NCCC Business Plan(2)

7/29/2019 NCCC Business Plan(2)

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Business Plan

Northern China Coal Company Limited

December 8, 2009

Contact:

Tony K. So,

Chairman of the Board and Chief Executive Officer

Northern China Coal Company Limited

212-214 Des Voeux Rd. Central,

Des Voeux Commercial Building,

Sheung Wan, Hong Kong

Telephone: (Canada) 1-905-499-2288

(Hong Kong) 852-6069-6977

(China) 86-159-0755-9255

E-Mail: [email protected]

Knight Merchant Banking

Office: +852 3960 6497

Fax: +852 3669 8008

Address: Suite 08, 20/F One International Finance Centre1 Harbour View Street Central

Hong Kong


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The first 8 parts of this Plan must be read in conjunction with the RiskFactors set forth in the Appendix. The fulfillment of our goals and projectedfinancial results all as set forth in this Plan is subject to substantial risks asdescribed in the Risk Factors. In addition the Company may elect to changeany aspect of the Plan.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Information included in this Plan may contain forward-looking statements. This information

may involve known and unknown risks, uncertainties and other factors which may cause the

Companys actual results, performance or achievements to be materially different from future

results, performance or achievements expressed or implied by any forward-looking

statements. Forward-looking statements, which involve assumptions and describe the

Companys future plans, strategies and expectations, are generally identifiable by use of the words

anticipate, estimate, should, expect, believe, intend "may," "project," "plan" or

"continue," or the negative of these words or other variations on these words or comparable

terminology. These forward-looking statements are based on assumptions that may be incorrect,and there can be no assurance that these projections included in these forward-looking statements

will come to pass. The Companys actual results could differ materially from those expressed or

implied by the forward-looking statements as a result of various factors, including the risk

factors described above and elsewhere in this Plan. The Company undertakes no obligation to

update publicly any forward-looking statements for any reason, even if new information

becomes available or other events occur in the future.


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RECIPIENT ACKNOWLEDGEMENT

This plan does not constitute an offer to sell, or a solicitation of an offer to purchase, securities.

This business plan has been submitted on a confidential basis solely for the benefit of selected,

highly qualified investors and is not for use by any other persons. Neither may it be reproduced,

stored, or copied in any form. By accepting delivery of this plan, the recipient acknowledges and

agrees that: i) in the event the recipient does not wish to pursue this matter, the recipient will

return this copy to Mr. Tony K So at the address listed above as soon as is practical; ii) therecipient will not copy, fax, reproduce, or distribute this Confidential Business Plan, in whole or

in part, without permission; iii) all of the information contained herein will be treated as

confidential material. Agreement executed by the recipient prior to, or contemporaneously with,

its receipt of this Confidential Business Plan.

Business Plan No.___________ Provided To_____________________________

Company_______________________________

Date___________________________________


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I. Table of Contents

I. Table of Contents .................................................................................... 4

II. Executive Summary ................................................................................ 5

III. General Company Description and Risk Disclosure ............................. 11

IV. Products and Services ........................................................................... 19

V. Acquisition Candidates .......................................................................... 31

VI. Management and Organization ............................................................. 43

VII. Startup Expenses and Capitalization ..................................................... 46

VIII. Financial Plan ....................................................................................... 47

IX. Appendix ............................................................................................... 52


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II. Executive SummaryOverview

Introduction

Northern China Coal Company Limited (NCCC) an British Virgin Island corporation primarily

engage in the business of (i) entering into management contracts for producing coal properties inthe Peoples Republic of China pursuant to which the Company has the right to extract the coal

at such mine (Extraction Arrangement) and (ii) acquiring and operating coal trading companies

licensed in such country.

As used in this document Northern China Coal Company Limited shall be referred to as

NCCC, the Company , we, us and our and shall include all wholly and majority

owned subsidiaries.

Most dollar information assumes the currency exchange rate of US$1.00 =RMB6.83 Yuan.

All coal and other minerals in China are owned by the Government and its subdivisions but

private entities may receive permission or license to extract the minerals and grant or transfer all

or a portion of such rights to a third party. The Companys first Extraction Arrangement will be

for the Xinjiang Tuokexum Northern Hills Coal Mine Project coal mine in Xinjiang Autonomous

Republic of China (NHM). The Company has a written understanding (the YSY Agreement)

with Xinjiang Yingshengyuan Mining Industry Limited Company (YSY) for the transfer of

NHMs extraction rights to it or its designee. YSY has previously acquired the rights to NHMand several additional mines in Tuokexum, Xinjiang. YSY subject to our successful operations

has agreed to assign the rights to several additional contracts to NCCC. The grant of right to

manage or extract the coal at NHM is for three years and is renewable for an additional three

years. Pursuant to the understanding with YSY, YSY is to be paid an annual fee of $500,000 to

coordinate inspection of the mine and other matters. If our production exceeds 1,800,000 MT in

any year, we will have to pay an additional fee to YSY. The YSY agreement has been entered

into by Dibao Mining Corporation which has existing mining operations and is controlled by an

officer and director of the Company. The YSY Agreement will be assigned to a newly formed

entity for no consideration. During the interim period the mine will be operated for our benefit.


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Due to transactional Value Added Tax (VAT) requirements, the Companys sales to customerscan only be made through licensed coal traders, thereby surrendering a portion of the gross profit

from such sales to traders through the fees that they charge. The Company has understandings to

acquire two coal traders. If the Company acquires a coal trader, it will be able to effect sales

through such an affiliated coal trader and obtain the revenue that will be paid to these traders as

fees. See information below relating to such acquisition.

NHMs output in 2008 was approximately 700,000 metric tons. The estimated gross profit before

corporate overhead at the average per ton sales price of coal that year would have totaled

approximately US$15.5 million. The gross profit for 2008 reflects a higher price for coal during2008 when severe weather and other problems resulted in shortages in the coal supply and higher

prices. Prices in subsequent periods were lower.

Offering

The Company intends to raise approximately $6,000,000 to pay the initial consideration of

$2,000,000 for NHM (including the reimbursement to a director for the initial downpayment of

$500,000). Any money raised will be placed into escrow until arrangements are in place for the

transfer of YSY Agreement to a 100 % owned entity is completed although a Company

controlled by an officer and not owned by us may be required to hold the agreement for our

benefit while we complete the corporate structure. The Agreement will then be assigned to us

without consideration.

If the transaction is not consummated, then all funds will be returned to investors without interest

or deduction.

The Company intends to use a majority of the balance of proceeds to acquire up to two coal

trading companies and a portion of the consideration for the Extraction Arrangement for an

additional mine as well as for working capital.

The Company will establish a policy pursuant to which it will declare dividends of 50% of net

profits of the entity, determined in accordance with generally accepted accounting principles.

The Company may change such policy in the future if management in good faith believes that it

will be beneficial to the Company. There is no assurance that the Company will achieve

profitability.


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Rapid Organic Growth, Guaranteed Sales and Future Acquisitions Pending

The Company is required under the YSY Agreement to significantly increase production from

NHM after the closing to 1,500,000 tons per year, and intends to further increase such production

to 150,000 tons per month or 1,800,000 tons per year. While the Company can immediately

boost production to 1,800,000 tons at NHMit will not do so until sales and other related issues

such as railway platforms and railway transportation arrangements has been set-up and are in

place for the increased coal production. The additional transportation capacity is needed to

maintain a consistent supply to our end-users since reliable supplies is integral to customer

satisfaction and is critical to building our business. We believe that it will take between 6

months and one year to accomplish the foregoing.

The Company has entered into various preliminary understandings with agents for power plants

wherein the Company will be able to effect sales for all the coal generated from the NHM at the

price of US$22.00 per ton. The Agreement with YSY also provides for the sale to YSY at such

price but NCCC can elect to sell elsewhere if it can obtain a higher price. As indicated below, the

Company is considering entering into three additional Extraction Arrangements for mines that

are currently managed by YSY that would add an additional 2.2 million tons of production per

year with the potential to increase to 7.2 million tons per year in increments over the 5 years after

initial receipt of funds.

With the increased annual production of coal from NHM and the anticipated 3 additional

Extraction Arrangements, the Company expects to achieve significant growth. Estimated sales in

2009 (which includes the first 2 months in 2010 and represents actual sales through January to

November 2009 based on information provided to us). Also set forth below are estimated coal

sales and profits before corporate overhead for fiscal years ending February 28, 2011 and

February 29, 2012 and February 28, 2013 are shown below.


