Coalmining company Gujarat NRE Coking Coal is trying to raise $50.5 million from shareholders to develop its two Illawarra coalmines and buy new mining equipment.
The company this month reported its highest quarterly production of 544,000 tonnes - for the three months to September - from its operations at Russell Vale and Wongawilli. But there are questions over future production at its NRE No 1 mine at Russell Vale.
Gujarat has finished mining its approved longwall, known as Longwall 4, but is yet to win approval to extract coal from its next mining area.
Its application to extend a "preliminary works" approval has triggered criticism from government agencies over the approval process and environmental risks.
The application is now before planning authorities.
This week, the coal miner announced a one-for-four rights issue to raise $50.5 million.
The offer, which allows shareholders to buy one fully paid share for every four they own at a price of 18¢, is partially underwritten by related company Wonga Coal.
Shares in Gujarat NRE closed yesterday at 16¢.
"The remarkable increase in quarterly production and sales figures of the first two quarters has prepared the right platform for our move to the next orbit," executive chairman Arun Jagatramka said in a statement to the stock exchange on Tuesday.
"As I thank all our stakeholders for their belief and faith in us we look forward to receiving such unstinted support and encouragement in the future as well, as we scale new heights."
A condition of the new shares offer is that it generates at least $31.6 million.
If the full $50.5 million is raised, $20 million will be spent at NRE No 1, made up of $5 million for mine development and $15 million for plant and equipment.
The remaining $30.5 million will be spent at Wongawilli, $15 million for mine development and $15.5 million for equipment.
Gujarat said if the lesser amount of $31.6 million was raised, then spending on mine development would remain the same but the investment in plant and equipment would be cut.
The funds would be used to develop "critical mining infrastructure" needed to support current and anticipated production, it said.
In offer documents the company also noted the shares were "highly speculative" and outlined risk factors including coal prices and possible adverse operating conditions.