Datong Coal Industry, the mainland's second-largest coal producer by output, plans to list shares in Hong Kong to raise HK$5.6 billion for the expansion of its reserves and production capacity.
The Shanxi-based miner said it would sell 300 million H shares, 26.39 per cent of its enlarged share capital, to overseas institutional and Hong Kong retail investors.
Datong said it would give strategic investors priority in the institutional portion. It might sell 15 per cent more shares if demand warranted, it said without giving a timetable.
Datong's A shares surged 3.7 per cent to close at 18.56 yuan yesterday, giving the proposed share sale a value of HK$5.6 billion. The stock has risen 175 per cent from its issue price of 6.76 yuan in June last year.
Sources said Datong had mandated HSBC and other investment banks to handle its Hong Kong listing.
The company, which raised 1.89 billion yuan in its initial public offering in Shanghai, has been hoping to float its shares in Hong Kong since the end of last year.
The listing plan was postponed as Beijing began charging fees for coal prospecting and mining in eight major coal-producing provinces and regions including Shanxi in November last year, industry sources said.
The government would ask Datong to pay for the mining right of its 51 per cent-owned Tashan Coal Mine in Shanxi, rather than transferring the right to its state-owned parent Datong Coal Mine Group for free, the sources said. Datong said the mining right would be worth up to 1.59 billion yuan.
Adding to the extra spending was the revised plan for the project that drove up construction costs to 3.02 billion yuan from 2.05 billion yuan.
Datong will join three other mainland coal miners, China Shenhua Energy, China Coal Energy and Yanzhou Coal Mining, in the Hong Kong stock market.