Henan Shen Huo Coal Industry and Electricity Power (000933), a producer of coal, aluminum products and electricity, plans to purchase a 51 percent stake in Zhengzhou Yuzhong Coal for 610 million yuan, reports China Securities Journal, citing a company filing.

The target company has four subsidiaries which control seven coal mines with total reserves of 488 million tons and recoverable reserves of 203 million tons.

The seven mines were appraised to be worth 2.93 billion yuan, according to the filing.

According to Shen Huo Coal, the proposed acquisition will greatly increase its reserves and improve its competitiveness.

Shen Huo Coal posted a 0.71 percent year-on-year drop in 2011 net profit to 1.15 billion yuan, with earnings per share of 0.685 yuan. Revenue rose 81.62 percent to 30.70 billion yuan.

The company plans to pay cash dividends of 0.8 yuan for every 10 shares held