Homeland Energy Group Provides Operations Update

TORONTO, CANADA, Apr 06 (MARKET WIRE) --
Homeland Energy Group Ltd. (TSX: HEG) ("Homeland" or the "Company")
provides an update on its operations in South Africa and a report on the
progress of a number of initiatives.

The company's Kendal operation has undergone significant change over the
last six months, both at the management level and with respect to
improving operational throughput and efficiencies. Management and the
board of directors are committed to improving the Kendal operation and
making it profitable in the short term as a platform for optimized
production, growth and improving value for all shareholders of the
Company. A major part of the funding required for working capital,
operating deficit (as the mine works towards steady state operation) and
Q4 2009/Q1 2010 capital expenditure plan was met by funds infused by GMR
Energy ("GMR") by way of a shareholder loan and private placement (see
releases dated November 18, 2009, December 7, 2009, January 8, 2010 and
February 11, 2010). Going forward, the balance of the capital expenditure
plan for 2010 is proposed to be funded largely by the cash flows from
operations. However, the liquidity situation at the Kendal operation
remains in a critical position. Any shortfall in achieving the sales
targets and a delay or lower realization of sale of noncore assets would
put stress on the company's cash flow position, which in turn would
impact the capital expenditure program and create the need to raise
additional funds.

The following is a summary of the Company's progress to date:

Rights Offering Prospectus:

In reviewing the Company's preliminary prospectus (see press release
dated February 11, 2010), the Ontario Securities Commission raised a
question concerning the accounting treatment of the Company's investments
in Madic Operation (Pty) Ltd. and Numin (Pty) Ltd. (the "Entities"). The
Company has decided to address this in the 2009 year end financial audit.
As a result, continued review by the Ontario Securities Commission of the
rights offering prospectus will be delayed until after the audited
financial statements for the year ended December 31, 2009 have been
filed. Please see the Company's press release of March 18, 2010 for
additional details on this accounting issue.

Kendal Loan:

Payment of the Debt Service Reserve Account was to commence in March
2010. A waiver has been received deferring this payment to June 2010.
Repayment of the loan will commence in June 2010. This loan repayment is
anticipated to be funded during 2010 largely by the sale of non-core
assets.

Loan Agreement with GMR:

The due date for the loan with GMR, previously announced January 8 and
February 11, 2010, has been extended to May 31, 2010

Kendal Colliery:

-- Contract Re Tendering - The Company continues to work diligently to
reduce mining and plant costs through re-tendering and the appointment
of new contractors. The scope of work for the plant re-tender includes
comprehensive Key Performance Indicators ("KPI's") which will guarantee
that the contractor performs to optimize the Company's production. This
will assist with the production of a consistent quality of coal being
delivered to market and will facilitate securing long term coal sales
contracts. The Company has to date received tender responses from two
companies who have agreed to meet our standards regarding plant
availability and product quality. This, along with bonus and penalty
clauses, is expected to significantly improve wash plant performance.
The process to retender the mining contract has also begun with
completion anticipated in Q2, 2010. The Company expects to reduce its
mining costs materially through this tendering process.

-- Production - Run of Mine production is at approximately 75% of capacity
or 100,000 tonnes per month. This was purposely instituted to reduce
mining costs and stocks until such time as the coal sales program and
wash plant performance improved. Coal stocks are currently about 50,000
tonnes. Run of mine production will be ramped up again to 150,000 tonnes
per month once additional coal sales contracts are secured.

Investigative studies were completed to reduce the amount of fines
produced during mining operations to alleviate associated problems in
the washing plant. This has resulted in a 10% reduction in fines,
improving the value of product produced.

-- Marketing- A marketing strategy has been developed by the management
team under the guidance of KPMG. The strategy comprises market research
and the development of a comprehensive domestic customer database for
South Africa. The database includes contacts, prices, use of coal and
quality requirements.

-- Coal Sales Contracts - the Company's objective is to tie up 70 to 75 %
of production through long term contracts with end users, with the
balance being sold on the spot market. To date, a 120,000 metric tonne,
12 month contract for large and small nuts has been signed with Envicoal
(Pty) Limited ("nuts" comprise the 2-3 inch size fraction). The
Company's marketing team is currently engaged in advanced negotiations
with several end users, including steel, cement and paper companies, on
long-term 12-month and 3 year contracts. All contracts are being
negotiated on the understanding that following the initial 1 to 3 year
term, they would be extended for an additional 3 to 5 years and possibly
life-of-mine. The dialogue with each company is progressing well, with
results expected in Q2, 2010.

