Hongli Coal & Coke Signed "Tripartite" Agreements With Fangda Special Steel
Technology And Henan Shenhuo Group
PINGDINGSHAN, China, Dec. 9, 2013
PINGDINGSHAN, China, Dec. 9, 2013 /PRNewswire-FirstCall/ -- SinoCoking Coal
and Coke Chemical Industries, Inc. (Nasdaq: SCOK) (the "Company" or
"SinoCoking"), a vertically-integrated coal and coke processor, today
announced that Henan Province Pingdingshan Hongli Coal & Coke Co., Ltd.
("Hongli"), a China-based coal and coke producer that the Company controls
through contractual arrangements, has signed "tripartite" agreements as
oA grade II coke and clean coke sales agreement with Fangda Special Steel
Technology Co., Ltd. ("Fangda") (Shanghai A-share listed: 600507), China's
largest automobile spring steel producer, for monthly supply of 6,000
metric tons of grade II coke and 3,000 metric tons of clean coke. Monthly
supply is expected to gradually increase over time to fulfill larger
requirements by Fangda.
oA coking coal supply agreement with a wholly owned subsidiary of Henan
Shenhuo Group ("Shenhuo") (China Shenzhen B-share listed: 000933), one of
the six largest state-owned coal enterprises in Henan Province.Per the
terms of the agreement, Shenhuo will supply Hongli with the coking coal
necessary to manufacture the grade II coke and clean coke for Fangda.
As per the terms of these agreements, Hongli will be able to obtain coal from
Shenhuo without using its working capital. Upon Hongli's delivery of coke
products, Fangda will pay both Hongli and Shenhuo.
Shenhuo's coking coal production facilities are located 65 kilometers (approx.
40 miles) from Hongli's Baofeng plant. Due to such proximity, coal can be
readily transported by trucks, and Hongli's purchase cost is expected to be
substantially lower than coal purchased from suppliers outside of
Henan.Additionally, Shenhuo's coking coal is a high-quality, high-bonding and
high-yield coking coal with low ash and sulfur contents.
The Company estimates Fangda's current coke demand is more than 2 million
metric tons annually, which is expected to increase to over 6 million metric
tons annually in the near future. As such, the Company believes that its
agreement with Fangda will generate steady revenue.The Company is seeking to
sign similar supply agreements with other steel manufacturers to offset
current soft market conditions.
SinoCoking's Chairman and CEO, Mr. Jianhua Lv noted, "Over the last several
years, we have been exploring the availability of high quality coal resources,
especially low-ash, low-sulfur and high-energy content coal. The agreement
with Shenhuo will provide us with the desired coal to manufacture high-quality
clean coke through coke sintering process at our Baofeng plant."
Mr. Lv added, "By way of background, the Baofeng plant received approval to
commence commercial production of our clean coke product in August 2013. Due
to favorable reception from our customers who have used the product, we have
been exploring strategic partnerships with large coal producers and steel
enterprises in China to develop a hybrid vertical business model.We expect
our "tripartite" arrangements with Shenhuo and Fangda to be the first of many
other similar arrangements that we seek to build amongst the coal, coke and
Mr. Lv concluded, "We remain committed to our goals and will continue to
implement our ambitious business plan. During the last several quarters we
have made tremendous efforts, which we believe should begin to yield results
starting in fiscal 2014 second quarter."
SinoCoking and Coke Chemical Industries, Inc., a Florida corporation, is a
vertically-integrated coal and coke processor that uses coal from both its own
mines and that of third-party mines to produce basic and value-added coal
products for steel manufacturers, power generators, and various industrial
users. SinoCoking has been producing metallurgical coke since 2002, and acts
as a key supplier to regional steel producers in central China. SinoCoking
also produces and supplies thermal coal to its customers in central China.
SinoCoking currently owns its assets and conducts its operations through its
subsidiaries, Top Favour Limited and Pingdingshan Hongyuan Energy Science and
Technology Development Co., Ltd., and its affiliated companies, Henan Province
Pingdingshan Hongli Coal & Coke Co., Ltd., Baofeng Coking Factory, Baofeng
Hongchang Coal Co., Ltd., Baofeng Hongguang Environment Protection Electricity
Generating Co., Ltd., Zhonghong Energy Investment Company, Henan Hongyuan Coal
Seam Gas Engineering Technology Co., Ltd., Baofeng Shuangrui Coal Mining Co.,
Ltd. and Baofeng Xingsheng Coal Mining Co., Ltd.
For further information about SinoCoking, please refer to our periodic reports
filed with the Securities and Exchange Commission.
Forward Looking Statement
This press release contains forward-looking statements, particularly as
related to, among other things, the business plans of the Company, statements
relating to goals, plans and projections regarding the Company's financial
position and business strategy. The words or phrases "plans", "would be,"
"will allow," "intends to," "may result," "are expected to," "will continue,"
"anticipates," "expects," "estimate," "project," "indicate," "could,"
"potentially," "should," "believe," "think", "considers" or similar
expressions are intended to identify "forward-looking statements." These
forward-looking statements fall within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Act of 1934 and are
subject to the safe harbor created by these sections. Actual results could
differ materially from those projected in the forward-looking statements as a
result of a number of risks and uncertainties. Such forward-looking statements
are based on current expectations, involve known and unknown risks, a reliance
on third parties for information, transactions or orders that may be
cancelled, and other factors that may cause our actual results, performance or
achievements, or developments in our industry, to differ materially from the
anticipated results, performance or achievements expressed or implied by such
forward-looking statements. Factors that could cause actual results to differ
materially from anticipated results include risks and uncertainties related to
the fluctuation of local, regional, and global economic conditions, the
performance of management and our employees, our ability to obtain financing,
competition, general economic conditions and other factors that are detailed
in our periodic reports and on documents we file from time to time with the
Securities and Exchange Commission. Statements made herein are as of the date
of this press release and should not be relied upon as of any subsequent date.
The Company cautions readers not to place undue reliance on such statements.
The Company does not undertake, and the Company specifically disclaims any
obligation, to update any forward-looking statements to reflect occurrences,
developments, unanticipated events or circumstances after the date of such
statement. Actual results may differ materially from the Company's
expectations and estimates. The Company provides no assurances that any
potential acquisitions will actually be consummated, or if consummated that
such acquisitions will be on terms and conditions anticipated on the date of
this press release, and the Company makes no assurances with regard to any
results of any such acquisitions.
SinoCoking Investor Relations Counsel:
Sam Wu, Chief Financial Officer The Equity Group Inc.
+ 86-375-2882-999 Lena Cati
email@example.com firstname.lastname@example.org / (212) 836-9611
SOURCE SinoCoking Coal and Coke Chemical Industries, Inc.
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