Mining
Right and Mining Assets Transfer Agreement

    between
Shanxi Pinglu  Renling Coal Industry Ltd. and Shanxi

    Puda
Coal Group Co., Ltd.

    


    This
agreement was signed by the following parties on October 28, 2010 at Pinglu
Hotel.

    Party A:
Shanxi Pinglu Renling Coal Industry Ltd.     (Transferor)

    Party B:
Shanxi Puda Coal Group Co.,
Ltd.              (Transferee)

    


    Whereas:

    1.
According to regulations of a series of documents including the Opinions of the People’s Government
of Shanxi Province on Implementing the Acceleration of Consolidation and
Restructuring of Coal Mining Enterprises (J.Z.F.[2008] No. 23), based on
the demand for consolidation of coal resources, Party B, as a main body in the
consolidation, acquires Party A’s total assets.

    2. Before
consolidation, Party A’s area of well field with coal resources is 3.859 km2, with
the coal seam 10# being approved to be mined. According to the plan of
consolidation and restructuring of coal mining enterprises in Pinglu County,
Yuncheng City (Part) and Yuanqu County, approved by the provincial government,
Party B, as a main acquiring enterprise in the consolidation restructuring,
acquires, consolidates and restructures Party A and Pinglu County Donggou Coal
Mine. After the consolidation, the area of well field will be 15.058 km2
(increased 8.6037 km2 after
consolidation) with the coal seam 10# approved to be mined, and the mine
capacity of 900,000 ton/year.

    3. Party
A is willing to transfer its entire assets pursuant to the assets list and
mining right pursuant to the Mining Right Transfer Contract as an appendix of
this contract to Party B;

    4. Party
B is willing to accept all the above-mentioned assets transferred by Party
A;

    5. Party
A’s internal competent authority has approved or recognized its act of
transferring assets, agreeing to transfer the entire assets to Party B and to
make proper arrangements for such work as repayment of debts.

    Under the
prerequisite that Party A and Party B promise to each other that the
above-mentioned conditions are met, with the principles of equity and mutual
benefit, both parties, upon friendly negotiation and consensus, enter into the
following agreement on the above-mentioned assets transfer:


    
      
         


      

      
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    Article
1 Consolidation mode

    1. Party
A will transfer its entire tangible assets to Party B, and Party B will purchase
Party A’s entire tangible assets and then establish a new company with the
pre-approved name of “Shanxi Pinglu Dajinhe Jinyi Coal Industry Co.,
Ltd.”

    2. The
coal resource fee paid by the coal mine of Party A shall be dealt with according
to J.Z.B.F.[2008] No.
83 “Methods for
Disposing Mining Fee Involved in Consolidation and Restructuring of Coal
Enterprises” issued by  Shanxi Provincial
Government.

    Article
2 Party A Representations

    Part A
represents that the transferred assets are legally owned by it without any
mortgage or other guarantee and free from any ownership dispute with any entity
or individual; Party A’s mining right shall be transferred to the
newly-established company upon the effectiveness of this agreement. According to
requirements and formats of land and resources authority, both parties have
signed the Mining Right
Transfer Contract which shall be an appendix of this contract, and the
transfer Coal Mining Permission will be processed accordingly.

    Article
3 Transfer fee and its payment method

    1. Upon
both parties’ confirmation of Party A’ tangible assets, coal resource fee and
compensation of mining right, Party A’s tangible assets worth RMB 38,830,000
Yuan, and its coal resource fee and compensation of mining right is RMB
166,170,000 Yuan, with the total price of RMB 205,000,000 Yuan, which is the
total transfer price for Party B’s acquisition of Party A’s entire assets and
mining right.

    2. Method
and time of payment of transfer fee:

    Party B
shall pay 50% of the transfer price in the amount of RMB102,500,000 Yuan, to the
account designated by Party A within three days after signing this agreement,
pay 40% of the transfer price in the amount of RMB 82,000,000 Yuan, to the
account designated by Party A within 30 days after finishing the modify
registrations or amendment of ownership certificate of Mining Right, as well as
other Title Deed to the new established company owned by Part B. The remaining
10% of the transfer price in the amount of RMB 20,500,000 Yuan, is deemed as
deposit, which will be paid by Party B to the account designated by Party A,
after 6 months of completion of the transfer of ownership certificate of Mining
License and other Property Title Deed.