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Year Sales (in Metric Tons) Yearly Gross Profit (in $)

2009 E (2009/01 2010/02) 815,000 (w/o Trading) $11,932,650

2010 E (2010/03 2011/02) 1,050,000 (with Trading) $23,928,000

2011 E (2011/03 2012/02) 2,070,000 (with Trading) $47,280,000

2012 E (2012/03 2013/02) 3,600,000 (with Trading) $82,225,000

(2009E Based on production for 14 months of 815,000 ton x RMB100/exchange rate @ 6.83)

*Assumes (i) the YSY guaranteed price of RMB150 Yuan (US$22.00) per MT and (ii) the

acquisition of additional Extraction Arrangements and increased production at NCH Mine and

such additional mines; (iii) Company takeover of NHM by March 1, 2010 and (iv) additional

assumptions set forth in Part VIII of this Plan.

Future Extraction Arrangement and Coal Trading Opportunities

The Company estimates output can be increased to 1 million tons a year in the short term. The

Xinjiang Fukang City Dahuangshan Huang Coal mine located in Xinjiang Fukang City

Dahuangshan Huang Caogou has an annual output potential of up to 2 million tons a year in the

short term. Historical yields have been 2 million tons in 2009. The Xinjiang Shanshan Country

Kanerqi Lead and Coal mine located in Xinjiang Shanshan Country has an annual output

potential of up to 0.6 million tons a year in the short term. The Company believes there is

potential to increase production to 7.2 million tons per year in increments over 5 years after

initial receipt of funds. All of the foregoing are operate mines same geological formation of

which NHM is also a part.

The Company has also identified opportunities to acquire coal trading businesses that

management thinks will produce synergies with the Extraction Arrangement operations that are

included in the financial forecasts section. NCCC has an understanding with one such entity in

J iangmen, Guangdong province and another with a trading company in Xinjiang. Each trading

company has the rights to trade coal and issue tax receipts on behalf of tax authorities nationally

and in the case of the J iangmen operation, export coal as well.


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The ability to trade coal on national scale provides NCCC with greater flexibility to servicecustomers either from any coal mine it has an Extraction Arrangement or any coal mines in

China which will generate additional profit. The sale of coal to the end user can, in practice,

only be made by an entity, which can issue a tax receipt indicating that the VAT tax has been

paid. Therefore, the Companys sales to customers can only be made through coal traders,

thereby surrendering a portion of the gross profit from such sales as a fee to these traders. The

Company has understandings to acquire two coal traders, one of which has an export license.

The latter is a valuable license as the Company believes not more than 5% of coal traders have

export licenses. If the Company acquires a coal trader, it will be able to effect sales through such

an affiliated coal trader, and thereby obtain additional revenue. The Company may also derive

additional revenues from any wholly owned coal trader from the coal traders performing

transactions on behalf of third parties.

The Market

According to the BP 2008 Statistical Review of World Energy, China produced nearly 1.3billion

tons of coal in 2007, up 7.0% from the previous year. The country has approximately

114.5billion tons of coal reserves, second only to the United States. Tuokexum of Xinjiang is one

of Chinas richest provinces in terms of coal production, supply. Because the mines in

Tuokexum are generally open pit mines, these mines tend to be safer and more efficient.

Over the last two years, the Chinese Government has closed a large number of small companies

in order to address economic, environmental and safety issues. This resulted in the elimination of

over 1,000 coal-related enterprises, mainly underground mining operations. The Company

believes that certain of our officers long-term relationship with the Xinjiang Government puts us

in an advantageous position relative to its competition.

The Company is well positioned to participate in Chinas modernization of the coal industry as a

result of its focus on open pit mines which the Company believes will be favorable for the

foreseeable future. NCCCs strategy ideally fits the industrys development path and will make it

one of the leaders in the coal industry.


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Corporate Structure

The Company will have an offshore holding structure commonly used by foreign investors with

operations in China. Northern China Coal Company Limited is a British Virgin Islands

corporation, which will owns Northern China Coal Investment Holding Limited (NCCC HK),

an International Business Company incorporated in the Hong Kong; NCCC HK will own

Tuokexum Dibao Natural Resources Co., Ltd. (Dibao NR), a WOFE Wholly Owned Foreign

Enterprise established under the laws of the Peoples Republic of China. The operations will be

conducted exclusively through a wholly owned subsidiary, Dibao Management Corporation,

which will receive an assignment of the YSY Agreement from Dibao Mining Corporation,

(Dibao). The Company will operate its China coal trading business through a separate

subsidiary of the WOFE. Tony K. So is the Chief Executive Officer of NCCC. Before funding,

one hundred Percent (100%) of the issued and outstanding shares of the Company are owned by

existing management team of which Seventy Percent (70%) of such shares of are owned by a

corporation controlled by Mr. So. An additional 6,000,000 shares of the Companys Common

Stock will be issued to the new investors together with 3 year warrants to purchase 6,000,000

shares at a price of $1.50. The newly issued shares acquired by the investors represent 10.71% of

the total outstanding shares after completion of the financing. These will be subject to an upwardadjustment if the EBITDA does not equal exceed $10,000,000 for the year ending February

2011. For this purpose EBITDA shall be defined as Earnings Before Interest, Tax, Depreciation

and Amortization and before one-time non-recurring funding and listing expenses. If EBITDA of

the Company as so defined does not equal or exceed $10,000,000 for the year ending February

2011, the number of shares owned by the investors shall increase by 25%.


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III. General Company Description and Risk DisclosureReference is made to the Risk Factor Section attached hereto detailing the Risks of this Offering.

NCCC Company description:

The Company will be engaged in coal production through the acquisition of Extraction

Arrangements for currently operating income producing open pit coal mining properties in thePeoples Republic of China (PRC). The Company has also identified opportunities to trade

coal from smaller mines in Xinjiang and other areas to customers and potential customers in

Henan province. It will do so with trading companies it intends to acquire. The Company

initially will obtain the Extraction Arrangements from the current rights holders, YSY Mining

Corporation for the NHN Mine, with a signed agreement executed on October 27, 2009 by Dibao

Mining which is controlled by an officer and by paying a deposit payment for these paid on

November 1, 2009. The YSY Agreement will be assigned without consideration to our designee.

In the interim the operations under the agreement will be for our benefit. Upon closing the

Company intends to continue to extract coal from the newly acquired rights that it controls and

has the right to mine and sell the coal on a per ton basis for cash on delivery, at pit or by contract.

Most of the coal will be sold by contract. The coal produced from the NHM will be sold

primarily to power plants through coal traders (including affiliated traders if acquired) and coal

wholesalers. While Coal wholesalers final customers are typically also power generators, they

also may serve other customers such as industrial companies, factories, other smaller wholesalers

and individuals for home heating.

The NHM property consists of an open pit coal deposit that varies in total thickness from 10 to50 meters. The mine is 2.7 square kilometers and part of a deposition which 27 kilometers in

length which includes other mines which seek to obtain Extraction Rights. NHM produces

mostly high-grade (6,000+ BTU) low sulfur coal. The mine is located approximately 200

kilometers northeast of the City of Xinjiang Urumqi in the Tuokexum Province.


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In addition to NHM, the Company pursuant to its initial agreement with YSY is negotiating toenter into Extraction Arrangements for properties as described in SectionV. It has reached an

oral understanding on these properties subject to the payment of consideration estimated at RMB

3 per ton for 3 years total production capacity which will be paid from the funds raised and

through cashflow.

It has included these 3 properties in its Forecasts in Part VII of this business plan. However, no

assurances can be made that these Extraction Arrangements will actually be acquired. Failure to

acquire these rights will negatively impact the projections; but management has identified

additional projects, with similar financial profiles.

Due to the laws of China, the Company does not and cannot have a 100% direct ownership

interest in NHM Mine or any other mine. However, through its indirectly wholly-owned

subsidiary, Dibao Natural Resources Corporation, a Hong Kong Company, the company will

own Dibao Management Corporation, which will obtain the YSY Agreement, and receive all of

the economic benefits derived from the business operations.

