The mine currently produces approximately 150,000 metric tons per year (mtpy) of high-quality, low-sulfur metallurgical coal and is expanding to 300,000 mtpy, which is expected to be completed in 2012. “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,” said Dickson Lee, chairman and CEO, L&L. “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.”
Under the agreement, L&L and the current owner of DaPing will form a U.S. joint venture company in China. L&L will contribute approximately $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.
