Perpetual Resources (ASX: PEC) is looking to capitalise on the surging coal demand in China and India by raising funds to explore for coal in West Sumatra in Indonesia - with the company moving towards becoming publically listed.
The Perpetual Resources IPO is offering 10 million shares at $0.20 to raise a minimum of $2 million, with oversubscriptions allowing for another $1 million to be raised.
The company more specifically is aiming to develop multiple coal mines throughout Indonesia and to supply from these mines a high-grade thermal coal export product into the burgeoning Asian power generation markets.
Perpetual Resources has entered into an agreement to acquire rights in relation to a coal mining and exploration tenement in West Sumatra, known as the Atoz Project.
The Atoz Project covers 192.08 hectares and is located 50 kilometres south of Padang in the central west of West Sumatra. Coal deposits occur sporadically throughout the district. Access to the Atoz Project is on a good bitumen road 76 kilometres south of Padang, with the journey taking 2 to 3 hours.
There are several daily scheduled airline flights between Jakarta and Padang.
Near term plans include implementing an exploration and development program across the Atoz Project, with an initial exploration budget of US$1,525,000 over 2 years.
Tapping Asia's coal demand
China is the largest coal consumer in the world, with hard coal consumption estimated at 3,319 Mt in 2010 (up from 2,884 Mt in 2009, an annual increase of 15.08%). Coal is the backbone of the Chinese power system and nearly 80% of the electricity generated in China is from coal fired power plants.
India is the third largest global coal consumer behind China and the United States with hard coal consumption reaching 626 Mt in 2010 (up from 589 Mt in 2009, an annual increase of 6.3%). Coal’s share in the Indian power generation mix amounts to around 74%.
Perpetual Resources is looking to tap this demand and considers that the Indonesian coal industry is ideally placed to continue benefiting from strong regional demand for steam coal.
Indonesia has proximity to the key export markets of China and India.
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