VHGI Holdings, Inc. Extends Letter of Intent to Purchase Producing Coal Mine Operation in Indiana in order to Secure Consents Furthers its commitment of nearly 4.5 million dollars already invested
FT. WORTH, Texas, Dec. 9, 2011 /PRNewswire/ -- VHGI Holdings, Inc. (OTC.QB: VHGI) is pleased to announce that its wholly-owned operating company, VGHI Coal, Inc., has extended its binding letter of intent until January 30, 2012, to purchase, an Indiana-based company whose sole operations consists of operating a coal mine in Indiana. VHGI and Rick Risinger, the sole shareholder of the mining company, are in the process of finalizing the definitive transaction documents and obtaining the various bank, third-party and regulatory consents necessary to consummate the transaction. The parties intend to close this transaction as soon as possible following receipt of such consents. VHGI Coal has already invested approximately $4.5 million in the Company in order to build-out the infrastructure and put the mine into full production by January, 2012.
Mr. Doug Martin, CEO and President of VHGI Holdings, has been spending virtually all of his time at the mine site, assisting Mr. Risinger in financial and operation issues. Upon the consummation of the transaction, Mr. Risinger will become President of VHGI Coal. Doug Martin has taken over the role as acting CFO of the company.
The company has the rights to mine a total of 2,800 acres, with verified reserves of 21 million saleable tons of coal available, with the ability to expand to an additional 80 million recoverable tons. The mine has received all necessary regulatory approvals, and is currently in production. The mine is currently shipping and producing approximately 130,000 tons of coal since August 2011, and is expanding production starting in January. The mine is strategically located within 150 miles of multiple coal burning electrical generation facilities, and has a rail spur adjacent to the property to facilitate a unit train and transportation logistics on-site.
"By having this much acreage under direct control of this operation, and with all the permits in place, we could not have crafted a better scenario for us to enter this sector of the energy market," stated Mr. Martin. "We see this as an outstanding opportunity to expand VHGI's footprint with an experienced and professional team and to create significant value for our shareholders." Also Mr. Rick Risinger, an active Coal operator in the Illinois Basin will be pursuing additional opportunities of growth for VHGI Coal as we complete the transaction. "This brings together a solid management team for future professional and financial strengths to further our coal development throughout the Midwest," stated Mr. Risinger.
Coal has many important uses worldwide. The most significant uses are in electricity generation, steel production, cement manufacturing and as a liquid fuel. Approximately 6.1 billion tons of hard-coal was used worldwide last year and 1 billion tons of brown coal. Since 2000, global coal consumption has grown faster than any other fuel. The five largest coal users - China, U.S., India, Russia and Japan - account for 77% of total global coal use.
Different types of coal have different uses. Steam coal - also known as thermal coal - is mainly used in power generation. Coking coal - also known as metallurgical coal - is mainly used in steel production.
According to a recent U.S. Energy Department study, world-wide coal consumption is expected to increase by 65% between 2005 and 2030. The U.S. share of world energy consumption could increase over that period from 27% to 29%, and the proliferation of clean-burning technologies could lead to even greater demand.
The above acquisition is subject to various conditions precedent, and there can be no assurances that the acquisition will be consummated, and if consummated, the final terms thereof.
About VHGI and VHGI Coal
VHGI is a diverse company with assets and interests focusing on opportunities within the Energy and Mining Markets, Precious Metals and Healthcare Technology Industry. VHGI Coal Inc., a wholly owned subsidiary of VHGI has recently initiated steps to leverage the company's operating history and corporate resources within the Coal Mining industry and intends to pursue these opportunities through Lease-Purchase, Acquisitions and Joint Ventures opportunities.
"Safe Harbor" Statement:
The statements in the press release that relate to the company's expectations with regard to the future impact on the company's results from new products in development and any other statements not constituting historical facts are "forward-looking statements," within the meaning of and subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Since this information may contain statements that involve risk and uncertainties and are subject to change at any time, the company's actual results may differ materially from expected results. This document may contain forward-looking statements concerning the Company's operations, current and future performance and financial condition. These items involve risks, contingencies and uncertainties such as product demand, market and customer acceptance, the effect of economic conditions, competition, pricing, the ability to consummate and integrate acquisitions, and other risks, contingencies and uncertainties detailed in the Company's SEC filings, which could cause the company's actual operating results, performance or business plans or prospects to differ materially from those expressed in, or implied by these statements. The Company undertakes no obligation to revise any of these statements to reflect the future circumstances or the occurrence of unanticipated events.
For Further Information: Contact Mr. Douglas P. Martin
Shareholder Relations – Communications: (954) 548-3086
SOURCE VHGI Holdings, Inc.