Due diligence on a proposal for one of China’s biggest coal producers Yanzhou Coal to merge with Australian company Gloucester Coal is under way. 1

Yanzhou has signed a proposal to merge Gloucester with Yanzhou’s wholly-owned Australian subsidiary Yancoal Australia.

The combination of Gloucester and Yancoal’s assets is set to create one of Australia’s largest listed operating coal companies with world-class coal production and export operations.

The merged company will be 77% owned by Yanzhou and 23% by Gloucester shareholders who participate in the merger.

Singapore's Noble Group, Gloucester's majority shareholder with a 64.5% stake, intends to vote its shareholding in favour of the merger proposal.

Due diligence by both parties on the proposal is expected to be completed by late February 2012.

Yanzhou Coal was ranked 23rd on the Top 100 Listed Chinese companies in 2007 and is the only Chinese coal company whose shares are listed at home and abroad. It owns two large Chinese coalfields and six large-scale coal mines as well as the 140 million tonne Austar coal mine in the Hunter Valley of New South Wales, Australia.

Gloucester operates two open cut mines – Stratford and Duralie - in the Gloucester Basin as well as Donaldson Coal in the Newcastle coalfield which consists of two underground mines – Tasman and Abel.

www.yanzhoucoal.com.cn

www.gloucestercoal.com.au

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