Puda Coal Announces Additional Coal Mine Consolidation Project

TAIYUAN, China, March 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 a consolidator of eight coal mines in Pinglu County, Shanxi Province, today announced its plans to acquire and consolidate four additional coal mines located in Huozhou County, central Shanxi Province (the "Jianhe Project").

In order to improve production efficiency and workplace safety and to reduce coal mine accidents, in early 2009, the Shanxi provincial government issued a policy which requires mergers and consolidations of coal mining companies in Shanxi Province. Pursuant to the government policy, larger coal production enterprises are given the opportunity to acquire, consolidate and restructure smaller coal mines through mergers, acquisitions and asset or share transfers. As previously announced by the Company on September 30, 2009, Shanxi Puda Coal Group, Co., Ltd ("Shanxi Coal"), a 90% subsidiary of the Company, was appointed by the Shanxi provincial government as a consolidator of eight thermal coal mines located Pinglu County in southern Shanxi Province (the "Pinglu Project"). Shanxi Coal recently received a new approval by the Shanxi provincial government to consolidate four additional coking coal mines into one coal mine. After the completion of the consolidation, the Jianhe Project is expected to increase the total annual capacity from 720,000 metric tons to 900,000 metric tons, according to the Shanxi provincial government's approval.

Among the four target coal mines, Shangxi Huozhou Leijian Coal Co., Ltd ("Leijian") and Shanxi Huozhou Fengshen Coal Co., Ltd ("Fengshen") are the smaller ones, and Shanxi Huozhou Jianzhuang Co., Ltd ("Jianzhuang") and Shanxi Jianhe Coal Industry Limited ("Jianhe Coal") are the larger ones; Jianhe Coal is the largest one of the four.

In May 2009, the Company purchased an 18% equity interest in Jianhe Coal, at a purchase price of RMB100 million. Leveraging its status as the only corporate shareholder of Jianhe Coal (the 82% equity owner is an individual shareholder) and a consolidator in the Pinglu Project, the Company applied and received approval to be the consolidator in the Jianhe Project.

Pursuant to the plans for the Jianhe Project, the four existing coal mines will be consolidated into one mine. The assets of the four coal mines will be transferred to Shanxi Lituo Coal Industry Co., Ltd, ("Shanxi Lituo"), a newly registered company that will be wholly owned by Shanxi Coal. The Company has received approval from the Shanxi provincial government for the registration of Shanxi Lituo. It is anticipated that upon the completion of the consolidation, the current 82% equity owner of Jianhe Coal will become a minority shareholder of the Company. The Company has commenced the coal reserve technical geological prospecting for the Jianhe Project.

Below is a summary of the Jianhe Project, according to the Shanxi provincial government approvals:

                                  Jianhe Project

                       4 Coal Mines-      1 Coal Mine-      Added Capacity
                     Pre-Consolidation Post-Consolidation

    Total area of
     Coal mines          4.8959 km2        6.5471 km2          1.6512 km2

    Coal reserves      19.28 million      23.72 million       4.44 million
                        metric tons        metric tons        metric tons

    Annual coal mine
     production           720,000            900,000            180,000
     capacity           metric tons        metric tons*       metric tons

    * Servicing term after consolidation is 21 years

    Source: The above data is based on the approval document sent to Puda Coal
            by the Shanxi provincial government.

The target coal mines are approximately 200 kilometers south of Puda Coal's headquarters and 50 kilometers from the Company's Lingshi coal washing plant. The coal in that area is fat coal and coking coal. The fat coal can be used as raw coal for making cleaned coal or as high quality thermal coal for power plants. Coking coal is used to make coke.

The Company is currently negotiating with the owners of the target coal mines on definitive coal mine asset purchase agreements.

"As an appointed coal mine consolidator of two coal reserve areas, located in southern and central Shanxi Province, respectively, we have strengthened our position as a major coal mining player in Shanxi Province," commented Mr. Liping Zhu, Chairman and CEO of Puda Coal. "We are very focused on reaching coal mine asset purchase agreements with all parties involved and completing a comprehensive coal mine construction plan. As a result, we are confident that our strategic transformation upstream into the coal mining and coal washing business should help increase our shareholder value."

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. Shanxi Province provides 20-25% of China's coal output and supplies nearly 50% of China's coke. 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, our plan to acquire and consolidate the four mines in the Jianhe Project and the estimates with respect to the size of the mining areas, the reserve and the production capacity are subject to, among other things, the risks and uncertainties relating to the market and geological condition, due diligence, negotiation for definitive agreements, etc. which are beyond our control, as well as our management's ability and capacity to execute our coal mine acquisition strategy and manage the coal mine operations. 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: [email protected]
     Web:   http://www.pudacoalinc.com

    Investor Relations Contact:
     Crocker Coulson, President
     CCG Investor Relations
     Phone: +1-646-213-1915
     Email: [email protected]

     Elaine Ketchmere, VP of Financial Writing
     Phone: +1-310-954-1345
     Email: [email protected]
     Web:   http://www.ccgirasia.com

SOURCE Puda Coal, Inc.