OJSC Raspadskaya plans to produce 16.7 million tons of coal in 2015, the company said in a Eurobond memorandum.

The new production target is 9.7% less than the 18.5 million tons the group said this time last year that it aimed to be producing by 2015.

The memorandum says that the group’s MUK-96 mine could raise output from 1.3 million tons to 3 million tons by 2015, Raspadskaya-Koksovaya from 0.9 million tons to 1.7 million tons, and Raspadsky from 2.7 million tons to 3.5 million tons. Output at the flagship Raspadskaya deep mine, which is under restoration, could grow to 8.5 million tons.

A year ago, the company said output was targeted to rise to 2.5 million tons at Raspadskaya-Koksovaya, 4 million tons at Raspadsky, and 9 million tons at Raspadskaya.

Planned investment in Raspadskaya-Koksovaya is 1.3 billion roubles in 2012 and 0.8 billion roubles in 2013, in MUK-96, it is 0.5 billion roubles and 0.8 billion, respectively, and in Raspadsky, it is 0.3 billion roubles and 0.8 billion roubles.

In April 2011, the Russian Federal Subsurface Resources Agency (Rosnedra) gave Raspadskaya-Koksovaya six months to eliminate violations of its license agreement. It had not obtained approval from the state appraisal body GlavgosExpertiza for the first stage of its mine on time, had not submitted statistical data for 2008 to the Russian Natural Resources Ministry, had breached the rules for building certain structures and the deadlines for achieving targeted production volumes. The enterprise corrected most of the violations by October, and Rosprirodnadzor, the natural resources watchdog, ordered it in December to achieve the production volumes set down by the license by the end of 2012.

ZAO Raspadskaya-Koksovaya consists of a coal mine under construction and the Koksovaya mine, which was bought from Evraz in the spring of 2010. It started to mine the Koksovaya reserves after the accident at the flagship mine in May 2010 and planned to adjust plans for the mine under construction for the emergence of Koksovaya, which could have taken the whole of 2011. The asset produced 900 000 tons of K and Ko grade coking coal in 2011.

The Raspadskaya group reduced output 13% in 2011 to 6.25 million tons; however, it was a third below the target at 1.59 million tons in Q1 2012 (1.58 million tons in Q4 2011).

The company continues to expand reserves and resources by acquiring new licenses: the Raspadsky strip mine won an auction for the rights to the Dorozhny section with C1 reserves of 5.6 million tons in March.

The memorandum also states exports should account for 30%-35% of sales by OJSC Raspadskaya in time and that the key markets are in Asia, especially Japan and South Korea, but less so for China, which has an abundance of low-cost Mongolian coal.

The company had to stop the Raspadskaya deep mine in May 2010, following an accident that claimed 91 lives. It did not resume exports until Q4 2011, when it shipped

33 000 tons of concentrate to Ukraine after selling 3.7 million tons inside Russia that year.

The company anticipates it will resume export sales to the Asia-Pacific region through the Far East ports in April, shipping 50 000 tons of coal concentrate.

OJSC Raspadskaya’s main Russian customers, Evraz, Magnitogorsk Iron & Steel Works, and Novolipetsk Steel, accounted for 74.4% of the group’s sales revenue in 2011, 59.1% in 2010, and 47.5% in 2009.

Evraz, which is one of OJSC Raspadskaya’s biggest shareholders, increased its share of the group’s revenue to 27.9% in 2010, from 27.2% in 2010, and 20.8% in 2009.

Raspadskaya also said in the memorandum that it borrowed $150 million from Raiffeisenbank in Q1 2012 for general corporate purposes.

OJSC Raspadskaya conducted a Eurobond road show for investors in Asia, continental Europe, Britain, and the United States from April 12 to 19, a financial market source has told Interfax.

Raspadskaya is looking to place from $300 million to $500 million worth of bonds.

The company was due to redeem $300 million worth of Eurobonds placed in 2007 at the end of April.

The Raspadskaya bond placement organizers are VTB Capital, Morgan Stanley, and Goldman Sachs.

Raspadskaya said in March that it had arranged a non-renewable two-year credit facility of $300 million from Sberbank for operating purposes, to repay existing loans and to finance a share buyback.

Raspadskaya said last year that it would be buying back up to 10% of its shares 78 079 980 shares) at 150 roubles per share, or a total of 11.7 billion roubles.

Raspadskaya’s free float is 20%. A controlling stake of 80% or 82% post-buyback is owned by Corber Enterprises, the beneficiaries of which are Evraz Group, on the one hand, and Gennady Kozovoi, Raspadskaya’s CEO, and Alexander Vagin, the company’s board chairman, on the other (via Adroliv Investments Ltd, also on a parity basis).