JYW Capital Corp. - Proposed Qualifying Transaction



    
    Agreement to acquire all of the shares of Hong Kong incorporated
    Golden Hill International Holdings Limited, a Chinese-based energy
    company
    

    VANCOUVER, June 25 /CNW/ - JYW Capital Corp. ("JYW") (JYW.P/TSX-V) is
pleased to announce the execution of an agreement in principle dated June 16,
2009 to acquire all of the shares of a private company, Golden Hill
International Holdings Limited ("Golden Hill"), incorporated in Hong Kong.
    The terms of JYW's proposed acquisition are subject to TSX Venture
Exchange (the "Exchange") acceptance and, if accepted for filing, this
acquisition will constitute JYW's "Qualifying Transaction" as that term is
defined in Exchange Policy 2.4. Upon the completion of this acquisition it is
expected that JYW will be listed as a Tier 2 oil & gas issuer.

    Property Highlights

    Golden Hill advises as follows with respect to its property and business:
    Golden Hill, through its Chinese subsidiary Xinjiang Huamei Mining Co.,
Ltd. of Hami City, Xinjiang Uygur Autonomous Region, China ("Huamei"), and
with its 25% joint venture Chinese Partner, Hami Zhongmei Energy Co., Ltd.
("Zhongmei") will be engaged in the development of primary energy assets in
China, primarily coalbed methane ("CBM") and coal production. Golden Hill,
Huamei and Zhongmei are recently formed corporate entities with no prior
history or operations. Golden Hill's first unaudited annual financial
statements, prepared as at June 30, 2008 (the most recent date for which such
financial statements have been prepared), are summarized as follows:

    
    -------------------------------------------------------------------------
    In Hong Kong Dollars ($HKD) - current conversion approximately 1 $HKD to
    $0.1467 Canadian Dollars
    -------------------------------------------------------------------------
                                       Assets         Current
      Revenue        Net Loss       (all Cash)    Liabilities         Equity
    -------------------------------------------------------------------------
       20,812       5,008,619       8,174,783          59,588      8,115,195
    -------------------------------------------------------------------------
    

    Golden Hill's primary asset is a CBM agreement providing a CBM mining
right to approximately 1,941 square kilometers (net) of prospective
coal-bearing land south of the city of Hami, China. The agreement also
provides for an application priority for all resources other than CBM in the
permit area. Huamei and its partner together hold a straight 100% working
interest in this CBM mining right.
    This CBM mining right is supported by a geological report titled
"Technical Report on CBM in the Eastern Dananhu Coalfield, Hami Prefecture,
Xinjiang Province, People's Republic of China" (the "Report") prepared by
Norwest Corporation, of Calgary, Alberta dated May 29, 2009. The Report has
been prepared in compliance with the provisions of National Instrument 51-101,
"Standards of Disclosure for Oil and Gas Activities" ("NI 51-101"). The author
of the Report is G. R. Jordan, P.Geol., who is a qualified person as defined
in NI 51-101.
    The Report contains the design of a drilling and core testing program
that will allow CBM resource estimates to be made. It is also designed to
provide engineering data concerning the nature of the reservoir so that an
appropriate production methodology can be designed and implemented. The
drilling and testing program is designed to be completed over three years in
separate phases, but it will also be possible to complete this work in a
shorter time period if desired. The estimated total cost of the three phases
of drilling amounts to $3.55 million CAD.
    The coal has not been properly tested for gas content. The current
program will achieve this, although based on coal quality and the Kim Equation
the Norwest report estimates an average gas content of 235 scf/t. Two Chinese
government geological survey branches have produced reports describing the
coal and other rock units in the Dananhu basin. These reports were prepared
many years ago and were aimed at the development of coal mining and electric
power generation. Such projects were not started in the past, waiting on
transmission and gas pipelines, now in place, and the establishment of a
high-capacity rail system, which is currently under planning and construction.
The coal seams are located within the Xishanyao Formation which is of Jurassic
age. The J2XA, J2XB, and J2XC Members have average cumulative coal thicknesses
of 4.04 m, 22.0 m and 4.58 m, respectively, for a total average cumulative
coal seam thickness of 30.98 meters.

