Shares in New Zealand Oil and Gas - the former parent company
and majority shareholder in Pike River Coal - came off a
trading halt yesterday, after investors were told there was
still $12 million of a $25 million short-term debt facility
available for Pike to use.
Shares in NZOG closed down yesterday at 87c, down about 29%
on the Friday close.
NZOG, as Pike's largest shareholder with 29.4%, placed its
shares on a trading halt on Monday in order to prepare a
statement to investors "on the possible implications for
NZOG" of Friday's explosion.
With Pike River staff and management focused on finding the
miners, NZOG was expected to be considering the financing
problems the mining operation had been facing in recent
months, Craigs Investment Partners broker Peter McIntyre
Pike River, while not yet in full production, is a major
economic driver in the Greymouth area.
"There's a lot uncertainty out there ... the miners, damage
and repairs and ongoing funding issues," he said.
The development of Pike has been plagued with problems.
The 10-year project has cost about $290 million and before
the explosion was least 20 months behind schedule, from a
combination of adverse rock formations, blockages, equipment
teething problems and underground roading issues.
Pike River secured a $25 million short-term facility from
NZOG last month, which is repayable in mid-December.
Pike River chairman John Dow said an announcement about
Pike's future funding was on hold, but NZOG and other lenders
had been briefed since the explosion, The New Zealand Herald
"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.
Yesterday, NZOG outlined its equity, debt, bonds and the
short-term lending facility to Pike, before asking for the
suspension to be lifted on the New Zealand and Australian
bourses, saying Pike still had $12 million it could draw from
NZOG developed the specialist hard-coking Pike River Coal
coal mine under its own umbrella before publicly listing the
company in 2007 and has put $85 million into the venture.
NZOG's board said in a statement to the market it and staff
extended their thoughts and sympathies to the men trapped at
the Pike River mine, their families, friends and colleagues.
Mr McIntyre put Pike River's running costs at $6 million to
$7 million a month.
It has $25 million due for repayment to NZOG in mid-December.
Estimates earlier this month were that it would need $50
million, but Mr McIntyre said the full cost could now be $75
He estimated Pike, which carries about $25 million in debt at
present, might be carrying $60 million to $65 million by June