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Pike River mine future in doubt

Pike River Coal says work on evaluating the impact on its West Coast mine of Friday's explosion is "down the line", as it focuses for now on finding the 29 men unaccounted for.The Pike River mine has great promise but extracting its quality coal

NZPA
Tue, 23 Nov 2010

Pike River Coal says work on evaluating the impact on its West Coast mine of Friday's explosion is "down the line", as it focuses for now on finding the 29 men unaccounted for.

The Pike River mine has great promise but extracting its quality coal has provided more challenges than expected.

Last month 29.4 percent shareholder NZ Oil&Gas (NZOG) agreed to provide Pike with a short term working capital facility of up to $25 million, which has an interest rate of 13 percent and was due to be repaid in December.

Pike River chairman John Dow told Radio New Zealand that an announcement about Pike's future funding was on hold.

Pike had talked to NZOG about what would happen as a result of Friday's incident, and was also talking to other people who were lenders to the company.

"But beyond that, I haven't got a lot to say at this point. We're still discussing the best way forward," Mr Dow said.

A suspension on trading in Pike's shares would remain in place until the company was able to do a meaningful evaluation of the impact on its physical infrastructure at the mine site.

"We're focused very much on finding our staff, and when that's done and the mine has been restored to habitability, then we'll be able to do a measured evaluation of the impact on the underground infrastructure," Mr Dow said.

"That will lead to all sorts of other understandings then about the physical impact and the financial costs of restoring operations.

"But to be quite honest, those are possibilities that are down the line."

Two of the company's customers were also shareholders in Pike River and had nominees on the board, and so had been very much in the loop as to what was happening and the impact on ongoing contractual relationships, Mr Dow said.

Pike River had been expecting to send a large shipment of coal to a Japanese customer at the end of the year, and the company was in touch with that customer.

Along with the suspension of Pike shares yesterday, the NZX also placed a trading halt on NZOG's shares.

Yesterday morning NZOG said it was preparing information on the possible implications for itself of the Pike incident, and at that point it had been expecting to provide that update before the market opened today.

In a brief not yesterday evening, NZOG said it expected to make a statement and resume trading on the NZX and ASX this afternoon or first thing Wednesday morning.

NZPA
Tue, 23 Nov 2010
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Pike River mine future in doubt
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