Pike River Coal Announces NZ$45 Million Rights Issue and...

Pike River Coal Announces NZ$45 Million Rights Issue and Placement


Pike River Coal Limited today announced it will raise NZ$45 million through an issue of
ordinary shares, with accompanying bonus options, to provide funds until steady state
production from hydro monitor mining is achieved.

The $45 million raising includes a $41 million renounceable pro rata rights issue to
shareholders and a $4 million placement to a major institutional shareholder. The rights
issue offer and placement will be one new share and one bonus option for consideration of
NZ$0.70, for every 5 Pike River shares (note1). The company is currently completing
negotiations for the underwriting of the issue.

The decision to raise cash at this time follows a rock fall from the lower section of the
new 108-metre ventilation shaft temporarily halting mining operations until remedied.
The rock fall has delayed the production ramp-up period by two to three months and
delayed first coal sales proceeds to the third quarter of 2009 (ended 30 September).
First hydro monitor production (the high pressure water cutting system) is now scheduled
for the fourth quarter of 2009 (ended 31 December).

As a consequence Pike River Coal has been required to fund the final capital expenditure
payments, largely for hydro-mining equipment, from a new equity issue instead of first
coal sales proceeds. The issue will also provide some working capital and cover the
estimated $7million cost to remedy the shaft, a portion of which may yet be covered by
insurance.

“Demand for the ultra low ash premium hard coking coal from Pike River Coal’s estimated
58 million tonne resource remains strong notwithstanding the difficult world economic
conditions“ Mr Ward says.

“We are seeking to mitigate the effects of the delay and will be meeting with our steel
mill and coking plant customers shortly to appraise them of the status at the mine and to
discuss the shipment schedules�.

Mr Ward said “The rights issue is being attractively priced for our shareholders who have
shown strong support as the mine progressed through the development phase�. The company’s
principal shareholder, New Zealand Oil & Gas Limited (NZOG), has committed to take up its
30 per cent pro rata share of the new shares issued.

Lead Manager for the issue is McDouall Stuart Securities Limited. Final confirmation of
the underwriting commitments is subject to completion of negotiations with selected
sub-underwriters. The terms of the placement (which are the same as the terms of the
rights issue) are subject to approval of NZX. Subject to receipt of those commitments
and approvals, it is intended that the offer will be fully committed/underwritten.

A Prospectus for the rights issue and an accompanying entitlement and acceptance form is
expected to be mailed to shareholders on or about 25 March 2009* and will be available to
view online at www.pike.co.nz. The Offer is expected to open on 25 March 2009 and close
on 14 April 2009.

Australian coal producers have commenced negotiations for the benchmark price for hard
coking coal supplied to Japanese steel mills from 1 April 2009. Market observers are
tipping hard coking coal prices in the range of US$130 to $140 per tonne, well above the
US$95 per tonne estimated at the time of the Company’s Initial Public Offering (IPO) in
mid-2007. The fall in the value of the New Zealand dollar exchange rate relative to the
United States dollar by approximately 30 per cent since the IPO will boost New Zealand
dollar revenues.


Renounceable Rights Issue Summary (Indicative)


Offer One new share and one bonus option for every 5 shares held as at 24 March 2009
(see note 1)
Subscription price $0.70 per share
Maximum number of new shares to be issued 58,571,429
Maximum number of shares on issue at completion of offer 352,323,610

Maximum number of new options to be issued 58,571,429
Intended Record date 24 March 2009
Indicative date for tights trading on ASX commences 18 March 2009
Indicative opening date of offer opens (note 2) 25 March 2009
Indicative rights trading on NZX commences 25 March 2009
Indicative rights trading on ASX ceases 3 April 2009
Indicative rights trading on NZX ceases 8 April 2009
Indicative closing date of the offer 14 April 2009
Indicative allotment date 21 April 2009


Notes
1 Rounded from actual entitlement ratio of 1 Right for every 5.01581192 shares held
2 These dates are subject to change and are indicative only. Pike River reserves the
right to amend this timetable without prior written notice, subject to the respective
Listing Rules of the NZSX and the ASX and relevant legislation, although an announcement
of any changes will be made on the NZSX and the ASX. A full copy of the timetable will
appear in the Prospectus.
3 No money is currently being sought and no applications for securities will be accepted
for money received unless the subscriber has received an investment statement in relation
to the offer.