Organizational Chart:

NCCC: Northern China Coal Company Limited, the listed entity in the British Virgin Island,

NCCC HK: The holding company that owns the onshore Chinese holding entity,

Wholly Owned Foreign Enterprise (WOFE): Onshore Chinese holding company entity that owns

the Chinese operating company

Dibao Natural Resources: The Xinjiang operation that holds the Extraction Arrangement and

operates the businesses,

Dibao Trading: A vehicle for The Xinjiang and Jiangmen trading operation if acquired

NCCC

WOFE

NCCCHK

DibaoYSY

MineExtractionArrangement

MineExtractionArrangementFee

DibaoTrading


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The Company intends to effect ownership of Dibao through the WOFE under Chinese law. Suchentity may repatriate profits without regard to currency restrictions. If the Company does not

obtain WOFE status, the Company will be subject to currency restrictions, and distributions may

be limited.

In managements opinion, there are tremendous opportunities in Chinas energy sector. Coal,

due to its bedrock importance to the economic life of China, is critical to the countrys ongoing

development. Recognizing this, the government has focused on and supports bringing in capital,

management and technology to improve productivity and financial stability of enterprises

engaged in the industry. The Companys goal is to be an important supplier of energy productsto meet the growing demand and needs of customers in China.

NCCC Company Goals and Risks to These Goals:

NCCC will monetize and expand the production of coal through the management agreement with

YSY for NHM. The cash generated from this facility will serve the following purposes;

1. Pay dividends to shareholders - subject to our working capital needs,

2. To acquire income producing management contracts and/or properties

3. Provide working capital funding for coal trading operation

4. Invest in opportunities related to the business (although none are planned except as

provided in this Plan)

5. Expand current production of mines subject to Extraction Arrangements.

The Companys continuing strategy is to expand the business by entering into additional

Extraction Arrangements. Successful implementation of this strategy is contingent on numerous

conditions and there can be no assurance that this expansion strategy can be successfully

executed due to competition for the best properties. NCCCs growth depends on managements

ability to enter into additional Extraction Arrangements from third parties.


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There is intense competition from other energy providers to obtain Extraction Arrangements.Managements ability to negotiate, obtain and execute Extraction Arrangements is critical to the

ongoing success of the enterprise. Management will also focus on developing a coal trading

platform where smaller mines sales will be made to NCCC. By expanding the ability of the

Company to sell coal, management believes that it will be somewhat easier to obtain new

production facilities and expand the Companys output by selling to an established customer

base. This strategy is dependent upon managements ability to execute both the trading strategy

and using internal demand to acquire Extraction Arrangements and then increase productivity of

these mines in order to continue to grow the business.

Additionally WOFE (Wholly Owned Foreign Enterprises) structures are designed to indirectly

obtain 100% ownership. This method is widely used and the Company does not believe it will

have any issues in forming the WOFE. If for some reason it cannot use the structure, the

Companys forecasts could be adversely affected.

Additionally, China may change corporate, tax, ownership, labor or other laws that may have a

negative effect on the profitability of the business.

The Market and the Companys customers:

The market in China for coal is limited to 4 major customer groups:

1. Electric utilities,

2. Iron, steel and other metal smelting and refining operations,

3. Corporate customers as a feedstock for production,

4. Wholesalers for individual customers for home heating and cooking.

NCCC initially will exclusively focus on selling coal directly to electric utilities and then to

metals smelters and wholesalers that sell coal to utilities. A professional sales force may be

needed when the company acquires more Extraction Arrangements.


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NCCC has reach understandings with or is in final negotiations with 7 major customers:

Buyer Order Total Consumption1. Power generator 1 300,000 tons per annum 2,000,000 tons per annum

2. Power generator 2 300,000 tons per annum 6,000,000 tons per annum



5. Trader 1 500,000 tons per annum



NHM for the year ended December 31, 2008 served (one) customer(s) which accounted for

100% of the sales and revenue due to limitation of production capacity. Since the Company

intends to expand production to over 1.8 million tons annually, it is negotiating additional

contracts that can be executed once production at NHM is ramped up. While the Company can

immediately boost production to 1,800,000 MT at NHM, it will not do so until sales and other

related issues such as railway platforms and railway transportation arrangements have been set-

up and are in place for the increased coal production. The additional transportation capacity is

needed to maintain a consistent supply to our end-users since reliable supplies is integral to

customer satisfaction and is critical to building our business. We believe that it will take

between 6 months and one year to accomplish the foregoing.

The Need for Additional Resources:

The Company will retain third party independent contractors for the extraction and local

transport operations between the mine and the railway platform. These third parties provide theequipment and labor to perform their services. Management believes that the equipment

currently deployed at the mine by the current contractor is adequate to meet the increased output

goals. The trucking of the extracted coal is delivered to the railway platform by independent

truck operators that are compensated on a per trip or mileage basis. Management also thinks that

compensation levels to third parties are adequate to attract these contractors in sufficient

numbers to meet the tonnage goals. However, if there are bottlenecks in the extraction or

delivery to the railhead, the Company may be required to obtain additional or substitute

Independent Contractors which have resources to provide additional mining equipment and/or

trucking capacity.


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The current bottleneck in the mining and delivery operation is the loading capacity at the railwayplatform where the Company only has access to 10,000 tons of loading capacity per day. This

amount represents adequate railhead loading capacity to meet the mines current output. While

the present capacity at the railhead platform will theoretically cover the additional annual output

of NHM, there are many days that the platform may not be available to us because of weather,

holidays, or other usage. Therefore, it is important that capacity at the railroad station be

increased.

To assure avoidance of bottlenecks for the expansion of NHMs output to planned levels will

require the Company to have access to at least 3 more loading platforms for an increase inloading capacity of 30,000 tons per day to a total capacity of 40,000 tons a day within 6 to 12

months of funding. An agreement with China Rail is under negotiation and subject to

confirmation.

In order for NCCC to achieve its production expansion goals, additional railway truck and

loading capacity is necessary. Management is confident that a quick expansion of railhead

capacity is attainable since it meets the governments dual goals of regional economic expansion

to promote social stability in Xinjiang and the additional capacity meets national goals of having

abundant and reliable supplies of energy.

China vs. Developed Nations Energy Consumption and the Coal Industry

Energy consumption in many of the developed nations has been flat over the past several years,

whereas energy consumption in China has grown at 10% or more annually for the last half of this

decade. This high growth rate has increased the demand for all energy feedstock sources,

particularly coal.

Coal supplies the vast majority (70 percent) of Chinas total energy consumption requirements.

Oil is the second-largest source, accounting for 20 percent of the countrys total energy

consumption. While China is making a large investment and efforts to diversify its energy

supplies, hydroelectric sources (6 percent), natural gas (3 percent), and nuclear power (1 percent)

account for relatively small proportion of Chinas energy consumption.


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Even with a concerted central government effort to support alternative energy technologies,

sources including environmentally friendly green technologies, growth in the aggregate

demand for energy will ensure that coal will continue to be the principle feedstock for Chinas

energy needs for the foreseeable future.

Competitive Strengths and NCCC Core Competencies:

The conceptual framework for the NCCC business model for the short and intermediate term

revolves around monetizing the value inherent in properties that are currently producing income.

The Company does not intend for management to explore, develop or build new mining assets

but to acquire mineral rights through management contracts and improve on operations and

management to maximize cash-flow and income.

The Company, therefore, is relying on its ability to identify, secure and monetize income

producing properties. It is focusing on those properties that throw-off large amounts of free cash

flow; Management intends to use the free cash flow to secure new properties and pay dividends

to investors.


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Typically, moving money out of China is a complex and difficult process since the currency isnot freely convertible. There are a myriad of laws and processes that must be addressed in this

process. The WOFE structure simplifies and allows for funds to be moved out of China for

dividends and debt payments. Management does not believe that there will any issues

surrounding these kinds of funds transfers. NCCC management believes by utilizing the WOFE

structure that allows the Company to allocate free cash-flow between dividends and funds

retained for reinvestment into mining properties in China to maximize shareholder value. If the

Company does not obtain WOFE status, the Company will be subject to currency restrictions,

and distribution may be limited.


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IV. Products and ServicesLocation of the Mine and Customers:

The greatest advantage to the NHM and NCCCs operating model is 3-fold;

1. Demand for energy has grown rapidly in China and management expects this trend to

continue, China relies heavily and is centered on the consumption of coal. Volume and

price can be reasonably expected to remain firm over the foreseeable future.

