TAIYUAN, China, Dec. 18 /PRNewswire-Asia-FirstCall/ -- Puda Coal, Inc. (NYSE Amex: PUDA), a supplier of high grade metallurgical coking coal used to produce coke for steel manufacturing in China, and one of the few coal mine consolidators appointed by the Shanxi Provincial government, today announced that the Company's subsidiary, Shanxi Puda Coal Group, Co., Ltd ("Shanxi Coal"), entered into coal mining rights and mining assets transfer agreements with Pinglu County Da Wa Coal Industry Co., Ltd ("Da Wa Coal") and Pinglu County Guanyao Coal Industry Co., Ltd. ("Guanyao Coal") on December 11, 2009, respectively.

Under the agreements, the total transfer price of the purchased assets of Da Wa Coal is RMB 190 million ($27.8 million), of which RMB 46.6 million ($6.8 million) is for Da Wa's tangible assets and RMB 143.3 million ($21.0 million) is for the mining rights and compensation to the previous owner. For Guanyao Coal, the purchase price totaled RMB 94.8 million ($13.9 million), of which RMB 37.6 million ($5.5 million) is for Guanyao's tangible assets and RMB 57.2 million ($8.4 million) is for the mining rights and compensation to the previous owner.

All the purchased assets will be placed into two newly established companies, of which Puda Coal will own 100%. The names of the two new companies have been approved by the provincial government in its notice dated September 28, 2009 approving Puda Coal to be a coal mine consolidator of eight coal mines in Pinglu County.

The agreements provide that Puda Coal pay 15% of the purchase price within three days after signing the business transfer agreements, which occurred on December 15, 2009, and 65% of the purchase price within 15 days after transferring the registrations and ownership certificates of mining rights, land and property deeds. At that point, Puda Coal will apply for new business licenses and operating approvals from the local government for the new companies. Once the approvals are received, Puda Coal will commence operations of the mines. Puda Coal will pay the remaining 20% of the purchase price of the mines, upon the one-year anniversary of the completion of ownership transfers.

Pursuant to the agreements, Da Wa Coal and Guanyao Coal will be responsible for canceling or terminating employment contracts (or employment relationships) with their staff, paying all unpaid wage, premium and welfare expenses, and bearing all the expenses caused by the cancellation or termination of the employment contracts.

Upon closing of the transactions under the agreements, Puda Coal plans to expand the two coal mines from current annual capacities of 300,000 metric tons and 150,000 metric tons to 600,000 metric tons and 300,000 metric tons, respectively. The Company expects to complete the restructuring projects within six to twelve months, without disrupting existing capacity and operations of the coal mines.

Both Da Wa Coal and Guanyao Coal have reserves of high quality thermal coal. On December 14, 2009, the average pre-tax tonnage sales price of average quality thermal coal in Shanxi Province was approximately RMB 400 per ton ($59).

"We expect the new coal mines to be accretive to our earnings in 2010," commented Mr. Zhu Liping, President and CEO of Puda Coal Inc. "We closely follow publicly-traded, large companies operating in the coal mining business in Shanxi Province, of which three are listed on the Hong Kong Stock Exchange and three are listed on the Shanghai Stock Exchange. On average, these companies generated operating margin of approximately 40% for their coal mining operating segments during the first six months of 2009. According to our consolidation plan, we look forward to acquiring an additional six coal mines and consolidating them into three."

About Puda Coal Inc.

Puda Coal, through its subsidiaries, supplies premium high grade metallurgical coking coal used to produce coke for steel manufacturing in China. The Company currently possesses 3.5 million metric tons of annual coking coal capacity. On September 28, 2009, the Shanxi provincial government appointed a subsidiary of Puda Coal, Shanxi Puda Coal Group Co., Ltd. as a consolidator of eight coal mines in Yucheng City, Pinglu County. On December 4, 2009 Puda Coal closed its 18% equity purchase of Shanxi Jianhe Coal Industry Limited Company, a coking coal mine in Shanxi Province. For more information, please visit http://www.pudacoalinc.com .

FORWARD-LOOKING STATEMENTS

The information contained herein includes forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward- looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. For example, the closing of the transactions under the acquisition agreements are subject to various closing conditions, including government registration, and there is no certainty as to whether the transactions will close and whether they will close on time. Further, our plan to increase the production capacity of the acquired coal mines is subject to, among other things, the risks and uncertainties relating to the market and geological condition, which are beyond our control, and our ability to operate and manage the newly acquired coal mines. which is not a sector our company has been operating in. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

    For more information, please contact:

    Company Contact:
     Laby Wu, Chief Financial Officer, Director of Investor Relations
     Puda Coal, Inc.
     Phone: +86-10-6439-2405
     Email: labywu@gmail.com
     Web:   http://www.pudacoalinc.com

    Investor Relations Contact:
     Crocker Coulson, President
     CCG Investor Relations
     Phone: +1-646-213-1915
     Email: crocker.coulson@ccgir.com

     Elaine Ketchmere, VP of Financial Writing
     Phone: +1-310-954-1345
     Email: elaine.ketchmere@ccgir.com
     Web:   http://www.ccgirasia.com

SOURCE Puda Coal, Inc.

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