Pike River Coal is going back to its shareholders for the second time in a year, this time seeking $45 million to fund the company through to production, which has been delayed by a rock fall in its mine.

The company's main shareholder, New Zealand Oil & Gas, is spending $12 million taking up its 30 per cent pro rata share and there would be a $4 million placement to a major institutional shareholder.

The company said it was confident the balance of the offer would be attractive to other institutions and retail shareholders.

Chief executive Gordon Ward said while there were no guarantees in mining, he was confident the work under way would shore up the tunnel to the coal seam at the operation 50km northeast of Greymouth.

The rights issue offer and placement will be one new share and one bonus option for 70c for every five Pike River shares.

The $1.25 bonus option could be exercised in two years.

In January last year a rights issue to raise $60 million by offering shareholders new shares at 90c each on a one for 3.6 basis was oversubscribed by 5 per cent.

The funds raised this time would replace revenue from lost production, cover the $26 million cost of mining equipment, wages and the repair work around the rock fall at a ventilation shaft.

Coal production has been delayed by two to three months. The first coal sales are not expected until September.

Some of the $7 million cost of repairing the shaft is expected to be covered by insurance.

The delay means the company will not be able to cash in on current record high prices of US$300 ($602) a tonne for its high grade hard coking coal, used in steel production. However, Ward said the company would benefit from the fall in the New Zealand dollar.

Coal prices are tipped to be reset sharply down around US$130 to US$140 a tonne from April 1, but this was still well above the US$95 a tonne the company had estimated at the time it was listed in 2007.

Demand for Pike River's estimated 58 million tonnes of low ash coal remained strong despite the difficult world economic conditions, he said.

Adrian Vance, a director of Christchurch sharebroker Hamilton Hindin Greene, said the fresh issue had to strike the fine balance of raising enough to get the mine to production and not being too dilutive for shareholders.

"I think the one for five is quite good - shareholders will accept it as part of the investment in Pike River which has always carried a certain risk and one of the risks has been shown by what happened here."

ABN Amro analyst Rob Foster said the offer was attractive, especially given the $1.25 bonus option.

"They could see the light at the end of the tunnel so it's unfortunate it happened when it did."

Pike River shares closed down 8c at 72c yesterday. The shares had traded as high as $2.45c during last year's commodity spike.

THE OFFER
* One new share and one bonus option for every 5 shares held as at March 24.
* Subscription price is 70c per share.
* A prospectus is expected to be mailed to shareholders by the end of this month and the offer will close on April 14.