As approved by the second extraordinary meeting of the Board of the Company on November 11st,2006,the Company purchased 98% share of Shanxi NengHua with RMB33.34 million of its self-owned.As approved by the Manager Meeting of the Company held on January 9th 2007,the Company purchased 2% share of Shanxi NengHua from one of its subsidies,Lunan Chemical Factory,with RMB 14.966 million of its self-owned.

        Shanxi NengHua has 83.31% Share of Shanxi Heshun Tianchi Energy Co.,Ltd.Shanxi Heshun Tianchi Energy Co.,Ltd.was mainly in change of the operation of Tianchi Coal Mine which started formal operation in November 2006.Shanxi NengHua has 99.85% Share of Shanxi Tianchi Chemical Co.,Ltd.Shanxi Tianhao Chemical Co.,Ltd was mainly in charge of the establishment and operation of a 0.1 mt/a methanol project.The methanol project will start into operation in the second quarter of 2008.

        Shanxi Heshun Tianchi Energy Co.,Ltd.is the first key project and the first pair of coal mines developed by Yankuang Group in Shanxi Province. The coal mine is located in Guyaokou Village Weima Town,17km to Heshun County ,the east border of Shanxi Province. The coal mine enjoys convent of transport with 3km east to No207 national road,16km northeast to Huili railway station of Sheyang and 3km south to Hanwang railway station of zuoqun County.The coal field area is 19.8km2,and its coal production is famous of premium quality with high CV and low ash content. the mine is an underground coal mine and adopted Comprehensive mechanized Top Coal Caving Method(综采放顶煤技术).

        Tianchi Coal Mine has started into operation in November 2006,and totally produced 1.30 million tones of raw coal by the end of December 31st,2007.Tianchi Coal Mine has 29.20 million tones of exploitation reserves.