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NZ Oil and Gas has agreed to provide up to $25 million extra to help develop Pike River Coal's West Coast mine, following an $85 million capital raising.
NZOG, Pike River's parent and largest shareholder with 31 per cent, said money raised through the initial public offering will run out at the end of January 2008, two months before coal production is scheduled to begin.
"... NZOG has agreed that after 1 January 2008 upon request of Pike River, it will provide equity funding or other financial support of up to $25 million to PRCL on usual and reasonable arms' length terms and conditions to be agreed," NZOG said.
The company said it expected the value of its investment to be "substantially upgraded" as the mine nears production.
Pike River shares listed last week at a 7 per cent premium after the capital raising closed oversubscribed. The much anticipated IPO was delayed many times, and the coal mine project near Greymouth has taken decades to get off the ground.
NZOG's stake has fallen from 61 per cent. Indian interests will hold just over 20 per cent.
The company intends to mine 17.6 million tonnes of high grade, low ash, coking coal identified as recoverable from the Brunner seam over 19 years. That will amount to around $2 billion, at today's exchange rate, over the mine's life.
The mine development cost is $207m.
- NZPA
