Songzai International Holding Group, a company engaged in developing and mining coal properties in the People's Republic of China (PRC), has entered into an asset purchase agreement to acquire Liujiaqu Coal Mine, which is located in the inner Mongolia region of the PRC.

Pursuant to the asset purchase agreement, the company shall acquire the Liujiaqu Coal Mine in consideration for a cash payment in the amount of $30m and the issuance of an aggregate of 10,000,000 shares of the company’s common stock.

The company anticipates that the acquisition will be consummated with the completion of industrial and commercial registration for the change of ownership within three months from the date the seller receives the cash portion of the consideration and that production at the Liujiaqu Coal Mine will begin in the third quarter of 2010.

The Liujiaqu Coal Mine is a new mine encompassing about 8.87sqkm. The total estimated resources of the mine are approximately 143 million metric tons. The annual production capacity of the mine is expected to be 1.2 million metric tons in 2011 with continuous growth thereafter. The extracted coal is to be sold on a raw product basis as thermal coal for power generation, cement rotary kilns and other industrial and home heating uses.

Hongwen Li, CEO of Songzai International Holding Group, said: “We are pleased to have entered into this agreement to complete the large, strategic acquisition of the Liujiaqu Coal Mine. As the further execution of ‘develop-the-west strategy’ by the PRC government continues, energy, as a dominating developing industry in western China, will experience continued demand.

“The geographic location of the mine, combined with its resources of approximately 143 million metric tons, make this an important and compelling deal that will more than double the size of our company.

“Based on our research and information provided, we expect that beginning operation in the third quarter of 2010 will deliver meaningful revenues from the mine this year and upwards of $50m in revenues during its first full year of operation in 2011.”