Coal Characteristics
The commercial value of coal is determined in part by its characteristics, including:

• Heat Value
• Moisture Content
• Sulfur Content
• Ash Content
• Volatile Matter Content

Coal Classification
Under the Chinese Coal Classification Standard, anthracite coal is defined as coal that has a volatile matter content of 10.0% or less. All of our coal is classified as WY2-class or WY3-class anthracite coal under the Chinese Coal Classification Standard, with the majority being classified as WY3-class anthracite coal.

Coal Products
In the PRC, end users generally characterize anthracite coal as chemical coal, PCI coal, or thermal coal. Chemical coal is generally used for the production of synthetic ammonia and methanol. PCI coal is generally used for sintering, smelting and injection purposes in the pulverized coal injection process in iron production. Thermal coal is generally used in the electric power industry for power generation and in the construction industry for cement production.

In the PRC, chemical coal and PCI coal are able to generally command higher selling prices and higher profit margins than thermal coal.

All the anthracite coal produced from our mines will be suitable to be sold as chemical coal and thermal coal, while the anthracite coal produced from our Baiping Coal Mine, Dayun Coal Mine and Yongsheng Coal Mine will be suitable to be sold as PCI coal.

Quality Control
To ensure that our anthracite coal meets the requirements of our customers, we have established three laboratories to test the quality of our coal. The laboratories are staffed by six quality control employees responsible for monitoring our anthracite coal production process, conducting inspection and testing of our anthracite coal and performing on-site inspections at our anthracite coal mines.