August 29, 2005

New U.S. energy bill may lead to funding for demonstration of Silverado's oil subsititute

The Alaska subsidiary of Vancouver-based Silverado Gold Mines stands to benefit from the passage of the new U.S. Energy Policy Act of 2005. The new legislation includes language specifically authorizing the U.S. Energy Secretary to "conduct a program of technology...demonstration and commercial application for coal and power systems, including programs to facilitate production and generation of coal-based power through...liquid fuels derived from low rank coal water." This clears the path for the U.S. government to support Silverado's Low-Rank Coal Water Fuel (LRCWF) demonstration project as a funding partner.

"Receiving a federal grant is a two-step process-first, being authorized and second, having funds appropriated. We have passed the first hurdle in obtaining a government grant," Silverado Gold Mines CEO Garry Anselmo explained. "We are very excited about 'Low-Rank Coal Water Fuel' being included as a practical fuel source in this long-awaited energy bill....We know this fuel works, and look forward to demonstrating the commercial applications of LRCWF" he added.

The company's subsidiary, Silverado Green Fuel, in Fairbanks, has been working to develop an environmentally friendly oil substitute produced from low-rank coal. Following hydrothermal treatment, the upgraded low-rank coal is mixed with water, much of which is recycled from the feed coal dewatering process. The end product, low-rank coal water fuel, is a stable, non-hazardous, low-cost alternative to petroleum-derived fuels. An added benefit, says the company, is that it can use existing fuel oil infrastructure for handling, storage and transportation.

Silverado Green Fuel has successfully demonstrated the technical feasibility of producing and using this oil substitute, derived from ultra-low-sulfur Alaska subbituminous coal, on a pilot plant scale. It estimates that a three-year, full-scale demonstration project, making use of an existing idled goal recovery plant near Fairbanks, would cost around $20 million. The company continues to work with the U.S. government, seeking an appropriation for the LRCWF demonstration project which would allow the project to get underway.

The U.S. Energy Policy Act of 2005 was signed by President Bush on August 9. The 1,725-page bill is the first comprehensive national energy plan to be introduced in the U.S. in more than a decade; it affects virtually every aspect of energy production in the U.S.

Notably, the legislation encourages energy efficiency and conservation at all levels, from government departments and agencies through business and industry to residential users. New minimum energy efficiency standards have been set for a range of commercial and consumer products and tax credits introduced for highly efficient central air conditioners, heat pumps and water heaters, as well as for building upgrades to conserve energy.

The bill will promote the development and use of renewable energy sources, providing tax credits for wind, solar and biomass energy. It has introduced, for the first time, a tax credit for residential solar energy systems. It also provides for expanded research into developing hydrogen technologies, and establishes a flexible national renewable fuels standard to encourage greater use of renewable fuels such as ethanol and biodiesel.

More information is available from Silverado Gold Mines, 604/689-1535, FAX 604/682-3519, E-mail, Web site

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