Listed Pike River Coal has punched through the most difficult section of its 2.3km tunnel - the 50m Hawera fault - and is just 182m from reaching the seam of its high-grade hard coking coal in the Paparoa Range near Reefton.
It has taken almost two years of tunneling and Pike River is due to start mining by late this month, with 200,000 tonnes of coal expected to be extracted by June next year, followed by about 1 million tonnes per year for an estimated 18 years.
The mine's general manager Peter Whittall said getting through the fault had been slow and difficult, with progress falling to 1m per day because concreting had been used for wall reinforcement, but little water or gas had been encountered through the fault.
"While possibly more fractured rock could again be found in this area near the fault, the most difficult mining challenge is over and tunnel advance rates are expected to improve significantly," he said in a statement yesterday.
In early June, Pike River secured a $US300 ($NZ411) per tonne contract rate with its Indian shareholder partners and Japanese steel mills for its inaugural production, more than triple the international $US98 benchmark coal price a year ago.
Pike River management is confident subsequent forward contracts covering the year from March 2009 will be of a similar order of $US270 to $US300, a range being picked by analysts.
Indian equity shareholders Gujarat NRE Coke Ltd and Saurashtra Fuels Private Ltd are contracted to purchase about 55% of production during the next 18-plus years, with the Japanese steel mill contracts covering the remaining 45% of production and run for a minimum of three years.
In the first week of June, Pike River displaced Hellaby Holdings on the New Zealand stock exchange's SE50 index of top companies after its shares broke through the $2 mark for the first time, ranking around 43rd on the index by market capitalisation.
Its share price averaged $2.23 during July.
The drilling of three wells targeting 300 petajoules of coal seam gas (CSG) potential in Southland is to start immediately, L and M Petroleum says.
The first well would be Goodwin-1, next to the proven Ohai coalfield, with drilling expected to start in the next seven to 10 days.
It was expected to take about a week to reach the total depth of about 250m.
Seismic data was being acquired over the western end of the Ohai area and would be used to confirm the location of subsequent CSG wells to be drilled, L and M said.
