Galway reports Prodeco signs agreement for GALCA coal project in Colombia

    TORONTO, Feb. 5 /CNW/ - Galway Resources Ltd. (GWY: TSX-V) is pleased to
announce today that it has entered into an exploration and joint venture
agreement with Prodeco for Galway's GALCA coal project in Colombia. The GALCA
coal project comprises 132,000 hectares that Galway believes could host a new
undiscovered coal basin that occurs close to surface. A 19-hole drilling
program has been designed for the first phase of exploration. This drilling
program will be focused on two areas (the northern flank and the southeastern
portion) that appear to have the highest prospect of coal near the surface.
    "We are very pleased to have Prodeco as a joint venture partner and to
aggressively explore and realize the full potential of GALCA. This area has
the potential to host several new coal deposits with great existing
infrastructure. The upside could be tremendous," cites Robert Hinchcliffe,
President and CEO of Galway Resources.

    Terms of the Transaction

    The terms of the GALCA exploration and joint venture agreement include
the following: Prodeco will fund the first 19 drill holes, and in
consideration for agreeing to fund the feasibility drilling program,
thereafter will earn 60% of the project. Prodeco will then earn the remaining
40% in the project by paying Galway an already agreed value per tonne of
economically mineable open-cut reserves determined in accordance with the JORC
Code. The feasibility costs that are not associated with drilling will be
spent based on a pro rata basis.

    GALCA Project

    The GALCA project comprises 77 concessions (132,000 hectares) and is
located in the Cesar State. The project has very favorable infrastructure,
with the Fenoco rail line running through the middle of the concession area,
and the Rio Magdalena river and the National Road to the Caribbean coast and
ports running along the western edge of the project.
    Extensive analysis has been conducted over several months studying
various seismic data and other geological analysis derived from petroleum
drilling carried out over the years. Geological analysis indicates the
presence of coal and this land package was put together targeting the areas
where it is believed that coal is closest to the surface. As such, the focus
for the 19 hole drilling program will be on the more prospective northern and
southeastern flanks.

    Colombian Coal Overview

    After doubling the production and exports of coal in recent years,
Colombia is the largest exporter of coal to the United States and is by far
the largest coal producer in Latin America. More specifically, the total
annual coal production is currently about 70 million tons and that figure is
expected to double by 2015 as levels of foreign direct investments continue to
increase with high energy prices. Colombia is recognized for its vast high
grade coal resources along with its highly motivated and skilled labor force.

    About the Company

    Galway Resources is also focused on commercializing the Victorio Project
(a molybdenum-tungsten project located in south western New Mexico), whose
positive Scoping Study results were reported on earlier this year. John
Tumazos of Very Independent Opinion has been engaged to assess Galway's
strategic alternatives. Mr. Tumazos has more that 25 years working on Wall
Street in the mining and steel sectors, providing strategic and transactional
advice to companies and financial institutions. Galway will look to secure
joint venture partners to advance Galway's different projects. Management
believes that its strategic portfolio of properties offers investors an
interesting and attractive exposure to a unique blend of commodities
(molybdenum, tungsten, metallurgical and thermal coal) in varying stages of

    Neither the TSX Venture Exchange nor its regulation services provider (as
    that term is defined in the policies of the TSX Venture Exchange) accepts
    responsibility for the adequacy or accuracy of this release.

    Forward Looking Statements:

    Some statements in this news release contain forward-looking information.
These statements include, but are not limited to, statements with respect to
the completion of transactions, the possibility of coal deposits, future
exploration, development and production activities, future expenditures and
forecast Colombian coal production. These statements address future events and
conditions and, as such, involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements
to be materially different from any future results, performance or
achievements expressed or implied by the statements. Such factors include,
without limitation, the timing and success of contemplated transactions and
exploration, development and production activities, the realization of coal
deposits, the timing and amount of expenditures and actual realized Colombian
Coal production. See the "risk factors" set out in Galway's management's
discussion and analysis files on the SEDAR website.

For further information:

For further information: Galway Resources Ltd., Robert Hinchcliffe,
President and Director, 1-800-475-2412,

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