Coal Asia Expects To Raise P800M from IPO

COAL ASIA Holdings is seeking to raise P800 million in an initial public offering scheduled in the fourth quarter of this year to help finance plans to start full commercial production in 2014.

An individual with direct knowledge of its plans said Coal Asia is selling 800 million primary shares at P1 each, equivalent to 20 percent of its expanded capital after the offering. The deal is being solely arranged by Abacus Capital and Investment Corp.

The source said the company filed its application with the Securities and Exchange Commission on Monday to list on the first board of the Philippine Stock Exchange.

Despite its recent correction, the benchmark index is still up about a fifth since the start of 2012, besting its closest neighbors in the region. The measure rose 1.6 percent to 5,297.99 on Monday.

"The market has done relatively well in the past few months. It's correcting a bit now but normally it strengthens toward the last part of the year so hopefully we will catch that cycle," the source said.

The company is hoping that investors will look past the decline in coal prices and instead focus on broader industry prospects given rising demand for thermal coal fuels both in the domestic and international power-generating sector.

A June preliminary feasibility study on the company's 7,000-hectare Davao Oriental site concluded observable coal reserves yield factor of 28,000 tons per hectare. This translates to an estimated market value of P23.8 billion.

In a statement on Monday, Coal Asia said the firm is targeting an initial production capacity of 600,000 metric tons of high-grade coal annually by 2014. It added that Coal Asia has already bagged off-take contracts both here and abroad but has also eyed the export sector, including India, Japan, Taiwan, Hong Kong and Vietnam.

Should plans push through, it could be one of the Philippines's biggest producers of coal alongside Semirara Mining Corp., which has diversified into power generation. The source said Coal Asia has no medium-term plans to become an integrated player like Semirara and will focus on being a pure-play coal company.

Coal Asia Holdings is the parent company of Titan Mining and Energy Corp., which owns mining exploration and development rights in Davao Oriental and Zamboanga Sibugay.

A Philippine Mineral Reporting Code standard geological report which was completed in April, identified Davao Oriental and Zamboanga Sibugay as having total potential coal resource of 120 million metric tons.