March 3 (Bloomberg) -- Pike River Coal Ltd., developer of a mine on New Zealand’s South Island, plans to raise NZ$45 million ($22 million) from a share sale to maintain funding after a rock fall delayed production.
The company will offer existing investors one new share and a bonus option for every five shares at a cost of 70 New Zealand cents apiece, the Wellington-based miner said in a statement sent to the stock exchange. A further NZ$4 million will be raise from a share placement to an institutional shareholder.
Pike River, which mines near Greymouth, is part-owned by India’s Gujarat NRE Coke Ltd. and Saurashtra Fuels Pvt. who are also contracted to take part of its low-ash, low-phosphorus production. The venture had planned on shipping its first 200,000 tons of the steel-making material by June before delaying it three months.
“We are seeking to mitigate the effects of the delay and will be meeting with our steel mill and coking plant customers shortly to appraise them of the status at the mine and to discuss shipment schedules,” Chief Executive Officer Gordon Ward said.
Pike River shares fell 8 cents to 72 cents at the 5 p.m. market close in Wellington. The stock has fallen 20 percent since Feb. 19 when the company said a rock fall had affected 30 meters of a 108-meter ventilation shaft needed for safe production from the mine.
The fall has delayed production by up to three months and means the company has to fund capital spending, including new mining equipment, from the share sale rather than proceeds from coal sales, it said. The stock sale, which closes April 14, will also help pay for the NZ$7 million repair to the ventilation shaft and bolster working capital, it said.
New Zealand Oil & Gas Ltd., which owns 30 percent of Pike River, will take up its entitlement, it said in a separate statement.
The bonus options expire April 21, 2011, and give holders the right to buy a share for NZ$1.25. McDouall Stuart Securities Ltd. is advising Pike River.
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