Coal Asia says the US$18 million it hopes to raise in a planned initial public offering (IPO), representing a 20% stake of the company, will be spent on developing its coal mines in Mindanao.

The funds will be allocated to additional exploration in one of the country’s largest known coal regions at Davao Oriental and Zamboanga Sibugay. It’s hoped the sub-surface exploration will increase the company’s estimated coal resources within these areas, which stand at 12.7 million tonnes with some 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 an in-house laboratory. The development plan for the mine is on schedule with commercial production of 600,000 tonnes of high grade coal per year 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.

The company says it is well placed 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 is the parent company of Titan Energy and Mining Corporation which owns the mining and development rights in Davao Oriental and Zamboanga Sibugay.

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