The
Pike River Coalfield is located on the West Coast of the South Island of New
Zealand near the top of the Paparoa Range
approximately 45 km north east of the coastal town of Greymouth. The Pike River
Coal Company Ltd (PRCC) is owned jointly by New Zealand Oil & Gas Limited
(NZOG) and private investors.

The
project has followed a long and difficult road towards project implementation
which is now a reality with mine construction scheduled to commence in November
2005. The first stage of the project, the consent and land access process has
been the most difficult. Resource consents for the project were first applied
for, granted and appealed in 1998. A second round of modified resources consents
followed a similar path in 2001. Following consultation with a range of parties
including local and central government as well as the Department of
Conservation, in March 2004 the Minister of Conservation granted PRCC access
through Department of Conservation land. In October 2004, the Environment Court
issued a Memorandum of Consent granting resource consents with conditions that
had been negotiated between PRCC and the appellants.

The
second stage of the project, investigation and design, commenced in December
2004 and was completed in June 2005 with the PRCC board ratifying the project
capital and operating budgets. While the investigation and design work was
proceeding, PRCC were also engaged in securing private equity and bank debt
funding for the project. Formal Board approval to proceed with project
construction was granted in September 2005 following completion of fund
raising.

The
project consists of a number of significant construction activities,
namely:

10.5 km of mine access road through previous logged and
virgin rain forest;

2.2 km of tunnel through metamorphic rock;

a coal preparation plant about 8.3 km from the mine
portal;

an underground coal preparation plant; and

a major slurry pump station, high and low pressure
underground water supply systems to support hydraulic mining units and
underground coal transport respectively.

Project construction is
expected to be completed in April 2007 with completion of the ventilation shaft.
Mine production will commence in December 2006 with coal from pit bottom
development which will be carried out by the mine owner.