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SinoCoking Issues Update on Construction and Financing of Underground Syngas Project

PINGDINGSHAN, China, Oct. 8, 2014 (GLOBE NEWSWIRE) -- SinoCoking Coal and Coke Chemical Industries, Inc. (Nasdaq:SCOK), an emerging producer of clean energy products located in Henan Province, today announced new developments in the construction and financing of its underground facility for the production of clean-burning syngas.

First, SinoCoking confirmed that the initial phase of construction on the project will commence this month and, when completed in March of next year, produce 60,000 cubic meters of syngas per hour. At this facility, to be constructed near the company's four mines in Henan Province, SinoCoking will employ the patented underground coal gasification (UCG) and carbon capture and storage (CCS) processes developed and jointly owned by its two technology partners – the Institute of Process Engineering of the Chinese Academy of Sciences and the North China Institute of Science and Technology – both of which on September 9 granted SCOK the exclusive right to commercialize both processes.

According to Dr. Wenjun Li of the North China Institute of Science and Technology, this underground facility will be the first in China to deploy both UCG and CCS technologies together in a commercial venture. Dr. Li, who has spent the last 11 years developing and testing these processes in mines deep underground and who authored many of the UCG patents, said he believed that the combination of both technologies would constitute "a leading scientific and environmental achievement" and permit China to "significantly accelerate" the pace at which it combats "destructive atmospheric pollution and global warming effects."

In the UCG phase of the process, said Dr. Li, two wells will be drilled into the mine's coal seam, with one well being used for injection of agents to ignite and gasify the coal in the seam, and the other well used to bring the resulting gases to the surface. These gases include carbon monoxide, hydrogen, methane, carbon dioxide and steam, the latter two of which are subsequently removed, leaving a syngas of carbon monoxide, hydrogen and methane usable as a clean-burning fuel or as an intermediary product that may be converted to fertilizers, solvents and assorted synthetic materials.

During the CCS phase of the process, he said, the removed carbon dioxide and steam are re-injected deep underground, where they further stimulate the coal gasification process and remain stored for decades, unable to contribute to global warming or atmospheric pollution.

The entire UCG/CCS process, said Dr. Li, is especially formulated to prevent the toxic groundwater contamination that has often resulted from competing technologies. This advance, he said, will be made possible by use of a patented drilling technology, specialized gasification agents, and automated systems that monitor and control the temperature of the gases traveling through the wells.

SinoCoking plans to fund the project's initial $18 million cost with approximately $6 million coming from operating cash flow, $6 million anticipated from bank loans, and $6 million from proceeds of the company's recent $14.3 million equity offering.

Each step of the project construction will be co-supervised by Dr. Li and the technical operations team of SinoCoking. This construction process will form the basis of a model that may be applied at future UCG/CCS sites, he said.

"SinoCoking was the ideal partner for us on this project," said Dr. Li. "First, the company has a very strong coal production infrastructure in place, ensuring a huge supply of coal to produce syngas on an ongoing basis. Second, Henan Province, where SinoCoking's four mines are located, has many large industries that are in need of syngas and form a natural customer base.

"Third, the Henan Province Government, as well as governments of the district and county, are very supportive of SinoCoking's commitment to this project, and we look forward to cooperating with them to make the project a success."

SinoCoking chief executive Mr. Jianhua Lv added, "After years of research by Dr. Li and some of the finest minds in China, our team is proud and excited to step into the forefront of UCG/CCS technology. With our two Institute partners we stand ready to advance our nation's efforts to reduce its reliance on the burning of coal for energy and to create a cleaner and healthier environment for all our citizens."

The CEO said that subsequent phases of SinoCoking's UCG/CCS project, estimated to cost $280 million and produce as much as 880,000 cubic meters of syngas per hour, will be funded by a combination of operating cash flow, bank loans and, possibly, an equity raise.

Mr. Lv said that SinoCoking would soon issue an update on the opening of the company's aboveground syngas facility in Pingdingshan, due to begin operations this month.

About SinoCoking

SinoCoking and Coke Chemical Industries, Inc. (www.scokchina.com), a Florida corporation, is an emerging producer of clean energy products located in Pingdingshan, Henan Province, China. The company is currently transitioning from its former identity as a vertically-integrated coal and coke processor that uses coal from both its own mines and that of third-party mines to produce basic and value-added coal products for steel manufacturers, power generators, and various industrial users. SinoCoking has been producing metallurgical coke since 2002, and acts as a key supplier to regional steel producers in central China. SinoCoking also produces and supplies thermal coal to its customers in central China. SinoCoking currently owns its assets and conducts its operations through its subsidiaries, Top Favour Limited and Pingdingshan Hongyuan Energy Science and Technology Development Co., Ltd., and its affiliated companies, Henan Province Pingdingshan Hongli Coal & Coke Co., Ltd., Baofeng Coking Factory, Baofeng Hongchang Coal Co., Ltd., Baofeng Hongguang Environment Protection Electricity Generating Co., Ltd., Zhonghong Energy Investment Company, Henan Hongyuan Coal Seam Gas Engineering Technology Co., Ltd., Baofeng Shuangri Coal Mining Co., Ltd., and Baofeng Xingsheng Coal Mining Co., Ltd.

Further information about SinoCoking is disclosed in our periodic reports filed with the Securities and Exchange Commission.

Forward Looking Statements

This press release contains forward-looking statements, particularly as related to, among other things, the business plans of the Company, statements relating to goals, plans and projections regarding the Company's financial position and business strategy. The words or phrases "plans," "would be," "will allow," "intends to," "may result," "are expected to," "will continue," "anticipates," "expects," "estimate," "project," "indicate," "could," "potentially," "should," "believe," "think", "considers" or similar expressions are intended to identify "forward-looking statements." These forward-looking statements fall within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934 and are subject to the safe harbor created by these sections. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties. Such forward-looking statements are based on current expectations, involve known and unknown risks, a reliance on third parties for information, transactions or orders that may be cancelled, and other factors that may cause our actual results, performance or achievements, or developments in our industry, to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from anticipated results include risks and uncertainties related to the fluctuation of local, regional, and global economic conditions, the performance of management and our employees, our ability to obtain financing, competition, general economic conditions and other factors that are detailed in our periodic reports and on documents we file from time to time with the Securities and Exchange Commission. Statements made herein are as of the date of this press release and should not be relied upon as of any subsequent date. The Company cautions readers not to place undue reliance on such statements. The Company does not undertake, and the Company specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement. Actual results may differ materially from the Company's expectations and estimates. The Company provides no assurances that any potential acquisitions will actually be consummated, or if consummated that such acquisitions will be on terms and conditions anticipated on the date of this press release, and the Company makes no assurances with regard to any results of any such acquisitions.

Contact:

SinoCoking: Investor Relations:
Song Lv, Chief Financial Officer Rick Eisenberg, Asia IR•PR.
+ 86-375-2882-999 +1 (212) 496-6828
lvsong@sinocoking.net rick@asia-irpr.com
http://www.scokchina.com/ http://asia-irpr.com/

Source:SinoCoking Coal and Coke Chemical Industries. Inc.