May 6, 2009 (FinancialWire) — Southern Energy Company, Inc. (OTC: SOCI) (Est. Market Cap: US$50.67 Mil.) has entered into negotiations with the group of vendors of the Lota Bay Concession to acquire a second coal concession located in Lota, Chile.

In addition, the vendor of the Lota Bay Coal Concession has agreed to defer the closing of the first concession to allow for the negotiation and completion of a definitive agreement on the second.

The second concession is adjacent to the first 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.

In March 2006 a drilling test was performed in the area of the first concession, showing 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.

Lota was a major coal-mining centre in southern Chile, situated on the Golfo 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 complete 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.

Southern Energy has been active in seeking out resource opportunities in North and South America to explore, develop, and produce since 2007 and is currently focused on the acquisition, exploration and development of coal, gold and silver properties throughout South America.

FinancialWire(tm) is a fully independent, proprietary news wire service. FinancialWire(tm) is not a press release service, and receives no compensation for its news, opinions or distributions. Further disclosure is at the FinancialWire(tm) web site (http://www.financialwire.net/disclosures.php). Contact FinancialWire(tm) directly via inquiries@financialwire.net.

Free annual reports for companies mentioned in the news are available through the Free Annual Reports Service (http://investrend.ar.wilink.com/?level=279).

Legal Disclaimer:

EIN Presswire provides this news content "as is" without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.