KEY POINTS:
New Zealand Oil and Gas yesterday took control of the planned float of Pike River Coal after the miner's three independent directors resigned, a source close to the company says.
Until yesterday the float, slated for February, had been in the hands of the Pike board. But the source said NZOG believes it can better fulfil its promise to float the company by taking over the process itself.
Reasons for the departures of chairman Dennis Wood and independent directors James Ogden and Graeme Duncan remain unclear.
Talk has centred on whether Pike's shareholders, including 61 per cent shareholder NZOG, were extending the fledgling company sufficient funds to develop the mine. Wood, Ogden and Duncan were said to have wanted more headroom built into the development budget.
NZOG has declined to comment, while Wood and Ogden have declined to even confirm their moves.
However, more detail could emerge today when NZOG is due to inform the NZX of the move and give an update on the progress of the Pike mine.
NZOG's decision to take direct control is sure to raise doubts among Pike's potential investors, coming so close to the planned flotation.
It is the latest in a series of setbacks to the float of the mine, which is in the Paparoa Range, northeast of Greymouth, and is capable of producing high-quality coking coal.
Last month, NZOG put the float on hold for the fourth time this year. It said it hoped to finally register a prospectus in February. It originally planned to float at the start of this year.
NZOG has previously blamed delays in securing bank financing as well as negotiating a deal with India's Gujarat NRE Coke, which became the project's third cornerstone investor in June. Gujarat injected $20 million into the company and has agreed to buy 40 per cent of Pike's production for the life of the mine. Its stake in Pike is linked to the price achieved during the flotation.
The other cornerstone investor is Indian coking coal company Saurashtra Fuels, which paid $17 million for a 10.6 per cent stake.
The mine will cost about $174 million to develop, including working capital of $30 million. This was to be covered by the $60 million raised from the existing shareholders, the float, due to raise $60-65 million, and a $65 million loan from Westpac. NZOG is not able to use this loan until the mine development is 80 per cent complete.
Talk of ructions on the board of Pike - which conservatively represents about half of NZOG's sharemarket value - emerged on Wednesday. Since then NZOG's shares have been under pressure and they closed yesterday down 3c at $1.04.
Observers were surprised last night that NZOG has stayed mum, especially since it is in the middle of a $40.5 million capital raising.
NZOG is seeking $23 million with a renounceable rights issue and has placed $17.5 million of new shares with professional investors to fund the development of its Kupe oil and gas prospect and provide the firm with working capital.
Despite the ructions, work on the mine appears to be well under way. Grey District Council mayor Tony Kookshorn - who is part of a consortium that will truck the coal from the mine to Port Westland - said reports from the mine head were positive.
PIKE RIVER COAL BOARD
Raymond Meyer (NZOG).
Tony Radford (NZOG).
Gordon Ward (NZOG).
Dipak Agarwalla (Saurashtra Fuels).
Graeme Duncan* (resigned).
Dennis Wood* (chairman, resigned).
James Ogden* (resigned).
*Independent directors
