L&L Energy Inc a US coal operator serving China vast coal market announced that through its subsidiary, Baoxing Economic and Trade Co Ltd it has subcontracted the operation of the Ping Yi Coal Mine located in Pingguan Town in Guizhou Province of China.
Under a fixed fee of approximately USD 876,000 per year, payable either in cash or in L&L common shares, Baoxing is allowed to operate the Ping Yi coal mine facilities of 150,000 ton annual production. The agreement allows Baoxing to operate Ping Yi, to provide the necessary working capital and to collect the respective revenue, net profits and/or losses of Ping Yi.
Under the agreement, Baoxing is the exclusive provider of advisory and consultancy services to Ping Yi related to the Company's general business operations. Ping Yi's revenue, profit, or loss will be consolidated in L&L financial statements as a variable interest entity. L&L expects the agreement to generate approximate of USD 15 million revenues per year and using USD 100 per ton coal price as a basis.
Ping Yi a profitable coal mine with annual 150,000 tonnes of coal production and 31 million tons of proven coal reserves has been in operation since 2007. Ping Yi is expanding its existing coal production capacity to 300,000 tonnes annually. Under terms of the agreement, Ping Yi has granted Baoxing an option to acquire Ping Yi's equity interests. The agreement covers a period of two years starting from November 1st 2009 and can be extended by mutual consent.
Mr Dickson Lee President & CEO of L&L stated that "We're confident that Boaxing's subcontract of Ping Yi will be valuable to L&L growth. This new development will extend more opportunities to us in the region.
http://www.steelguru.com/news/index/2010/01/27/MTMwMzQ3/L_L_Energy_announces_subcontract_agreement_for_Ping_Yi_Coal_mine_operations.html
Tuesday, January 26, 2010
L L Energy announces subcontract agreement for Ping Yi Coal mine operations
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