US China Mining to Restart Coal Production at Xing An Mine

U.S. China Mining Group, Inc. (OTC Bulletin Board: SGZH), a Chinese leader in coal production and exploration in the People's Republic of China, today announced today that the Company will resume coal production at its Xing An mine in November 2010.

The Xing An mine was closed for maintenance and retrofit projects that began at the end of fiscal 2009. The Xing An mine, located in the far northern region of Heilongjiang Province, near the Russian border, produces high-quality thermal coal which is sold throughout China.

In December of 2009, the Company began a program to upgrade the Xing An mine.  These improvements are intended to increase efficiency, safety and boost production at the site.  Operations at the Xing An mine will be transitioning from room-and-pillar mining to long wall mining upon completion of these modifications. With these improvements, the Xing An mine will be able to process coal year round.

The Company also projects that production will increase from 600,000 metric tons per year to 900,000 in 2012.  In order to accelerate these modifications, production at Xing An was halted completely in February of 2010 and will now resume production.  The Company expects to be at full production with all upgrades completed, by May of 2011.  Pricing for Xing An coal has increased strongly from historical levels and currently sells for $44/ton.

Mr. Hongwen Li, President of U.S. China Mining Group, commented, "The Company distributes coal from Xing An directly to our customers via national railways.  Importantly, the government guarantees U.S. China Mining Group preferred access to these railways since they provide needed coal to local power plants.  As such, the Company maintains distribution leverage and indirectly controls access to the railway allowing them to drive better pricing of brokered coal as well."  Li continued,  "We will now resume partial operations at the Xing An Mines during the fourth quarter and full operation will commence in the second quarter 2011, which we anticipate will significantly boost our revenues and lower our costs."