SEATTLE, March 28, 2011 /PRNewswire/ -- L & L Energy, Inc., (Nasdaq: LLEN) ("L&L" or the "Company"), a U.S.-based company founded in 1995 with coal mining and distribution businesses in China, announced today that it has entered into a contract to acquire a majority controlling interest (60%) of the DaPing coal mine ("The Mine" or "DaPing"). The acquisition became effective on March 15, 2011.
The DaPing mine is located in PanXian, Guizhou Province in China. The mine currently produces approximately 150,000 tons of high-quality, low-sulfur metallurgical coal per year and is expanding to 300,000 tons of production capacity, which is expected to be completed in 2012. The Mine is expected to generate an estimated $36 million in annual revenue based on current production capacity and an average coal price of $240 per ton. The Mine is expected to contribute an estimated $11 million in net income attributable to L&L for the fiscal year ending April 30, 2012.
Pursuant to the agreement, L&L and the current owner of DaPing will form a U.S. joint venture company in China (the "JV"). L&L will contribute approximately USD $18 million in exchange for management control and 60% equity of the new joint venture company on a net equity basis. An additional $3 million in capital expenditures is planned to be injected by L&L for the improvement of safety and operational efficiency of the mine. In keeping with the Company's acquisition strategy, payments to the DaPing purchase price will be in installments. The current owner of the Mine will contribute mining rights and all mine-related assets to the JV.
Dickson Lee, Chairman and CEO of L&L, stated: "This agreement represents an important step forward in our long-term growth strategy. By acquiring a majority stake in the DaPing mine, we will be better positioned to meet the rising coal demand in China and more specifically Guizhou Province, which is undergoing rapid industrialization due to the Chinese government's economic development initiatives. The current owner of DaPing has a profitable operating history and close relationships with distributors in the region. We expect to expand upon its already profitable operation, which is expected to significantly contribute revenue and net income to L&L's operations."
Mr. Lee continued, "With our strong reputation, we are very well situated to benefit from government policies encouraging the consolidation of smaller mines. We will continue to pursue strategic acquisition opportunities and look forward to updating shareholders on our progress in the months ahead."
About L & L Energy
L & L Energy (Nasdaq: LLEN), founded in 1995 and headquartered in Seattle, is primarily engaged in coal mining, washing, coking and distribution in Yunnan and Guizhou Provinces. The Company also has marketing offices in Shenzhen, Guangzhou, Hong Kong and Taipei. The Company's major products are in thermal and metallurgical coals. For more information, see www.llenergyinc.com.