    When
Party A’s payment is due according to the above-mentioned stipulation, in the
event of dispute caused by Party B’s debts, the time of payment shall be
postponed until disposal of the dispute.


    
      
         


      

      
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    Article
4 Representations, Warranties and Covenants

    Both
parties of this agreement represent to each other that they have complete legal
qualification for signing, and performance of its obligations under, this
agreement, and they will carry out this agreement with the principles of honesty
and creditability. All the covenants made by both parties on this agreement are
continuingly valid and irrevocable.

    1.  The
representations, warranties and covenants made by Party A to Party
B

    (1) Party
A warrants that it owns the transferred assets legally and has complete and
valid right of disposing the assets, it does not create any mortgage, lien or
other security interest on the assets, it has no ownership dispute with anyone,
it has made no promise to transfer the assets under this agreement to anyone
other than Party B, no third party has the right of preemption, and it will
cause no other accusation or material damage to Party B for transfer of assets,
or else, it shall unconditionally assume all the economic and legal
responsibilities caused by the breach of above representation and
warranties.

    (2) Party
A has disclosed all the liabilities or contingent liabilities to Party B
according to the facts, and has not created any mortgage, pawn, lien or other
forms of guarantee or counter-guarantee.

    (3) Party
A obtains all the assets in a legal and valid manner, and has paid all the
considerations and expenses etc. payable for acquisition of the assets, and
handled necessary registration, filing and licensing, etc. required by
law.

    (4) Party
A warrants that all the documents, materials and information related to this
assets transfer that it has provided with Party B are true, accurate and
complete.

    (5) Party
A has no dispute with adjacent entity, villages, or villagers, or other people
over the land, constructures, passages, and roads etc. occupied by the
transferred assets.

    The
assets designed to be transferred by Party A involve no claim, lawsuit,
arbitration, judicial investigation proceeding or administrative investigation
penalty, nor do they involve any potential claim, lawsuit, arbitration, judicial
investigation proceeding or administrative investigation or
penalty.

    (6) Up to
the date of signing this agreement, Party A has informed all the third parties
related to the transferred assets including but not limited to its creditors of
all the matters concerning the transfer, and has obtained the written consents
of the relevant third parties.

    (7) Party
A has disclosed to Party B the information related to the transferred assets and
necessary for Party A’s normal exercise of the ownership of the transferred
assets after the transfer date and any information whose disclosure will have an
impact upon the signing of this agreement.

    (8) Party
A will actively cooperate with Party B in properly handling the procedures
required by assets transfer, including but not limited to government’s approval,
transfer registration and change registration, according to law, and will hand
over the transferred assets according to the date specified by this
agreement.


    
      
         


      

      
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    (9) If
the representations, warranties and covenants made by Party A are unreal, or
Party A violates the representations, warranties and covenants and other
provisions of this agreement, Party A agrees to compensate for Party B’s direct
and indirect losses with its own property and its rights under this agreement
(referring to the outstanding balance in the installment payments).

    (10)
These representations, warranties and covenants shall come into effect upon the
signing of this agreement, and shall remain valid after the completion of the
assets transfer.

    2.  The
representations, warranties and covenants made by Party B to Party
A

    (1) Party
B meets the conditions of this assets transfer, and is capable to sign and
fulfill this agreement.

    (2) Party
B warrants to pay the assets transfer price according to the terms of this
agreement.

    (3) Party
B warrants to actively cooperate with Part A in handling the transfer
registration and hand-over procedures of the transferred assets.

    (4) Party
B must locally establish the limited liability company “Shanxi Pinglu Dajinhe
Jinmen Coal Industry Co., Ltd.” with independent accounting and corporate
capacity, and accept the supervision of the local finance, taxation and
industrial &commercial authorities, and pay taxes and duties according to
law.

    (5) The
newly-established Shanxi Pinglu Dajinhe Jinyi Coal Industry Co., Ltd. must
comply with the policies and regulations of the governments of Shanxi Province,
Yuncheng City and Pinglu County with respect to local coal production and
sales.

    Article
5 Rights and obligations

    
      	
            	
              1. 
      

            	
              Party
      A’s rights and obligations

            


    

    (1) To
require Party B to pay the assets transfer price to Party A’s designated
account.

