Coal Miner Announces Plan To Go Public

MANILA - A coal miner filed on Monday its application with the Securities and Exchange Commission to hold an initial public offering in the fourth quarter of the year.

In a statement, Coal Asia Holdings, which claims it is the holder of the country's second largest coal reserves, said it will list its shares on first board of the Philippine Stock Exchange.

The miner plans to raise P800 million from an offering of 800 million primary shares, representing 20 percent of the company's capital stock, at P1 apiece, said a company official who refused to be identified.

"We think that the market is quite receptive to an IPO given its strong performance in recent months. We expect it to continue throughout the year based on analysis of local and international brokerages monitoring the Philippines," the company official said.

Proceeds of the maiden share sale will finance mining exploration and development work of its unit Titan Mining and Energy Corp., which has mining rights in Davao Oriental and Zamboanga Sibugay.

Coal Asia, which has the potential to become the biggest producer of high-grade bituminous coal, said mine developments are on track with commercial production of 600,000 metric tons of high grade coal per year scheduled 2014.

A preliminary feasibility study dated June 12 on the 7,000-hectare Coal Operating Contract No. 159 in Davao Oriental covering a 214-hectare area concluded the economic viability of the area with an observable coal reserves yield factor of 28,000 tons per hectare, translating to an estimated market value of P23.8 billion.

An independent valuation report prepared by Multinational Investment Bancorporation in May valued Titan's coal assets at P12.5 billion.

A Philippine Mineral Reporting Code standard geological report, done in Apri, on COC Nos. 159, 166 and 167 in Davao Oriental and Zamboanga Sibugay identified total potential coal resource of 120 million metric tons.

Coal Asia has secured off-take contracts both here and abroad but is also eyeing the export markets including India, Japan, Taiwan, Hong Kong and Vietnam.

The miner is upbeat that its higher grade coal sources in Mindanao is poised to benefit from the expected explosion in demand from large scale energy producers establishing their coal-fired energy generating plants and cement plants gearing up for the impending growth of Mindanao through the government's plans to establish key economic zones in the area.

So far this year, three companies - GT Capital Holdings Inc., EastWest Banking Corp. and Calata Corp. - debuted in the local bourse through an IPO, while Rockwell Land Corp. joined the bourse through listing by way of introduction.