Gujarat NRE's Australian Flagship subsidiary India NRE Minerals IPO closes oversubscribed

Gujarat NRE Coke Ltd has announced that the Initial Public Offer of India NRE Minerals Ltd of 30 million shares at Au$ 0.50 each aggregating to AU$ 15 million has closed on the stipulated date having been over subscribed.

"This is a major reason for us to celebrate in the group" said Mr. Arun Kumar Jagatramka, Vice Chairman & Managing Director of the Company, "for the issue also marks the entry of Indian retail investors, perhaps for the first time on such a scale, who have overwhelmingly responded to our call to come on board the flagship in making of the NRE group in Australia." It will be pertinent to note here that the Reserve Bank of India recently allowed individual Indians to invest upto US$ 100,000 in overseas listed equity every year - a little known and seldom availed of option that was utilized by the Company to provide the Indian investing fraternity to take part in a rare resource play in Australia and reap the benefits of investing in a mature market.

India NRE Minerals Ltd owns and operates the NRE No 1 colliery with proven resources of more than 300 million tonnes, in the southern coalfields of New South Wales. This landmark colliery has produced significant amount of high quality Coking coal and have catered to both the domestic and export markets.

The mine re commenced production in September 2005 since when it has produced over 600,000 tonnes of Coking coal, exported to India. The current issue is being floated to raise funds for the commencement of long wall mining which is supported by external technical consultants with a view towards ramping up of production from the mine from the current level of 1 MTPA to over 4 million tonnes per annum.

The Company would continue to hold more than 90% stake in India NRE Minerals Ltd even after the present Public offer. The Company is the largest merchant producer of Low Ash Metallurgical Coke in India and has strategic interests in various resource plays in Australia. It was the first Company to have acquired a coal mine outside India and today owns 3 Hard coking coal mines in Australia. The Company's other major interests in Australia include petroleum prospecting in the Canning basin and prospecting for gold, iron ore, coal, magnetite and other base metals in Tasmania.

India NRE Minerals Ltd has negotiated an off-take agreement with the parent Company for upto 1 million tones per annum which will give it an unique buffer and put a cap on marketing expenses. The proximity to the un-congested coal export port of Kembla, the tried and tested management expertise of the Indian parent, the historically accepted quality of the coal and the parentage that will offer virtually unhindered access to the significantly growing Indian steel market will all go to add to the Company’s free run to prosperity. Add to it the continuous infusion of capital by the Indian parents, who have already invested over $ 90 million in the mine and the prospects seen even better.

China has imposed a fresh export duty on coke which is expected to further strengthen the global pricing adding value to the Company’s prospects. Coupled with the surge in demand from India which is all set to take its steel making capacities to beyond a hundred million metric tones by the year 2020, Australian coal mines are suddenly the preferred investment destinations of the world, things that augur well for the Company.

The issue was lead managed by BBY Ltd, while Ernst and Young Transaction Advisory Services Ltd, Perth acted as Corporate Advisors.

Source : Equity Bulls

Keywords