Mechel to make foreign buy after placement -source

MOSCOW, July 18 (Reuters) - Russian mining giant Mechel (MTL.N) plans to use the money raised from its share sale to acquire a large private mining firm abroad, a financial market source familiar with the situation said on Friday.

Mechel declined to comment.

The source said the acquired foreign asset will first be integrated into Mechel and will then "very likely" be included in the Mechel Mining subsidiary that the firm is creating.

On Wednesday, Mechel set the price range for its sale of preferred shares at $50.50 to $60.50 per share. It has already received permission from Russia's markets watchdog to place 35 percent of its preferred shares.

Mechel plans to sell 55 million new preferred shares both in Russia and in Frankfurt in the form of global depository receipts (GDRs), totalling 11.67 percent of its share capital after the sale.

It is expected to raise more than $2.5 billion. The book on the deal closes on July 22. The company has so far sold only common shares, which closed yesterday in New York at $42.84 each, down 8.21 percent for the day. (Reporting by Olga Popova; Writing by Simon Shuster; Editing by Quentin Bryar)