March 15, 2010 (FinancialWire) — Yongye International, Inc. (NASDAQ: YONG), a plant nutrient maker, said that its operating entity in China, Yongye Nongfeng biotechnology, has signed an agreement with a local supplier of humic acid to purchase an undeveloped lignite coal resources project in Inner Mongolia, PRC.

The agreement with Wuchuan Shuntong Humic Acid Trading Co., Ltd, provides for the acquisition of Shuntong’s development rights to a currently undeveloped lignite coal resource project located in Wuchuan County, a suburb located outside the city of Hohhot, Inner Mongolia, where Yongye’s major operations reside in the PRC.

Yongye said that, according to a third party valuation report, the project area is estimated to contain over 40 million cubic meters of surface level lignite coal, which it said can supply the company’s long term needs.

According to the agreement, Nongfeng will pay Shuntong RMB240 million (worth around $35.1 million) to acquire the development rights for this project. The acquisition will be completed after Nongfeng makes full payment to Shuntong and receives in return the full, unencumbered title to the development rights.

Zishen Wu, the company’s CEO, said “Acquiring this lignite coal resource is of great strategic importance to us and is in line with our overall plan. In our operations, humic Acid, which is extracted from lignite coal, is the most significant cost component and it is important to secure this lignite coal resource at a cost effective price.”

He added that, once the acquisition closes, Yongye’s Shengmingsu business won’t be subject to market price fluctuation of this key raw material.

Yongye said it also plans to build a new manufacturing facility in an economic development zone which is in close proximity to the coal project. The factory is to be capable of extracting humic acid from lignite coal and producing 20,000 tons per year of the company’s liquid plant product and 10,000 tons per year of its powder animal product.

China-based Yongye International is engaged in the development, manufacturing, distribution and sales of Shengmingsu brand plant and animal nutrient products.

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