NZOG comes off trading halt

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 said.

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 reported yesterday.

"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 the loan.

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 million.

He estimated Pike, which carries about $25 million in debt at present, might be carrying $60 million to $65 million by June 2011.