Coal Asia Holdings says it is negotiating with several potential foreign investors interested in strategic agreements regarding the company’s coal mining projects in Mindanao.
Coal Asia’s chairman Harald Tomintz says it’s inappropriate to identify the prospective investors while the talks are in their early stages and a planned US$19 million initial public offering is progressing. “With the coming IPO, we should have enough cash to bring our coal mines into production. Thus, we are not in a rush to get a strategic partner.”
It’s expected the net proceeds from the IPO will bring Coal Asia’s Davao Oriental mine into production by 2014 with more than half of the capital raised allocated towards its feasibility study and mine development. The company says the remainder will be spent on bringing its Zamboanga Sibugay mine into production by 2015.
The IPO will see Coal Asia sell 800 million new common shares, or about 20% of its US$95.5 million outstanding capital stock.
Coal Asia is the parent company of Titan Energy and Mining Corporation which owns the mining and development rights in Davao Oriental and Zamboanga Sibugay. The company says it is placed well to capitalize on the expected growth in coal demand by large-scale energy producers preparing for the growth in Mindanao off the back of the government’s plans to establish key economic zones in the country’s southern-most region.
Coal Asia’s estimated coal resources within these areas stand at 12.7 million tonnes with 59 million tonnes in potential deposits at Davao Oriental and 3.5 million tonnes with a further 47.6 million tonnes potential at Zamboanga Sibugay. A Philippine mineral reporting code standard geological report completed in April identified both sites as having a total potential coal resource of 120 million tonnes.
Construction of additional support structures for mine development at the 7000 hectare Davao Oriental site will also be undertaken, including mine access roads, port facilities, blasting operation facilities, a campsite, treatment plants and in-house laboratory. The development plan for the mine is on schedule with annual commercial production of 600,000 tonnes of high grade coal scheduled to begin from 2014.
Coal Asia has already secured offtake contracts for the coal from domestic and international customers and is investigating opportunities within the export markets of India, Japan, Taiwan, Hong Kong and Vietnam.