As per the equity swap contract, L & L intends to acquire 50% controlling interest of the operations of LuoZhou and exchange its non-strategic interests in its coking coal mine in Guizhou as payments-in-kind, the Zone Lin coking facility, shares of L&L common stock and a cash deposit
L&L chairman and CEO, Dickson Lee said Union Energy has been a strong partner and this transaction will further cement the relationship.
"When completed, the acquisition of LuoZhou will substantially upgrade our existing mining portfolio’s operations and better align our product mix to help supply increasing demand for thermal coal in the region," Lee added.
The LuoZhou mine can meet the high mining standards set by the government and produce low sulfur, high BTU thermal coal.
Currently under the trial production, the mine will reach its approved rate of 150,000 tons per year by end of 2012 (on reserves of 27 million tons), with targeted expansion to 450,000 tons.
The mine is expected to generate $70m revenues and 31% net profit once it reaches full production.
Union Energy will diversify its product portfolio and expand its customer base by acquiring coking facilities and coking coal mines.
The transaction is subject to final reviews.
