www.oraclecoalfields.com
Oracle Coalfields is a UK based company with its primary coal projects in Pakistan. It will in time evaluate global opportunities for investment and strategic partnership for coal mining and production.
Oracle Coalfields recruits Citigroup to find “comprehensive funding solution” for Pakistan coal project
Oracle Coalfields (LON:ORCP) has drafted in a blue-chip adviser to help with its bid to commercialise the 1.4 billion-tonne Thar Coalfield, in Pakistan’s Sindh Province.
Citigroup Global Markets has been brought on board to find a “comprehensive funding solution” for the project.
The recruitment of an internationally recognised bank such as Citi is quite a feather in the cap for Oracle, which moved up to the AIM market earlier this year.
Moreover, it underlines the significance of Thar as a potential supplier of cheap energy to the developing Pakistan economy.
Oracle owns Block VI of the coal field, which is some 380 kilometres east of Karachi.
It contains lignite coal, which is brown in colour and has lower calorific value than the thermal coal that goes for export from places such as Indonesia.
It’s the sort of stuff that is found in abundance in Victoria, Australia and Germany.
The plan is to mine around 1 million tonnes a year from 2013, which will be sold to Lucky Cement and used to heat its kilns.
Output will then ramp up to 2.5-3 million tonnes annually as its deal with the Karachi Electric Supply Company, or KESC for short, kicks in.
The power company, majority owned by the Dubai-based private equity group Abraaj Capital, will use coal taken from the Thar Coalfield in new plants set to come online from around 2015.
However, Oracle’s plans currently are only the starting point for a resource that could be mined for the next century.
Analysts estimate the cost of the project to be around US$350 million in total, with around US$100 million of that to be found through equity funding, or a strategic partnership.
There will also be an element of local financing involved, and the company could even qualify for assistance from the World Bank’s International Finance Corporation.
Citi was selected because significant experience in financing mining projects globally and its country expertise in Pakistan, Oracle said this morning.
Shahrukh Khan, Oracle’s chief executive, said: “After careful consideration and having looked at a number of international banks, we are delighted to have appointed Citi.
“The appointment will add to our financial expertise and market coverage as we evolve to the next stage of development with an excellent team of financial advisors to guide us.
"The company remains fully committed to the development of Block VI, Thar Coal Project and continues to receive support from the Pakistani Government at all levels, all of whom recognise the positive economic and infrastructure impact our project will have on the country."
