Pike River Coal Ltd, the operator of the underground mine where 29 miners have perished, remains reliant on a major shareholder for money and has no funding beyond December.The corporate story behind the human disaster is also one of great hope that faded
Pike River Coal Ltd, the operator of the underground mine where 29 miners have perished, remains reliant on a major shareholder for money and has no funding beyond December.
The corporate story behind the human disaster is also one of great hope that faded slowly.
The shares of New Zealand Oil&Gas Ltd (NZOG), the creator of Pike River Coal and its 29.4 percent shareholder, are back in trading halt tonight pending an announcement.
NZOG said on Tuesday that arrangements were being made for Pike River Coal to draw down the $12 million balance of a $25 million facility on the understanding that all secured creditors approve a standstill period of 90 days. The facility provided by NZOG only runs until December.
Pike River Coal's other major shareholders are customers Gujarat NRE Ltd of India, with a 7.1 percent stake, and Saurashtra World Holding Private Ltd with a 5.5 percent stake.
As at July 2, New Zealand institutional investor Accident Compensation Corp held a 4.9 percent stake and New Zealand Superfund had 1.7 percent.
Pike River Coal became a listed company on the NZX and ASX following a successful initial public offering in July 2007 but it has gone back to investors cap in hand four times as the mine development ran into problems.
In March 2008, it raised $60m in a rights issue and $US30m in convertible bond issue and in April 2009 it raised $45m in a rights issue and share placement.
In May this year it was back in the market with a $10m share placement and a $40m rights issue. In September NZOG agreed to the $25m short-term funding facility.
The mine was marketed as an exciting private sector project in an industry dominated by a state-owned coal producer at a time of hope that New Zealand could replicate the miraculous Australian resource story with its own new projects.
The Pike River mine was an attempt to mine sensitively on the edge of a National Park covered in ancient native trees. It was promoted as a mine of the future where mining could address environmental concerns and provide well-paid work in a region reliant on low-paid tourism jobs and a fading timber industry.
Those opposing the mine were concerned about subsidence and acid mine drainage.
The final go ahead came from a Labour Party government in March 2004.
"This mine does represent an intrusion into an area of high conservation values and a decision on whether to allow it to go ahead has been a very difficult one to make because of this," Conservation minister Chris Carter said when giving conditional approval.
But the mine development was slow. Production was delayed by a partial collapse of a ventilation shaft, and a rock graben (an area of hard rock) encountered near the pit bottom.
The first shipment of coal was sent to India in February 2010 and the second was dispatched in the days after the Christchurch earthquake.
