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Pike River Reports A $1.14 Million Loss

news release 29 August 2008

Pike River Reports A $1.14 Million Loss For Year Ended June 2008

Pike River Coal Limited has reported a $1.14 million loss in the financial year ended 30 June 2008 reflecting the development phase of its new mining operation and related one-off costs.

First production of premium hard coking coal from the new Pike River mine under the Paparoa Range on the West Coast is due by the end of September 2008 and 200,000 tonnes are scheduled to be mined by June 2009.

Chief Executive Gordon Ward says “the most exacting task has been the 2.3 kilometre access tunnel to the Brunner coal seam, which is nearing completion, but has been made more difficult in the final section by variable rock conditions”.

That aside, he says, “the thoroughness of the de-risking, both operational and financial, has put the company into a strong position for making good progress once coal has been reached”.

The financial impact of the de-risking is reflected in the current year’s results with a number of one-off items; including recruitment of management and a skilled mine workforce, and transition into new coal transport arrangements. The loss for the year, whilst somewhat less than market expectations, is not particularly relevant given that first coal production will occur in the following financial year.

Mr Ward says “one of the really positive outcomes has been the highly successful capital raisings during the year, attracting investors nationally and offshore, to raise more than $182 million from the debt and equity markets in a financial environment best described as challenging.”

This is a reflection, he says, of the high value coal resource, the cutting edge mine infrastructure the company has built, experience of the management team, and Pike River’s attraction as New Zealand’s only listed coal stock. Recruitment has gone well with more than 80 staff now employed. Mr Ward says the outlook for the year to June 2009 is positive with forward orders in place and prices for premium hard coking coal tripling to US$300 per tonne for first coal sales compared to a year ago.

Over the next few years, he says, hard coking coal demand is forecast to remain high. Pike River’s progress is reflected by its July 2008 entry into the NZX Top 50 companies.

The company’s market capitalisation is currently approximately $500 million. The company enjoys a strong balance sheet and the focus remains firmly on delivering the second largest hard coking coal mine in New Zealand.

ends

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