Solid Energy's balance sheet is debt heavy and the coal producer would have needed a large capital injection from the taxpayer to keep it operating as it was before the restructuring announcement made on Monday.
The company had $295 million of debt at the June 30 balance date, up from $220 million in the previous corresponding period.
The company is making 440 of its staff redundant, with the West Coast the hardest hit. The Spring Creek mine is being mothballed with staff numbers reduced from 254 to 32.
After two months of underground work, preparing the mine for "care and maintenance", the workforce would be reduced to 20.
Spring Creek had not been profitable for some time, Solid Energy chairman Mark Ford said.
Since the Spring Creek Mining Company was set up in 2007, it had lost more than $100 million. It had been in a development phase since the end of 2011, with minimal coal production, and had cost the company $50 million during that time.
Spring Creek would not have returned to full production until early next year and to reach that point, a further $40 million to $70 million would have been needed, he said.
An analysis of Solid Energy's balance sheet for the year to June showed Spring Creek was not the company's only problem area.
Before tax write-backs were taken into consideration, Solid Energy had written down its assets by $151.7 million in the year. It had gained $2.5 million in the recovery of a loan, to give total impairments of $149.2 million.
The company reported an operating loss of $27.7 million after impairments for the year, down from a $137.2 million profit in the previous corresponding period.
Mr Ford said the price for Spring Creek's semi-soft coking coal would need to be between $180 to $200 a tonne for the operation to deliver a profit and pay off the investment made in it.
International contracts were now being made about $120 a tonne.
Opponents to both the mothballing of Spring Creek and the Government's plans to partially privatise the state-owned asset have called on the Government to pump more money into the company or to stop the partial asset sales process.
However, if Solid Energy was now partially privatised, the company would be in a stronger position to raise much-needed capital without calling on the Government, currently the sole shareholder.
A partially privatised company could go back to shareholders for more capital through a rights issue or a shareholders' purchase plan.
The Government has indicated it does not want to take on more debt, and having a variety of shareholders gives the company a chance to raise money from sources other than banks.
Economic Development Minister Steven Joyce has come under criticism for suggesting objectors pull their appeals to the Bathurst Resources Escarpment mine, near Westport.
But Bathurst is a publicly listed company and succeeds or fails on its own merits. It would not require a handout from the Government to keep operating, and shareholders note the risk of investing in a mining company when they buy its shares.
