Officials said it would acquire the LuoZhou mine and LaShu Mine, both newly constructed operations in HeZhang County, near its existing Weishe complex, from partner Union Energy.
Together, the mines have about 32.4 million tons of anthracite reserves. LuoZhou alone has 27Mt and has already completed its government-mandated trial production.
L&L wants to begin production in December at an initial annual rate of 200,000 tons, ramping up to an approved rate of 300,000tpa in the coming months.
LuoZhou’s expansion goal is 450,000 tons by the end of 2013, while LaShu is starting trial production. It expects to have an initial production rate of 150,000tpa and ramp to 300,000tpa.
“Union owns a portfolio of seven mines in HeZhang County [and] wishes to diversify its mining portfolio and to expand its customer base with L&L,” officials said.
“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.”
The 30-day wait for finalization, the company added, stemmed from a review of the transactions details by advisors.
It will also be subject to final valuation.
Work at its Weishe operation was rolling along, the producer said, having earned its safety and regulatory approvals and ramping up to its approved rate of 150,000tpa.
Because of the positive momentum and operational confidence, L&L has already begun the mine’s expansion to 450,000tpa.
Hinging on final terms and conditions, should all three factors go as scheduled and expected, L&L could add about 1 million tons of coal production to its portfolio.
The tonnage could generate $US100 million in sales and profit of $40 million for its mining segment using today's prices.
“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,” chairman and chief executive officer Dickson Lee said.
“We expect to work closely with Union Energy as a partner in the region for many years to come."
