Pike River chairman: Company insured for $100m

Above-ground infrastructure at the Pike River Mine. File picture / Greg Bowker

As the West Coast struggles with the emotional cost of the Pike River tragedy, the chairman of the company has reassured the community that there is still a future for the mine and the company.

Pike River chairman John Dow said the company had two "business interruption" insurance policies, with $100 million of coverage.

Both of the company's main lenders, the BNZ and major shareholder New Zealand Oil and Gas had also agreed to extend loan repayments dates until the end of February and had suspended interest payments.

Dow said while there still needed to be an assessment of damage underground to the mine, there was significant infrastructure - including roads, water pipes, offices and workshops that were undamaged.

"My view of it is that Pike River would be considered an advanced development project," said Dow.

"Clearly we won't be a coal mine for a while, but equally clearly this site has value, it has the ability to be rebuilt, but until we understand what the scale of damage is underground it's hard for me to say how much it might cost and how long it might take."

Dow said all staff had been told to co-operate fully with the inquiries that had been launched into the cause of the blast.

The company was running its own inquiry, with a lawyer appointed to act as a "point person" to co-ordinate contact between staff and the various inquiries.

"We also commit to make sure that we keep the other inquiries appraised of things that we might find and to ensure that everyone is keeping to the same objective - to get to the truth. To find out what happened and then to understand how we can make sure that this never happens again," said Dow.

Staff were told on Wednesday that their wages and salaries would be paid until the end of Christmas.

"It's been an important area of certainty to them, Chrismas is coming, their families are torn apart already by this tragedy, we don't need them to be ongoing financial concerns," said Dow.

Pike River had just issued 'force majeure' notices to its transport contractors and would start discussions with other contractors next week.

"The real challenge though is that we need to be able to assess the level of damage sustained to our underground infrastructure, at the moment we know that there have been two significant explosions underground, we need to find out the level of damage that has been done there," said Dow.

"But I would just remind you that everything on the service remains intact - we've got water pipelines, roads, powerlines, infrastructure, offices, workshops the coal preparation plant, load-out facilities and the entire network of support to this."

"A significant amount of the capital that's been invested in this business is available and useful to us.

Once we've cleared the mine, once we've recovered our boys, then the business of evaluating damage that might have been done can be assessed."

Dow said nothing would be done until it was safe to go back down into the mine.

"All I can say is that we won't be going down underground until it's safe to do so. We wouldn't be going underground to get our boys until it's safe to do so, and we won't be going down to evaluate damage until it's safe to do so."

The decision by BNZ and NZOG to delay loan repayments gave Pike River 'breathing space' allowing the company to assess damage and determine what to do next - and what that might cost and what it could mean for the future of the mine.