U.S. China Mining Group, Inc. Resumes Production at Xing An Coal Mine

Oct 27, 2010, 15:27 ET from U.S. China Mining Group, Inc.

CITY OF INDUSTRY, Calif., Oct. 27 /PRNewswire/ -- U.S. China Mining Group, Inc. (OTC Bulletin Board: SGZH), a Chinese leader in coal production and exploration in the People's Republic of China, today announced today that the Company will resume coal production at its Xing An mine in November 2010. The Xing An mine was closed for maintenance and retrofit projects that began at the end of fiscal 2009. The Xing An mine, located in the far northern region of Heilongjiang Province, near the Russian border, produces high-quality thermal coal which is sold throughout China.

In December of 2009, the Company began a program to upgrade the Xing An mine.  These improvements are intended to increase efficiency, safety and boost production at the site.  Operations at the Xing An mine will be transitioning from room-and-pillar mining to long wall mining upon completion of these modifications. With these improvements, the Xing An mine will be able to process coal year round.

The Company also projects that production will increase from 600,000 metric tons per year to 900,000 in 2012.  In order to accelerate these modifications, production at Xing An was halted completely in February of 2010 and will now resume production.  The Company expects to be at full production with all upgrades completed, by May of 2011.  Pricing for Xing An coal has increased strongly from historical levels and currently sells for $44/ton.

Mr. Hongwen Li, President of U.S. China Mining Group, commented, "The Company distributes coal from Xing An directly to our customers via national railways.  Importantly, the government guarantees U.S. China Mining Group preferred access to these railways since they provide needed coal to local power plants.  As such, the Company maintains distribution leverage and indirectly controls access to the railway allowing them to drive better pricing of brokered coal as well."  Li continued,  "We will now resume partial operations at the Xing An Mines during the fourth quarter and full operation will commence in the second quarter 2011, which we anticipate will significantly boost our revenues and lower our costs."

About U.S. China Mining Group: U.S. 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

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Ronald Blekicki



SOURCE U.S. China Mining Group, Inc.