On July 13, 2011, the Independent Committee of the Board received a draft merger agreement from Chairman of the Board, Mr. Ming Zhao, pertaining to the preliminary buy-out proposal made by Mr. Zhao on April 29, 2011. Although it is expected that evaluation and negotiation of the draft agreement will take at least several weeks, neither the Company nor the Independent Committee can provide any assurances that a definitive agreement will be executed or approved or that a transaction will be consummated or the timing of such. The Company will provide no other updates regarding the proposed buy-out until there is a material development.
By letter dated July 7, 2011, the independent registered public accounting firm of Puda Coal, Moore Stephens, resigned, effectively immediately. Moore Stephens served as the Company's auditor since July 19, 2005. Moore Stephens also advised the Company that further reliance should no longer be placed on its previously issued audit reports relating to the Company's financial statements for fiscal years 2009 and 2010. The resignation and non-reliance advice by Moore Stephens are based on its conclusion that it is no longer able to rely on the representations of the Company's management received in connection with its audits of the Company's financial statements for the last two fiscal years. Moore Stephens believes such management representations are materially inconsistent with the alleged unauthorized transfers of subsidiary ownership by the Company's Chairman, Mr. Ming Zhao, which are currently subject to the investigation by the Audit Committee. The Company's Audit Committee will continue its investigation into the alleged unauthorized transactions.
Puda Coal today announced that its Board of Directors has unanimously ratified the Audit Committee's decision to launch a full investigation into the allegations raised in a recent article alleging various unauthorized transactions in the shares of a subsidiary company, Shanxi Coal. The Audit Committee has retained professionals in the United States and China to assist it in its investigation. The full board, including Mr. Ming Zhao, the Chairman of Puda Coal, has agreed to cooperate in the investigation.
Although the investigation is in its preliminary stages, evidence supports the allegation that there were transfers by Mr. Zhao in subsidiary ownership that were inconsistent with disclosure made by the Company in its public securities filings. Mr. Zhao has agreed to a voluntarily leave of absence as Chairman of the Board of the Company until the investigation is complete. The New York Stock Exchange has halted trading in the Company's stock.
We are making a solid progress in executing our growth plan and have now entered into agreements to acquire three of the four coal mines under the Jianhe Project. We expect to finalize the agreement with Jianhe Coal in the near future and are preparing to execute our consolidation and expansion plans under the Jianhe Project. In the meantime, we are preparing the required reports for coal mine design, consolidation and restructure process for submission to the government. The primary reserve of the Jianhe Project is metallurgic coal, which provides an attractive opportunity to take advantage of China's growing infrastructure and demand for steel. It also allows us to benefit from synergies between our coal washing and coal mining operations. Jianhe Coal is in excellent condition, and a new, larger mine shaft has been completed by its original owner before it was shut down by the government under the coal mine consolidation program. In addition, we have already commenced the comprehensive construction designing work at the Jianhe Project. We expect our Pinglu and Jianhe projects to gain further momentum and anticipate our coal mining business to make a solid contribution to our financial results in the second half of 2011 and beyond.
In 2011, we anticipate another solid year of performance from our coal washing operations, as we expect demand for steel to remain high. More importantly, we expect our coal mine consolidation projects to make a solid contribution to our financial results. We have already commenced construction of the designed production expansion of the first project company under Pinglu Phase I and began producing a small amount of thermal coal during the construction period. By the end of first quarter, we expect to receive construction approval for the second project company under Pinglu Phase I, and we anticipate receiving construction approvals by July 2011 for all three Pinglu Phase II project companies. In the near term, we expect to enter into asset purchase agreements with the owner of the coal mines under our Jianhe Project. In the longer term, as we successfully execute our coal mine consolidation projects, we will find the right balance between our coal washing and coal mining businesses to generate optimum return on investment and value for our shareholders.
We have now successfully acquired all coal mines to be consolidated under our Pinglu Project. We are currently in the process of consolidating and restructuring these coal mines. We estimate that we will complete consolidation, capacity and technology improvement of the five new coal mines under Pinglu Project within next 12 months, of which Dajinhe has begun construction coal producing in this February. We believe our experience in timely executing acquisition of coal mines under Pinglu Project will be an important asset in managing coal mine acquisition under Jianhe Project. In addition, we estimate that in fiscal year 2011 raw coal produced during the construction period of the Pinglu Project will be about 849,000 metric tons. We are encouraged by our progress thus far and are confident that as the coal mine consolidation program gains momentum, it will enable us to pursue additional coal mine consolidation projects and achieve new milestones in the near future.
On December 9, 2010, Shanxi Yuncheng Municipal Coal Mine Industry Bureau approved all comprehensive reports prepared on Dajinhe Coal's geology, preliminary construction design, and safety and environmental impact. Construction of the production expansion of Dajinhe Coal was also approved to begin on January 1, 2011. The mine has total recoverable reserves of 10.8 million metric tons and its annual production capacity is expected to expand from 300,000 metric tons before the construction to 600,000 metric tons after the construction and production expansion. Dajinhe Coal's existing coal mine is in good condition, which reduces the complexity of construction and production expansion. The Company estimates the expansion will be completed within a period of eight to twelve months. Since the improvements are based on the existing coal mine, which had good operating record prior to the government mandated shut down under Shanxi Province's coal mine consolidation program, coal will be produced during the construction period. The Company estimates that Dajinhe Coal will produce approximately 150,000 to 290,000 metric tons of thermal coal during the construction period.
In the second half of 2010, we expect our coal washing operations to continue to perform well. Despite some indications of a slow down in the real estate market, we expect China's steel-intensive industries to exhibit strong demand in the second half of the year. We are moving forward with our coal mine consolidation projects and will continue the preconstruction work as we await the required government approvals. We believe that we have strong execution capabilities and we expect that we will continue to make substantial progress once the approvals are obtained. We expect to receive the transitional production permit and resume production for the first two Pinglu County mines in the near term. We continue negotiations with the owners of the remaining six coal mines in Pinglu County as well as the four coal mines in Huozhou County.
Puda Coal began 2010 with solid revenue and net income growth, thanks to stronger cleaned coal sales volume and higher selling prices reflecting the continuing recovery of China's steel industry. Supported by our coal washing business and coal mine consolidation projects, we are well-positioned for continued growth in the remaining quarters of 2010 and beyond. We continue to make progress on our coal mine consolidation projects. The asset transfers of the Da Wa Coal and Guanyao Coal mines in Pinglu County were completed in April and we will pay for the assets transfer when the additional registered paid-in-capital of Shanxi Coal is confirmed by the Shanxi government office. Pre-construction activities at these two mines are currently underway. We are working closely with the Shanxi government and expect to receive approval for the business license transfers for all eight of the Pinglu County mines in the near term.
In response to record high steel prices driven by demand in the infrastructure construction sector in China, the steel industry has begun increasing production levels. Puda Coal anticipates that tonnage sales in 2010 will improve from current levels as steel inventories decline and customers increase order volumes. Puda Coal expects that such demand will provide significant opportunities for suppliers of cleaned coking coal like Puda Coal. As a result, management believes the outlook for its coal washing operations should be attractive, as the Company has maintained its customer base and supply channels.