Halt on mining shares likely

Pike River coal mine. Photo / Greymouth Star

Pike River Coal shares and those of its cornerstone shareholder, New Zealand Oil & Gas, are likely to put on a trading halt this morning following the West Coast mine blast

Trading in both companies was halted on Australia's ASX shortly before that market closed on Friday evening. It is in place until tomorrow.

The New Zealand market closed on Friday before the seriousness of the Pike River blast was known.

Executives from both companies will discuss the halt today. NZOG said it would be unusual for it to be in place in one market and not the other.

Pike River's share price fell 4c, or 4.35 per cent, to 88c on Friday but brokers said news of the explosion at about 4.30pm had not spread and the volume of trading was not large.

New Zealand Oil & Gas has invested about $85 million for a 29 per cent stake in Pike River which it spun off to develop the coal mine northeast of Greymouth where work began in 2006.

Last month NZOG agreed to provide Pike with a working capital facility of up to $25 million, which has an interest rate of 13 per cent and is to be repaid by December 15.

While Pike River had not drawn on the full amount, Pike was investigating ways of extending the short-term funding through other means, which could have included going back to shareholders.

The company met investors last week to discuss further funding for the project that has been plagued by tunnel construction problems and production delays but was moving towards reaching "steady state" production next year.

Its hard coking coal is used in steel furnaces. Fifty-five per cent of it is contracted to two large Indian firms.