Beren Mining Plans Mongolia's Biggest Domestic IPO, Broker Says

March 12 (Bloomberg) -- Beren Mining LLC, a Mongolian iron ore producer, is preparing the nation's biggest initial share sale on the domestic exchange to capitalize on demand for the raw material in neighboring China.

The closely held company seeks to raise about $100 million for 30 percent of its equity, or five times more than was ever raised in an IPO in Mongolia, said Lkhagvadorj Burenmend, deputy director of BDSec JSC, Beren's underwriter. The IPO has “just been approved” by the state markets regulator, he said.

“We're aiming for an August listing, depending on market conditions,” Lkhagvadorj said in a March 7 interview in Ulan Bator. BDSec plans to arrange meetings with potential investors in Singapore, South Korea, Tokyo and New York, he said.

China's demand for steel-making ingredients including iron ore and coking coal has helped mining companies led by Mongolia Mining Corp. raise more than $750 million in share sales abroad in the last two years. That number would more than quadruple if state-run coal miner Erdenes Tavan Tolgoi completes a planned $3 billion listing in Mongolia, London and Hong Kong this year.

Beren Mining's website was not available and the company could not be contacted.

Beren Mining will need to overcome a trend by locally- listed Mongolian companies of not disclosing their full profit to minimize taxes and secure government aide, James Passin, principal of New York-based Firebird Management LLC's Mongolia fund. Firebird is the biggest investor in stocks on the Mongolian bourse, Passin said.

Doubling Capacity

“There's little expectation of transparency, liquidity and stocks that reflect fundamentals,” Passin said March 7 at an IPO conference in Ulan Bator. “With that, it's hard to take the Mongolia Stock Exchange seriously and invest capital.”

Beren Mining plans to use the IPO funds to double its annual capacity of 250,000 metric tons of iron ore concentrate from its Tamiryn Gol mine in the central Arkhangai province of Mongolia. The company's stock is 51 percent owned by Beren Group LLC and the rest by Sor Metal LLC, according to a BDSec brochure distributed at the IPO forum in Ulan Bator.

Its ore is sold domestically and exported to China. Beren Mining is forecast to have revenue of 1.75 billion tugrik ($1.3 million) this year and net income before tax of 38.3 million tugrik, according to BDSec's brochure.

--Editors: Rebecca Keenan, Ryan Woo

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