Pike River assets in demand

POTENTIAL buyers have approached Pike River Coal’s receivers as they continue to pursue big insurance claims. Meanwhile, the New Zealand Department of Labour has placed controls over the disaster scene as part of its investigations.
Pike River assets in demand Pike River assets in demand Pike River assets in demand Pike River assets in demand Pike River assets in demand

Underground at Pike River Coal's namesake mine in New Zealand a few months before the mining disaster which claimed 29 lives.

Blair Price

Pricewaterhouse Coopers receivers outlined their strategy in their first report on Pike’s state of affairs:

  • a) Stabilise the mine with a view to either restructuring the company or selling the assets
  • b) Retain a core team of employees to manage the mine and related matters
  • c) Pursue the insurance claims

Pike had material damage and business-interruption insurance cover totalling $NZ100 million, but large insurance claims often face various delays and challenges.

PWC said 115 people were retrenched on December 16.

The maximum entitlement payout for employees, including estates of deceased miners, was $18,700.

The core services team consists of 28 staff while there are another 12 employed on a casual basis for various duties around the mine site.

Efforts to stabilise the underground atmosphere at the mine are making some steady progress before a long anticipated New Zealand Police mine handover to PWC, but the premium hard coking coal underground remains in demand.

“We have received unsolicited expressions of interest from various parties in the assets,” PWC said.

“At this stage we will continue to deal with the immediate issues, and are still considering the longer-term options available with respect to the mine and its related assets.”

Unsurprisingly, PWC does not expect the $31.9 million of unsecured creditors to have their claims met, with unsecured trade creditors totalling $15.4 million.

“At this time, the outcome of the receivership is very uncertain.

“Given this uncertainty, our current best assessment is that is it unlikely that any funds will be available to meet the claims of unsecured creditors.”

Pike shares on both the Australian and New Zealand bourses have been suspended from trading since the first tragic explosion at the mine on November 19.

PWC said it was too early to ascertain when or whether the trading suspension will be lifted.

“The receivers also make no estimate whatsoever as to any value the shares of the company may have at the current time or at a future date should the suspension be lifted.”

New Zealand Oil and Gas has been steadily making buybacks of its own shares as investors punish the 29.35% Pike shareholder.

Pike also owes around $NZ64 million in loans to the oil and gas company.

The receivers said the Department of Labour had served Pike with a “do not disturb” notice.

“The notice covers all equipment, parts and consumables (new and worn) used in connection with the Pike River mine.

“To date, DoL has not seized any items as part of their investigation into identifying the ignition source of the first explosion.

“However, DoL clearance is required prior to any items being removed from the mine site.”

The receivers were appointed on December 13, with Pike holding a $10.9 million cash position at the time.

Recovery efforts at the mine have been heavily funded by the New Zealand Police.

The police announced a handover of the mine to the receivers more than a month ago, but it is yet to be executed.

A recent coronial inquest found that all the 29 men missing in the Pike River disaster died within minutes of the first explosion at the mine.

Hopes of finding more survivors ended after the second underground explosion on November 24.

Damage from subsequent methane explosions and a fire underground further complicated the recovery effort.

Possible causes of the mining disaster will be covered in the Royal Commission inquiry, which must report to New Zealand’s governor-general by March 31, 2012.

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