Reality check for Pike River Coal

Pike River Coal almost halved its production forecasts for the 2011 year to between 320,000 and 360,000 tonnes. Photo / Greg Bowker

Pike River Coal says that its revised production targets are achievable rather than a best case scenario.

The West Coast mining company has encountered many problems with development but has exported two shipments of coal. The company earlier almost halved its production forecasts for the 2011 year to between 320,000 and 360,000 tonnes.

Peter Whittall, who has been responsible for mine development and took over as chief executive on October 2, yesterday faced shareholders at an annual meeting at the mine site.

"Ladies and gentlemen, there has been speculation that I have made a conscious decision to develop a more conservative style in heading the company than has been evident in the past," he said.

The change in leadership provided an opportune time to present a different production forecast.

"These new figures present a range of achievable possibilities rather than a best case scenario and I am personally a lot more comfortable with providing you, our investors, with a more realistic time frame and production schedule as possible while preserving a measure of upside capacity," Mr Whittall said.

The previous forecasts consistently proved to be at the upper end of the range while operations performed at the lower end.

"Now it's time to be more realistic in our approach and forecast production at rates which we have a realistic chance of achieving," he said.

The downgrade in forecast production had necessitated a review of the company's financial requirements and an announcement detailing these plans would be made shortly.

Tony Radford and Stuart Nattrass were re-elected as directors by a show of hands and shareholders also approved an amendment to an agreement which grants major shareholder NZ Oil & Gas an option to buy coal for a longer period.

- NZPA