Pike has delivered two coal exports, totalling about $9.9 million, and is ramping up toward full production.
The mine, in the rugged Paparoa Ranges, about 50km northeast of Greymouth, on the West Coast, has already cost about $288 million and is at least 20 months behind schedule.
The funding facility was not unexpected, with brokers Forsyth Barr predicting in late August Pike would require at least $10 million more capital, possibly from NZOG, which spun off and listed Pike in May 2007.
After Pike flagged the need for a facility earlier in September, shares rose from $1.09 to yesterday's $1.14, where they remained steady.
NZOG chief executive David Salisbury said yesterday the new arrangements were in the best interests of both companies, with NZOG having a majority 29.4% interest in Pike.
The short-term facility is repayable in full in December.
In late August, for the financial year to June, Pike posted a tripling of after-tax losses at $39 million for the year to June, highlighting that it was still in development phase; a scenario which did not draw undue criticism from analysts.
Yesterday, Forsyth Barr broker Suzanne Kinnaird said having secured $25 million, Pike now provided itself with some "headroom" to meet production targets, and secure additional resources, such as equipment.
"New Zealand Oil and Gas has done well out of the deal, with a 13% interest rate and a $600,000 establishment fee," she said.
Craigs Investment partners broker Chris Timms said it was fortunate Pike had such a supportive, well-capitalised majority stake-holder to call on, as a similar facility from a banking syndicate could have financially "onerous".
Pike River will also ask its shareholders, who have been tapped three times since listing with further rights issues, to approve a one-year extension to an existing coal option NZOG holds.
In April this year, NZOG provided a replacement convertible bond facility for $US28.9 million ($NZ39.2 million) for Pike and took a coal option, which covers uncontracted coal quantities for the first three years and up to 30% of annual coal production for the remaining life of mine - which is estimated at 1 million tonnes per year for 18 years.
• Earlier this week, Pike announced it would next year begin exploration drilling of the Paparoa coal seam, which is about 200m below and parallel to the present Brunner seam it mines, having talked up Paparoa's potential for several years.
• Pike chief executive Gordon Ward, who had been with the company from its concept 14-years ago, was replaced a fortnight ago by Peter Whittall, general manager for the past five years.
