close
MENU
1 mins to read

NZOG steps in for Pike River

NZ Oil and Gas has agreed to provide a short-term working capital facility to Pike River Coal of up to NZ$25 million to sustain underground mine development.NZOG is Pike River Coal's majority shareholder at 29.4%.The short-term facility has an interest ra

Nina Fowler
Thu, 30 Sep 2010

NZ Oil and Gas has agreed to provide a short-term working capital facility to Pike River Coal of up to NZ$25 million to sustain underground mine development.

NZOG is Pike River Coal’s majority shareholder at 29.4%.

The short-term facility has an interest rate of 13%, establishment and monitoring fees totaling $600,000 and is repayable in full on 15 December 2010.

As part of the arrangement, NZOG has requested a one-year extension to their coal option agreement, initially granted to NZOG in April 2010. The request will be put to Pike River shareholders.

Analysts raised concerns about Pike River’s cash flow in August on expectations that the company’s second coal shipment would be further delayed.

Pike River general mines manager Peter Whittall told NBR today that payment for the second shipment was received last week – a “bit over $6m” at the benchmark premium coking coal price of about US$225 per tonne.

The company expects to dispatch at least one more shipment by December.

Mr Whittall was unsure how much of the facility would be needed.

“We, as a company, pitched for $25m to have some movement in the shipment timing, more than we think will actually happen.”

The working capital facility announced today will cover the purchase of new hydro-mining equipment, understood to already be commissioned, installed and working well.

NZOG chief executive David Salisbury said today that the new arrangement – which will allow Pike River to focus on ramping up to full production - is in the best interests of both companies.

NZOG has previously indicated that its share of Pike River Coal is not a core asset and will be sold off “when the time is right”.

Chris Roberts, NZOG corporate affairs manager, confirmed to NBR that today’s announcement has not changed that position.

Nina Fowler
Thu, 30 Sep 2010
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
NZOG steps in for Pike River
8963
false