Pike River Coal shares were punished yesterday after the company announced another delay to exports that will force it to negotiate a funding extension with a major investor.

Pike River shares fell 11c, or 9.65 per cent, to $1.03 after the company yesterday said it faced a six-month delay in shipping 60,000 tonnes of hard coking coal to Japan.

It is the third delay in this year, this time due to mine development hold-ups and machinery problems.

The company said it may have to raise more funds and will have to renegotiate terms with Goldman Sachs' Liberty Harbor which has convertible bonds worth US$27.5 million ($40.1 million).

Under terms of the existing deal the mine near Greymouth had to be capable of producing 800,000 tonnes - 66,700 per month - in the 12 months ended November 30, 2010.

Pike River's chief executive Gordon Ward said Liberty Harbor's initial response was "favourable" and a formal request for an extension for up to six months would be made once the company had finalised an updated mine plan and production schedule.

"They want to see this mine through to full production and they recognise the nature of the issues we're dealing with, it's not something that is a fundamental concern, it's just a delay."

The company would consider an interim shipment of 20,000 to 30,000 tonnes in order to bring in cash. There was already a stockpile of more than 10,000 tonnes of coal, which is used in steel production. If the company did need some additional funding Ward said "it wouldn't be a problem".

Pike River's listing was plagued by delays, problems with fractured rock resulted in serious delays during tunnelling, a rock fall in the ventilation shaft earlier this year had stalled the project and required $41 million more from shareholders to fund repairs, and now equipment and mine development hold-ups had hit the project.

In response to claims the company has not managed expectations well, Ward said it did not want to disappoint the market this time around.

"We could have been a little more conservative in retrospect. We've taken a more pro-active approach now and chosen to bite the bullet."

Mining machines the company thought had been built completely in Germany turned out to have their tracks made in Vietnam and they had not proved tough enough. They were covered by warranties but the manufacturer would not meet consequential losses.

"It's unfortunate that we've had these issues but we will overcome all of them," Ward said.

ABN Amro Craigs broker Peter McIntyre said the market was looking for "real clarity" about Liberty Harbor's commitment and until then the share price would remain under pressure.

"The time frame is [now] long enough that if they don't get it right this time there would be some serious questions asked."

Problems were to be expected in a mining operation but the latest was a significant one, he said.

Adrian Vance, a director of Christchurch sharebroker Hamilton Hindin Greene said from an investment point of view the market was not reflecting the value of the resource in the ground and wouldn't until there was more certainty around the management and the extraction process.

"Until they start delivering on that the stock is likely to continue to trade at these levels."

Forsyth Barr analyst Andrew Harvey-Greene said: "There is a real issue here with expectation management and so far Pike hasn't delivered on the expectations they've put out to market."

LOSS FOR YEAR TOTALS $14m

Pike River Coal reported a loss for the year to the end of June of $13 million.

Pike River said the result reflected the pre-production status of the mine until early June 2009.

Included was a $6.2 million unrealised exchange loss relating to currency movements on a US dollar-denominated convertible bond, a $2.1 million depreciation charge and $3.5 million of interest paid.

At June 30, Pike River held cash of $21.7 million and had $26 million of available undrawn debt facilities.