SinoCoking to Produce Hydrogen at Syngas Facilities for Sale to Shenma Industry Co Ltd

SinoCoking Coal and Coke Chemical Industries, Inc.

, a vertically integrated producer of clean energy products located in Henan Province, today announced it has signed an agreement to provide hydrogen, a byproduct from the production of syngas, to Henan Province-based Shenma Industry Co Ltd (Shanghai Exchange:600810). Hydrogen production is scheduled to begin later this year and will be generated at a facility located alongside SinoCoking's aboveground syngas facilities. The company said it will employ the Pressure Swing Adsorption ("PSA") process to separate hydrogen from syngas. The hydrogen will be purified by SinoCoking to meet Shenma's requirements, including quality in excess of 99.96% purity, a production quantity of 12,000 cubic meters per hour, and an anticipated market price of RMB 1.5 per cubic meter. SinoCoking expects the new facility for the hydrogen project to be completed in October 2015 at a cost of approximately $11 million, with about $6.5 million of that amount to be financed through a credit line from the Pingdingshan Rural Credit Union. Based on current market prices for hydrogen, management estimates that SCOK will recover its construction costs within the initial nine months of operation. SinoCoking had previously announced that current production of 25,000 cubic meters of syngas per hour at its aboveground facility is expected to double shortly with the addition of a second facility at the same site. Together, output from these facilities will produce the initial 12,000 cubic meters per hour of hydrogen. However, the company added that its longer-term plan is to produce hydrogen "on a much larger scale" from its Underground Coal Gasification ("UCG") syngas project currently under development and scheduled to begin operations, along with the second aboveground facility, by the end of March 2015. The testing period for the underground facility should be completed during the month of April. SinoCoking said it expects that hydrogen to be produced at its aboveground and underground syngas facilities will be utilized in hydrogen fuel cells and supplied to regional hydrogen refueling stations supported by the Chinese government through its China 2014-2020 Energy Development Plan. "We are excited that the hydrogen generated from our burgeoning syngas program can be used by industrial customers like Shenma Industry Co Ltd," said SinoCoking Chairman and CEO Mr. Jianhua Lv. "With the success of our current technology-driven projects, SinoCoking will accelerate its transition from a traditional coal and coking company to a major source of clean energy and key supporter of China's clean energy initiatives." Shenma's Chairman Mr. Wang Liang also commented, "We look forward to a long-term relationship with SinoCoking, as it will provide our company with a local and reliable supply of high-quality hydrogen. Our increased use of hydrogen as an alternative to fossil fuels will continue to benefit our customers and help reduce environmental pollution." For additional information on SinoCoking, please go to http://www.scokchina.com or refer to the company's periodic reports filed with the Securities and Exchange Commission (http://www.scokchina.com/sec-filings.html). Investors wishing to receive SinoCoking's corporate communications as they become available may go to the company's Investor Relations site (http://www.scokchina.com/corporate-overview.html) and register under Email Alerts. Also, investors may submit questions directly to Mr. Lv and his staff to receive non-confidential information about the company's operations and products at the company's "Ask Management" blog (http://www.scokchina.com/ask-management.html).