Pike River hopes to gain bond extension

Pike River Coal expects to gain an extension to the production condition on its US$27.5 million ($37.8 million) Liberty Harbor convertible bonds.

Pike River has asked Liberty Harbor to extend a production condition on the bond to June 30, 2010 from November 30. The mine must be capable of producing 800,000 tonnes in the 12 months from the condition date.

Problems in the ramp-up at Pike River's mine, near Greymouth, delayed export shipments and meant the company needed extra funding.

Managing director Gordon Ward told the company's annual meeting yesterday that a review of key mining issues was completed last week by a technical adviser to Liberty Harbor. No major concerns with the operation were identified.

Based on this response, Pike River believed the condition would be extended, although commercial terms were still to be addressed, Ward said. Liberty Harbor is part of a Goldman Sachs asset management group.

Ward said Pike River was also carefully weighing up alternatives, including debt and equity, for a further $20 million in working capital. Those funds were not needed until February.

Despite the difficulties encountered in developing the mine, all the infrastructure was in place for mining about 1 million tonnes of coal a year, for at least the next 18 years, Ward said.

More than 17,000 tonnes of coal had been stockpiled, and would be part of the inaugural export shipment of up to 30,000 tonnes of hard coking coal to be sent to Pike's Indian customers, due in the January to March quarter of 2010.

Pike River shares closed down 1c yesterday to 99c.

- NZPA