Mongolia’s Erdenes May Be Valued at $10.6 Billion, Frontier Says

Erdenes Tavan Tolgoi, the Mongolian state-owned coal miner proposing an initial public offering, may be worth as much as $10.6 billion, according to Frontier Securities.

The value of the each Erdenes share is 933 tugrik (70.8 cents), Frontier said in a e-mailed report, citing a May 30 statement on the government’s website. Frontier calculated the value of the company based on Erdenes having 15 billion shares.

Erdenes Chief Operating Officer Graeme Hancock confirmed a value had been set without giving further details.

The company last month delayed its planned IPO until February or March, citing a decline in global market conditions. It had planned to raise $3 billion from the share sale in Hong Kong, London and Mongolia’s capital, Ulan Bator before the delay.

“The valuation is reasonable and is in line with that of Mongolia Mining Corp. (975),” Helen Lau, an analyst at UOB-Kay Hian Ltd. (UOBK) in Hong Kong, said by phone. “But market sentiment is poor right now and investors may not have the appetite.”

Mongolian Mining, the nation’s biggest coking coal exporter, is worth HK$19.8 billion ($2.5 billion) based on today’s share price at 2:54 p.m. It has 3.7 million shares outstanding, according to data compiled by Bloomberg.

Mining companies have lost 32 percent of their market value in the past year, the Bloomberg World Mining Index shows. Companies including Sany Heavy Industry Co. (600031) and China Nonferrous Mining Corp. (1258) canceled or reduced share sales planned for last month in Hong Kong.

Hong Kong IPOs

Companies have raised $3.1 billion selling new shares in Hong Kong so far in 2012, down 65 percent on a year earlier, according to data compiled by Bloomberg.

The IPO is set to be Mongolia’s first listing of a state-run miner overseas as the country’s economy grew by a record 17.3 percent last year. Mongolia is holding parliamentary elections on June 28.

Erdenes is developing the East Tsankhi part of the 6 billion-metric-ton Tavan Tolgoi coal deposit.

To contact the reporters on this story: Yuriy Humber in Tokyo at yhumber@bloomberg.net; Michelle Yun in Hong Kong at myun11@bloomberg.net

To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.