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Tigers Realm scales back

WEAK equity market conditions have forced Owen Hegarty's Tigers Realm Coal (TRC) to scale back its offering despite continuing strength of coking coal prices.

WEAK equity market conditions have forced Owen Hegarty's Tigers Realm Coal (TRC) to scale back its offering despite continuing strength of coking coal prices.

The Melbourne-based company would not comment on the size of the scale-back and its repricing. But the latest term sheets show what was originally promoted as a $200-250 million float is now a $30-45 million offering at a reduced price of 60? a share.

Tigers Realm is the first of the commodity specific spinoffs planned by the privately held Tigers Realm Minerals, a group of former Oxiana/OZ Minerals senior managers, including the bustling Mr Hegarty.

Poor equity market sentiment towards floats is the likely cause of the scale-back. Late last month the planned $500 million float of underground contract miner Barminco was pulled because of poor sentiment.

At the lower raising of $30 million, TRC would have a market capitalisation of $202 million, with the float representing about 15 per cent of the company. It is assumed TRC will use the funds to advance its overseas coking coal properties before returning at a later date for development funding.

Unlike iron ore, there is a scarcity of high-quality coking coal development opportunities. That has been reflected in recent pricing of $US295 a tonne for premium hard coking coal, a key ingredient in steel.

TRC was created soon after the financial crisis hit in 2008 with the aim of assembling a portfolio of Pacific Rim coking coal development projects. It recently increased its total stock exchange compliant resource base to 198 million tonnes of coking coal.


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