US China Mining Group Closes $15 Million Private Placement

CITY OF INDUSTRY, Calif., Jan. 7, 2011 /PRNewswire/ -- US China Mining Group, Inc. ("US China Mining") (OTC Bulletin Board: SGZH) is pleased to announce the closing of a private placement financing, resulting in gross proceeds of $15,000,000. In the private placement, US China Mining sold 3,750,000 units at a price of $4.00 per unit. Each unit is comprised of one share of common stock and one-half of one common stock purchase warrant. Each whole warrant entitles the holder to purchase an additional share of common stock at an exercise price of $6.80.  The warrants have a five year term.

As part of the terms of the transaction, Mr. Yue Guoqing has delivered 500,000 shares of the Company's common stock directly or indirectly owned by him ("make good shares") to an escrow account. Subject to US China Mining achieving certain net revenue targets in 2011 and 2012, these make good shares shall be returned to Mr. Guoqing. The net revenue target for 2011 is $81,300,000 and for 2012 is $102,000,000.

Euro Pacific Capital, Inc. acted as the lead placement agent in the transaction, and Luopan Capital LLC acted as co-placement agent. Proceeds from this financing will be used to support capital expenditures and working capital, including capital expenditures at existing mines, expenditures to increase our US shareholder base and to provide capital for accretive acquisition opportunities.

Mr. Hongwen Li, CEO of US China Mining Group, commented, "The closing of this private placement is a milestone for US China Mining Group. We believe that the transaction will benefit all of our shareholders as we expect to use the funds prudently to support the rapid expansion of our coal producing business.  Additionally, this transaction helps further strengthen our balance sheet to deal with normal business fluctuations as well as puts us in a position of strength to take advantage of any strategic growth opportunities that we believe are in the best interests of our shareholders."

The securities issued in the private placement have not been registered under the United States Securities Act of 1933, as amended, or the securities laws of any other jurisdiction. Accordingly, these shares may not be sold by investors in the United States, except pursuant to an effective registration statement or an applicable exemption from the registration requirements.  

This press release does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful. For additional information, please refer to US China Mining's current report on Form 8-K to be filed with the Securities and Exchange Commission in conjunction with this transaction.

About US China Mining Group

US China Mining Group is a company engaged in coal production and sales by exploring, assembling, assessing, permitting, developing and mining coal properties in the People's Republic of China ("PRC"). After obtaining permits from the Heilongjiang Province National Land and Resources Administration Bureau and the Heilongjiang Economic and Trade Commission, we extract coal from properties to which we have the right to mine capped amounts of coal, and then sell most of the coal on a per metric ton ("ton") basis in cash on delivery, primarily to power plants, cement factories, wholesalers and individuals for home heating. We do not own the coal mines, but have mining rights to extract a capped amount of coal from a mine as determined by government authorized mining engineers and approved by the Heilongjiang Department of Land and Resources. Our business consists of the operations of Tong Gong coal mine in northern PRC, located approximately 175 km southwest of the city of Heihe in the Heilongjiang Province and the Hong Yuan and Sheng Yu coal mines located in the city of Mohe in Heilongjiang Province.

Safe Harbor Statement

This press release contains certain statements that may include 'forward-looking statements' as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are often identified by the use of forward-looking terminology such as "believe, expect, anticipate, optimistic, intend, will" or similar expressions. Such forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of risks and factors, including those discussed in the Company's periodic reports that are filed with and available from the Securities and Exchange Commission. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these risks and other factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

SOURCE US China Mining Group, Inc.