Atlantic Coal raises £12m

Pennsylvania-focused coal miner Atlantic Coal has raised £12m gross from investors that include the Blackrock Smaller Companies Fund.The shares are being placed at 0.75p a share and this represents a 70% increase on the existing share capital. Directors and their wives are subscribing for 46.67m of the shares being placed. The net proceeds are £11.4m. AIM-quoted Atlantic Coal wants to consolidate coal mining assets in the region of its Stockton mine in Pennsylvania. The cash in the bank will help to finance any potential acquisitions and provides scope for a large acquisition if it can be found.Atlantic Coal will only prosper if it acquires other coal mining assets in Pennsylvania. A number of assets have already been identified. Some deals could be done on a royalty basis which will limit upfront costs. The existing plant and equipment could be used to process coal from the other mines.Some of the cash could go to increasing production at Stockton, which has a ten year mine life. Stockton produces anthracite, which is high carbon coal used in steel making, glass production and domestic heating. Demand for high-quality anthracite outstrips supply in Pennsylvania.The coal price is rising and the average selling price has been $137/ton in recent months. Assuming 200,000 tons of coal are sold and a target price per ton of $130, Atlantic Coal says that Stockton's revenues would hit $26m in 2011.