The West Coast-based miner yesterday announced a $14.1 million loss for the six months to December, but this was somewhat overshadowed by the rights issue, its transference of an estimated debt of $42 million to 29.5% shareholder NZ Oil & Gas, which originally spun-off and listed Pike River almost three years ago, plus a further $15 million NZOG loan.
Shares in Pike, which were trading at $1 in late-January, were down more than 5% at 89c yesterday after the announcement.
After two and a-half years spending $280 million in development, including $50 million in cost overruns and a more than 20-month delay to inaugural exports last week, Pike appears to be bullish that international coking coal prices will remain strong, Craigs Investment Partners broker Peter McIntyre said.
He said it was positive for Pike that NZOG will take over an estimated $42 million bond debt to US-based Liberty Harbor, in return for NZOG having a two-year option to buy uncontracted coal.
The 7.6% shareholder and contracted partner Gujarat NRE, of India, is supporting the share offer.
However, Mr McIntyre said Pike had already received and spent a total $105 million raised from shareholders in two earlier rights issues.
"This is Pike River's third capital-raising and hopefully it will be the last," Mr McIntyre said.
The capital-raising has been on the cards since Pike raised the idea last October.
Mr McIntyre said of the $50 million issue, and the $15 million loan, that it was better for Pike to go for a larger issue now to cover all eventualities, and not have to go back to the market in the future.
"This arrangement adds another revenue line to NZOG [in future coal sales] while Pike gets surety of product delivery," Mr McIntyre said.
Pike chief executive Gordon Ward remained adamant Pike could deliver an annual million tonnes of coal for the estimated 18-year mine life, once hydro (water-blasting) mining started in in the quarter to September.
"The results for this period reflect the fact that the mine was in development phase," he said in a statement yesterday.
Mr Ward said it was "certainly" and "absolutely" the last time the company would be looking for funding.
He told NZPA the $50 million rights included a cash buffer of at least $20 million, so Pike River would have sufficient cash to see it through any slowing of build-up to full production.
Pike's $14.1 million loss, compared to $9.5 million last year, included $4.3 million in unrealised foreign exchange gains, $3.8 million in a depreciation and amortisation charge and $2.6 million interest expense, balanced by a $5.9 million tax benefit, he said.
"This [tax] benefit is recognised in the income statement, as the company will generate taxable profits in the immediate future," Mr Ward said.
