Despite the year’s progress, Pike River managing director and chief executive Gordon Ward said the company was going to miss its first production target, chiefly due to time lost during tunnelling that delayed hydro-mining.
“We expect to undershoot our 200,000-tonne production target this financial year by about 20 per cent,” he said at the annual general meeting held Friday.
“Hydro-mining is still expected to commence in June 2009.”
On the company’s outlook in the context of a falling global coal market, Ward had a wait-and-see approach.
“Analysts currently have a wide range of predicted outcomes for next year’s hard coking coal price negotiations,” he said.
“In such uncertain and fast-moving times it is not possible to provide an accurate prediction – we will have to wait for the conclusion of contract pricing negotiations – typically around March each year.
“What we do know is that Pike River will benefit from the significant depreciation in the NZ dollar, which will buffer lower coal prices. The kiwi dollar has dropped against the United States dollar by about 30 per cent in the past six months and some banks are picking that it could go lower.
“We are also fortunate to have life-of-mine sales contracts with our two Indian shareholders for approximately 55 per cent of the mine’s coal production as well as long-term sales contracts with two Japanese steel mills.”
Pike River is aiming to hit production of 1 million tonnes per annum by mid next year and Ward considers further exploration of the Paparoa seam could unlock up to 8Mt of hard coking coal which would blend well with its currently mined Brunner Seam coal.
“Our coal has the lowest ash content in the world and a high fluidity level, which make it a very efficient coal in the steelmaking process,” he said.
“It also has a very low phosphorous level – a good thing because phosphorous weakens steel.
“These factors lead us to believe that Pike River premium hard coking coal will continue to attract a high level of international demand and to obtain the top prices for coking coal.”
Pike River is listed on both the New Zealand Stock Exchange and the Australian Securities Exchange.
