Australia-based Guildford Coal plans to raise $25m through the issue of new equity.

The company which has market value of $170m, has placed its stock in a trading halt and appointed Foster Stockbroking to lead the equity issue, reports Deal Journal Australia.

The company, which secured a mining licence for its South Gobi project in Mongolia earlier this year, plans to issue new shares at 70 cents each.

The firm has a 70% stake in Terra Energy, which is expected to produce its first coal from the South Gobi project in the first half of 2012.

The South Gobi resource now totals 70.4m tons of coking coal, an increase from its earlier estimate of 63.1m tons.

A mine with an annual production capacity of one to two million tons of coal could be built at the South Gobi development site.