2. The social instability in Xinjiang involving Islamic agitators has caused the government

both nationally and locally to focus on promoting economic growth in the region. In

order to boost business conditions, we believe that the government has loosened policy

restrictions to attract capital and investment for both foreign and domestic investors.

Mine is

located here

Customerslocated here


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3. Safety of underground coal mines has been a major problem for many years and mineaccidents claim the lives of thousands of miners annually. The official tally of mine

accident deaths totaled more than 3,700 in 2008 but other estimates claim that there are as

many as 20,000 miners that die in accidents every year. As a result, China has embarked

on a program, province-by-province of consolidating mines, in most cases under State

Owned Enterprise control and closing those facilities that do not meet safety standards. It

is important to stress that this program is targeting underground coal mines and not open

pit mines, as NHM, is focused on. Therefore, supply will be constrained by the closure

of substandard mines and those that need to temporarily close in order to improve safety

fittings in operating facilities. The safety drive will, over the short term, potentially

reduce supply as unsafe mines are closed or temporarily shut to upgrade safety.

Management thinks that operating mines safely is an important aspect of maintaining

good relationships with government authorities and gaining benefits that this safety

record entails.

Management expects that demand will continue to remain robust while constraints on supply

may increase. Technical and fundamental factors should overwhelm any operational, investment

or technological factors that may drive increased production or lower prices. These favorablesupply/demand characteristics are likely to keep margins healthy and profitability strong.

Management recognizes there is a window of opportunity for investment in Xinjiang and

moving rapidly to secure these resources. Management thinks that these business conditions will

be favorable for companies such as NCCC for the foreseeable future.


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Product Pricing:

Global coal prices are determined by market demand and supply and these factors determine

price. The global coal industry utilizes long-term contracts since large users, such as utilities

need to secure reliable supplies in order to ensure uninterrupted service to their customers.

However, in the PRC, the price for certain thermal coal used for power generation is determined

among coal suppliers and power plant buyers in accordance with the pricing guidance published

by the PRC Government.

Therefore, there is little flexibility to set prices by producers or customers since they are

determined by government intervention. The price setting mechanism is not market based and

the element of public policy that determines prices adds an element of risk to the business but

also adds further levels of security to investors in energy producing investments.

Specifically, the Government setting prices of resources such as coal creates risk for producers if

these prices are set too low or are adjusted to affect social or economic policy that benefits one

group over another. However, the Governments desire to generate adequate energy supplies tomeet demand from individuals and business is an overwhelming goal of the government today.

Investors can therefore expect favorable policies towards energy producers for the foreseeable

future.

Moreover, the risk from artificially low coal prices may be somewhat mitigated if NCCC

acquires a coal trading company with an export license. If such acquisition occurs, NCCC may

export coal at higher prices if price of coal below true market prices. This mechanism in general

will also temper the governments desire to set prices too low since this may result in lower

supply and shortages.


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Pricing of coal is also influenced by the government through their control of the rail system,Management intends on operating and setting prices within these constraints. Prices will

therefore be set by taking into account:

1. Prices in the relevant local coal markets as dictated by government mandate

(inclusive of transportation costs);

2. Grade and quality of the coal; and

3. Relationships with customers.

Currently, the average price for raw coal in Xinjiang is RMB200 (US$29.28) per ton for delivery

at the pit for 6,000+BTU rating. Most of the Companys coal is sold pursuant to contract and

delivered by rail.

Until 2002, the production and pricing of coal have largely been subject to close control and

supervision by the PRC Government, which centrally manages the production and pricing of

coal. Previously, the price of coal was determined based on a government-devised pricing

guideline which set out the suggested prices for coal. However, in order to effectuate the

transformation from planned economy to market economy practices, from January 1, 2002 Chinaeliminated the state guidance price for coal and allowed prices for all types of coal to be

determined in accordance with market demand. However, as the PRC Government continues to

maintain control over the national railway system, which is the primary means for coal

transportation in China, the PRC Government still may exert influence over the pricing of coal

through its allocation of railway transportation capacity for coal.

In addition, under the Price Law of the Peoples Republic of China, promulgated on

December 29, 1997, effective from May 1, 1998, in the event of an actual increase or potential

increase in the prices of important products such as coal, the State Council and the provincial

governments, autonomous regions and municipalities directly under the PRC Government may

adopt intervention measures, such as restricting the ratio of price differentials or of profits, and

imposing price limits, etc. In August 2004, the NDRC issued a notice setting forth temporary

measures to be imposed on thermal coal prices for certain regions. In December 2004, the NDRC

issued a notice setting forth guidelines for pricing of thermal coal sales in 2005. Under these

guidelines, the coal suppliers and their customers may not negotiate for the sale of coal at prices

exceeding the government suggested price range.


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Similar to coal pricing, the production and supply of coal, which is dictated by the PRCGovernments annual state coal allocation plan, has been gradually liberalized and largely

subject to market forces. Major domestic coal suppliers and coal purchasers attend the Annual

National Coal Trading Convention to negotiate and discuss the price and quantity of coal to be

supplied and purchased for the coming year through the signing of letters of intent and short and

long-term supply contracts.

The Economic Importance of Coal to China:

The People's Republic of China is by far the largest producer of coal in the world, producingover 2.8 billion tons of coal in 2007, or approximately 39.8 percent of all coal produced in the

world during that year. By comparison, the second largest producer, the United States, produced

more than 1.1 billion tons in 2007 only 40% of the production of China.

Importantly, from an employment policy perspective, coal plays an enormous role where an

estimated 5 million people work in China's coal-mining industry. Maintaining employment in

the rural regions where the bulk of coal is produced is a goal of the Chinese government, both

national and locally. Maintaining employment and programs for increasing the safety of mines

support the health and welfare of the rural population will be an ongoing priority of the national

and provincial governments.

Coal makes up 77 percent of China's total primary energy consumption, and China is both the

largest consumer and producer of coal in the world. China holds an estimated 114.5 billion short

tons of recoverable coal reserves, the third-largest in the world behind the United States and

Russia and about 13 percent of the worlds total reserves. There are 27 provinces in China that

produce coal. Northern China, especially Shanxi Province, contains most of China's easily

accessible coal and virtually all of the large state-owned mines. Coal from southern mines tendsto be higher in sulfur and ash, and therefore unsuitable for many applications.

Coal consumption has been on the rise in China over the last eight years, reversing the decline

seen from 1996 to 2000. More than 50 percent of Chinas coal use is in the non-electricity

sectors, primarily as feed stocks for industrial companies. The balance of 50 percent is used in

the power sector.


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Chinas Coal Industrys Competitive Landscape:

Chinas coal industry has traditionally been fragmented among large state-owned coal mines,

local state-owned coal mines, and thousands of town and village coal mines. The top three state-

owned coal companies produce less than 15 percent of the domestic coal. Shenhua Coal, the

worlds largest coal company, holds 9 percent of the domestic market in China with 2008

revenues of RMB 107 billion (US$15.6 billion).

Though the smaller coal mines hold a sizeable portion of the market, they are inefficient and are

challenged to respond to market demands. China has tens of thousands of small local coal mines

where inefficient management, insufficient investment, outdated equipment, and poor safety

records prevent the full utilization of coal resources. The goal of consolidating the industry is toraise total coal output, attract greater investment and new coal technologies, and improve the

safety and environmental record of coal mines. According to one industry report, at the end of

2005 China had 25,000 coal mines. Independent analysts estimate that over the past several years

China has closed down between 20,000 and 50,000 small coal mines and about 200 million tons

of production from small mines is slated for closure.

In contrast to the past, China is becoming increasingly open to foreign investment in the coal

sector, particularly in an effort to modernize existing large-scale mines, introduce new

technologies into Chinas coal industry and to allow for capital to be more efficiently allocated


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within this important energy sector. Areas of interest in foreign investment concentrate on newtechnologies with efficiency and environmental benefits, including coal liquefaction, coal bed

methane (CBM) production, and slurry pipeline transportation projects. The Chinese government

is actively promoting the development of a large coal-to-liquids industry illustrating that coal

will pay an important role in Chinas energy future for a long time to come.

