The venture and its long-suffering shareholders have been beset by problems amounting to more than $50 million of extra costs and compounding to a delay of more than 20 months in production.
Investors acted angrily yesterday, with shares trading down about 10%, around $1.06, on strong turnover of about 1 million.
Pike's chief executive Peter Whittall said the revision was primarily because of slower-than-expected progress in developing underground roads off its 2.3km tunnel within the Paparoa Range, which would impact on the forecast production in the period to June 2011.
"Slower roadway development to date and lower forecast development in the next few months, ahead of the introduction of the second ABM20 continuous mining machine and an upgrade to one of the current machines, will result in some interruptions to hydro [water blasting] production in the new year," he said.
Pike has downgraded its production from about 600,000 tonnes to a range within 320,000 to 360,000 tonnes.
"This will result in a couple of months of previously scheduled high production in May and June slipping into the following financial year," Mr Whittall said.
Pike was also "evaluating revised funding requirements", including repayment of the $25 million New Zealand Oil and Gas (NZOG) short-term facility due in December.
"Discussions are under way with various parties, with further announcements expected during November 2010, which will include details of the financial impact of these developments," Mr Whittall said.
Neither broker Tony Conroy, of Forsyth Barr, nor Peter McIntyre, of Craigs Investment Partners, were surprised by the downgrade.
They picked a likelihood of refinancing, possibly by as much as up to $40 million.
The production downgrade indicated a full-year 2011 downgrade of $25 million at the earnings before interest and tax and amortisation (ebitda) level, to ebitda of $5 million, equating to a loss of 5c per share, Mr Conroy said.
"It looks like more funding will be necessary, but my numbers suggest it wont be much; about $5 million, and [it] is more for headroom purposes, than anything else," Mr Conroy said.
However, Mr McIntyre said Pike would have to replace $25 million recently lent by majority shareholder NZOG when it comes due on December 10.
"Pike will need to get this replaced and we anticipate a finance requirement of $30 million to $40 million", likely from debt but possibly from an equity raising, Mr McIntyre said.
Earlier this month Pike, which delivered its first two export shipments to Lyttelton recently, worth about $9.9 million, announced it was provided a short term facility of up to $25 million by 29.4% majority owner NZOG, which spun off and listed Pike in May 2007.
Since listing, almost $290 million has been spent on development, shareholders have been tapped three times for further rights issues.
NZOG has stepped in on several occasions with further funding.
In late August Pike posted a tripling of after-tax losses to $39 million for the year to June.
In April this year, NZOG provided a replacement convertible bond facility for $US28.9 million ($NZ39.2 million) for Pike and took a coal option, covering uncontracted coal quantities for the first three years and up to 30% of annual coal production for the remaining life of mine.
