Montem Resources seeks $15m in listing for Canadian coal mining projects

Thermal coal is about $52 a tonne and metallurgical coal about $114.

Some smaller resource industry players are trying their hand at a sharemarket listing, including Montem Resources.

It plans to raise up to $15m and list with a value of about $100m.

The company has had aspirations to float for some time, but is now out speaking to investors following an earlier non-deal roadshow.

It is understood the plan is to move forward with its initial public offering early next month with advice from broker Morgans.

Montem is backed by the billionaire Flannery family and it counts groups such as Regal Funds Management among its shareholders, investing when it made efforts to secure pre-IPO finance.

The group has two steelmaking coal projects in Canada — the Tent Mountain Mine and the Chinook Project, which is moving towards development.

Montem’s efforts to list are expected to be followed by other groups in the mining space, with European funds targeting the Australian market as a safe haven.

However, the challenge will be convincing investors to offer commitment at a time that coal prices are lagging.

Thermal coal is about $52 a tonne and metallurgical coal about $114, with steel production currently subdued and China importing more iron ore that the so-called “black gold”.

Not helping the situation has been port-based hold-ups for exports.

But elsewhere, commodity prices have held up relatively well.

Metallurgical coal used for making steel could recover, with governments likely to embark on major projects to stimulate their economies.

On the other hand, thermal coal has been hard hit due to low gas prices.

The current conditions mean that Brookfield and BHP will be closely watched as both are expected to make efforts to divest thermal coal-related assets.

Brookfield wants to list the Dalrymple Bay Coal Terminal in Queensland, which earlier had a value of at least $2bn.

While the group is once again testing market interest for a listing and is also open to a sale, the challenge with that transaction is that the asset is considered critical infrastructure, so could face some challenges obtaining Foreign Investment Review Board approval for an overseas buyer.

With Australian investors, thermal coal is out of favour, and about 30 per cent of the coal leaving the terminal is of the thermal variety.

One possible outcome is that only a small percentage of the terminal is floated.

This would allow Brookfield to progressively sell down its interest over time.

Meanwhile, BHP’s Mount Arthur coal mine in NSW is considered non-core and is also expected to be divested.

Its mining rival Rio Tinto sold its thermal coal assets in 2017 to Yancoal for $2.69bn.

Some believe that now, in hindsight, the sale by Rio was good timing.