KEY POINTS:
The much awaited Pike River Coal float could be delayed further after New Zealand Oil and Gas pushed back the mine's production timeframe for a third time.
The mine, expected to be New Zealand's second largest coking coal exporter, is now expected to produce coal in the March quarter of next year, - a delay of up to three months because of unexpected "variable rock conditions", the company said.
The delay may prove another setback to NZOG's plan to spin off and float Pike River, which has suffered teething problems from the outset.
NZOG, which with a 54 per cent stake is the majority owner, proposed floating its subsidiary in 2001, but has delayed the event many times.
Brokers were tipped to receive a prospectus in March, but one did not appear and NZOG did not explain why.
In December last year chairman Dennis Wood, and independent directors Graeme Duncan and James Ogden resigned from the Pike River board because they said NZOG had taken over control of the float.
Pike River chief executive Gordon Ward said the delay in coal production and in an IPO would not adversely affect investors.
"That's the business of mining. There's only one way to work out how long a tunnel will take [to build] and that is to construct it," he said.
But one NZOG shareholder, who asked not to be named, said yesterday he would rather the float did not go ahead until closer to when the mine started producing and things were more settled.
"Then you can say, the exchange rate is this, the company's making that - it would be easier for the market."
New NZOG chief executive David Salisbury said the delay in the Pike River float was "because of finance and structuring issues" but would not elaborate on what those issues were.
"Obviously those are getting urgent attention.
"Our immediate priority is concluding funding arrangements."
Ward said the company was completing debt financing.
The regulatory approval process for a public offering of shares in the mine was well advanced, he said, but the high dollar was having an effect on the IPO's size.
"When we put the prospectus out [we want it to] reflect what's happened over the past couple of months with the dollar, and need to ensure we get it as up to date as we can get it."
Wellington brokerage McDouall Stuart is leading the float.
In its 2005 annual report, NZOG said the mine's first coal production was scheduled for November 2006, then last year's annual report predicted first coal production in this year's December quarter.
NZOG will remain a shareholder in Pike River post float, but Salisbury could not say how much it would hold.
Ward said tunnelling progress at the Pike River Coal Mine was behind schedule. One factor was variable rock conditions which geologists had not expected.
However, the rate of advancement in the mine tunnel had improved since January.
Ward expected the rate to continue to improve, especially as the tunnel got closer to 2100 metres where there was "softer" rock.
Mine contractor McConnell Dowell was installing a conveyor to help speed up removal of rock.
The company had also spent $250,000 on a "shockrete" machine which lines the tunnel and helps prevent rocks falling.
"Overall we're behind schedule. Whether we can claw that back or not we won't know until we've actually built the tunnel."
The mine, near Greymouth on the West Coast of the South Island, has taken eight years to get the necessary consents, including an access agreement with the Department of Conservation.
All up the mine is expected to cost about $174 million and about $50 million has been spent so far.
In February NZOG appointed John Dow and Stuart Nattrass to the PRCL board. John Dow is former managing director of Newmont Australia, and Nattrass is a director of Fonterra and a former global head of foreign exchange risk for Westpac in Sydney.
Coal play
* Floating Pike River was first proposed in 2001.
* The IPO has been delayed four times.
* A prospectus was expected in March but did not appear.
