Mongolian mining firm Hunnu Coal says it intends to list in Hong Kong next year, underlining the city's growing appeal as a centre for funding for resource firms. The company has been one of the best-performing initial public offerings on the Australian Stock Exchange over the past few months. It has risen 335 per cent since listing in February and at one point stood 540 per cent above its listing price of 20 Australian cents (HK$1.30). 'Listing in Hong Kong gives us more international visibility and higher trading volumes than other markets, and I think Hong Kong investors like Mongolia and coal,' managing director George Tumur said during a recent investor conference in Moscow. He said that of the 15 Mongolian companies listed on exchanges in Sydney, Toronto and Hong Kong, the two Mongolian firms listed in Hong Kong - SouthGobi Resources and Mongolia Energy Corp - had a bigger market capitalisation and higher trading volume. Tumur said the company planned to list in Hong Kong in the third or fourth quarter of 2011 and was expecting to raise between USS$200 million and US$300 million. 'Australia is almost seed capital raising for Hong Kong,' he said, adding that Hong Kong investors prefer big production firms, while Australia has a better understanding of exploration companies. Tumur said that Hunnu would have a 'decent amount' of JORC resources within 12 months. The JORC (Australasian Joint Ore Reserves Committee) code is widely accepted as a standard for professional reporting of mining deposits. 'We are targeting resources of 500 million tonnes, which is comparable to SouthGobi,' he said. SouthGobi raised HK$3.4 billion earlier this year but has been a disappointment, since it fell on its first trading day and is still 27 per cent below its issue price despite the strong demand for coal from China. Hunnu is still at the exploration stage although it expects to start production at its Unst Khudag coal mine later this year. Tumur said the company had A$30 million in cash and expected to deploy 60 to 70 per cent of this during the current drilling season to delineate the resource and to prepare a JORC-compliant report. The company has 10 sites in Mongolia, though it is aiming to start three coal mines over the next four years. Unst Khudag, the focus of the company's current operations, is 59,000 hectares, making it more than seven times the size of Hong Kong Island. It is about 200 kilometres from the Chinese border. Tumur said the coal was relatively cheap to mine at about US$5 per tonne. 'The coal is easy to mine as it's just below the surface and it's high-quality thermal coal. We are already in discussion with various parties interested in off-take agreements for the next 20-30 years.' The coal is about 6,460 kilocalories per kilogram, which makes it suitable for new large power stations in northern China. Coal above 5,000 kcal/kg is considered high-quality thermal coal. 'We've been talking to Chinese power plant operators and US companies that have invested in power plants in China,' Tumur said. Discussions have so far centred on mine-head sales, with the off-takers making their own transportation and logistics arrangements. In some cases this will involve building a paved road to the border once production ramps up to more than a few million tonnes. Tumur said that Chinese companies had initially discussed taking a significant equity stake in the firm, with discounts on off-take prices. However, given the demand, Tumur said Hunnu had no need to sell equity. Last year, Mongolia sold 8.5 million tonnes of coal to China, and this is expected to increase to 12 million tonnes in 2010.