Synopsis of Abterra's AGM

Abterra bought 49% of Jiaozhong coal mine (Shanxi) at $188m rmb with a coal reserve of 10m metric tonnes but was later revised up to 64m metric tonnes. However, it was found later that the true minable coal reserve was 50m metric tonnes. During that time, foreigners were not allowed to own more than 50% shares in chinese coal mines and Abterra made a smart move by buying 49%(24.5m metric tonnes) of Jiaozhong coal mine at a super cheap price with a minable coal reserve of 50m metric tonnes. Please note that Abterra did not account for Jiaozhong's earning contribution in its financial statement and therefore, the temporary production shutdown in Shanxi had no effect on Abterra. Abterra's revenue and earning drops were mainly due to its core trading business which suffered from the worldwide financial crisis and the olympic event whereby coal shipments to china came to a virtual stop.

Thereafter, the chinese government started to restructure the mining industry in 2009. No foreigner is allowed to own any chinese mine now and the chairman of Abterra used his guanxi(close relationship) with Shanxi government to retain part of the shareholding by diluting from 49% to 24.01% as the chairman had been investing in Shanxi province for the past 20 years. Although the purchase price of 188m rmb remained the same, the total coal reserve increased to 117m metric tonnes due to Shanxi government injection of its own coals and the production capacity had been increased to 900,000 metric tonnes instead of 150,000 metric tonnes. Therefore, Abterra can be considered to be in ownership of 28m metric tonnes which is slightly more than its previous holding of 24.5m metric tonnes. Jiaozhong coal mine is said to be restarting production this month and Abterra is awaiting formal confirmation in writing from Jiaozhong and abterra will be accounting for jiaozhong earnings on its financial statement this year.

Abterra also announced during the AGM that it had just clinched a S$20m deal from Glencore with a profit margin of 7-12% and all the cylinders will be firing at full speed this year with the expectation of about 300% improvement in its businesses for 2010. GNR also would like to increase its shareholdings in abterra but is only permitted to purchase only 1% every 6-month according to SGX ruling. This move can be seen by the recent purchases by GNR in the SGX announcement.

Abterra sought a credit line of $20m with YA Global because it had to put up money for bank LC for its trading business. In a nutshell, Abterra has to put up about $30k for every $1m of trade. The shareholders passed all the resolutions including issuance of additional shares for future expansion of credit lines and acquisitions. Abterra also has the intention to increase its shareholdings in yongxin from 15% to 20% so that it can equity account for yongxing's earnings under Abterra.

In conclusion, anyone or company that would like to have a hand in the coal mines in China has to acquire companies like Abterra. Furthermore, China does not export any coal and is a net importer of coals which only goes to show that any coal mine under Abterra in China will be selling all the coals to China users easily. In short, there is no demand problem but supply problem in China and the coal price is definitely increasing over time.