Kinetic Development Group Limited: Comprehensive Progress Update on Yong’an and Weiyi Coal Mines

Key Highlights

• Major Investment: Over RMB4.6 billion invested in acquisition and construction of Yong’an and Weiyi coal mines, fully funded by accumulated profits.
• Significant Resource Base: Yong’an Coal Mine holds 224 million tonnes of coal resources; Weiyi Coal Mine holds 119 million tonnes.
• Operational Milestones: Yong’an entered joint trial operations in November 2024; both mines expected to commence formal production by 2026-2027.
• Production Capacity: Yong’an is designed for 1.20 million tonnes/year; Weiyi for 900,000 tonnes/year.
• Advanced Processing Facilities: State-of-the-art Coal Handling and Preparation Plant (CHPP) operational, processing up to 2.40 million tonnes/year.
• Low Mining Costs: Estimated production costs for clean coal are RMB380/tonne (Yong’an) and RMB400/tonne (Weiyi).
• Potential for Substantial Returns: Full operational capacity expected to drive performance growth and enhance shareholder value.
• Sales Outlook: Target customers include domestic coking, steel, coal chemical, and power generation enterprises.

Detailed Progress and Operational Updates

Investment and Acquisition

In June 2022, Kinetic Development Group completed the acquisition of 100% of Ningxia Kinetic Mining Co., Ltd., previously Ningxia Sunshine Mining Co., Ltd., for a total consideration of RMB3.122 billion. This includes RMB758 million for equity, RMB884 million for creditor’s rights, and RMB1.480 billion for mining rights payment (with RMB622 million paid and RMB858 million to be paid in installments over ten years starting from 2023). Total investment in mine construction for both mines has reached RMB1.5 billion, bringing the aggregate investment to RMB4.6 billion, all funded internally.

Yong’an Coal Mine

• Location & Scale: Ningxia Hui Autonomous Region, covering 21.7 sq. km.
• Resource Estimate: 224 million tonnes total (63.22 million indicated, 161 million inferred).
• Coal Types: Fat coal, 1/3 coking coal, hard coking coal; clean coal is high-quality with low ash and high caking properties.
• Mining Method: Underground, combining inclined and vertical shaft; “two areas and two faces” model for simultaneous mining.
• Operational Status: Joint trial operations began in November 2024; extraction systems in lower coal group running smoothly. Upper coal seam system construction expected completion second half of 2026, with transition to formal production upon obtaining safety permits.
• Production Plan: 2026 – 500,000 tonnes from lower coal group; 2027 – simultaneous production from upper and lower groups, reaching 1.20 million tonnes/year.
• CHPP Facility: A large-scale, advanced plant processing 2.40 million tonnes/year is operational, featuring heavy medium pressureless three-product separation, coarse coal slime separation, and fine coal slime flotation for efficient and flexible processing.
• Ancillary Facilities: Includes ventilation, gas pumping, water treatment, fire-fighting, power, and comprehensive office and housing infrastructures.
• Mining Costs: Estimated at RMB380/tonne for clean coal at full production.

Weiyi Coal Mine

• Location & Scale: Ningxia Hui Autonomous Region, covering 26.7 sq. km.
• Resource Estimate: 119 million tonnes total (38.09 million indicated, 80.52 million inferred).
• Coal Types: Fat coal, 1/3 coking coal, hard coking coal; exceptionally low ash and sulphur in clean coal, suitable for coking, chemical, and thermal uses.
• Mining Method: Underground, inclined shaft development; production starts with one mechanized mining face per wing, expanding to two faces for full capacity.
• Construction Status: Shaft construction progressing smoothly, with Phases I and II completed and Phase III underway. First mining face expected completion second half of 2026, with formal production starting after safety permits in 2027. Second mining face operational by second half of 2027, full capacity by 2028.
• Ancillary Facilities: Includes ventilation, gas pumping, power, water treatment, fire-fighting, office, dormitories, and canteen.
• Mining Costs: Estimated at RMB400/tonne for clean coal at full production.

Future Outlook

• Production Timeline: Yong’an expected to commence formal production in second half of 2026, reaching full capacity in 2027. Weiyi to enter trial operations in second half of 2026 and reach full capacity in 2028.
• Sales Prospects: Customers primarily domestic coking, steel, coal chemical, and power generation companies.
• Strategic Impact: The successful ramp-up of both mines will enhance Kinetic’s production capacity, optimize operational efficiency, and drive performance growth, which could be significant for shareholder value and potentially impact share price.
• Commitment to Safety and Sustainability: The Group is committed to safe production practices and sustainable development, ensuring steady business growth.

Shareholder Information and Potential Price Sensitivity

The substantial investments, rapid progress in mine construction, transition to formal production, and low mining costs suggest a strong potential for increased profitability. The anticipated growth in production capacity and operational efficiency, combined with a solid customer base, are positive indicators for future revenue and performance.

These developments may be price sensitive, as the transition to full production and the resultant increase in output and efficiency could materially impact the Group’s financial performance and share value. Investors should monitor the timely completion of mine construction, operational ramp-up, and any updates on sales contracts or customer acquisition.

Disclaimer

This article is for informational purposes only and does not constitute any forecast, estimate, or financial advice regarding the Group’s revenue or profit. Investors are advised to exercise caution and conduct their own due diligence when dealing in securities of Kinetic Development Group Limited.

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