    Acquisition Highlights

    The terms of the Qualifying Transaction are as follows: JYW will issue
42,251,892 common shares in its capital stock to the shareholders of Golden
Hill for all of the 42,251,892 common shares of Golden Hill currently issued
and outstanding, on the basis of one share of JYW to be issued for each share
of Golden Hill. There are currently 6,160,000 shares of JYW issued and
outstanding which would result in JYW having 48,411,892 common shares issued
and outstanding following the closing of the Qualifying Transaction not
including the completion of the concurrent financing referred to below, and
57,611,892 common shares issued and outstanding following the closing of said
concurrent financing. Golden Hill further understands that some or all of the
shares of JYW to be issued to the shareholders of Golden Hill may be subject
to both the escrow provisions provided in Exchange Policy 2.4 and the trading
restrictions as provided in applicable securities legislation. The transaction
is an Arm's Length Qualifying Transaction as defined in Exchange Policy 2.4,
the closing of which, in conjunction with the closing of the concurrent
financing, will result in Lishe Feng (see particulars below under "Officers,
Directors and Insiders") becoming a "control person" of the Resulting Issuer
(i.e. - the holder of more than 20% of its voting securities), and as such
will be subject to the approval of JYW's shareholders (which it intends to
obtain by obtaining consents from the holders of in excess of 50% of its
currently issued and outstanding share capital, so as to avoid JYW having to
call a Special General Meeting of its shareholders for this purpose). Upon the
closing of the Qualifying Transaction, JYW expects to change its name to
"China Coal Corporation", which has been reserved for this purpose. (There has
been no deposit made by JYW to Golden Hill in connection with the proposed
Qualifying Transaction.)

    Private Placement

    Closing of the Qualifying Transaction will be subject to JYW also closing
a concurrent financing by way of private placement, to consist of the sale of
9,200,000 units at a price of $0.25 per unit to raise gross proceeds of
$2,300,000, with each unit to consist of one common share of JYW and one-half
(1/2) of a non-transferable share purchase warrant, with each whole warrant to
entitle the holder to purchase one additional common share of JYW at a price
of $0.50 for a period of two years from closing. Golden Hill agrees that it
will be its responsibility to ensure that the concurrent financing is
completed. The net proceeds of the financing will be used to fund the drilling
and test program described above, make required payments under permit
agreements, and provide JYW with sufficient working capital to satisfy
operating and regulatory requirements. All securities issued pursuant to this
private placement, including any securities issued in payment of commissions
or finders' fees, will be subject to a four-month hold period in Canada,
commencing at closing of the private placement. The private placement will be
brokered by Union Securities Ltd.

    Sponsorship of Qualifying Transaction

    Union Securities Ltd., of Vancouver, B.C., Canada, subject to its
completion of satisfactory due diligence, has agreed to act as sponsor in
connection with the transaction. An agreement to sponsor should not be
construed as any assurance with respect to the merits of the transaction or
the likelihood of completion. Union Securities Ltd., as sponsor, will earn
$30,000 minimum in corporate finance fees, 120,000 shares of JYW, plus costs,
as well as 5% in cash on any funds raised by it under the private placement,
plus finder's warrants equal to 10% of the number of private placement units
it may be responsible for placing.

    Officers, Directors and Insiders

    The key vending shareholders of Golden Hill are Lishe Feng of Beijing,
China and Raymond Fong of Calgary, Canada. Following the completion of the
Qualifying Transaction, the officers, directors and insiders of the "Resulting
Issuer" (as defined in Exchange Policy 2.4) will be:

    Lishe Feng, President and Director - Mr. Feng, of Beijing, China, is a
self-employed businessman through interests in multiple businesses located
primarily in China. Mr. Feng obtained a bachelor of mathematics degree from
Xinjiang Education Institute in 1982, and a Master of Economics degree from
Cheung Kong Graduate School of Business thereafter. Mr. Feng is and has been a
director and an officer of numerous companies, including Xinjiang First
Automotive Works (FAW) Corporation, Xinjiang Shawan Coal Mine, and Xinjiang
Gold Cattle (group) Bio Inc. He has been involved with numerous government and
industry associations, including the National Cattle Industry Association
(CAAA) in China.

