Pike River gets mining go-ahead

By CHRIS DANIELS, energy writer

A stock exchange listing for the Pike River Coal Company is now likely after the Government approved its West Coast mine yesterday.

Pike River Coal, 72 per cent owned by New Zealand Oil & Gas, has been trying for seven years to get approval to dig for coal on land managed by the Department of Conservation in the Paparoa Ranges, 40km northeast of Greymouth.

While decisions on funding the $50 million development have yet to be made by the NZOG board, an eventual spin-off and stock exchange listing for Pike River Coal is expected.

The NZOG share price surged 6c to 53c on yesterday's news. Since the start of this year, the share price has climbed 50 per cent, though most of this has been because of the quickening pace of development for its Kupe natural gas field, of which NZOG owns 15 per cent.

NZOG shares have not been valued this high since February 2000.

Conservation Minister Chris Carter yesterday approved in principle the application for an access agreement to the Pike River mine which will allow a road to be built through 3.6km of public conservation land.

On completion, the Pike River mine will be New Zealand's second-biggest export coal mine. Two million tonnes of coal a year is exported at the moment and Pike River is expected to send at least one million tonnes overseas.

The underground mine should have a life of 20 years or more and could open within 18 months.

Pike River wants to truck the coal to Greymouth then barge it to a wharf at Shakespeare Bay, near Picton. From there it would be shipped to the world's steel mills.

Facilities will need to be built at the wharf, which is owned by the Port of Marlborough.

NZOG general manager Gordon Ward said talks with the port company had been going on for some time, and around $25 million would need to be spent on port facilities.

Funding for this "needed to be worked through", said Ward. The port company would require long-term contracts with the coal producers to underwrite such an investment.

The 28 per cent of Pike River not owned by NZOG is owned by private investors, based in Australia and New Zealand.

These investors funded a feasibility study and initial drilling and were involved in the mining industry. Other, smaller New Zealand shareholders later invested in the company.

The idea is to eventually spin off the Pike River Coal Company, and list it on the local stock exchange.

Ward said the board had a variety of options to consider over the next few months, when looking for the $50 million needed to develop the mine.