NZOG delays start date of production from Pike River coalmine

New Zealand Oil and Gas has pushed back the start date of its Pike River coalmining venture by nearly a year.

The NZX-listed prospecting company told Australian institutions and brokers yesterday that production at the Greymouth mine would not start until the third quarter of next year.

The mine had been expected to start production by this November. No reason was given for the change of date.

NZOG has long been planning to float Pike River, in which it owns a 69 per cent stake, but it did not give an update on the float process this week.

However, although general manager Gordon Ward made no mention of Pike River Coal's initial public offering (IPO) at the investor briefing, a company source said a prospectus was expected soon.

The company said much of the work on the 8km access road to the mine tunnel entrance had been completed, bridges had been built, the final design of the coal-slurry pipeline completed and 10km of seamless pipeline had been ordered from Japanese suppliers.

Contractor bids for a build-own-operate contract for the coal preparation plant were due during the June quarter.

Ward also touched on a coastal prospect 100km north of New Plymouth with the potential to produce up to 70 million barrels of oil.

He said the Felix prospect in the northern Taranaki oil fairway showed promising exploration potential and further investigations were planned in the next six months.

The Felix prospect was one of the company's most exciting, straddling an area between the mainland and the Tasman Sea, with new information indicating good prospects.

"It's enough to give people the idea of the potential of what we're looking at," he said, but further seismic surveying was needed. Part of the field's attractions was its location close to shore, meaning drilling costs could be less expensive.

NZOG has a market capitalisation of $230 million and 11,000 mostly local shareholders. It has a 69 per cent stake in the company. Indian coking coal company Saurashtra Fuels Private owns 10.6 per cent.

Coal production is expected to build to more than 1 million tonnes annually by 2008. Two major Japanese steel mills have preliminary deals to take a combined 450,000 tonnes of coal a year for a minimum of four years.

NZOG shares hit a low of 26c in March 2003 but were steady yesterday at $1.05.