Pike River Unable To Explain Share Price Hike

NZ Stock Exchange asks for reason behind 15% rise

The New Zealand Stock Exchange has written to hard coking coal miner, Pike River Coal, asking it to explain at 15% rise in its share price.

The exchange wrote to Pike River after shares rose 14.74% to $1.09 on Wednesday; however, managing director Gordon Ward has said that there was no material information that could be released to explain the rise. The shares rose again on Friday, up 4.5% to $1.14. Analysts suggested that bids for Australia’s Macarthur Coal, a rise in coking coal prices and a shift to quarterly rather than annual contracts were possible reasons behind any increase in the share price.

In March Pike River exported its first shipment of coking coal to India and aims to produce 1 million tonnes of coal per year.

Pike River Reports $14 million H1 Loss

Pike River Coal, New Zealand’s only listed coal miner, posted a $14.1 million first-half loss on Wednesday which, the company said, reflects the mine’s development phase.

The loss to 31 December 2009 compared to a $9.55 million loss for the same period last year and includes a $4.3 million unrealised exchange gain (relating to currency movements on the USD convertible bond), a $3.8 million depreciation and amortisation charge and $2.6 million of interest expenses.
Total investment in mine assets was $279.3 million including a $14.6 million investment was made in mine assets during the period.

Chief executive Gordon Ward commented: “Once hydro-mining is underway in the July-September 2010 quarter, the typical export shipment size of premium hard coking coal will be approximately 60,000 tonnes. Once full production rates from hydro-mining are achieved, the mine is expected to produce an average of approximately 1 million tonnes of premium hard coking coal a year.”

The company is also to raise $50 million in an equity issue. The company had suggested in its quarterly report last October that it needed $20 million in working capital. Biggest shareholder New Zealand Oil and Gas will refinance its existing $US28.9 million ($42m) bond facility, if shareholders approve. NZOG is to subscribe to its 29.5% interest in the rights issue and will also have a two-year option to buy Pike River coking coal at annually-negotiated market prices up to the existing un-contracted amount of coal to March 2013 and up to 30% of annual production for the rest of the mine’s life. Pike River said this would not affect contracts with Asian customers and it would still be able to sell on the spot market.

The new convertible bond will allow Pike River to repay its Liberty Harbor bond facility of $US27.5 million.

Last week Pike River despatched its first shipment of coal to India.

Pike River Sends First Coal Shipment To India

New Zealand hard-coking coal miner, Pike River Coal, sent its first shipment of coal to India on Friday, a 20,000 tonne consignment worth $3.4 million shipped to Indian customer Gujarat NRE Ltd, which owns a 7.6% stake in Pike. GNRE is one of two Indian customers contracted to 55% of Pike's coal over its mine life.

CEO Gordon Ward said "It's a milestone day for us after some pretty intensive efforts." Pike has spent $270 million getting to this stage, $50 million of which were unexpected costs, forcing the miner to twice go back to its backers for more funds.

"It's a milestone day for us after some pretty intensive efforts," Mr Ward said, "we're very appreciative investors have kept their eye on the prize.”

Pike River Delays Exports From NZ Coal Mine

The first 60 000-t export shipment from ASX-listed Pike River Coal’s new mine has been delayed until the January-March quarter in 2010.

The miner initially planned to export its first coal from the Pike River mine, in New Zealand in mid-November.

Pike River Coal stated on Monday that production of premium hard coking coal from its new mine has been running at lower-than-expected rates, owing mainly to early geological complexity and machinery difficulties, resulting in slower roadway development driveage.

“The first 60 000-t export shipment, scheduled for mid-November 2009, will unfortunately be further delayed while the pit-bottom development roadways are extended to the area where first coal will be mined by hydro-monitors,” the company said in a statement.

The first hydro coal was expected in the April-June 2010 quarter.

“The Pike River mine has overcome many challenges to get into operation, and while the current delay is frustrating for investors, customers and staff, it is an issue that many new mines have to face and work through. Most of the hard work has been done and investor patience is set to be repaid, with Pike River producing low-ash coal at a time of rising global demand,” said Pike River Coal CEO Gordon Ward.

The underground coal handling facilities at Pike River have been commissioned and pit-bottom is continuing to be developed with a combination of coal and stone drives. The three new coal cutting machines have been largely repaired and modified, with the remaining outstanding modifications being replacement of tracks on the two continuous miners by the German manufacturer.

