New Zealand's Pike River Coal Ltd plans to raise NZ$45 million ($22 million) through an issue of new shares and a placement to an investor, it said on Tuesday, after delays to production and sales.
It said the funds would be used to provide working capital after a rock fall disrupted mining, delaying progress to steady production at its mine in the South Island.
"The rights issue is being attractively priced for our shareholders who have shown strong support as the mine progressed through the development phase," said chief executive Gordon Ward.
Pike River will offer one new share for every five currently held at 70 NZ cents each with a bonus option, which would raise NZ$41 million. A placement of new shares to an investment institution would raise a further NZ$4 million.
Shares in Pike River Coal, which came off a trading halt, last traded down two cents or 2.5 percent at NZ$0.78. The stock has fallen 11 percent so far this year, compared with a 9.8 percent drop in the benchmark top 50 .NZ50 index.
New Zealand Oil & Gas Ltd, which owns around 30 percent of Pike River, said it would both partly underwrite the issue as well as take up its full entitlement of new shares, funded by its large cash reserves.
Two Indian companies Saurashtra Fuels Ltd and Gujarat NRE Coke Ltd also hold substantial minority stakes in Pike River.
Lead manager for the issue is McDouall Stuart Securities.
Pike River mines hard coking coal used in steel making and said last year it had signed contracts for $300 a tonne for the first production by the end of this month, with its Indian shareholders and two Japanese steel mills.
Source: Reuters
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