Puda Coal Signs Coal Mining Right and Mining Assets Transfer Agreements with Two Coal Mines
December 18 2009 - 8:30AM
PR Newswire (US)
TAIYUAN, China, Dec. 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 one of the few coal mine consolidators appointed by the Shanxi
Provincial government, today announced that the Company's
subsidiary, Shanxi Puda Coal Group, Co., Ltd ("Shanxi Coal"),
entered into coal mining rights and mining assets transfer
agreements with Pinglu County Da Wa Coal Industry Co., Ltd ("Da Wa
Coal") and Pinglu County Guanyao Coal Industry Co., Ltd. ("Guanyao
Coal") on December 11, 2009, respectively. Under the agreements,
the total transfer price of the purchased assets of Da Wa Coal is
RMB 190 million ($27.8 million), of which RMB 46.6 million ($6.8
million) is for Da Wa's tangible assets and RMB 143.3 million
($21.0 million) is for the mining rights and compensation to the
previous owner. For Guanyao Coal, the purchase price totaled RMB
94.8 million ($13.9 million), of which RMB 37.6 million ($5.5
million) is for Guanyao's tangible assets and RMB 57.2 million
($8.4 million) is for the mining rights and compensation to the
previous owner. All the purchased assets will be placed into two
newly established companies, of which Puda Coal will own 100%. The
names of the two new companies have been approved by the provincial
government in its notice dated September 28, 2009 approving Puda
Coal to be a coal mine consolidator of eight coal mines in Pinglu
County. The agreements provide that Puda Coal pay 15% of the
purchase price within three days after signing the business
transfer agreements, which occurred on December 15, 2009, and 65%
of the purchase price within 15 days after transferring the
registrations and ownership certificates of mining rights, land and
property deeds. At that point, Puda Coal will apply for new
business licenses and operating approvals from the local government
for the new companies. Once the approvals are received, Puda Coal
will commence operations of the mines. Puda Coal will pay the
remaining 20% of the purchase price of the mines, upon the one-year
anniversary of the completion of ownership transfers. Pursuant to
the agreements, Da Wa Coal and Guanyao Coal will be responsible for
canceling or terminating employment contracts (or employment
relationships) with their staff, paying all unpaid wage, premium
and welfare expenses, and bearing all the expenses caused by the
cancellation or termination of the employment contracts. Upon
closing of the transactions under the agreements, Puda Coal plans
to expand the two coal mines from current annual capacities of
300,000 metric tons and 150,000 metric tons to 600,000 metric tons
and 300,000 metric tons, respectively. The Company expects to
complete the restructuring projects within six to twelve months,
without disrupting existing capacity and operations of the coal
mines. Both Da Wa Coal and Guanyao Coal have reserves of high
quality thermal coal. On December 14, 2009, the average pre-tax
tonnage sales price of average quality thermal coal in Shanxi
Province was approximately RMB 400 per ton ($59). "We expect the
new coal mines to be accretive to our earnings in 2010," commented
Mr. Zhu Liping, President and CEO of Puda Coal Inc. "We closely
follow publicly-traded, large companies operating in the coal
mining business in Shanxi Province, of which three are listed on
the Hong Kong Stock Exchange and three are listed on the Shanghai
Stock Exchange. On average, these companies generated operating
margin of approximately 40% for their coal mining operating
segments during the first six months of 2009. According to our
consolidation plan, we look forward to acquiring an additional six
coal mines and consolidating them into three." 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. On September 28, 2009,
the Shanxi provincial government appointed a subsidiary of Puda
Coal, Shanxi Puda Coal Group Co., Ltd. as a consolidator of eight
coal mines in Yucheng City, Pinglu County. On December 4, 2009 Puda
Coal closed its 18% equity purchase of Shanxi Jianhe Coal Industry
Limited Company, a coking coal mine in Shanxi Province. 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, the closing of the transactions under the acquisition
agreements are subject to various closing conditions, including
government registration, and there is no certainty as to whether
the transactions will close and whether they will close on time.
Further, our plan to increase the production capacity of the
acquired coal mines is subject to, among other things, the risks
and uncertainties relating to the market and geological condition,
which are beyond our control, and our ability to operate and manage
the newly acquired coal mines. which is not a sector our company
has been operating in. 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: Web: http://www.pudacoalinc.com/ Investor
Relations Contact: Crocker Coulson, President CCG Investor
Relations Phone: +1-646-213-1915 Email: Elaine Ketchmere, VP of
Financial Writing Phone: +1-310-954-1345 Email: Web:
http://www.ccgirasia.com/ DATASOURCE: Puda Coal, Inc. CONTACT: Laby
Wu, Chief Financial Officer, Director of Investor Relations of Puda
Coal, Inc., +86-10-6439-2405, ; Investor Relations, Crocker
Coulson, President of CCG Investor Relations, +1-646-213-1915, , or
Elaine Ketchmere, VP of Financial Writing, +1-310-954-1345, Web
site: http://www.pudacoalinc.com/ http://www.ccgirasia.com/
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