tigers realm coal hunts for $20.6 million

Febuary 19, 2013, 5:47 PM
Tigers Realm Coal Hunts for $20.6 Million
Article Comments Deal Journal Australia HOME PAGE »smaller

By David Winning
Russia-focused mining company Tigers Realm Coal Ltd. TIG.AU 0.00%is seeking to raise at least 20 million Australian dollars (US$20.7 million) at A$0.20 a share, a person familiar with the matter said.

The raising is being conducted by Investec Bank at a 9% discount to the company’s closing share price of 22 cents a share Tuesday, the person told Deal Journal Australia.

Tigers Realm Coal is among a group of miners on the Australian Securities Exchange aspiring to become a major coking coal producer, taking advantage of rising Asian demand for raw materials used to make steel.

It believes that developing deposits close to the coast in eastern Russia gives it an advantage over rivals in Australia, where rail and port infrastructure bottlenecks and a time-consuming permitting process are slowing developments.

Still, concerns over political risk in Russia have weighed on its share price since its ASX debut in August 2011. The stock has never traded above its offer price of A$0.50 a share.

Tigers Realm Coal needs funds for a bankable feasibility study of its Amaam mine in eastern Russia, which the company predicts could produce more than 5 million tons of coking coal annually from as early as 2016.

The US$1.45 billion cost of the Amaam mine dwarfs Tigers Realm Coal’s market capitalization, and means the company will likely need a strategic partner and bank funding.

The company has said it is also looking to drill further holes at its Amaam North project, which could be brought online sooner as the coal is close to the surface and could ship from an existing coal terminal at Beringovsky port.

A mine at Amaam North could produce up to 1 million tons of coking coal a year, with first output in around 2015 if all licenses and approvals are in place. That would give Tigers Realm Coal cash flow early, which could help finance the Amaam project and also convince cautious investors to step forward, according to the company.

The company is 29% owned by Tigers Realm Group, chaired by Australian mining industry veteran Owen Hegarty.

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