Due to the strong and increasing demand this decade, Chinas coal imports started growing after

2002 since imported coal prices including transportation became competitive with domestic

production prices particularly in the coastal cities. Additionally, the coal industry suffers from

frequent bottlenecks in transmission to consumer markets leading to unstable deliveries of

supplies. Customers such as utilities are dependent upon reliable supplies of coal and shortfalls

cause brownout and blackout that damage the utilities reputation with their customers and can

cause damage and sever dislocations to businesses and the economy that rely upon stable energy

supplies.


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Types of Coal in China:

Due to the differing attributes of coal and properties, our product is low sulphur, 6,000+BTU,

and is primarily sold to power plants and metallurgy operations. NCCCs coal resources are of a

high enough quality and also meet the demand of, cement factories, industrial users andwholesalers. Our focus on utilities and those wholesalers that service utilities is a strategic

decision where we do not want to have to manage a larger scale sales organization. We would

prefer to devote resources to identifying and securing new properties to acquire.


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Our Potential Customers:

The Company will sell its coal on a per ton basis directly to its customers assuming it has

acquired a licensed coal trader. Coal is generally sold to major customers by purchase order

signed prior to the beginning of each mining season. These purchase orders generally specify the

quantities and timing of purchases planned over a time period generally for the period of one

year. The balance of the sales comes from purchase orders issued by the same customers that

have additional requirements for coal during the year, or from other customers.

For the year ended December 31, 2008, only 1 (one) customer accounted for 100% of the salesand consolidated revenue derived at NHM which represents only 9% of this particular

customers yearly consumption. Since the Company intends to expand production to over 1.8

million tons annually, it will need to negotiate new supply contracts. Net coal sales as

represented by the pro-forma forecasts are the expected invoiced value of coal sold, net of sales

taxes, government fees, extraction taxes, transportation costs and various miscellaneous fees

relating to sales if the invoiced value. Many of the latter expenses are born by the coal trader.

Please see Section VII for Financial Projections

It is important to note that due to high demand and to ensure consistent supply; customers alwayspay for coal in advance or make substantial deposits. While the price of coal did not change

significantly between 2005 and 2006, there was a significant increase in 2007 and 2008 driven

by market demands and changes in government price structures. Under such conditions, most

customers in 2008 paid in advance of delivery to secure supplies. Since customers do not have

the option to secure supplies through paying higher prices, the market has adjusted through this

mechanism where producers are paid well in advance for future production. It is unknown if

these kinds of conditions will remain in place or for how long or if customers are willing to pay

us in advance for their long-term supply needs. The Company expects that customers will pay

against delivery of coal to either rail head or delivery destination. Any ability to secure

payments in advance will generate valuable cash for the Company. There is no assurance that

the Company will receive significant prepayments.


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Also, once NCCCs coal is extracted, it is typically picked up immediately by, or loadedimmediately for delivery to customers. The Company anticipates not having to maintain an

inventory of extracted coal for the foreseeable future. Therefore, the Company can expect to

keep most inventory levels low which will also keep our working capital needs minimal. Under

the current supply/demand profile, the Company cannot foresee any problems to secure steady

customers nor a need to maintain higher than minimal inventories for its core business.

The annual consumption for most of NCCCs potential clients is between 4 to 10 million tons

annually. Therefore if the Company has sufficient working capital during the slower summer

months, there may be an opportunity to ship production to customers, wholesalers or storage

facilities in advance of demand. This tactical allocation of funds serves several purposes:

Increases the supply available to customers during higher demand periods when supplies

may be constrained by railway bottlenecks

Improves the Companies relationship with the railroad by utilizing extra capacity during

slow periods

NCCC is a more reliable supplier to customers as excess inventories during difficult

times assists our customers with their problems.

Increases the potential for profits as this allows for somewhat higher volumes andpotentially higher prices during peak demand periods

There is no assurance we will be able to ship in advance

Managements intention is to continue to retain NHMs single customer and establish new long-

term business relationships to be met by the increased production. It should be noted that a coal

fired power plant is capable of consuming at least 2 million tons of coal annually. Management

believes that the environment is favorable to obtain new customers and has been actively

negotiating sales arrangement with potential customers as illustrated in the following table:

1. Power generator 1 300,000 tons per annum







There is no assurance any of the foregoing will be consummated.


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As indicated above the typical consumption of a customer is between 4 to 6 million tonsannually, NCCC is limiting sales to the above figures due to our projected capacity limitations

and the need to diversify our customer base. Furthermore, customers desire to have more than

one supplier in the event that there are delivery problems from any single supplier.

Competition:

The coal business in China is a dynamic and fast growing industry. However, Chinas coal

industry is fragmented and operators include large state-owned coal mines, local state-owned

coal mines, and thousands of town and village coal mines.

China has tens of thousands of small local coal mines where inefficient management, insufficient

investment, outdated equipment, and poor safety records prevent the full utilization of coal

resources. Additionally, China is closing some of these smaller mines or forcing them into larger

State Owned Enterprises. Therefore, supply from smaller operations may not be reliable.

It is also important to recognize, that the largest consumers of coal, electric utilities require

continuous and uninterrupted supplies of coal and therefore value the ability of suppliers to

provide coal in sufficient quantities and in a timely manner. Therefore, utilities are not inclined

to buy from smaller operators but from larger suppliers and wholesalers that consolidate

production from smaller operations.

Since customers need reliable supplies, producers with capacity to deliver and those that have

access to rail transport are the dominate competitors in this industry. Long-term relationships

and the ability to deliver coal on time are the most important issues when considering

competition. Due to government price setting, other aspects such as service and reliability of

supplies are more important than price in the customer/supplier relationship.

Geographic issues play an important role. Coal is a high volume but low price to weight

business and there is little capacity to replace supplies with those from places further afield.

Deliveries of coal require rail capacity from point-to-point and coal is more efficiently consumed

as close to the source as possible.

The companys customers, both current and proposed are on major rail lines and management

expects it will only face competition from new production. As the rail map below illustrates, the

customers in Henan are accessed by the major rail lines in China today.


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The Company believes that significant transportation cost savings to our potential customers maybe possible from other potential coal providers, but in the Companys opinion the coal derived

from these sources is not competitive with the Companys product.

The real differentiator between competitors is the logistics of being able to deliver reliable

supply to customers.

Figure 2: China's Internal Rail Network

From Here

To Here


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V. Acquisition CandidatesNCCC evaluates each possible management contract candidate on the following aspects in order

to value the investments potential to generate cash flow and return to investors:

The Company seeks only Extraction Arrangements for open pit mines as underground

mines are much more management intensive and risky to operate

Distance to and road conditions between the pit and railway station is evaluated as thesefactors affect local transportation costs and time to market.

The loading capacity of such railway platform that the company can access that services

the contemplated acquisition. Lack of capacity limits the Companys ability to increase

production

The capacity of railway track that we can access thru this railway platform. This is

dependent upon China Railways ability to provide capacity and which our ability to

deliver product to final customers depends.


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NHM or Xinjiang Tuokexum Northern Hills Coal Mine Project:

The Xinjiang Tuokexum Northern Hills Coal Mine or NHM will be managed by Dibao

Management under the YSY Agreement. YSY holds the rights granted by the Tuokexum

Government and assigned to it. This coal mine is located at Tuokexum County, 200 kilometers

from the Xinjiang capital Urumqi.


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The Tuokexum Northern Hills Mine Project Terms:

Important points to consider:

Tuokexum - Each year Dibao Management is required to pay RMB 3,000,000 Yuan

(US$500,000) to YSY which obligated to coordinate the annual inspection and other

matters relating to the mine. YSY has agreed to purchase all the coal that is mined,

effectively setting a floor price of RMB150 Yuan/tons (approximately US$22). Dibao

may elect to sell to others if the selling price is higher.

The advantages of this mine are based on the following factors:

Low transportation cost: The coal mine is 70KM apart from a railway station and the

transportation cost is RMB30Yuan/ton (US$4.39),

Low extraction cost: Due to the open pit mine, the extraction cost is RMB 20 Yuan per

ton (US$2.93),

Guaranteed selling price by the YSY Agreement Not lower than RMB150 Yuan/ton

(US$22), Production start for the one year period after the beginning of the operation of the mine

by us, 15,000 ton increasing to 150,000 ton per month or 1.8 million ton/year starting

within 12 month after funding,

Monthly revenue: 150,000 ton x 100 Yuan (150Yuan - 30 Yuan for local transportation

costs - 20 Yuan for extraction costs) =15million Yuan (US$ 2.19 million per month),


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The following is one of the Mines identified for Extraction Arrangements bythe Company. While the Company believes, based on discussions to date, thatit will successfully be able to enter into Extraction Arrangement(s) for theextraction of coal at this mine and the additional two mines described below.

