TAIYUAN, China, Dec. 30, 2010 /PRNewswire-Asia-FirstCall/ -- Puda Coal, Inc. (NYSE AMEX: PUDA) ("Puda Coal" or the "Company"), a supplier of high grade metallurgical coking coal used to produce coke for steel manufacturing in China and a consolidator of twelve coal mines in Shanxi Province, China, today announced that on December 23 and 24, 2010, Shanxi Puda Coal Group Co. Ltd ("Shanxi Coal"), a 90% subsidiary of Puda Coal, completed acquisition of coal mining rights and assets of four coal mines under Phase II of the Pinglu Project: Pinglu County Sanmenzhen Xuhutuo Coal, Pinglu County Daqi Coal, Shanxi Pinglu Renling Coal and Pinglu County Donggou Coal.
Phase II of the Pinglu Project will be co-developed by Shanxi Coal, Mr. Ming Zhao, Chairman and a principal stockholder of Puda Coal, and Mr. Jianping Gao under a previously announced Investment Cooperation Agreement dated August 1, 2010. Under the Investment Cooperation Agreement, Shanxi Coal, Mr. Zhao and Mr. Gao will each contribute 40%, 30% and 30%, respectively, of the total investment needed for the consolidation and construction of the coal mines under Pinglu Project Phase II. The parties will share the profits based upon the above investment contribution percentages and bear the risks and losses in connection with the project which will be limited by the amount of investment contributed by each party.
As previously announced by the Company, pursuant to the acquisition agreements, the purchase price is RMB 125,000,000 (approximately $18.77 million) for Xuhutuo Coal, RMB 66,200,000 (approximately $9.94 million) for Daqi Coal, RMB 205,000,000 (approximately $30.65 million) for Renling Coal and RMB 77,500,000 (approximately $11.59 million) for Donggou Coal. Shanxi Coal paid 50% of the purchase price within three days of execution of each agreement and 40% of the purchase price on December 23 or 24, 2010 after the assets transfers were completed and the mining permits and property deeds were transferred. The remaining 10% of the purchase price will be paid six months after the mining permits and property deeds were transferred.
Shanxi Coal placed all the purchased assets of Xuhutuo Coal and Daqi Coal into a new project company, Shanxi Pinglu Dajinhe Jinmen Coal Co., Ltd. and all the purchased assets of Renling Coal and Donggou Coal into a new project company, Shanxi Pinglu Dajinhe Jinyi Coal Industry Co., Ltd.
"We continue to make significant progress with the acquisition of four of the six coal mines to be consolidated under Phase II of the Pinglu Project. We expect to complete the consolidation and restructuring of these four acquired mines over the next twelve months," commented Mr. Liping Zhu, President and CEO of Puda Coal, Inc. "Meanwhile, we are advancing our efforts towards applying for construction permits, including safety analysis reports, environmental assessments, preliminary construction and expansion proposals and geological technical reports. We are also in late stage of negotiating with the owners of the two remaining coal mines under Pinglu Project Phase II and expect to enter into acquisition agreements with them in the near term."
Mr. Zhu added, "We have deployed a team of seasoned professionals and expect to retain key managers from the acquired coal mines to successfully execute the consolidation and restructuring of Pinglu Project. In addition, the Shanxi government permits reduced coal production during the course of construction and production upgrades and we estimate the target coal mines of Pinglu Project will produce approximately 849,000 metric tons in 2011."
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. The Company is in the process of adding coal mining operations to its business, as an acquirer and consolidator and acquirer of coal mines in Shanxi Province. On September 30, 2009, Shanxi Coal, a 90% indirect subsidiary of the Company, was appointed by the Shanxi provincial government as an acquirer and consolidator of eight thermal coal mines located Pinglu County in southern Shanxi Province. Shanxi Coal plans to consolidate the eight coal mines into five, increasing their total annual capacity from approximately 1.1 million to 3.6 million metric tons. Shanxi Coal received another approval by the Shanxi provincial government to consolidate four additional coking coal mines into one coal mine in Huozhou County. 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. For more information, please visit http://www.pudacoalinc.com.
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 ability to acquire and consolidate the remaining target coal mines 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; our success in executing the strategy of entering coal mining sector will depend on our management's ability and capacity to execute our 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.
Investor Relations Contact:
Crocker Coulson, President
CCG Investor Relations
Laby Wu, Chief Financial Officer, Director of
Puda Coal, Inc.
Elaine Ketchmere, VP of Financial Writing
SOURCE Puda Coal,Inc.