    (2) To
warrants that the assets transferred to Party B are legitimate.

    (3) To
hand over the entire assets to Party B on the closing date.

    (4) Party
A shall sign all the necessary documents, and assist Party B in finishing any
act leading to the effectiveness of the assets transfer under this agreement,
including but not limited to signing or causing a third party to sign any
document or application or obtain any related approval, agreement or permission,
or finishing any related change and transfer registration and
filing.

    (5) Party
A shall be responsible for properly handling the relationship with the community
where the transferred assets are located and the surrounding neighbors, and
shall ensure Party B’s accepting of the assets free from
interference.


    
      
         


      

      
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 2.  Party B’s rights and obligations

    (1)  To
pay according to the provisions of this agreement.

    (2) To
enjoy the exclusive ownership and right of disposal of the transferred assets as
of the closing date.

    Article
6 Hand-over of the assets

    1. Party
A and Party B shall finish the on-site hand-over of all the tangible assets and
related documents transferred by Party A within five working days as of the date
of signing this agreement. On the hand-over date, each party shall appoint
professional staff to jointly handle the hand-over procedures on the site of
mining area of Party A and sign the Letter of On-site Hand-over as an appendix
of this agreement. The Letter of On-site Hand-over shall be made in two
originals, one for each party.

    The
Letter of On-site Hand-over shall include the following content at
least:

    (1) The
status of Party A’s land use right, and the building and structure attached to
the land, including but not limited to houses, roads, supply lines and
equipment;

    (2) The
status of Party A’s mining right and technical materials related to coal
resources;

    (3) The
certificates as well as geological, equipment, and technical drawings required
by the future safe production and legal operation, including Party A’s possible
procedure of operation and examination and the completed procedure of mining and
operating the mineral resources;

    (4) Other
assets which shall be handed over as agreed upon by both parties, including the
well road used for production of the mine as well as other attached facilities,
and coal-mining equipment and facilities.

    2.  The
table of tangible assets handed over by Party A is based on the assets list. The
assets handed over include purchase invoice and documents for import &
export of related assets, and other certifying bills or materials, such
ownership certificates as real estate ownership certificate and mining right
certificate, and related design drawing and documents.

     3.  In
the course of hand-over, if both parties find that amount reduction and value
depreciation happen to the assets listed in the assets list, Party B shall have
the right to deduct from the balance of the transfer price according to the
standard of determining the appraisal value of reduction and depreciation of the
assets. If the balance of the transfer price is not enough to offset the loss of
the assets, Party A shall return the transfer fee paid by Party B with the
equivalent amount.


    
      
         


      

      
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     4.
Within 60 days of the closing date, Party A shall assist Party B in finishing
the change of all the certificates, including transfer or change of such
ownership certificates as mining right certificate, land certificate and house
property certificate. The costs and expenses of handling change registration of
ownership shall be borne by Party B.

    Article
7 Labor and employment

     1.
Party A shall be responsible for canceling or terminating the labor contract (or
labor relationship) between Party A and its staff, pay up unpaid wage, premium
and welfare expense, and bearing all the expenses caused by cancellation or
termination of the labor contract (or relationship) according to
law.

     2.
Any injured employees shall be compensated by Party A in one time according to
the Regulations on Work-related Injury Insurances and related national
regulations on work-related injury.

     3.
After establishing the new company, if needed, Party B shall first employ the
original staff of Party A upon necessary review if the qualification and other
condition of the original staff is similar to new employee candidates, and the
consolidated coal industry company shall sign labor contracts with them, and
perform the contracts according to national labor administrative laws and
regulations as well as related policies of Party B.

    Article
8 Treatment of creditor’s right and debt

     1.
Before signing this agreement, Party A shall provide Party B with a Waiver
Notice signed by creditors of Party A and exempting Party B from the debt of
Party A before the closing date, in which the detailed condition of debt should
be listed. Meanwhile, Party A shall provide Party B with a Waiver signed by
Party A, exempting Party B from any possible tax responsibilities caused by
transfer.

     2.
Within three days as of the date of signing this agreement, Party A shall
publicize the matters concerned with this assets transfer in the main media in
the province, covering the method for Party A’s liquidation or restructuring
after the assets transfer, the principles and plan of dealing with the
creditor’s right and debts (including any guarantees made to the external
parties) in the assets transfer, and the term of creditors’ claims and
consequences of failure to claim.

