Gujarat will purchase equal quantities of Pike River’s two main products – low ash hard coking coal, differentiated primarily by sulphur content.

The number of Pike River shares acquired by Gujarat for its $20 million investment will be matched to the eventual initial public offering (IPO) share price when Pike River floats.

Gujarat’s investment is subject to regulatory approvals including Overseas Investment Commission consent.

The Pike River mine, located at the crest of the Paparoa Range north of Greymouth on New Zealand's South Island, will make Pike River Coal Company one of New Zealand's largest exporters of coal.

The mine will produce 1.3 million tonnes per annum by 2008 with first coal production scheduled by November 2006.

The proposed mine will use hydraulic (high pressure water) extraction and continuous mining.

Gujarat is the second major Indian investor to get on board the Pike River project. In September 2005 India's Saurashtra Fuels Private (SFL) acquired a 10.6% stake through investment of $NZ17 million.