This is encouraging.Waratah: a minor with big dreamsEmail Print...

This is encouraging.

Waratah: a minor with big dreams
Email Print Normal font Large font Jamie Freed
July 16, 2008 - 12:00AM

THE east coast could soon play host to its own version of Western Australia's Fortescue Metals.

The Queensland coal developer Waratah Coal - already listed in Toronto - plans a dual-listing on the Australian Securities Exchange to help advance ambitious plans for a $5.3 billion thermal coal export project in the Galilee Basin.

The hefty price tag of Waratah's project would include a new port at Shoalwater Bay, between Rockhampton and Mackay, and a 500 kilometre rail line that could be shared by owners of infrastructure-starved deposits in the Bowen Basin.

Waratah owns more than 4 billion tonnes of thermal coal resources in the Galilee Basin, and plans to export 25 million tonnes a year from several open pits, starting in 2012.

"With our project reaching a far more iconic status ... it will be very important to Queensland and the national economy, so we'll do a dual-listing on the ASX," Waratah's chief executive, Peter Lynch, told the Herald.

He said Waratah, which has a market value of $C250 million ($255 million), listed in Canada in mid-2006 because junior coal companies received little attention in Australia at the time. This week it hired ABN Amro Morgans to help with the ASX compliance listing, which will not seek any new funds from Australian investors.

Australian individuals, including Waratah directors, and institutions already own about half of its shares.

Mr Lynch said Waratah had yet to decide how to fund the project, which is comprised of a $1.8 billion mine, $2 billion railway and $1.5 billion port. He said outside infrastructure investors were likely to be involved with the railway and port, which would be used by other coal producers. He added that Waratah had already received "significant interest" from potential infrastructure partners in Australia and overseas.

Mr Lynch said Waratah would consider partnering with big coalminers or Asian power generators to help finance the project, but noted that there were "plenty of good lessons" in the financing techniques Fortescue used to fund its $3.7 billion iron ore project.

Fortescue financed most of its project with junk bonds rather than equity, and Mr Lynch noted Waratah was similarly averse to a severe dilution of its shareholder base. A final decision on financing should be made in late 2010.