There is no assurance it will be able to enter into such arrangements.

In the case of each arrangement, we indicate current production orcontemplated production for the initial periods. In each case we believe wewill be able to boost production at these mines to the aggregate amounts setforth elsewhere in this Plan depending upon increased rail facilities and otherlogistics.

To be Acquired: Xinjiang Qitai Suoerbasitao Humic and Coal Mine Project

The Xinjiang Qitai Suoerbasitao Humic and Coal Mine is located at Xinjiang Qitai. Dibao will

hold a 50% stake in this mine with a 50:50 joint venture with Xinjiang Qitai Longqiao Chemical

Limited Company. This mine is currently operating with positive financial profile.


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The advantages of this mine are based on the following factors:

Transportation cost: The coal mine is 13KM away from a railway station and the

transportation cost is 20Yuan/ton.

Low extraction cost: due to open pit mine, the extraction cost is 20 Yuan/ton.

Selling price: Humic acid 60 Yuan/ton, coal 130 Yuan/ton at pit

Production starting 2009/10: Humic acid 200,000 ton/year, 17,000 ton/months.Coal 800,000 ton/year, 68,000 ton/month.

Monthly revenue: Humic acid 17,000 ton x 40 Yuan =680,000 Yuan

Coal 68,000 ton x 110 Yuan =7,480,000 Yuan

Total 680,000 +7,480,000 =8,160,000 Yuan (US1.2 million)

Monthly gross profit: 8.16 million Yuan (US$1.1 million) x 50% =4.08 million Yuan

(US0.6 million).

Reserves: Humic acid 20 million ton coal 80 million ton

Term: 10 years until May 2018

Remark: The Monthly revenue RMB110 Yuan per ton is the net selling price excluding RMB20

extraction cost and RMB20 as the local transportation cost.


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This is one of the Mines identified for an Extraction Arrangement by theCompany. There is no assurance it will be able to enter into sucharrangement.

To be Acquired: Xinjiang Fukang City Dahuangshan Huang Caogou Coal Mine Project

The Xinjiang Fukang city Dahuangshan Huang Caogou Coal Mine is located at Xining Fukang

Dahuangshan Huang Caogou. Dibao is seeking to acquire 100% of the management contract onthis mine. This coal mine is 90 KM away from the Xinjiang capital Urumqi with the following

details:


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The advantage of this mine is based on the following factors:

Low transportation cost The coal mine is 8KM apart from railway station and

the transportation cost is 8Yuan/ton.

Low extraction cost due to open pit mine, the extraction cost is 20 Yuan/ton.

Selling price 130 Yuan/ton at pit (RMB 150 RMB 20 Extraction)

Production starting 2009/11 Coal 2,00,000 ton/year, 170,000 ton/month

Monthly revenue 170,000 ton x approximately 120 Yuan

=20,400,000 Yuan (US3 million)

Monthly gross profit 20.4million Yuan ( US$3 million)

Reserves 60 million ton

Term 3 years until June 2012 renewable for another 3 years


extraction cost and RMB10 as the local transportation cost that we need to take into

consideration when we deal with the customers.


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This is one of the Mines identified for an Extraction Arrangement by theCompany. There is no assurance it will be able to enter into sucharrangement.

Mines Xinjiang Dibao Mining Ltd Has an understanding to Acquire: Xinjiang Shanshan

County Kanerqi Lead/coal Mine

Xinjiang Shanshan County Kanerqi lead/coal mine is located at Xinjiang Shanshan County.

Dibao is seeking an Extraction Arrangement for 100% of the rights to this mine. The mining

area is 130KM away from the Shanshan County train station. This mine have a total area of

28.16 square kilometers with two exposed coal mine belts, approximately 5000 meters long, and

50 300 meters wide

The advantage of this mine based on the following factors:

Transportation cost: The mine is 130KM apart from railway station and the transportation

cost is 30Yuan/ton.

Low extraction cost: due to open pit mine, the extraction cost is 20 Yuan/ton.

Selling price: Humic acid 50 Yuan/ton, coal 130 Yuan/ton at pit

Production: Humic acid 300,000 tons/year, 25,000 tons/months,

Coal 600,000 tons/year, 50,000 tons/month

Monthly revenue:

o Humic acid 25,000 ton x 30 Yuan =750,000 Yuan

Coal 50,000 ton x 100 Yuan =5,000,000 Yuan

Total 750,000 +5,000,000 =5,750,000 Yuan (US0.84million)

Monthly gross profit: 5.75. million Yuan ( US$0.84 million)

Reserves: Humic acid 3 million ton coal 90 million ton

Term: 10 years until May 2018


extraction cost and RMB30 as the local transportation cost that we need to take into

consideration when we deal with the customers.


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Legal Environment and Regulatory Overview:

Coal Law:

On August 29, 1996, the PRC Government promulgated the Peoples Republic of China Coal

Law (the Coal Law), which became effective on December 1, 1996. The Coal Law sets forth

requirements for all coal mines, including state-owned mines and privately owned mines, mainly

providing for resource exploitation planning, approval of new mines, the issuance of mining and

safety production permits, implementation of safety standards, processing of coal, businessmanagement, protection of mine areas from destructive exploitation, and safety protection for

miners and administrative supervision.

Mining activities in the PRC are also subject to the Peoples Republic of China Mineral

Resources Law (Mineral Resources Law), which was promulgated by the PRC Government on

March 19, 1986 and amended on August 29, 1996. The Mineral Resources Law regulates any

matters relating to the planning or engaging in the exploration, exploitation and mining of

mineral resources. According the Mineral Resources Law all mineral resources, including coal,

is owned by the state. Except under limited circumstances, any enterprise planning to engage in

the exploration, exploitation and mining of mineral resources must first apply for and obtain

exploration rights and mining rights before commencing the relevant activities.

Licensing and bonding requirements:

Prepaid mining rights represent the amount the Company will pay as consideration for Extraction

Arrangement and represents a right to extract a certain amount of coal underlying a mining right.

In the case of the YSY Agreement, our rights are based upon 1,500,000 MT. annually. We may

be liable to pay YSY at the rate of RMB 3 per ton if we exceed 1,500,000 tons as contemplated.

YSY in turn will have to pay the government for any overage of the amounts listed in the initial

extraction license issued by the government.


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Health, workplace, or environmental regulations:

The PRC adopted extensive environmental laws and regulations that affect the operations of the

coal mining industry. The outcome of environmental liabilities under proposed or future

environmental legislation cannot be reasonably estimated at present, and could be material.

Under existing legislation, however, Company management believes that there are no probable

liabilities that will have a material adverse effect on the financial position of the Company.

Annually NHM is subject to inspection, including a safety examination. The Government

charges a fee for such inspection. NHM has passed an annual safety inspection up to 2009.

Fees and Taxes:

There are various taxes and fees that are imposed upon coal producers in Xinjiang Province, as

well as statutory reserves which coal producers required to set aside. Under the YSY Agreement

such taxes, fees and statutory reserves as applicable are to be paid by YSY to the owner which is

ultimately responsible.

The Company is subject to corporate income taxes and other statutory taxes subject to allcorporations on profits, VAT and employee emoluments. VAT taxes are already figured into the

price of the product and all revenue figures in the financial forecasts and pro-forma income

statements are net of VAT taxes. Corporate income taxes for WOFE structures are waived for

the first 2 years of the Companys operation.

National taxes are broadly as follows:

Item Base Rate

Corporate income tax Taxable income 12.5-25.0%VAT Revenue from domestic 17.0%


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Other issues:

Personnel

NCCC does not foresee a need to have mine employees directly since most of the labor will be

contracted from independent providers but it will be a necessity to employ around 60-70

personnel at the Dibao operating company. Employees of the Company will typically be skilled

and professional individuals whose talents in such areas as logistics, bookkeeping, mine

management will be utilized in the management of the Company

Transportation:

The Company expects that nearly all of its net sales will depend upon coal transported by the

Chinese national railway system. As the railway system has limited transportation capacity and

cannot fully satisfy coal transportation requirements, discrepancies between capacity and

demand for transportation exist in certain areas of the PRC. We plan to utilize the national rail

system to transport coal to our customers. No assurance can be given that we will be allocated

adequate railway transport capacity or acquire adequate rail cars, or that we will not experienceany material delay in transporting our coal as a result of insufficient railway transport capacity

or rail cars.

