Company briefs

Coal explorer Guildford Coal is set to bring on a large, Hong Kong-based institutional investor as part of its $25 million capital raising to fund its Mongolian operations. The company entered a trading halt yesterday ahead of the proposed issue. The capital raising is expected to be completed at 70¢ apiece, a 1¢ discount to the company’s last traded price of 71¢. Hedge-fund investor Och Ziff ­Capital Management, which owns 12.64 per cent of Guildford, is not thought to be one of the institutions involved in this placement, which is being managed by Sydney-based stockbroker Foster Stockbroking. Guildford boasts a 291.8-million-tonne coking and thermal coal resource at its South Gobi and Middle Gobi projects in Mongolia. Guildford’s Mongolian subsidiary, Terra Energy, has been granted a mining licence for its South Gobi project, and the company announced on March 5 that it was on target to start mining by the middle of this year. Guildford is also developing the Hughenden and White Mountain coal projects located in the northern end of the Galilee Basin coal province in central Queensland.

Patersons Securities analyst Matthew Trivett said: “The capital they raise will definitely mean they have sufficient funds to get the South Gobi project up and running." Mr Trivett estimates that the project will require minimum capital expenditure of about $20 million to begin production. He said early-stage production at the South Gobi project was more appealing than the Galilee Basin assets, which were quite deep and expensive to mine and lacked a clear infrastructure solution. “The infrastructure solution is still a way away, so [the company] will probably push back production on Hughenden, which will reduce the value," Mr Trivett said. Dan Hall