L&L Energy, a Seattle-based company with a five-year track record of profitable coal operations in China, will pay an earnest deposit of approximately $349,000 (RMB 2,200,000) for LuoZhou.
The acquisition of LuoZhou marks the company's third transaction with Union Energy following the acquisition of the Weishe Mine and a recent MOU to acquire a controlling interest of the LaShu Mine.
L&L said LuoZhou was currently in trial production and would reach its approved rate of 150,000 tons per annum by the fall of 2012 on reserves of 27 million tons, with targeted expansion to 450,000 tons.
Together the three mines, which are all located in the HeZhang County, are expected to produce more than one million tons of low sulfur, high BTU, anthracite coal each year.
The remaining balance will be paid in instalments under other consideration, including payment-in-kind of non-strategically held interests, stock and/or cash. Terms for the remaining balance are still being finalized, the company said.
L&L director and mining expert Dr Syd Peng said: "We are successfully implementing our consolidation strategy in HeZhang County with Union Energy. We aim to repeat the successes of Weishe, being designated as a model mine by local authorities, at other operations.
“LuoZhou and LaShu will upgrade our existing mining portfolio, increase our total accessible reserves, and provide added coal to expand our wholesale operation, driving profits and growth.”