Both 60-t machines were currently operational, but repairs, including track work, has resulted in considerable production downtime, during the past month.

Other main factors limiting production over the past month, have included the unavailability of some underground coal and rock haulage machines, owing to breakdowns, a greater level of roof support being required owing to the proximity of the Hawera fault, and the need to familiarise new staff with machinery and mining practices.

Pike River Coal stated that the countermeasures taken by the company included more intensive maintenance, intensified operator training, and changes to underground work practices following internal and third-party review.

“The mine is working two shifts, 24 hours a day, seven days a week in order to meet our production targets, and all Pike River’s management and staff are focussed and committed to this outcome,” Ward noted.

Source: Mining Weekly

Pike River Progressing Mine Repairs

Pike River Coal Ltd has made good progress towards its goal of restoring ventilation to its coal mine on the West Coast of the South Island following a rockfall in February.

The mine is yet to export any coal and delays in its development has caused the company to raise $45 million this year. While production has been delayed the price of hard coking coal has been falling.

The company has employed 110 people out of the total workforce of 150 required for full production.

Pike River said today the first export shipment of 60,000 tonnes of coal to Japan was due in the July-September 2009 quarter.

Coal production with one of the continuous miner machines was to recommence at the start of May, once reaming and lining of a 600mm diameter "slimline" ventilation hole was completed.

Full ventilation would be restored by the end of May with completion of an angled shaft bypass around the main ventilation shaft where it was blocked by a rock fall.

Large-scale production would come with the arrival from Australia of a high pressure water cannon, which would cut coal at a rate averaging more than 2000 tonnes a day.

Hydro mining was scheduled to start during the October-December quarter, boosting production to one million tonnes a year.

The economic downturn has reduced demand for steel and, as a result, premium hard coking coal prices have fallen from the record $US300 ($NZ532.76) per tonne in the 2008 Japanese fiscal year.

Pike River said the recent annual benchmark price-setting process for the year ended March 31, 2010 saw premium hard coking coal priced a $US128 per tonne.

"Pike River anticipates a price at or about this level when it completes its own negotiations.

"That would still be approximately $US30 per tonne higher than forecast for this period at the time of the company's 2007 initial public offer."

Source: National Business Review, NZ

Pike River Success At Brunner Coal Seam

New Zealand coal miner, Pike River Coal, has confirmed the presence of three potentially mineable seams of low sulphur hard coking coal beneath the main Brunner seam it has opened up under the Paparoa Ranges near the west coast of New Zealand's South Island.

A new exploration hole drilled from the surface to more than 250 metres below the Brunner seam, has found three additional, separate, mineable seams of 2.2 metres, 3.4 metres, and 5.4 metres thickness respectively. The new corehole was located 600 metres north of the ventilation shaft and 1900 metres northeast from a previous hole drilled into these coal seams.
The new corehole intersected the first seam 140 metres below the Brunner seam and the third (and thickest) seam 240 metres below the Brunner seam.

Pike River Chief Executive Gordon Ward cautions that one drilling test – the first in nearly 20 years - does not prove the extent of the new resource “but it is a most positive and encouraging result”.

The only previous corehole, located close to the western outcrop along the Paparoa ranges and about 1.3 kilometres south-west of the ventilation shaft, intersected six thin seams with just one seam of about 2 metres thickness. The current hole appears to have all the seams represented, but all seams have thickened appreciably.

Based on sampling the Paparoa coal seams which are exposed along the western outcrop, it was expected that the coal resource would improve to the north. The latest corehole has confirmed this is the case.

Pike River Coal is now waiting for test results, due in a few weeks, on the quality of coal in each of the three potentially mineable seams.

Over the next 18 months, as mining of the Brunner seam advances, more test drilling will be undertaken from underground using an in-seam drilling rig, to establish the thickness and length of the Paparoa seams before any decisions are made.

Analysis from the original test drilling nearly 20 years ago and sampling along the western outcrop of the Paparoa Ranges showed the Paparoa seams vary in thickness with potential for up to 8 million tonnes of recoverable coal.

Mr Ward says if any of the new Paparoa seams prove economically viable, Pike River Coal would benefit from having a source of low sulphur coking coal on-site and since much of the infrastructure is already in place development costs would be significantly reduced.