AMP buys into Pike River

NEW Zealand-based Pike River Coal has made a $4 million share placement with AMP Capital Investors, separate to its upcoming $41 million share offer scheduled to start March 31.

Blair Price

At an issue price of 70c per new share, Pike is offering one new share for every five held as of the March 25 record date.

Each new share will also be issued with a new option at no additional cost, and is exercisable at $1.25 for a new ordinary share until April 24, 2011.

“We are delighted that AMP Capital Investors has made a significant additional investment in Pike River and are very pleased that this rights offer will be fully underwritten,” Pike chief executive Gordon Ward said.

The decision to go to the market follows a rock fall last month, from the lower section of the new 108m ventilation shaft, at its namesake underground coal mine at the Paparoa Ranges on New Zealand’s South Island.

Mining operations have been temporarily halted until the problem is remedied.

The rock fall has delayed the production ramp-up period by 2-3 months and delayed first coal sales proceeds to the September quarter.

First hydro-monitor production, using a high-pressure water cutting system, is now scheduled for the December quarter, 2009.

Pike River will use the funds to make final capital expenditure payments, largely for hydro-mining equipment.

The cash will also be used towards working capital and to cover the estimated $7 million cost to remedy the shaft, a portion of which may yet be covered by insurance.

The offer is expected to close around April 17.

Shares in Pike remained today at 65c.

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