Pike River Coal said it would start in-seam exploration drilling of the Paparoa seam, which sits 200m below the Brunner seam it is mining, in the first half of next year.

The company sees considerable potential in this deeper seam, but exploration of it has been delayed by operational priorities at the mine on the West Coast.

In January 2009, an exploratory test drill hole into the Paparoa seam on the eastern side of the coal deposit found three potentially mineable seams of low sulphur, hard coking coal, which were 9m thick.

The coal, once washed, had exceptionally high fluidity, as well as strong swelling numbers, low ash and low sulphur content.

In its annual report, the company said two continuous miners bought from mining equipment supplier Waratah Engineering had not operated to expectations and had required ongoing modifications.

Because of these problems, Pike River leased one reconditioned ABM20 continuous mining machine for 12 months at the cost of $4 million, which began operating in August, and bought a second ABM20 for $5 million, which will arrive in January.