    Raymond Fong (P.Eng.), Co-Chief Executive Officer and Director - Mr.
Fong, of Calgary, Canada, is a self-employed businessman through interests in
multiple businesses globally. Mr. Fong is a director for Sunshine Oilsands
Ltd. in Canada. He has also been an officer and director for Stealth Ventures
Ltd., Zapata Capital Inc., Ultra Capital Inc., Ag Growth Inc., and United
Rayore Gas Limited, over a career that spans 40 years in business.

    
    Mark J. Roth, Co-Chief Executive Officer, Chief Financial Officer and
    Director
    

    Mr. Roth, of Calgary, Canada, has been an officer of Stealth Ventures
Ltd. (SLV/TSX.v) from June 2005. Prior to that he was a Unit Manager and
Senior Account Executive with RBC Bank in Calgary (Energy). Mr. Roth is a
graduate of Queen's MBA program (1992), and prior to that earned an
undergraduate degree at the University of Alberta (Economics). Mr. Roth serves
on three Boards in Canada - as Director of a GE Capital Company, a private
holding company, and an independent national brokerage/corporate finance
company. In Hong Kong he served on the Board of Golden Hill. Mr. Roth has
almost 20 years of experience and education in the field of finance in many
industries, concentrating in energy.

    Alvin Jackson (B.Sc., P. Geo), Director - Mr. Jackson, of Vancouver,
Canada, is a professional geologist and a member of the Professional Engineers
and Geoscientists of BC. He is currently the Chairman and Chief Executive
Officer of Red Dragon Resources Corp., and also acts as Chairman and director
for Western Standard Metals. He also currently holds the position of director
in Gold-Ore Resources Ltd., Canasil Resources Inc., Coro Mining Corp,
Riverstone Resources Inc. and Aquila Resources Inc. Mr. Jackson is the former
President of Eurozinc Mining Corp.

    Glenn R. Yeadon, Secretary - Mr. Yeadon, of Vancouver, Canada, is a
Barrister and Solicitor in British Columbia, practicing mainly in the field of
securities law. He has been associated in the practice of law with Tupper
Jonsson & Yeadon and predecessor firms since 1980. Mr. Yeadon obtained a
Bachelor of Commerce degree from the University of British Columbia in 1975
and a Bachelor of Laws degree from the University of British Columbia in 1976.
Mr. Yeadon has been a director and an officer of a number of reporting issuers
for over 20 years.

    Trading Halted

    In accordance with Exchange policy, JYW's shares are currently halted
from trading and are expected to remain so until the completion of the
Qualifying Transaction. (Other than as elsewhere disclosed herein, there are
no significant conditions to the completion of the Qualifying Transaction.)

    Completion of the Qualifying Transaction is subject to a number of
conditions, including, but not limited to, Exchange acceptance and, if
applicable pursuant to Exchange requirements, majority of the minority
shareholder approval. Where applicable, the transaction cannot close until the
required shareholder approval is obtained. There can be no assurance that the
transaction will be completed as proposed or at all.
    Investors are cautioned that, except as disclosed in the management
information circular or filing statement to be prepared in connection with the
Qualifying Transaction, any information released or received with respect to
the Qualifying Transaction may not be accurate or complete and should not be
relied upon. Trading in the securities of a capital pool company should be
considered highly speculative. The TSX Venture Exchange Inc. has in no way
passed upon the merits of the proposed transaction and has neither approved
nor disapproved the contents of this press release.

    
    On behalf of the Board of Directors

    JYW CAPITAL CORP.

    "Joanne Yan"

    President, Chief Executive Officer,
    Chief Financial Officer and Director
    

    The technical information in this news release has been reviewed and
approved by G.R. Jordan, of Norwest Corporation, a qualified person for the
purposes of NI 51-101. Mr. Jordan is independent from JYW Capital Corp.

    WARNING: This news release may contain forward looking statements based
on assumptions and judgments of management regarding future events or results
that may prove to be inaccurate as a result of exploration and other risk
factors beyond its control, and actual results may differ materially from the
expected results.

    
    NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS
    THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS
    RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS NEWS RELEASE.
    





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JYW CAPITAL CORP.

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