L&L to Finalize Acquisition of Two (2) New Mines, Expanding Coal Production
SEATTLE, Oct. 22, 2012 /PRNewswire/ — L & L Energy, Inc. (NASDAQ: “LLEN”) (“L&L” or “Company”), a Seattle-based company with a track record of profitable coal operations in China, announces that it expects to finalize the acquisition of two new mines, the LuoZhou Mine (“LuoZhou”) and LaShu Mine (“LaShu”), in the next 30 days.
Both LuoZhou and LaShu are newly constructed mines located in HeZhang County, Guizhou Province China, near L&L’s Weishe Mine. The two mines produce low sulfur, high BTU, anthracite coal with approximately 34.2 million tons of combined coal reserves. LuoZhou has 27 million tons of reserves and in accordance with the newly adopted mining standards set by government, has completed its trial production. It is anticipated to produce at an initial annual rate of 200,000 tons in December, ramping up to its approved rate of 300,000 tons per year over the subsequent months. LuoZhou is targeted to expand to 450,000 tons by the end of 2013. LaShu is starting its trial production process and will initially produce at a rate of 150,000 tons per year and ramp up to its approved rate of 300,000 tons. Both mines are currently owned by Union Energy (“Union”), a partner of L&L.
Union owns a portfolio of 7 mines in HeZhang County. As disclosed earlier, Union wishes to diversify its mining portfolio and to expand its customer base with L&L. L&L’s acquisition of approximately 90% controlling interest in LuoZhou and LaShu will be structured as an equity interest swap for L&L’s coking coal mine and its Zone Lin coking facility. Details of the swap are being reviewed by advisers and the transaction is expected to be completed within 30 days. Subject to final valuation, L&L may issue cash and/or a small amount of LLEN shares to Union as additional consideration under the swap.
Expansion of the Weishe Mine
As of two months ago, L&L’s Weishe mine received its safety and regulatory approvals and has ramped up to its approved rate of 150,000 tons per year. As management has continued to gain operational confidence, a decision has been made to begin the expansion of Weishe Mine to 450,000 tons of annual production, further improving its sales.
Subject to the final terms and conditions, the above three events if fully executed will bring approximately one million tons of new coal production to L&L. This new tonnage will generate approximately $100 million of new sales and approximately $40 million of profit for L&L’s mining segment at today’s prices.
L&L’s Chairman and CEO, Dickson Lee, commented: “I am pleased with leadership of Union Energy to close the transaction in the next 30 days. The acquisition is a realization of L&L’s consolidation strategy, with emphasis on building coal reserves and leveraging the government’s consolidation policy to substantially increase sales and EPS. We expect to work closely with Union Energy as a partner in the region for many years to come.”
Forward Looking Statements
The statements containing words that are not historical fact, including statements related to Company’s future performance, are all “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and that involve a number uncertainties. Actual results of the future events described in this document could differ materially. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
L&L Energy, Inc.
SOURCE L & L Energy, Inc.