Company moves forward with coal mining operations after suffering 53.7% decrease in revenue and HK$12mln loss.
Doxen Energy Group Limited (“Doxen Energy” or “the Group”) (HKEx code: 668) has announced its final results for the year ended 31 March 2010.
Coal mining in the Fukang region in Xinjiang
On 18 May 2010, the Group embarked on its first major step to enter the coal mining business by entering into an agreement to acquire 100% interest in the New Century Coal Mine located near Fukang City in Xinjiang Autonomous Region of the PRC for a total consideration of HK$300million, to be settled by issuance of new shares of the company at HK$1 each, according to a company report.
A recap of developments at Xinjiang
The New Century Coal Mine is a thermal coal mine and operation was ceased in 2009 to increase its annual production capacity from 90,000 tonnes to 900,000 tonnes. The New Century Coal Mine has an aggregate mining area of approximately 2.5478km2 covered by mining licence. Coal production is anticipated to commence in late 2012. Sales of coal is expected to begin by the end of 2012 or early 2013.
It is intended that the coal products will be mainly sold in the Fukang region, Xinjiang and other regions between Fukang and Urumqi. Potential customers are large-scale power generating companies and cement manufactures in the Fukang region.
Fuel by the continues development of Xinjiang’s economy, and in light of the policy of local coal utilization and extensive processing, demand for coal in future will be increased significantly.
Strategic Cooperation Agreements
Moving forward from the acquisition, the Group has also entered into strategic collaboration agreements with Henan Coal Chemical Industry Group Co. Ltd and Jiangsu Huaxi Group Company on 18 May 2010 to establish long-term strategic alliances to cooperate in the exploration and development of coal mining projects within the PRC.
Mr. Lo Siu Yu, Chairman of Doxen Energy said, “Coal mining has been identified by the management as one of the future major business focuses of the Group, we see particularly strong development potential in this sector. We believe that commencing the coal mining business marks an important first step to set a course of our future growth, with the long term goal of building businesses synergies within the mining operations.”
It was during the early of this fiscal year, several unsatisfactory preformed restaurants were disposed. The remaining operating restaurants in the year ended 31 March 2010 were the Eighteen Brook Cantonese Cuisine, Imperial Kitchen and Shanghai Lu Yang Cun Restaurant.
With this change, the revenue of the Group decreased by approximately 53.7% to HK$152 million (2008/09: HK$328 million) while loss attributable to shareholders was approximately HK$12 million. (2008/09: HK$83 million loss). The reduction of the loss was largely due to the disposal of certain unsatisfactory performed operating units.
The acquisition of the New Century Coal Mine and the strong alliances with reputable industry players mark another great leap forward for the Group to enter the promising coal mine sector in the PRC.
In addition to the New Century mine, the Group will continue to explore the acquisition of a coking coal mine located in Fukang, PRC. The coking coal mine has an aggregate mining area of approximately 2.139 km2.
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