Pike chairman John Dow said discussions were at an advanced stage with potential funders and an outcome is expected by the end of this month.
“During the current quarter good progress has been made with the installation of hydro-mining equipment, although capital costs have been higher than budgeted and installation has taken longer than expected,” Dow said.
He said the company was also committed to the purchase of a second Sandvik ABM20 continuous miner, which was previously unbudgeted.
“The introduction of the first ABM20 in August has proved an unqualified success in driving production roadways and in achieving improved development rates, and we look forward to taking delivery of the second machine ready for operation at the start of 2011,” Dow said.
“The increases in costs, and the delay in the receipt of revenues from the second coal shipment last week, have impacted short-term cash flow and led to the need for additional working capital.”
After years of anticipation, Dow said the hydro-mining equipment was fully installed, with commissioning and first extraction planned to start this week.
The company will review the progress of roadway development and hydro-extraction – which uses high pressure water to cut the coal – over the coming weeks.
The production and other related data will also be reviewed and used to make an updated forecast of Pike’s annual production expectations.
“While we now have to deal with the short-term impact of the additional capex we have committed to, it has been pleasing to see the results of introducing the new continuous miner and, with hydro-mining imminent, we are moving into a phase where our future production rates will be able to be forecast with more confidence,” Dow said.
The Pike river mine has been plagued with setbacks during its development and the company’s long-serving chief executive officer and managing director Gordon Ward will leave the company on October 1.
No reasons for his unexpected departure have been provided by the company.
Development costs led Pike to report a $NZ39 million loss for the 2010 financial year.
Pike shares are down 3% to 82c this morning.
