Closing mine 'worst case scenario'

Prime Minister John Key said everything that could be done to recover the men had been done. Photo / Supplied
Prime Minister John Key said everything that could be done to recover the men had been done. Photo / Supplied

Closing the Pike River coal mine and handing the land back to the government is the worst-case scenario, according to the company's receiver.

Receiver John Fisk of PricewaterhouseCoopers told NewstalkZB he has to get the "best price obtainable for the assets" which are worth billions of dollars, and handing the land back to the Department of Conservation is at the bottom of the list.

Police sealed the entrance to the mine yesterday after deciding it was too dangerous to continue efforts to recover the bodies of the 29 miners killed in November's explosions.

The receiver has until the close of business on Monday to make a decision on the mine's future.

"The worst scenario for us is that a fence is put around it and the land is handed back to DoC, who are the landowners. That is a possibility," Fisk said.

"If we get the mine into an inert state so that we can have time to look at the various options, and see if it's possible to do a capital raising or to sell the mine and give somebody else the opportunity to do something with it, we will obviously look at that."

Pike River Coal called in the receiver last month after its main asset was devastated by a series of deadly explosions which left the atmosphere in the mine highly volatile.

Fisk said PRC has about $10 million in cash, and "we need to think carefully about how that could be spent, and also what would be involved with doing that."

The receiver's priority is to get the mine safe so they can assess the options, he said.

"We have to get the best price obtainable for the assets,"

Fisk said. "We're told there's considerable value in the coal that is in there."

Pike River Coal's stock was put on a trading halt and ultimately removed from the stock exchange after the explosions.

Major shareholder New Zealand Oil & Gas is heavily exposed through both debt and equity to PRC, and shed about one-third of its value over the mine's problems. NZOG rose 1.2 per cent to 87 cents in trading today.

The mining company has previously said it has as much as $100 million of insurance coverage for business interruption.

- BusinessDesk

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