Resurgere Mines IPO to raise 1.2 bln rupees

MUMBAI, Aug 6 (Reuters) - Resurgere Mines & Minerals India Ltd will raise up to 1.21 billion rupees through an initial public offer, which opens on Aug. 11, the company said on Wednesday.

The price band for the 4.45-million-share offer has been set at 263 to 272 rupees a share, it said.

The firm, in which Merill Lynch MER.N holds more than 12 percent stake, will use the funds to part-finance its extraction and crushing facilities and purchase 6 railway rakes.

The company, which has four iron ore mines and one alumina mine, will invest around 1.16 billion rupees in a wagon investment scheme to buy six rakes to reduce logistics cost, it said in a press release.

It plans to invest another 1.3 billion rupees in setting up its extraction and crushing facilities, the release said.

Resurgere sells iron ore of various grades in the spot market domestically and exports iron ore fines, or powdered ore, to China.

The firm has applied for a mining lease and two prospecting mining leases in Maharashtra. Its iron ore mine at Orissa is estimated to have reserves of about 75 million tonnes.

“We are now also looking at long-term contracts,” Subhash Sharma, managing director, told a news conference. “We need to hedge against the volatility in prices.”

Sharma hoped heavy expenditure on infrastructure and construction projects in India will buoy steel demand, giving impetus to iron ore, used in making the alloy.

“We feel this demand will not stop,” he said. “But we are diversifying into other minerals also. Our bauxite (alumina) mine is one such step”.

Resurgere holds 60 percent stake in a bauxite mining company in Maharashtra and is looking to mine copper, manganese and zinc in the future, he said.

The company posted a net profit of 665.6 million rupees for the year-ended March 2008 on total income of 4.25 billion rupees. (Reporting by Swati Pandey; By Prem Udayabhanu)