Short term funding for Pike River

10:36 am on 26 November 2010

Beleaguered miner Pike River Coal has received $12 million from its cornerstone shareholder, New Zealand Oil & Gas.

The amount is part of a $25 million loan facility between the two companies, which Pike River had used to fund its operation.

The company had borrowed $13 million before an explosion on Friday. Twenty nine men died in the mine.

New Zealand Oil & Gas says it could have asked for the money back and that it did not have to provide any more funding.

But NZOG says it won't seek immediate repayment of the loan, and it'll honour the spirit of the agreement and make the remaining $12 million available to Pike River.

It has extended the repayment date of the loan from the middle of next month to late February next year. Interest payments are deferred until then.

New Zealand Oil & Gas says it's the right thing to do and the miner's workforce needs to know it can still be paid.

The company has also donated $500,000 to the Pike River Miner's Relief Fund.


The mine was in the early stages of production before Friday's explosion. It had exported two shipments of coal worth about $9 million. A second explosion occurred on Wednesday.

Pike River Coal chairman John Dow said on Thursday the company's prime focus is making the mine safe so the miners can be brought home.

He says $290 million has been invested in the mine and no-one knows how badly the infrastructure has been damaged.

He says the directors will discuss possible options at the meeting.

Chief executive Peter Whittall says it's difficult to talk about the future of the mine at such an early stage, but he thinks it could be operational again one day.

The company has told employees they will be paid until the new year.

It has also set up a charitable trust to support the miner's families and it will contribute $500,000.

Shares in NZ Oil & Gas, which resumed trading on Tuesday, rose 5 cents to 94c on ZThursday after secured creditors of Pike River Coal agreed to a stand-still period of 90 days.