West Coast hard-coking coal specialist Pike River Coal bid farewell to its first shipment of export coal to India yesterday - 20,000 tonnes worth $3.4 million - having spent $270 million in mine development since listing on the stock exchange two and a-half years ago.
The company has overcome years of negotiations, multiple capital raisings and 20 months of delays due to geotechnical problems and rockfalls to finally get the 20,000 tonnes loaded at Lyttelton yesterday.
Of the $270 million spent, about $50 million was on unexpected costs, prompting Pike to twice go back to shareholders for more working capital.
Pike chief executive Gordon Ward was upbeat about the first shipment, praising the long-suffering investors who have stood by Pike.
"We're very appreciative investors have kept their eye on the prize.
"It's a milestone day for us after some pretty intensive efforts," Mr Ward said.
Shares in Pike were trading at a year-high of $1.23 in June, and were yesterday at about 93c.
The coal-seam being mined at present is in the rugged Paparoa Range, 50km northeast of Greymouth.
Pike has always been bullish on the possibility of mining another adjacent coal seam, but its estimated content has not been added to coal projections.
The hard-coking coal loaded aboard the Tian Bai Feng yesterday is a crucial component of steel making.
It is going to Indian customer Gujarat NRE Ltd, which owns a 7.6% stake in Pike and is one of two Indian customers contracted to 55% of Pike's coal over its mine life; estimated at 1 million tonnes per year for 18 years.
Craigs Investment Partners broker Peter McIntyre remains cautious on output predictions of a million tonnes a year, saying 800,000 tonnes was more likely.
"I hope they do achieve a million [tonnes].
"But Pike has a history of disappointing the market," Mr McIntyre said.
Mr Ward was confident yesterday that once hydro-mining (water blasting) began in mid-2010 Pike would be producing enough coal in 12 months to supply 800,000 tonnes by the end of that financial year and would move towards the 1 million tonne per year rate - which was its capacity, he said.
Because of the compounding delays, Pike River offered and achieved a fully subscribed rights issue of $41 million in April last year and was considering another issue and debt raising, which analysts estimated at between $20 million and $40 million, to supply more working capital.
Pike was spun-off from New Zealand Oil & Gas Ltd for listing and NZOG maintains a 29.5% stake.
Mr Ward declined to comment on the need for more capital yesterday, saying details of the issue would be released soon.
In November Pike was blasting through a large 100m wide "graben" (depressed hard rock), which drill testing had failed to identify earlier, estimating at the time it would be "back into coal" in early-January.
Mr Ward said he expected to hit the coal seam in the next three weeks.
