Agritrade Resources Ltd  announce that Agritrade Mine Holdings Ltd, a direct wholly-owned subsidiary of the company, entered into an equipment supply contract to acquire a complete longwall system from Zhengzhou Coal Mining Machinery (Group) Co Ltd, a leading comprehensive coal mining and excavating equipment manufacturer in the People’s Republic of China at a consideration of RMB139,400,000 for the group’s mining operation at the Merge mine in Indonesia.

After the acquisition, the Merge mine will be operated with two longwall systems. The company expects that the production capacity of the Merge mine will be increased by approximately 2.5 Mt annually following the Acquisition, reaching a total annual production capacity of approximate 3.5 Mt.

The Merge mine is the only large-scale, mechanised longwall underground coal mine in Indonesia. Additionally, the Merge mine has significant JORC compliant proved and probable coal reserves of 97.1 Mt and produces run-of-mine coal with low inherent moisture, low sulphur content and high calorific value of approximately 6,426 kcal/kg on air-dried basis, which is similar in quality to benchmark Newcastle coal of 6,300 kcal/kg.

Ng Xinwei, Chief Executive Officer and Executive Director said: “The fully retreating mechanised longwall mining is a proven and accepted mining method that reduces operating cost. The longwall operations also allow the group to economically extract high quality coal. I believe taking a second longwall to our flagship will further enhance the group’s capability to tap into the underground coal mining opportunities present in Indonesia and ultimately help us achieve our goal in becoming an integrated energy solutions provider.”