd.
Ajay Gupta
Chief Financial Officer
+1 416 506-1979
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