Centennial announced today it had successfully completed an institutional placement of new shares by book-build and will issue 20 million shares at $A4.95 to raise $A99 million. The funds will be used to reduce debt, explore options of expanding production at Mandalong, target the export market and to progress the Anvil Hill development.

Centennial yesterday also increased it coking coal reserves from 47.5 million tonnes to 80.3Mt with the integration of former Austral mine Tahmoor.

Goldman Sachs JBWere held fast on its short-term rating of ‘underperform’ on the New South Wales coal producer and advised investors to hold in the long term.

“While the increase in reserves is a positive longer term sign, the key issue in the near term remains turning around the production capabilities of the Austral mine. This mine has been problematic in the past and will require a very good operational performance during FY06 to meet consensus forecasts,” energy analyst Neil Goodwill said.

UBS Investment Research also left Centennial’s rating at ‘neutral’ and called the capital raising “slightly opportunistic”

“Centennial says the money is to provide financial flexibility. Is there another deal in the wings?” it said.

Following the successful institutional placement to domestic and international investors, Centennial managing director Bob Cameron said the outcome demonstrated a strong level of confidence in the company.