(EnergyAsia, April 13 2011, Wednesday) — Alberta, Canada-based China Coal Corporation said it expects to receive by mid-May the Chinese government’s approval for its plan to acquire a 60% equity interest in the Mei Feng coal mine located near Urumqi in western China’s Xinjiang province.
Last year, China Coal said its 75%-owned Chinese subsidiary, Xinjiang Huamei Mining Co Ltd, had agreed to acquire a 60% interest in the Mei Feng mine which has been operated as a collective known as the Manasi county Lucaogou Yuanfeng coal mine. China Coal has agreed to pay RMB150 million for the stake with an initial refundable deposit of RMB22 million. (US$1=RMB6.54).
To allow for outside investment, the mine managers are required to form a private Chinese corporation to hold and operate the mine asset, which has been named Xinjiang Mei Feng Mining Co Ltd. The process is underway and China Coal’s subsidiary will be required to comply with regulations with the appropriate ministries in the Chinese government.
China Coal said it has engaged Norwest Corp of Calgary and Salt Lake City to prepare a comprehensive NI 43-101 technical report on the Mei Feng mine. Field visits and other extensive due diligence led to completion of the report in January 2011, and it has been submitted to the exchange for review. China Coal said it has included preliminary exchange comments in the final draft for the mine which started commercial production last September.
With new regulations imposed over the last two years, coal mines in Xinjiang province must produce at least 90,000 metric tonnes per year or face closure. This minimum level will soon be raised to 300,000 metric tonnes, and the regulations will continue to tighten as China improves coal industry productivity and safety.
China Coal, which began trading on Canada’s TSX Venture Exchange last June, said Mei Feng was engineered to comply with the new standards. The company is focused acquiring coal mines, properties and related assets in China.