-- Operations - The phase II expansion project which comprises a Run of
Mine tipping and crushing arrangement at the southern side of the
reserve, and a 1.4 kilometer overland conveyor with 5,000 tons of surge
capacity is under construction. When complete, the project will reduce
transport and re-handling costs destined to the plant by approximately
US$1.6 million per year.

-- Construction - Homeland is planning to construct an additional wash
plant to wash the discards and a crushing and screening plant for
crushing and screening raw coal from the number 4 seam in order to make
a product that is useable for the South African power generation market.
A proposal has been received from a third party for plant construction
with Homeland paying on a cost per tonne basis for ownership, operation
& maintenance. Ownership would be transferred to Homeland after
approximately 3 years. The plant can be commissioned within 6 months
from start of construction and will further improve sales and
profitability in 2011.

-- KPMG Advisory Services ("KPMG") have been engaged to assist in the
optimization of the Kendal operation (see press release dated Nov. 18,
2009). KPMG has worked closely with the Company since the fall of 2009
to compile a marketing strategy, scope of work and KPI's for the Plant
tender, compiling the scope of work for the mining tender, development
of the Management information system as well as several cost reduction
initiatives. KPMG is compensated on a performance/success rate basis.

Eloff:

At the Eloff prospecting right, an area in the northwest
quadrant of the property has been identified as a target for potential
mining; however, an additional 50 boreholes must first be drilled. In
principle, agreement for drilling has been reached with a prominent
farmer on the land and a further meeting with any remaining farmers is
scheduled to take place shortly. All drilling is planned to be completed
by the end of August, 2010, after which the Corporation will assess the
results. Results are anticipated in Q4, 2010.

Exploration:

Drilling completed to date on the Dwarsfontein prospecting right is being
compiled into a Preliminary Feasibility Study; it is anticipated that the
report will be completed before the end of Q3, 2010.

In conclusion, the Company continues to implement a cost reduction
program throughout the Company's operations and at the same time to
optimize the operations at the Kendal Colliery. Homeland is working with
all stakeholders to ensure the Company is able to meet its financial and
operating commitments. Nonetheless, shareholders are advised that certain
risks exist for the future performance of Homeland's operations. If the
Company is unable to meet the objectives set out herein, the Company will
face significant pressure on its cash flow in the coming months.

Homeland Energy Group Ltd. (TSX: HEG) is a coal producer with operations
in the Witbank area of South Africa. The company also has a large-scale
development property in South Africa and exploration interests in
Southern Africa (is this correct statement?). Homeland will continue to
seek out interests in additional coal projects in South Africa and
neighbouring countries as well as internationally. Homeland is a
shareholder in Homeland Uranium Inc., a Canadian uranium exploration
company focused on projects in Niger and the United States. Homeland
Energy Group Ltd. is currently traded on the Toronto Stock Exchange under
the symbol "HEG" with 302,115,756 common shares issued and outstanding.
www.homelandenergygroup.com.

Qualified Person

This news release was reviewed by Homeland's Senior Coal Geologist and
QP, Graham Gemmell, Pr.Sci.Nat., a Qualified Person as defined in
National Instrument 43-101.

Forward-Looking Statements

"This press release contains or refers to forward-looking information,
including statements regarding the estimation of mineral resources,
exploration results, potential mineralization, exploration and mine
development plans, timing of the commencement of operations and estimates
of market conditions, and is based on current expectations that involve a
number of business risks and uncertainties. Factors that could cause
actual results to differ materially from any forward-looking statement
include, but are not limited to, failure to convert estimated mineral
resources to reserves, the grade and recovery of ore which is mined
varying from estimates at the Kendal Colliery, capital and operating
costs varying significantly from estimates, the preliminary nature of
metallurgical test results, delays in obtaining or failures to obtain
required governmental, environmental or other project approvals,
political risks, uncertainties relating to the availability and costs of
financing needed in the future, changes in equity markets, inflation,
changes in exchange rates, fluctuations in commodity prices, delays in
the development of projects and the other risks involved in the mineral
exploration and development industry. Forward-looking statements are
subject to significant risks and uncertainties, and other factors that
could cause actual results to differ materially from expected results.
Readers should not place undue reliance on forward- looking statements.
These forward-looking statements are made as of the date hereof and the
Company assumes no responsibility to update them or revise them to
reflect new events or circumstances other than as required by law."

Please visit www.homelandenergygroup.com

Contacts:
Homeland Energy Group Ltd.
Henry Hoffmann
Chief Operating Officer
416 506-1979
info@homelandenergygroup.com
www.homelandenergygroup.com

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