Australia's Tigers Realm Coal slides on debut

Mon Aug 29, 2011

MELBOURNE Aug 29 (Reuters) - Australian coal explorer Tigers Realm Coal had a choppy first day on the Australian bourse on Monday, rising 20 percent then falling as much as 13 percent below its issue price following a poorly timed float.

The company, with stakes in two coking coal projects in Russia and Colombia, raised A$37.5 million ($39.5 million)through its initial public offering.

It launched its offering just as markets plunged in early August, forcing the company to slash its initial target of A$200 million to A$37.5 million.

Tigers Realm Coal shares opened at A$0.505, traded as high as A$0.60 and last traded at A$0.46, 4 cents below its issue price, valuing the group at A$167 million. The broader market was up around 2 percent on Monday.

The funds will be used for drilling work at the Amaam project in far eastern Russia and Landazuri in Colombia.

Drilling to firm up resources at Amaam, the group's biggest project, is expected to run through early 2012, with Tigers Realm Coal aiming to have a feasibility study completed by late 2013.

Chief Executive Martin Grant said the company would look at a wide range of options for future funding, including selling equity stakes to mining companies, steel makers, or trading companies in return for offtake agreements.

Amaam would be well-positioned to supply hard coking coal into China and other Asian markets.

Grant was confident Amaam had an advantage versus coking coal mines being developed in Mongolia and Mozambique which could start producing at the same time.

"Mozambique and Mongolia will continue to be challenged for a long period," he told reporters.

Grant, a geologist, held senior posts in BHP Billiton's coal business, including BHP Billiton Mitsubishi Alliance, the world's top exporter of coking coal, before taking the reins at Tigers Realm Coal. He has also worked as an investment banker at UBS and JBWere.

Tigers Realm is 6.25 percent owned by Tigers Realm Minerals, founded by former chief of Oxiana, Owen Hegarty, after Oxiana merged with Zinifex to form OZ Minerals .

Credit Suisse was lead manager and underwriter for the offering, with co-lead manager Bell Potter Securities.