Solid Energy's Spring Creek mine north of Greymouth is being put on an eight month trial and management has said closing it could be an option.
The company halted extraction at the mine in November because of the risk of spontaneous combustion, and coal production fell from 47,000 tonnes to 10,000 tonnes.
Since then it had been losing around $2 million a month.
More than 100 employees attending a meeting in Runanga, near Greymouth, yesterday were told if targets were not met management would have to look at its options -- including closing the mine.
"Everyone's concerned, management, miners, customers, suppliers -- that's why it's important to share information," chief operating officer Barry Bragg said after the meeting. "We wanted to talk to our workforce first. . . we have to be honest."
The main problems at the underground mine were ventilation, and its geology as it is heavily faulted. Solid Energy must ensure the area where its miners were working was free of gas, and the two factors were impacting on productivity.
Solutions included making sure equipment was operating efficiently, Mr Bragg said.
The announcement came in the middle of wage negotiations, which had already sparked one wildcat strike and a two day walk-out.
Mr Bragg said it had always planned to release the latest report's findings at this stage, though it had to seek permission from the union to talk to the workforce to maintain good faith bargaining.
