Tunnellers cut through the last few metres of an access tunnel stretching nearly 2.3 kilometres under the Paparoa Range to intersect with the Brunner seam.

“Whilst tunnelling has taken longer to break through because of poor rock conditions in much of the last 300 metres, we have now very much de-risked the development and can begin operating as a coal mine,” chief executive Gordon Ward said.

During its production ramp-up phase, Pike River is scheduled to produce its first 100,000 tonnes by March 2009 and another 100,000 tonnes by June 2009.

From mid-2009 onwards the mine is scheduled to achieve its “steady state” production rates of approximately 1 million tonnes a year.

Pike River has settled its first coking coal sales to March 31, 2009 at $US300 per tonne.

Ward said while the world’s current financial difficulties were likely to have some negative impact on next year’s steel production in some regions, and therefore potentially on coal prices, “it would take time for that impact to be determined”.

He said an offset factor was the weaker New Zealand dollar against the US dollar, which had a favourable impact on export prices.

The New Zealand dollar has depreciated by 23% against the US dollar since March 2008.