New Canadian coal play fronts Aussie fundies for IPO
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North Americans are becoming increasingly bullish about their role as a contingency supplier to steel mills in Asia.LUKE SHARRETT
They tend to call it "steelmaking" coal rather than "coking" coal, but whatever label you put on it, the Canadians are sure talking a lot about it at the moment.
Hot on the heels of the old Riversdale team's attempts to IPO a collection of Canadian coking coal assets, Riversdale's neighbour Montem Resources is now knocking on many of the same doors.
Street Talk can reveal Montem, led by former Atrum coal executive Peter Doyle, will start talking to institutional investors next week as part of a non-deal roadshow. The focus will be on Montem's plan to restart the shuttered Tent Mountain mine in Alberta.
Corporate advisory boutiques RFC Ambrian and Beer & Co are joint lead managers. Coal veteran and former Oakbridge boss Rob Yeates is chairing the business.
North American coking coal mines tend to be higher cost producers than those in Queensland's Bowen Basin, but with prices for the premium hard stuff above $US180 per tonne, there is plenty of money to be made from mines that aren't quite elite standard.
Plus with Aurizon threatening to reduce the amount of Australian coal that can travel down its railways to port, North Americans are becoming increasingly bullish about their role as a contingency supplier to steel mills in Asia.
The Montem team is hoping to find enough interest on their roadshow to warrant a $20 million raising later this year for a $55 million market capitalisation, with proceeds set to be devoted to restarting the mine.
The biggest risk to their plans may be a bit of coal IPO fatigue; Coronado Coal and Bounty Mining have also been doing the rounds lately, and Riversdale's IPO plans were delayed in March.
Fundies will be quick to compare it to Riversdale's mooted deal. This one is cheaper and its backers would argue its permits are better.
Tent Mountain was put on care and maintenance in 1983 but its mining permits remain valid. Montem bought it for $12 million and while it still has to amend the environmental approval in the permit, the Montem team reckons they can be back mining it and selling coal into Japan and North Asia by 2020.
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