Puda Coal Announces Signing Agreements to Acquire Three Coal Mines Under Jianhe Project

In March 2010, Shanxi Coal was approved by the Shanxi provincial government to acquire and consolidate four coking coal mines in Huozhou County, Shanxi Province, known as the Jianhe Project, which, once completed, should increase the total annual capacity of target coal mines from the current accumulated 720,000 metric tons to 900,000 metric tons per year.

Pursuant to the coal mine acquisition agreements signed on April 6, 2011, Shanxi Coal agreed to pay an aggregate purchase price of RMB 98,000,000 (approximately $14.98 million) for Jianzhuang Coal, RMB 92,000,000 (approximately $14.06 million) for Leijian Coal, and RMB 87,000,000 (approximately $13.29 million) for Fengshen Coal.

Under each agreement, Shanxi Coal agreed to pay 90% of the purchase price within five days of signing and the remaining 10% of the purchase price three months after the signing if Shanxi Coal confirms there is no claim against respective seller with respect to the transferred assets. Jianzhuang Coal, Leijian Coal and Fengshen Coal will be responsible for canceling or terminating their respective employment contracts (or labor relationships) with their employees, paying all unpaid wages, insurance premiums and welfare expenses, and bearing all of the expenses caused by the cancellation or termination of the employment contracts. The tangible assets and related documents of the three coal mines will be transferred to Shanxi Coal within seven business days upon signing of the agreements.

Shanxi Coal is in the final stages of negotiations with the owner of the last Jianhe Project mine and expects to sign a definitive agreement to acquire Shanxi Jianhe Coal Industry Limited Company ("Jianhe Coal") in the near future. Jianhe Coal is the largest mine of the four target coal mines to be consolidated under Jianhe Project. In May 2009, Shanxi Coal acquired an 18% interest in Jianhe Coal for RMB 100,000,000 (approximately $15.27 million). Leverage on its status of 18% equity owner and the sole corporate shareholder of Jianhe Coal, Shanxi Coal applied and received approval to be the consolidator of Jianhe Project.

Shanxi Coal plans to place all the acquired assets of Jianzhuang Coal, Leijian Coal, Fengshen Coal and Jianhe Coal into Shanxi Huozhou Lituo Coal Industry Co., Ltd. ("Huozhou Lituo"), a newly established project company approved by the Shanxi provincial government. The geological technical report on Lituo Coal has been completed. Based on the construction plan, the three small mines will be closed, one of their mine shafts will be changed as gas emission shaft, Jianhe Coal facility will become the operational mine of Huozhou Lituo to explore the coal reserves, including reserves underground of the three mines. Shanxi Coal expects to receive construction approval by June 2011.  Shanxi Coal anticipates that it will take about eight to ten months to complete the construction upgrades and consolidation of the mines under the Jianhe Project after receiving construction approval.

"We are making a solid progress in executing our growth plan and have now entered into agreements to acquire three of the four coal mines under the Jianhe Project. We expect to finalize the agreement with Jianhe Coal in the near future and are preparing to execute our consolidation and expansion plans under the Jianhe Project. In the meantime, we are preparing the required reports for coal mine design, consolidation and restructure process for submission to the government. The primary reserve of the Jianhe Project is metallurgic coal, which provides an attractive opportunity to take advantage of China's growing infrastructure and demand for steel. It also allows us to benefit from synergies between our coal washing and coal mining operations," commented Mr. Liping Zhu, CEO of Puda Coal.

"Jianhe Coal is in excellent condition, and a new, larger mine shaft has been completed by its original owner before it was shut down by the government under the coal mine consolidation program. In addition, we have already commenced the comprehensive construction designing work at the Jianhe Project. We expect our Pinglu and Jianhe projects to gain further momentum and anticipate our coal mining business to make a solid contribution to our financial results in the second half of 2011 and beyond," Mr. Zhu concluded.

About Puda Coal, Inc.

Puda Coal, through its subsidiaries, supplies premium high grade metallurgical coking coal used to produce coke for steel manufacturing in China. The Company currently possesses 3.5 million metric tons of annual coking coal capacity. The Company is in the process of adding coal mining operations to its business, as an acquirer and consolidator and acquirer of coal mines in Shanxi Province. On September 30, 2009, Shanxi Coal, a 90% indirect subsidiary of the Company, was appointed by the Shanxi provincial government as an acquirer and consolidator of nine thermal coal mines located Pinglu County in southern Shanxi Province. Shanxi Coal plans to consolidate the nine coal mines into five, increasing their total annual capacity from approximately 1.1 million to 3.6 million metric tons. Shanxi Coal received another approval by the Shanxi provincial government to consolidate four additional coking coal mines into one coal mine in Huozhou County. After the completion of the consolidation, the Jianhe project is expected to increase the total annual capacity from 720,000 metric tons to 900,000 metric tons, according to the Shanxi provincial government's approval. For more information, please visit http://www.pudacoalinc.com.

FORWARD-LOOKING STATEMENTS

The information contained herein includes forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. For example, our plan to complete different phases of coal mine consolidation within certain time frame, and the estimates with respect to the future agreement signing, coal reserve and the production capacity are subject to, among other things, the risks and uncertainties relating to the market, geological and construction conditions, which are beyond our control, as well as our management's ability and capacity to manage the coal mine operations, which are new to our business. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.