Huaihe Energy Co., Ltd. said its controlling subsidiary Huaihu Coal & Power Co., Ltd. has obtained deep mining rights at the Dingji coal mine after signing a mining rights transfer contract with the Department of Natural Resources of Anhui province.

Huaihu Coal & Power paid the full transaction price of 28.70 million yuan  ($0.42 million)  in one installment and has obtained the real estate certificate (mining rights) and mining license, the company said in a filing.

The newly acquired resources, obtained through a non-public agreement, total 888 million tonnes of retained resources, including 258 million tonnes of gas coal, 629 million tonnes of 1/3 coking coal and 826,000 tonnes of 1/2 medium-coking coal. The resources are located in the deep section of the current Dingji mine boundary at depths of -1,000 to -1,200 meters and will be integrated with existing resources for extraction.

Under the contract, the mining rights transfer fee comprises a transaction price and an annual collection component. The transaction price was calculated at 29 million yuan based on a formula incorporating the starting price standard of 20,000 yuan per square kilometer, adjustment coefficients for metallogenic geological conditions and exploration degree, and the mining area.

The annual collection component will be calculated as annual sales revenue (excluding VAT) multiplied by a mining rights transfer yield rate of 2.4% and a conversion coefficient of 0.7. This component will only begin after the previously compensated resources of 945 million tonnes are fully utilized, out of the original 1.02 billion tonnes of compensated resources, of which 74 million tonnes had been consumed by end-2025.

Huaihe Energy said the deep resources will extend the mine's service life and enhance Huaihu Coal & Power's sustainable development capacity, with no significant short-term impact on Dingji mine operations. The 29 million yuan transaction price has been paid, and the yield component will not begin until later, so cash flow impact is limited.

The company cautioned that coal resource development involves uncertainties including geological conditions, extraction technology and work safety, which could lead to higher costs, delays or plan adjustments.

It also noted exposure to national industrial policies, environmental regulations and safety supervision, as well as frequent coal price fluctuations driven by macroeconomic conditions, energy structure adjustments and downstream demand changes.

The Dingji mine, located in Fengtai county in northwestern Huainan city, covers a field area of 162 square kilometers with recoverable reserves of 640 million tonnes and deep resources of approximately 890 million tonnes.

Construction began on June 28, 2004, and the mine commenced production on December 26, 2007, with a designed capacity of 5 million tonnes per year, later verified at 6 million tonnes per year in 2012.

Dingji mine is a large coal mine under Huaihu Coal & Power, a joint venture between Huaihe Energy Holding Group and Shanghai Electric Power Co., Ltd. It serves as China's first "coal-power integration" demonstration project, primarily supplying the Tianji power plant for the "Anhui power transmission to the east" program.