KAL Energy, Inc. - Closes over US$9M in Private Placement

KAL Energy, Inc (OTCBB:KALG) (FRANKFURT:D9T) is pleased to announce the raising of over US$9M to further fund and develop its business in general and specifically to support the exploration and development of its thermal coal concessions in Kalimantan, Indonesia. Furthermore the company announces a broad corporate & operational overview, aimed at cost reduction and improved execution, plus updates on key company activities. Funding Update KAL has been successful in raising over USD 9 Million in a private placement. These funds will be deployed to fund a Phase 2 Exploration program, carry out a restructuring program and remove legacy Accounts Payable from the company’s balance sheet. The current cash position enables the company to make significant progress on its goals, however, the move to production will undoubtedly require further funding as the scale of the operations increase. Corporate Reorganization Overview Since taking over as CEO of KAL Energy in mid November, Mr. Martin Hurley has instituted a vigorous review of all aspects of the company. To date this has yielded a significant reduction of the monthly burn-rate as evidenced by our quarterly financial filings. While this represents significant progress on cost reduction goals, the company continues to enhance its operations. While this is a key goal; a streamlined, flatter organization together with specific Management changes, as recently announced, is equally targeted to deliver better and more reliable execution of our Corporate goals and plans. Development Program Update The Company’s previously stated plans for commencing production on Block 24 in 2007 have not been met due to delays in raising initial funding & also by some poor historic execution. The transitioning of Block 24 from exploration to production remains a top priority of the Company. To that extend, we are devoting all key talent and energies to realizing this key milestone. Work is currently underway to ensure all geological, engineering, permitting and governmental activities are aligned and planned, so that the company can inform the market of a reliable new schedule to the commencement of production. However coal will not be produced in volume from our existing concessions in 2008. Exploration Program Update The Phase 2 Exploration program will remain focused on KAL Energy’s Block 24 and Block 16. The focus for Block 24 is to upgrade the qualification from a JORC Inferred Resource to JORC Measured status, and to drive the technical program for mine studies & planning. The Block 16 component of the program will be early stage, with a target of establishing a JORC resource and basic economic feasibility. Plans for both components of the plan are currently being finalized, with the mobilization goal being the first fiscal quarter. With a full update being presented to the Market as appropriate after full analysis and consideration. Acquisitions Program Update During Q2/Q3 the company sought to purchase a prospective coal property in Mongolia. The company has incurred ~USD400K in option payments, drilling and exploration fees on its Mongolian operations. While initial results for the property were deemed positive, by subsequently putting the deal through a rigorous due diligence process the decision was reached not to proceed further with the acquisition. This saved the company from significant cash and equity disbursements, for a tenement that was consequently deemed not to make the appropriate financial and commercial returns such as are now required for our shareholders. The Strategy Going Forward The company has refocused to three key pillars of strategy; a) complete exploration of Block 24 & seek to move it into production as soon as practically and commercially possible, b) undertake early stage exploration of Block 16, and c) seek attractive acquisitions for its Asian thermal coal portfolio where returns to shareholders can be significantly enhanced in the long-term. Tighter focus on execution and cost management will enable KAL to deliver strongly on these going forward. Commenting on the announcement Mr. Martin Hurley, CEO of KAL Energy, stated "I am delighted in announcing the successful capital raising round for KAL Energy. Given the currently challenging capital market conditions, it is reassuring to see institutional investors responding strongly to the KAL Energy proposition. These new funds enable KAL to continue developing its thermal coal prospects and position the company to capitalize on the very strong fundamentals of the Asian coal market. With the company now funded and structured for success, timing could not be better for KAL. Regional macro dynamics, the persistent structural infrastructure constraints on supply and sustained economic growth in China and India driving demand & prices for thermal coal. ” For more information on KAL Energy, Inc. please visit our web site at www.kalenergyinc.com KAL Energy, Inc. has rights to two coal concessions situated near the Mahakam River in North Eastern Kalimantan, Indonesia. This river is a key transportation system for delivering coal to domestic and international markets. One of the concessions has a JORC Compliant Inferred Resource of 204 Million tonnes of thermal coal. With numerous other coal mines in East Kalimantan, including the world's largest thermal coal exporter Kaltim Prima Coal (KPC), KAL Energy's concessions are in a region that is known for its extensive open pit thermal coal producing mines and environmentally friendlier coal product. Indonesia has recently surpassed Australia as the world's leading thermal coal exporter. Notice Regarding Forward-Looking Statements This news release contains "forward-looking statements," as that term is defined in Section 27A of the United States Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements in this press release which are not purely historical are forward-looking statements and include any statements regarding beliefs, plans, expectations or intentions regarding the future.