Johannesburg — COAL mining and exploration company Optimum Coal yesterday announced plans to list on the JSE at the end of the month. It expects to raise about R1,6bn in the initial public offering (IPO).

Optimum Coal is the sixth-largest producer and the fourth-largest exporter of thermal coal in SA - after Anglo American, BHP Billiton and Xstrata - with operations in Witbank, Mpumalanga.

The black economic empowerment company's prominent board members include nonexecutive chairman Sivi Gounden, a former director-general at the Department of Public Enterprises, and businessman and former Eskom chairman Bobby Godsell.

The listing comes as analysts have forecast IPO activity in the global mining sector will gather pace this year as companies seek alternative ways of funding after the devastating credit crunch a year ago.

Optimum said it expected to raise R1,6bn through a subscription for new shares and an offer for sale by certain shareholders.

The offer consists of the sale of up to 42,75-million fully paid ordinary shares priced between R34 and R37, made up of an offer for subscription of 24-million shares and an offer for sale by the selling shareholders of up to 18,75- million ordinary shares. The price of the shares will be announced on March 24.

The company said it would be meeting with invited individuals and institutions in SA and abroad over the next two weeks, ahead of the listing.

The proceeds will be used to fund its capital requirements, repay debt incurred in the acquisition of the controlling interest in Koornfontein mines and to fund potential acquisitions.

The company recently raised its stake in Koornfontein to 41%, and this is expected to increase to 91% after the approval of its acquisition of Sentula's stake.

CEO Mike Teke said the listing came at a time of robust demand for coal. "Optimum has strategically located operations with good access to rail infrastructure, rapid loading and export facilities, and a large export entitlement at Richards Bay Coal Terminal.

"We are cash generative and have a strong balance sheet, which provides a sound platform for growth. We believe the time is right for Optimum to list as there are few pure coal plays on the JSE. We can now begin accelerating towards our vision to become the benchmark South African-owned and controlled coal mining and exploration group."

Last month Ernst & Young said the credit squeeze in 2008 fundamentally changed the way the industry will be financed in future. Equity was expected to play a greater role in the next wave of growth, with the IPO market starting to recover this year.

"Following the decline of the project finance model, we could see a return to individual mines being floated, with proceeds used for development and investors sharing in the profits when the mine goes into production.

"A recovery in IPOs has begun, but will require a sustainable period of stability in global stock markets and metals prices to return to former levels."