(EnergyAsia, July 12 2011, Tuesday) — Hong Kong-listed King Stone Energy Group Limited said it has agreed to fully acquire Inner Mongolia Liaoyuan Coal Mining Company Limited from Shanghai Quintana Investment Management Centre for an undisclosed sum.

In its memorandum of understanding (MOU) with Shanghai Quintana, King Stone said it will pay for the shares through internal funds that will include a deposit of RMB 25 million. (US$1=RMB6.45).

King Stone said the transaction, conducted through Eerduosi Hengtai Coal Company Limited, will boost its coal production capacity and reserves in China’s Inner Mongolia and position itself as a consolidator of smaller mines in the region.

Liaoyuan Coal Mining owns a thermal coal mine in Eerduosi in Inner Mongolia that has been producing 600,000 tonnes a year since 2008.

Located near King Stone’s Hengtai coal mines, the mine holds 19 million tonnes of high quality coal reserves with heat value of 5,200-5,500 kilocalorie per kg.

King Stone’s chairman, Wang Da Yong, said the mine has recently been upgraded, raising its annual production capacity to 900,000 tonnes.

“This latest acquisition is another demonstration of the company’s commitment to long-term development and progress and highlights (our) strong financial position,” he said.

King Stone ventured into the coal business when it acquired Eerduosi Hengtai Coal Company Limited in Inner Mongolia in December 2009. It has also bought out mines in Shuozhou in Shanxi province.