NCCCs mines depend on a single transportation carrier such as China Rail or a single mode of

transportation in addition to the trucking from the mine to the railway platform. Disruption of

any of these transportation services due to weather-related problems, flooding, drought,

accidents, mechanical difficulties, strikes, lockouts, bottlenecks, and other events could

temporarily impair our ability to supply coal to our customers. The transportation providers may

face difficulties in the future that may impair our ability to supply coal to our customers,

resulting in decreased revenues.

Suppliers

The Company will not directly mine coal at any of the properties. Instead it will engage

independent contractors to perform both the mining and truck transportation to the railroad.

These independent contractors are required to provide all required labor, supplies and equipment

for the tasks that they are contracted to perform.


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Credit Policies

Coal is paid for at point of purchase or in advance. There is no need to extend credit to

customers.


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VI. Management and OrganizationCurrent Officers, Directors and Key Employees:

The Company has no agreements for compensation for its officers and directors. It, however,

contemplates that such compensation shall not exceed US$1.5 million for the first 12 months.

The following list contains the name, and positions the directors of the Company and where

officers indicated as of the date of this Business Plan. Their business background is described

below.

TONY K. SO: Chairman of the Board and Chief Executive Officer (CEO)

DAVID A. BIZZARO Vice President and CFO,

ZHANG ZONG LUN: Vice President, Mining operations,

LIANG JIAN XIONG: Interim Treasurer,

Vice President, China Relationship and China Legal Advisor,

GLEN HENRICKSEN Company Secretary

Bios:

TONY K. SO: Chairman and CEO has 20 years experience in tax, legal, corporate financing

and structure funding and venture capital investment managing $750MM, Tony has over 20

Years managing international operations and global business development including being the

General Manager of Wang managing the Asia operations for 18 countries in Asia including but

not limited China, Japan, Korea, Taiwan, Singapore etc. As the General Manager for Wang, one

of the tasks was managing a Venture fund of US$750MM invested in the High-tech industry and

teaming up with Taiwan Government to invest in Taiwan Companies focusing for International

business development operations such as PC manufactures. He has 20+ years business

relationships with senior Government officials in China.


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In 1994 Tony started developing business operations in China focused on energy and naturalresources as a Natural Resource Trader for Oil and Coal. In 2001 Tony further developed the

business in the mining industry and invested in couple of mines in China. In 2007, Tony started a

business relationship with Dibao as the consultant for business development and become the

President and CEO of Dibao in 2008 managing couple of coal mines operations in China. In

addition to the Energy and Natural Resources industry, Tony has been the CEO and CFO for

EFT Biotech Holdings Inc. (EFTB) in charge of the reverse merger of HumWare Media Corp in

November 2007. In 2008 Tony has successfully placed the private placement for US$57 million

for EFTB which also including an option of another US$57 million. In 2009 Tony was also

involved in the business development for Buckman, Buckman & Reid assisting the firm with the

start-up of their China operations and introducing 30,000+customers to sign-up for securities

accounts. Tony is focusing in Energy and Natural Resource Industry and will continue by using

his Chinese Government business relationships and international business development

experiences to build NCCC as the major Energy and Natural Resource force in China.

DAVID A. BIZZARO: Vice President and CFOhas 20 years of hands on operational finance

experience helping small, mid and large cap companies drive profitable growth into international

markets. A highly skilled international finance professional, David has held key leadershippositions in the U.S., Asia, Europe and Latin America with world-class multinational companies

including NCR, Sprint/Global One, CIENA, AVAYA and ICT Group. Most recently Mr.

Bizzaro served as CFO for Rigid Building Systems, a $100 mm manufacturer of pre-engineered

steel buildings. Prior to that he served as Vice President of International Operations at High

Street Partners, a global professional services firm where he successfully expanded HSPs

footprint throughout Asia, Europe and Latin America while advising CFOs of venture backed

and publicly traded companies on complex international expansion issues. Prior to joining High

Street Partners, Mr. Bizzaro was the Sr. Vice President of International Finance at ICT Group, a

$500 mm publicly traded leader in the outsourced call center and BPO space. Earlier in his

career, David was based in Hong Kong as the Asia Pac CFO for CIENA Corporation, and he

spent five years in Europe with NCR Corporation where he held key financial management roles

of increasing responsibility in Madrid and Amsterdam. David also gained valuable Latin

America experience with Sprint/Global One, where he served as Regional Finance Manager for

the Americas Division. Having lived and traveled extensively in Asia, Europe and Latin

America, Mr. Bizzaro is fluent in Spanish and French and has a working knowledge of Mandarin

and Portuguese. A Certified Management Accountant (CMA), he holds a Masters of

International Business Studies (MIBS) from the University of South Carolina and a B.A. in


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Economics and Spanish from Beloit College in Wisconsin. Mr. Bizzaro currently resides in theNew York metropolitan area.

ZHANG ZONG LUN: Vice President, Mining operations, Mr. Zhang is engaged in the mineral

exploration and mining management area for the last 10 years in Xinjiang area managing 10+

coal mines. Mr. Zhang has the rich dressing technology with to practice the ore experience, is

familiar with the minerals enterprise's operation and has a strong business relationship with the

local Xinjiang Government officials and ministry of mining.

LIANG J IAN XIONG: Vice President, China Relationship and China Legal Advisor. Mr.

Liang is a professional Lawyer practicing business law in China for over 20 years. In the recent

five years has set up new ventures in 4 different industries and Trade enterprises, with working

experience in assets reorganization, financing, and acting as an advisor for overseas enterprises

entering into the China market. Mr. Liang has the 20 years working experience in developing

Government relations and managing the Government network.

GLENN HENRICKSEN: Company Secretary, Glenn is a founding partner of CIF Hong Kong

Limited and Asia Technology Management (ATM), consulting firms that advise corporations,

banks and non-bank financial institutions in the Asian and EMEA region. Glenn has served as

interim CFO for a Shenzhen based Investment Bank and a start-up Bulletin Board NASDAQ

listed company that operates in China, Glenn was hired by the African Development Bank to

start the Banks fixed rate investment unit. Glenn was the Hong Kong based risk manager for

securities dealer Bear Stearns for all Asian derivative, credit and currency businesses as well as

global responsibilities at the firm for high-grade corporate bonds, convertible and asset swaps

books. Prior to Bear Stearns, Glenn was a Principal with BlackRock Financial Management

where he managed portfolios in excess of US$10 billion in corporate bond and securitized assets

portfolios. Glenn also held a portfolio management position with New York Life, was a

corporate bond trader with Prudential Bache Securities and an analyst with Value-Line

Investment survey earlier in his career. Glenn received a BS/MBA degree from State University

of New York at Buffalo in 1982. He is a US citizen, permanent resident of Hong Kong and has

some communication skills in Mandarin Chinese and French.


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VII. Startup Expenses and CapitalizationThe Company is seeking funding of US$ 6 million to be allocated as follows:

1. US$ 3 million will be allocated as consideration for Extraction Arrangements that we will

acquire. An agreement for NHM has already entered into with YSY for the with the

license fee of RMB13,500,000 (US$2 million)), a US$500,000 initial deposit has already

been paid by Tony So. The deposit is considered a loan from Tony So and will be paidback upon raising funds. This license fee is based on the annual extraction of 1.5 million

tons of coal with a RMB 3 Yuan per ton license fee for a period of 3 years. (3 years x

RMB 3 per ton x 1,500,000 tons=RMB 13,500,000 =US$2.0 million). US$1 million

will be allocated for license fees for rights for another of the other coal mine that we plan

to acquire as discussed in the body of this Business Plan.

2. US$ 1 million may be used to acquire up to 2 coal trading operations, one in Xinjiang and

the other in Jiangmen as discussed in the of this Business Plan.

3. US$ 1 million is allocated for consideration for obtaining additional loading platforms,

4. Over US$820,000 will be used for expenses of this offering, with the balance used for

general corporate purposes, including professional fees covering professional services

such as legal, audit and investment banking and a portion of the costs in connection with

the possible acquisition of a public shell.


