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Pike River completes this year's largest IPO

Saturday 21 July 2007, 2:58PM

By Mediacom

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Pike River Coal Limited shares will debut on the New Zealand sharemarket (NZSX) today, after successfully completing the largest public equity raising in New Zealand so far this year.

Strong interest from investors for shares in the miner of hard coking coal resulted in all 65 million shares in the Initial Public Offer (IPO) being allocated plus 20 million in oversubscriptions, raising a total of $85 million. The funds will be used for the ongoing development of the hard coking coal resource owned by Pike River near Greymouth and reduce the amount of debt required. At today’s prices, the Pike River coal mine is expected to generate $2.3 billion in export receipts over its lifetime.

“Investors recognized that this is a high quality project that will source a premium product for the increasing demands of the steel industry” Pike River CEO Gordon Ward says.

Pike River coal is understood to have the lowest ash and highest fluidity of any hard coking coal in the seaborne trade. These attributes are valuable in the production of steel, having a high energy content and allowing other lower grade coals to be blended.

“Hard coking coal prices have firmed on the spot market this year and the trend is likely to continue into 2008 when the Pike River mine begins production,” Mr Ward says. Full production, averaging 1 million tonnes a year, is scheduled to begin in 2009.

At present a 2.3 kilometre access tunnel to the coal in the Paparoa Ranges is closing in on the halfway mark and is currently at 1038 metres. Meanwhile, work is proceeding on the necessary infrastructure to support the mine including a coal preparation plant, offices, workshops and staff facilities. The mine will employ 150 people directly.

Coal will be transported by road to Greymouth and moved on two purpose built self propelled vessels to Port Taranaki for export to India, Japan, Brazil, Europe and other markets.

More than 70 per cent of the first three year’s production has already been sold.

“The Pike River mine is already making a significant contribution to the West Coast economy and will continue to do so for at least 19 years,” Mr Ward says.

Pike River shares will be quoted on the NZX and the ASX under the code “PRC”.