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Source: ONE News
New Zealand Oil & Gas, the largest shareholder in Pike River Coal, will take a $21 million impairment charge on the rest of its investment in the mine.
The oil and gas explorer said it's impairing all of its remaining investment in PRC, and the provision will appear in its first-half financial statements for the six months ended December 31, which will be released on February 22.
The company's shares fell 2.6% to 74 cents.
In October, NZOG committed a further $4.6 million to help meet mine stabilisation costs after the receivers warned they had exhausted their working capital.
Pike's receivers begun repaying creditors after receiving more than $80 million in a final settlement from the mine's insurers, since then NZOG has received a total of $41 million from Pike River insurance settlement.
"NZOG has undertaken a further review of the carrying value of its investments in PRCL," the company said in a statement to the NZX.
"This has required an assessment of the expected future cash recovery from PRCL and the ongoing cost of the receivership, which NZOG is funding."
NZOG advanced $12 million to Pike immediately after the November 19 explosion that killed 29 miners and led to the mine's closure and receivership.
The $12 million unsecured advance, which has since ballooned out to $15.3 million with interest and other expenses, was the second tranche of a $25 million facility that was to have helped the mine reach full production.
Receivers for Pike have advised there are three potential outcomes from the sales processes, including outright purchase of the mine, a structured deal with a smaller upfront payment and future payments dependent on certain outcomes being received and the sale of removal assets only.
