Hunnu Coal Chairman raising money for iron ore venture in Mongolia

Hunnu Coal chairman Matthew Wood is seeking to capitalize on his company’s success in Monogolia this year, launching another company focused on the minerals-rich nation this week. Hunnu has been one of the big success stories in the minerals sector after closing a AUD20-million initial public offering (IPO) in early February. The company has delivered a more than five-fold return to its initial investors and, unlike the majority of this year’s resource floats, has never traded below its launch price.

Wood’s latest venture, Haranga Resources, is seeking to repeat the Mongolian success of Hunnu - this time focused on iron ore. The company last week filed documents launching a AUD25-million IPO with the Australian Securities and Investments Commission, seeking to issue 125 million shares at 20c each.

The Haranga prospectus says the company has signed deals to acquire a controlling interest in five iron ore projects in Mongolia. While the company doesn’t yet have a clearly defined resource at any of the projects, Wood said in the Haranga prospectus he believes the “favorable geology, political stability, improving infrastructure and a fast developing mining sector makes Mongolia an outstanding destination for investment”.
Mongolia is rapidly emerging as one of the go-to destinations for resource companies looking for high-value projects, but there has been only limited exploration for iron ore. Haranga says there are three significant locally owned iron ore mines in Mongolia, all exporting directly to China, along with a handful of smaller operations. In 2009 the China Investment Corporation invested USD500 million to acquire a minority stake in the largest of these, the Eruu Gol mine, which is located in the same region as Haranga’s newly acquired assets.

Haranga plans to spend AUD10.6 million exploring for iron ore on its tenements in the first two years of operations, if the IPO is fully subscribed. The offer opens on November 17, and will close on December 6. If the offer is fully subscribed Haranga will have a market capitalisation of around AUD37.4 million when it lists on the Australian Securities Exchange.