Monday, November 30, 2020
 
Columnist
Martin Hennecke
 
KINETIC M&E
HKEx Stock Code : 01277 
 
Corporate Profile
The Group is focused on constructing and developing the Dafanpu Coal Mine, and seek to operate highly efficient and safe coal mines. The Group's vision is to become a leading private-sector, integrated coal provider in China with mining, processing, transportation and storage capabilities.

Business Review - For the year ended December 31, 2012

The Group has been focusing on becoming an integrated coal provider. The Group's Dafanpu Coal Mine in Zhunger'er Banner, Erdos City, Inner Mongolia (the “Dafanpu Coal Mine”) has moderate to thick coal seam and is rich in coal resources. During most of the year ended 31 December 2012, the Dafanpu Coal Mine was still at trial production stage and there were no material changes in the coal resources and coal reserves of the Dafanpu Coal Mine prepared under the Joint Ore Reserves Committee Code (“JORC Code”) as at 31 December 2012 when compared with the information disclosed in the Company's annual report for the year ended 31 December 2011.

For the year ended 31 December 2012, trial production of the Dafanpu Coal Mine was delayed due to various reasons, affecting the schedule and plan of trial production and commercial production. However, as a result of the persistent efforts by the Group, the Group obtained a safety production permit (安全生產許可證) and a production permit (生產許可證) for the Dafanpu Coal Mine on 18 December 2012 and 25 December 2012 respectively. This allows the Dafanpu Coal Mine to move from trial production stage to commercial production stage.

As at 31 December 2012, the construction of the loading station “Xiaojia Station” with the associated rail spur lines, of which the Group holds 45% interest therein, has been completed. The Board expects the required permits and approvals for the operations of the Xiaojia Station and its associated rail spur lines to be issued in due course. Upon commencement of operations, Xiaojia Station will have a handling capacity of 15.0 million tonnes per year. With Xiaojia Station and its associated rail spur lines, the Group will have rail capacity to transport coal products from Xiaojia Station along the Nanping Rail Line to Qinhuangdao in Hebei, China's largest transshipment port as well as the reference area which sets the benchmark price for China's coal market. In addition, the Group has set up a coal trade centre in Qinhuangdao and obtained the relevant coal sales and trade permits. In this way, the Group can source coal from other coal mine operators and resell to customers through its integrated supply chain, so as to meet the demand for coal products of different customers in different environments.

Further, the Group has engaged the Coal Mine Research and Design Institute of Inner Mongolia (內蒙古煤炭研究設計院) to formulate a detailed research and design plan on the mining of the No.6 coal seam of Dafanpu Coal Mine, where the richest coal resources are to be found. As at 31 December 2012, the aforementioned research and design plan was substantially completed and the Group is currently in the process of refining the development plan for the No.6 coal seam.

Exploration, Development and Mining Production Activities During most of the year ended 31 December 2012, the Group's Dafanpu Coal Mine was still at trial production stage. The Dafanpu Coal Mine obtained a safety production permit and a production permit at the end of December 2012 and this allows the Dafanpu Coal Mine to move from trial production stage to commercial production stage.

Business Outlook - For the year ended December 31, 2012

The future development of the Group remains challenging and full of opportunities. Having obtained safety production permit and production permit for the Dafanpu Coal Mine and completed the construction of Xiaojia Station and its associated rail spur lines, the Group has achieved initial results in its endeavours. Apart from focusing on the progress of commercial production in the Dafanpu Coal Mine project, the development of Xiaojia Station and its associated rail spur lines as well as the coal trade business at Qinhuangdao, the Group strongly believes that it can gain a more dominant position in the coal market if it takes control of more coal resources. Accordingly, the Group has entered into a purchase option agreement with Mr. Zhang Li and Zhunge'er Banner Fuliang Coal Mining Limited (准格爾旗富量礦業有限公司) on 9 March 2012, pursuant to which the Group has the right to acquire a 85% equity interest in Guizhou Fuliang Mining Limited (貴州富量礦業有限公司) (“Guizhou Fuliang”). Guizhou Fuliang is in the process of obtaining mining rights to the Yangmei Longtai Coal Mine through its wholly-owned subsidiary Guizhou Yangmei Longtai Coal Limited (貴州楊梅龍泰 煤業有限責任公司). In addition, the Group will continue to identify quality and suitable coal investment projects, with the increase in coal resources and coal reserves as the Group's core strategy, in the expectation that the integration of these with the Group's business will achieve synergies and economies of scale.

Source: Kinetic M&E (01277) Annual Results Announcement
Chairman Zhang Li Issued Capital (shares) 8,430M
Par Value USD 0.001 Market Capitalisation (HKD) 4,552M
 
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