HONG KONG, February 18 /PRNewswire/ --

- Fast Expanding Coal Energy Business with Total Coal Reserves of over 570 Million Tons

Kiu Hung International Holdings Limited ("Kiu Hung International" or the "Company"; HKEx: 381) held an extraordinary general meeting ("EGM") today and approved the acquisition of the entire equity interest of Lucky Dragon Resources Limited ("Lucky Dragon") with a total consideration of HK$840 million (subject to adjustments).

Lucky Dragon owns the entire equity interest in Tongliao City Heng Yuan Mining Company Limited ("Heng Yuan") which in turn owns (i) the mining rights and operation facilities of the Huanghuashan Coal Mine and (ii) the exploration rights of the Bayanhushuo Coalfield.

Huanghuashan Coal Mine is located in Tongliao City of Inner Mongolia of the PRC. Heng Yuan owns the mining license (certificate no.1500000720617) and related operating facilities of the coal mine. According to a technical report compiled by SRK Consulting China Limited ("SRK Consulting"), Huanghuashan Coal Mine has estimated coal reserves of approximately 7.85 million tons in a site area of 1.71 km2. The coal type of Huanghuashan Coal Mine is semi-anthracite coal and the current at-pit market prices of the coal are approximately RMB250-260 per ton (pre-washing) and RMB550-560 per ton (post-washing). It is estimated that the unit production cash cost of the coal mine will be approximately RMB77 per ton of coal (include the cost of coal washing).

Bayanhushuo Coalfield is located in Xilinguolemeng of Inner Mongolia. Heng Yuan owns the exploration license (certificate no. 1525000510130) of the coal mine. According to a technical report compiled by SRK Consulting, Bayanhushuo Coalfield has estimated coal reserves of approximately 434.76 million tons in a site area of 51.34 km2. The coal type of Banyanhushuo Coalfield is high quality thermal coal and the current at-pit market price of the coal is approximately RMB190 per ton. It is estimated that the unit production cash cost of the coal mine will be approximately RMB63 per ton of coal.

Mr. Joseph Hui, Chairman of Kiu Hung International, said, "Coal mining business is a highly profitable and an indispensable business in China. Kiu Hung is well positioned to diversify into this promising business with huge coal reserves of over 570 million tons."

"We will expand the production capacity of Huanghuashan Coal Mine to 600,000 tons per annum and construct an underground coal mine with annual production capacity of 3 million tons for Bayanhushuo Coalfield. We will also construct coal-washing facilities for Huanghuashan Coal Mine in order to further improve the profit margin," added Mr. Hui.

Assuming no adjustment has to be made, the total consideration of HK$840 million shall be satisfied by (i) HK$160 million of cash, (ii) HK$420 million by the issue of 600 million consideration shares and (iii) HK$260 million by the issue of convertible notes with a conversion price of HK$0.70 per conversion share.

About Kiu Hung International

Kiu Hung International Holdings Limited (HKEx: 381; http://www.kiuhung.com ) is an investment holding company that has wholly-owned subsidiaries in coal energy, gift and toy industries.

The company operates three coal mines in the Inner Mongolia Autonomous Region in China, with total reserves of more than 570 million tons. The company also engages in the manufacture and sale of gifts, toys, flags and garden products and is an authorized supplier of the 2008 Beijing Olympic toy products.

Contact: Eric Yip Tel: +852-2801-0036 Email: eric.yip@aca.com.hk Kathy Cheung Tel: +852-2801-0021 Email: kathy.cheung@aca.com.hk

Both Of ACA Financial PR for Kiu Hung: Eric Yip, +852-2801-0036, eric.yip@aca.com.hk; Kathy Cheung, +852-2801-0021, kathy.cheung@aca.com.hk