Final touches on Pike River Coal's $35m IPO

Details of a $35 million share float and listing of the NZX's only coal-mining stock are due within weeks, as New Zealand Oil and Gas puts the final touches on its Pike River Coal IPO.

NZOG said last year that it was aiming for a stock exchange listing of the spun-off Pike River company in late March, but shareholders are still waiting for news.

A company spokesman said yesterday that details of the float were expected next month.

Pike River Coal is developing a mine on the West Coast at a cost of $100 million.

Indian coking company Saurashtra Fuels Private and NZOG have already made a combined contribution of $40 million towards creating what will be the country's biggest private sector coal exporter.

NZOG owns 65 per cent of the company and Saurashtra owns 10.6 per cent. Development costs will be funded by debt and up to $35 million in equity from the share offer.

Saurashtra is India's largest privately owned coke manufacturer and has agreed to buy at least 150,000 tonnes of high-quality Pike River coal every year for the mine's life, at market price.

NZOG has said a "significant portion" of any shares from the $35 million capital raising will be reserved for its own shareholders.

The first coal is due out of the mine in November and production will build up to one million tonnes a year by 2008.

The company has also got preliminary agreements with two major Japanese steel mills for the sale of a combined 450,000 tonnes a year of coal for a minimum of four years.

Pike River hopes that record worldwide steel production, driven by China and India in particular, will keep pressure on coking coal prices.

After floundering around the 30c mark, NZOG shares have enjoyed a strong run since hitting a low of 26c in March 2003.

The share price reached a peak of $1.28 in February last year and now stands at around the 90c mark.

NZOG shares closed up a cent yesterday at 91c.