     3.
Party A shall first use the purchase price obtained from assets transfer to pay
up its debts, and shall satisfy all its liabilities, debts and guarantee
obligations (including the disclosed and undisclosed) before the date of
completing the assets transfer. If Party B suffer any liability caused by
lawsuit or arbitration for events acquired prior to the closing date, Party B is
entitled to claim indemnification and reimbursement from Party A or the third
party receiving the transfer fee, and shall have the right to require Party A to
bear other resultant losses, including but not limited to lawyer’s fee, legal
cost, related investigation and evidence collection fees, and travel
fees.


    
      
         


      

      
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    If the
above-mentioned liabilities of Party A occurs before Party B pays the transfer
price, Party A shall have the right to deduct the above-mentioned price from the
transfer price Party A shall pay to Party B].   If the above-mentioned
liabilities of Party A occurs after Party B pays the balance of the transfer
price to Party A, Party A shall return the corresponding transfer price paid by
Party B according to the total actual loss borne by Party B and compensate for
additional loss.

     4.
Party A shall not operate in the name of an entity after signing this agreement,
and shall form a liquidation committee responsible for liquidating any remaining
issues as of the date of signing this agreement. The liquidation committee shall
remain at least two years as of the date of establishing the new company in the
consolidation. Party A’s liabilities in connection with “government
appropriations being replaced by loans” owed to the government before the
restructuring shall be borne by Party A.

     5.
Before signing and sealing this agreement, Party A’s owners or shareholders
shall issue a letter of commitment to Party B, promising to assume to all the
liabilities, which should be taken on by Part A under this agreement, after the
legal person certificate of Pinglu
County Da Wa Coal Industry Co., Ltd. is withdrew or revoked.

    Article
9 Method of land use

    Within
the scope permitted by the national policies, if Party B or the new company
established in the consolidation will continue to utilize the land that was used
by Party A except the land with land use right certificate, Party A’s method of
land use shall be adopted temporarily.

    If Party
B or the new company established in the consolidation will not use the land,
Party A shall be responsible for canceling the contract and properly handling
the follow-up work. The expense that should be to the other party for
cancellation of the contract shall be borne by Party B.

    Article
10 Social responsibility

    Party A’s
social responsibility for supplying coal and power and bearing the public
welfare expenses for the village (town) or the country, to the extent that is
recognized by Party B, shall be succeeded by the new company established by
Party B in the consolidation. As for the responsibilities that are not
recognized by Party B, Party B or the newly-established company shall enter into
a new agreement with related third party. Party A shall be responsible for any
house collapse, ground fracturing, unsolved dispute with villagers, and the
unsettled and unfulfilled agreement with Party A that occurs prior to Party B’s
take-over.


    
      
         


      

      
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    Party A
shall be responsible for canceling the contracts the performance of which is not
complete before signing this agreement, and for property handling the follow-up
work. The expense paid to the other party for cancellation of the contract shall
be borne by Party A.

    Article
11 Related taxes and duties

     1.
The taxes and duties that occurred prior to the closing date in the duration of
Party A shall be borne by Party A.

     2.
The taxes and duties caused by performance of this agreement shall be borne by
Party A and Party B respectively according to law and regulations.

    Article
12 Effectiveness of the agreement

    This
agreement shall come into effect upon the signing of both parties and that the
following prerequisites are met:

    
      	
            	
               
      1.  

            	
              The
      conditions Party A shall meet:

            


    

    (1) As
the property owner, Party A has adopted necessary resolution authorizing this
assets transfer as required by law.

    (2) Party
A has obtained the approval, confirmation, consent, and permission of the
relevant governmental authorities on the matters related to this assets transfer
with the assistance and cooperation from Party B.

     2.  The
preconditions Party B shall meet:

    (1) The
competent decision-making authority of Party B has adopted necessary resolution
that occurred prior to the closing date the matters related to this assets
transfer;

    (2) Party
B has obtained the approval, confirmation, consent and permission of the
relevant governmental authorities on the matters related to this assets transfer
with the assistance and cooperation from Party A.

