Trading halt needs to continue, says Pike

Pike River Coal chairman John Dow. Photo / Mark Mitchell

Pike River Coal says it does not want trading in its shares resumed until it gets an indication of what it could cost to rebuild the business.

Its shares have been suspended from trading for more than a week after blasts at its West Coast mine that have claimed the lives of 29 workers and put the future of the mine and the company in doubt.

Chairman John Dow said one view was to relist the stock sooner rather than later.

"I've heard that view expressed on a number of occasions. I don't subscribe to it. The principle of equal ignorance sounds great in theory but it doesn't do much for a wise investor wondering what they're supposed to make of it.

"We would prefer to come back to the market when we've got enough information for investors to evaluate the worth of Pike stock and the timeframe to get back to production."

Exchange operators on both sides of the Tasman would not want suspensions to drag on and a compromise would be necessary. An NZX spokeswoman said there was no pressure on the company to apply to have the suspension lifted but the exchange was talking to Pike River every day.

She said all investors needed to have equal access to information. There was an 11-month halt in trading in the Beaconsfield gold company which owned the Tasmanian mine in which one man died and two were rescued.

Dow said given the uncertainty about being able to get back into the mine, the timetable for the resumption in trading in Pike - which last closed at 88c - was unclear. A series of explosions have rocked the mine and coal is on fire.

Besides making the mine safe, it is the integrity of the tunnel's walls and ceiling that is seen as key to any future mining and it is not known if they have been damaged.

A Royal Commission of Inquiry was yesterday appointed and Dow said from his early reading it appeared work could resume within the mine before the full findings were made, if it could be done safely. The company was now working to establish its precise cash position.

It has another $12 million of a $25 million loan to draw down from its cornerstone shareholder New Zealand Oil & Gas, which with a $20 million BNZ loan does not have to be repaid until the end of February. It also has sold around 20,000 tonnes of stockpiled coal for just over $5 million.

Pike River was also going through the complicated process of filing a claim for business interruption insurance which could pay up to $100 million. The policies are with a Lloyds syndicate and another international insurer which Dow said covered projected earnings.

While Dow holds hope for the company restarting work, an Australian analyst said it will be tough to ask investors to front up with more money.

"Who's going to do that when there's no certainty the mine is going to get up and running - it's going to be hard to tap investors for fresh equity when there's so much uncertainty out there," said Cameron Peacock of IG Markets in Melbourne.

NZOG holds a 29.4 per cent stake in Pike River and when its shares resumed trading after a two-day halt last week its value was sold off by the same amount.

One analyst said this showed investors then rated the coal company as having little or no value.