The company is on track to begin hydro-mining in the July-September quarter, with roadways being developed within the coal seam to allow water storage and pumping systems to be installed to support the future mining operations.

 

Based on a revised production ramp-up and the latest mine plan, Pike River has pushed back its second export shipment of hard coking coal to July 2010.

 

Production for the year ended June 30, 2011 is forecast to be about 620,000 tonnes.

 

The mine expects to hit its average steady state rate of 1 million tonnes per annum in the first half of 2011.

 

Pike River chief executive Gordon Ward said the mine had driven the first access roadway through the rock graben back into coal.

 

Over the past six months, Pike River staff and contractors have been working in two primary areas underground at the pit bottom, which is situated at the far end of the access tunnel.

 

Access roadways have been driven out towards the hydro-mining areas west of the graben, and large underground excavations are being constructed for hydro-mining infrastructure in the southern pit-bottom area.

 

"We have driven the first access roadway through the rock graben and graded that roadway uphill back up into the coal seam. The roadway is now being driven to the closest hydro-mining area, located 80 metres to the northwest of the rock graben," Ward said.

 

"The access roadways are built for the life of mine and need to be on a constant grade to ensure that coal will wash downhill without pumping from the uphill mining operations."

 

A second roadway through the graben has a further 50m to re-enter the coal seam.

 

The company said in-seam drilling had proven to be a valuable mine-planning tool.

 

Six in-seam holes have been drilled into the coal seam in a fan from the northwest down to the south, all confirming at least 300m of coal once through the rock graben.

 

All in-seam holes intersected 9m of Brunner seam premium hard coking coal consistent with the updated geological model.

 

The most recent hole was drilled through the graben and continued to the west beyond the location of the first hydro-mining areas.

 

The company said the results were consistent with the previous in-seam holes described above and confirmed the absence of significant faulting in this target area.

 

Current drilling is radiating out to give detailed information for approximately the first six months of hydro-mining extraction.

 

To keep the mine on track, Pike River yesterday announced a $10 million placement of shares and an underwritten $40 million renounceable pro-rata rights issue to shareholders and option holders.

 

The rights issue offer will be two new shares for every 19 Pike River shares; and two new shares for every 19 Pike River listed options at 88c per new share.

 

The placement will be made to institutional investors and two Pike River major shareholders – New Zealand Oil & Gas Ltd and Gujarat NRE.

 

"The rights issue offer and placement will provide funding through the ramp-up into hydro-mining operations and will also provide a cash buffer of $18 million," Ward said.

 

In addition to this equity raising, Pike River will go ahead with a binding agreement with NZOG announced in February to subscribe to a new convertible bond to refinance the $US28.6 million bond facility, and the granting of a two-year option to NZOG to purchase Pike River coking coal, over the life of mine, at market prices negotiated annually.

 

The NZOG funding package is conditional on Pike River executing this coal option agreement with NZOG.

 

This week’s raising is expected to open April 30 and close May 19.

 

Pike River shares closed at 80c yesterday.