Officials said L&L had started due diligence of targeted large-scale surface mines in Inner Mongolia for potential acquisition, though it declined to provide specific sites.
“The eventual acquisition of surface mines and entry into long-term coal supply agreements in Inner Mongolia is expected to significantly expand and diversify L&L's existing underground coal operations from south China into a national presence,” L&L said, with director and surface mining expert Jingcai Yang assisting in its search efforts.
L&L chairman and chief executive officer Dickson Lee confirmed it was moving forward with platform expansion and was specifically eyeing Inner Mongolian surface operations of 1 million-plus tons to diversify its portfolio.
“Our on-the-ground technical capabilities are in place and we have built a strong team that includes Mr Yang and Dr Syd Peng who bring industry connections in Inner Mongolia and US mining technology respectively to our operations,” he said.
L&L also announced it would sell its “underperforming” Ping Yi mine back to its original owners.
It is one of five underground operations held by the company.
L&L originally purchased the operation in 2009 for about $US4 million and has sold the property for $31 million.
The consideration is payable in part as a prepayment on its future purchased coal as well as future use of the mine's coal washing facility.
The company secured an offtake deal with Ping Yi’s buyer at a discounted price which would allow it access to the mine's future production.
“We are committed to enjoying the long-term benefits of consolidation in the Guizhou province,” Lee said.
“Selling the Ping Yi mine is a healthy move and will allow us to focus our energy on purchasing additional mines, including those in Inner Mongolia.
“As L&L has developed more resources over the years, a diversification into larger, surface mining in Inner Mongolia, as well as upgrading our existing mining portfolio will ensure diversified growth with a positive impact on company's bottom line.”