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VIII.Financial Plan

The income statement for the mine and trading operations are illustrated below:

Our Fiscal year will start from March 1 and end at the last date of February.

Year 2010 will be the year from March 1, 2010 to February 28, 2011

NCCC Forecast FinancialStatement Coal Operation USD '000Exchange rateUS$1.00=RMB6.83 2010 2011 2012 2013 2014

Profit & Lost - Mine Operation

Production Capacity (MT) 1,050,000 2,070,000 3,600,000 3,870,000 4,875,000

Price/Ton (RMB) $150 $150 $150 $150 $150

Sales in RMB ('000) $157,500 $310,500 $540,000 $580,500 $731,250

Revenue (RMB '000) - MineOpn $157,500 $310,500 $540,000 $580,500 $731,250Revenue (USD '000) - MineOpn $23,060 $45,461 $79,063 $84,993 $107,064

Extract RMB20/ton $21,000 $41,400 $72,000 $77,400 $97,500Local Transportation

RMB30/ton $31,500 $62,100 $108,000 $116,100 $146,250

Total COGS (RMB '000) $52,500 $103,500 $180,000 $193,500 $243,750

Total COGS (USD '000) $7,687 $15,154 $26,354 $28,331 $35,688

Gross Profit USD '000 $15,373 $30,307 $52,709 $56,662 $71,376

Expenses USDManagement Cost USD

'000 (10%) $1,537 $3,031 $5,271 $5,666 $7,138Total Operating ExpensesUSD '000 $1,537 $3,031 $5,271 $5,666 $7,138

Net Income/(Loss) EBITDAUSD Coal Operation $13,836 $27,277 $47,438 $50,996 $64,239


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NCCC Forecast Financial Statement -Exchange rateUS$1.00=RMB6.83 2010 2011 2012 2013 2014

Profit & Lost - Trading Operation

Contract on hand 1,050,000 2,070,000 3,600,000 3,870,000 4,875,000

Sales in RMB per ton $660 $660 $660 $660 $660

Revenue (RMB '000) - TradingOpn $693,000 $1,366,200 $2,376,000 $2,554,200 $3,217,500

Revenue (USD '000) - TradingOpn $101,464 $200,029 $347,877 $373,968 $471,083

COGS (RM '000B)

Cost - Coal $157,500 $310,500 $540,000 $580,500 $731,250Cost - Railway Mgn fee

RMB150/ton $157,500 $310,500 $540,000 $580,500 $731,250

Cost - Railway TransportRMB250/ton $262,500 $517,500 $900,000 $967,500 $1,218,750

Total COGS (RMB '000) $577,500 $1,138,500 $1,980,000 $2,128,500 $2,681,250

Total COGS (USD '000) $84,553 $166,691 $289,898 $311,640 $392,570

Gross Profit USD '000 $16,911 $33,338 $57,980 $62,328 $78,514

Expenses USD '000Commission USD '000(5%

Revenue) $5,073 $10,001 $17,394 $18,698 $23,554

Management Cost USD'000(10%) $1,691 $3,334 $5,798 $6,233 $7,851

Total Trading ExpensesUSD'000 $6,764 $13,335 $23,192 $24,931 $31,406

Net Income/(Loss) EBITDA USD

'000 Trading Operations $10,146 $20,003 $34,788 $37,397 $47,108

NCCC Forecast FinancialStatement USD '000Exchange rateUS$1.00=RMB6.83 2010 2011 2012 2013 2014

Total Income/(Loss) EBITDAUSD '000 Consolidated $23,982 $47,280 $82,225 $88,392 $111,347


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Key Assumptions Coal Mine Operations:

Assumes completion of NHM and full production within one year and proposed total of 3

additional Extraction Arrangement for coal mines acquired in First, 18th and 43th month

after funding,

,

Price per ton remains at RMB 150 (US$22.0) @ 6,000 BTU for NHM. Management

believes that this is a conservative figure despite prices that have traded higher recently.

The current market for coal @6,000 BTU is RMB 200 (US$29.28) per ton or higher

depending upon the BTU rating,

Assumes that the company is successful obtaining at least 1 more loading platform

initially and ultimately obtain all 3 of the contemplated new loading platforms for

operations in subsequent years. Management has conducted negotiations with the

Railway authorities and is confident that 3 additional platforms can be fully secured.

The company can generate greater profits if all 3 of the contemplated new loading

platforms can be secured. Management has conducted negotiations with the Railwayauthorities and is confident that 3 additional platforms can be fully secured,

Independent Contractor costs for local transportation and extraction as well as

management and other costs do not change.

Key Assumptions Coal Trading Operations:

Price based on RMB 660 Yuan per ton which is the current market price and assumes

sales consistent with past,

The completion of acquisition of two coal trading companies,

Assume no changes to the RMB/US$ exchange rate.


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Projected Cash Flow

2010 2011 2012 2013 2014

Opening Balance $0 $10,779 $25,819 $56,532 $82,229

Cash Inflow

Funding $6,000 $0 $0 $0 $0

Mining Oper $13,836 $27,277 $47,438 $50,996 $64,239

Trading Oper $10,148 $20,003 $34,788 $37,397 $47,108

Others $0

Total Inflow $29,984 $47,280 $82,226 $88,393 $111,347

Cash Outflow

Funding Cost $800 $0 $0 $0 $0

Acquire Coal Mine $5,000 $5,000 $5,000 $10,000 $20,000

Acquire Oper $1,000 $500 $1,000 $1,000 $5,000

Expenses $1,320 $1,800 $2,400 $5,000 $6,000

Interest $0 $0 $0 $0 $0

Professional Fee $400 $1,300 $2,000 $2,500 $3,000

Dividend $10,685 $23,640 $41,113 $44,196 $55,674

Others $0 $0 $0 $0 $0

Total Outflow $19,205 $32,240 $51,513 $62,696 $89,674

Cash Flow (+or -) $10,779 $15,040 $30,713 $25,697 $21,673

Closing Balance $10,779 $25,819 $56,532 $82,229 $103,902

NCCC Cash Flow Forcast

NCCCs cash-flow is forecast to be positive after initial funding of US$ 5 million, the investment

of those funds and the operation of the facility to the benefit of the Company. Management does

not expect that there will be a need to raise additional funds and that all acquisitions and capital

investments can be made from internally generated funds. The Companys WOFE intends toenter into a management agreement with Dibao pursuant to which the WOFE will charge

management fees to the operating Company. This approach is designed to minimize the tax

burden at each level of the operation and to provide sufficient cash to make dividend payments.

There is no assurance that such a strategy will result in our ability to shield income or minimize

taxes over the whole corporate structure


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IV APPENDIX A

RISK FACTORS

You should carefully consider the risks described below together with all of the other

information included in this report before making an investment decision with regard to our

securities. The statements contained in or incorporated into this offering that are not historic

facts are forward-looking statements that are subject to risks and uncertainties that could cause

actual results to differ materially from those set forth in or implied by forward-looking

statements. If any of the following risks actually occurs, our business, financial condition or

results of operations could be harmed. In that case, the value of our common stock could decline,

and you may lose all or part of your investment.

WHILE THE COMPANY BELIEVES ITS FORECASTS WILL BE REALIZED, THE COMPANY MAY NOTBE ABLE TO FUFILL ITS PLANS OR, IF IN THE BEST INTERESTS OF THE COMPANY IT MAY ELECT

TO CHANGE ITS PLANS.

While the Company is working diligently to accomplish its goals and believes they will be

achieved, there is no assurance that we will be able to fulfill all the actions set forth in the Plan.

The Company may not be able to effect the additional acquisitions, increase production at

NHM, or enter into additional sales agreements. The failure to enter into one more transactions

may result in a major alteration of our plans set forth in the Plan and our financial forecasts. The

Plan and forecasts may also be affected by the occurrence of unforeseen circumstances,

including, but not limited to, the factors described under Forward Looking- Statements and the

Risk Factors herein. The Company may elect at any time to change any aspect of the Plan, if

management in good faith believes it is in the best interest of the Company to do so.

THERE IS NO ASSURANCE THAT THE COMPANY WILL COMPLETE ADDITIONAL ACQUISITIONS.

The Company contemplates, and its forecasts reflect, the acquisition of additional extrac

Documents

NCCC Business Plan(2)