* Mongolian Mining prices HK IPO at HK$7.02 each-sources
* Company valued at 12.6 times estimated 2011 earnings (Adds details and background)
By Kennix Chim
HONG KONG, Oct 5 (Reuters) - Mongolian Mining Corp, Mongolia’s largest privately-held domestic producer and exporter of coking coal, raised $650 million by pricing its Hong Kong initial public offering at the middle of an indicative range, sources familiar with the deal said.
Mongolian Mining , whose Ukhaa Ukudag (UHG) mine is roughly 245 km from Mongolia’s border with China, sold 719 million shares at HK$7.02 each, the middle of the range of HK$6.48 to HK$7.56 each, two sources said.
The sources were directly involved with the deal but not authorised to speak publicly on the matter.
Hong Kong's Hang Seng Index .HSI has gained 11 percent in the third quarter, with more than 20 companies tapping the market to raise funds in these two months, including American International Assurance's (AIA) $15 billion Hong Kong IPO.
At the offering price range, Mongolian Mining is valued at 12.6 times forecast 2011 earnings estimated by bookrunners.
Mongolian Mining generated orders for more than 10 times the shares initially on offer to Hong Kong retail investors, one of the sources said, adding that Henderson Land (0012.HK) Chairman Lee Shau-kee and GIC also invested to the stock.
Mongolian Mining, partly owned by Mongolia’s largest private conglomerate MCS Holding and Kerry Group, started mining at UHG deposit in April 2009.
The company produced 1.8 million tonnes of coking coal by the end of 2009 and plans to produce about 3.8 million tonnes of coking coal in 2010 and increase its coal production to about 14.7 million tonnes for 2013.
Mongolia Mining has engaged Sedgman to build a coal handling and washing plant in order to recover the margins linked with coal washing, currently being conducted by third parties.
Mongolian Mining’s trading debut is set for Oct. 13, under the symbol “975” (0975.HK). (US$1=HK$7.76) (Reporting by Kennix Chim; Editing by Chris Lewis and Anshuman Daga)