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Pike River makes first export shipment as investors await capital raising plans

Friday 19th February 2010

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Pike River Coal, which has been forced to raise additional capital during development of its coal mine near Greymouth, announced its first export shipment – 20,000 metric tons of coking coal, worth $3.4 million, being sent to India.

The customer, Gujarat NRE, one of two India coke companies that have agreed to buy Pike’s output for the life of the mine, estimated to be at least 18 years. The company’s long-term assumptions are for $1 billion of coal to be extracted, based on an average price of US$140 a ton and an average exchange rate of 59 US cents.

Gujurat and Saurashtra Fuels will take about 55% of Pike’s coal, with Japanese steel mills contracted to buy 22% of the mine’s output over the next three years.

Shares of Pike were unchanged at 93 cents on the NZX today and have sunk almost 20% in the past six months as the company had to contend with unforeseen extra development and remedial work at its site 50 kilometres northeast of Greymouth.

The delays drained Pike’s cash reserves as it continued spending on development without any revenue from coal sales, forcing it to tap investors for additional funds.

Chief executive Gordon Ward has said Pike needs at least $20 million more to tide it over and investors are awaiting details of its plans, which could include a mix of debt and equity offered at a discount.

Pike is 30% owned by New Zealand Oil & Gas.

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