Marenica Energy looks to diversify assets with foray into U.S. coal sector

Marenica Energy (ASX: MEY) has subscribed for a cornerstone investment in a new IPO to be called Texas & Oklahoma Coal Company Limited (TOCC), which would provide the company with exposure to the rapidly emerging U.S. coal market.

The new coal investment is an initial step towards diversifying and expanding Marenica's asset base and provides an early-stage opportunity to participate in the development of coal export opportunities from the U.S.

Marenica has subscribed for 3.4 million shares in TOCC, which has issued initial seed capital of 28.75 million shares at $US0.06 per share. This will equate to a substantial 6.4% interest in the company’s pre-IPO issued capital.

Marenica shareholders may also be offered a priority allocation of shares in the TOCC IPO, once it proceeds.

The investment gives Marenica a low-cost entry into the US energy market and an opportunity to increase its interest as TOCC develops its core projects and reduces the risk associated with these projects.

Based in Dallas, Texas, TOCC is strategically positioned to take advantage of the coal resources available in Texas and Oklahoma.

The U.S. is developing its coal export industry, with projects in Texas and Oklahoma ideally placed to participate in this highly profitable emerging business.

TOCC is in the process of acquiring options over or equity interests in selected coal projects in the U.S.

Plans are well advanced to secure a coal resource base of between 100 million and 500 million tonnes. Listing on the ASX is expected in early 2012.

Significantly, U.S. coal exports are increasing with around 35 million tonnes exported in 2010. 27% of the world’s coal reserves are located in the US, while Australia has about 8%.

Experienced Board Members

TOCC Chairman Geoff Hill, served as managing director and chief executive – Australia of the Morgan Grenfell group in the mid-1980s, before forming his own investment advisory business, International Pacific Securities.

He is currently the chairman of Mt Gibson Iron (ASX: MGX), Heritage Gold (NZE: HGD) and Metals Finance Limited and a director of Broken Hill Prospecting Limited and Asian Property Investments Limited. He is also the executive chairman of International Pacific Securities Inc.

The board has recently appointed Gary Cochrane who has 25 years of experience in the mining, engineering and construction industry in Australia, China, Indonesia and New Guinea with senior management and technical roles at operating mines in Australia and New Guinea.

Robert Pearce, Marenica Energy’s Ltd chairman, is also a director and investor in TOCC.