Pike River Coal Ltd. increased the budget for developing its mine on New Zealand's South Island by 6 percent citing increased tunneling costs.
The project's cost estimate was increased by NZ$11 million ($8 million) to NZ$185 million, the Wellington-based company said in a statement to the New Zealand stock exchange today. Most of the increase is from extracting more difficult rock to form the access shaft for the mine near Greymouth, Pike said.
The mine, part-owned by India's Gujarat NRE Coke Ltd. (GNC) and Saurashtra Fuels Pvt. will be the country's second-largest coal exporter when it starts producing low-ash, low-phosphorus coking coal starting in the first half of next year.
Rising prices should more than compensate for the higher development cost, Pike said. Hard coking coal prices in Asia for the year starting April 1 may settle around $115 a ton, compared with the $96 assumed in the project's prospectus forecast, the company said.
Pike shares rose 2 cents, or 2.4 percent, to a five-week high of 87 New Zealand cents at the 5 p.m. close of trading in Wellington.
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