     (3)
Either party shall inform the other party on the day when it meets all the
above-mentioned preconditions or the exemption of any such exemption. The
above-mentioned conditions shall be satisfied before signing this
agreement.

    Article
13 Transition period

     1.  After
signing this agreement and before the closing date, Party A shall use the
transferred assets in a careful, proper and reasonable manner under the
principles of honesty and credibility, ensuring that no adverse changes would
occur to the assets and protecting the public and private property from any
damage or reduction.

     2.  If
Party A is at the stage of normal production and operation, the rights and
interests arising from the transferred assets from the appraisal benchmark date
to the transaction date shall be owned by Party B.


    
      
         


      

      
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    Article
14 Force majeure

    In the
case of the events of force majeure the occurrence and consequences of which are
unforeseeable and can’t be prevented or avoided, directly affecting the
performance of this agreement or leading to failure to perform this agreement in
principle, the party affected by the events of force majeure shall immediately
inform the other parties of the status of the events in written form, and
provide a detailed statement describing the condition of the events and a
certificate regarding reasons for failure to perform this agreement within 15
days. According to the degree of the events’ influences on fulfillment of this
agreement, the parties of this agreement shall negotiate to decide whether to
cancel this agreement, or exempt part of responsibility for fulfilling this
agreement, or postpone the fulfillment of this agreement.

    Article
15 Responsibilities for breach of contract

     1.
Either party’s breach of obligations, warranties or covenants in this agreement
constitutes breach of contract. The breaching party shall assume the
responsibilities for the breach of contract, and compensate the other party for
all the resultant economic losses of the other party, including direct and
indirect losses.

     2.  If
either party’s material breach of contract causes the performance of this
agreement, the non-breaching party shall have the right to cancel the agreement
unilaterally. The breaching party shall return the property obtained from the
other party, and compensate the other party for all its resultant losses,
including direct and indirect losses.

     3.  If
Party B fails to pay the transfer price to Party A according to the term
required by this agreement, it shall pay to Party A 1‰ of the overdue transfer
price as penalty for each day of delay; if Party A delays the hand-over of the
asset, or delays the completion of related procedures as industrial and
commercial registration, it shall pay Party B 1‰ of the total paid transfer
price as penalty for each postponed day.

     4.  If
the mineral resources as discovered by Party A is inconsistent with the
materials provided by Party A, Party B shall have the right to cancel the
agreement or both parties shall determine the transfer price
otherwise.

    Article
16 Alteration and supplement of the agreement

    After
signing this agreement, both parties, upon negotiated consensus, can amend and
supplement this agreement, provided that such amendment or supplement must be in
writing. The document of the above-mentioned alteration and supplement shall
have the same legal effect as this agreement. The notice related to this
agreement, sent by either party to the other party, shall adopt written
form.


    
      
         


      

      
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    Article
17 Settlement of disputes

    In the
event of any dispute arising from fulfillment of this agreement or related to
this agreement, both parties shall friendly negotiate to settle it promptly. If
negotiation fails, either party can bring the case to court.

    Article
18 Confidential clauses

    Without
written approval of the other party in advance, either party shall not disclose
the existence of this agreement and its content to any third party, or else, it
shall assume the responsibilities for breach of contract, unless such disclosure
is required by any applicable law or stock exchange rules.

    Article
19  Effectiveness of the appendixes

    The
appendixes of this agreement include the promises made by Party A and the assets
list recognized by both parties, which are an integrated part of this agreement
and have the same legal effect as this agreement.

    Article
20 Text of the agreement

    This
agreement shall be made in ten originals, one for Party A and one for Party B,
and the rest for related government offices.

    


    Party A:
Shanxi Pinglu Renling Coal Industry Ltd.

    (Corporate
Seal)

    Legal
representative:Yezhi Zhang 

    (Signature,Seal)

    Or
authorized representative:

    Party B:
Shanxi Puda Coal Group Co., Ltd. 

    (Corporate
Seal)

    Legal
representative:Ming Zhao

    (Signature)

    Or
authorized representative:


    
      
        
           


        

        
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    October
28, 2010

     


    Exhibition:

    1, Letter
of Intention of Coal Mining Right Transfer

    2,
Valuated Assets List Summary

    3, Board
Resolution of Part A

    4,Authorization
Letter of Part A



    
      
         


      

      
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