L&L said that the acquisition, a part of its strategic expansion plans, is anticipated to be completed in 2010 and will enable it to better serve the growing demand for coal and energy supply in China.
Under the signed terms of the MOU, L&L intends to acquire at least a 51% equity stake in Shunda and will invest an undisclosed amount in Shunda’s operations.
The invested capital is slated principally for use in the construction of a 1 million ton capacity new coking facility recently initiated by Shunda, which recently received licensing approval from the Chinese government. The mining company has already begun construction on the coking facility, which is scheduled to be operational in 16 months, contingent upon the investment by L&L.
Shunda also plans to utilize joint venture funding from L&L to expand the annual production capacity at its coal washing facility from 900,000 tons to 1,200,000 tons. L&L is currently performing due diligence regarding the acquisition and at this point firmly believes that any such acquisition would be accretive in the first year.
Dickson Lee, president and CEO of L&L, said: “We are very excited about our new relationship with Shunda Mining, and the incredible growth opportunities it affords us.
“We believe with the Shunda’s existing mining, coal washing operations, and the anticipated new coking faculties, it will have a dramatic effect on our net income and earnings per share. We view this as a major step to become a China’s premier coal provider.”
