Solid Energy agrees conditional Pike River purchase

10 May 2012

Solid Energy agrees conditional Pike River purchase with clear expectations regarding recovery of mine workers’ bodies

Solid Energy has completed its due diligence and signed a full but still conditional sale and purchase agreement with the Receivers to buy the assets of Pike River Coal Limited (in Receivership). The agreement remains conditional on the transfer of permits and land access agreements.

In conjunction with this, Solid Energy has made clear commitments regarding recovery of the bodies of the 29 Pike River mine workers, and entered into an agreement with the Government that sets out the roles each will play (Letter of Agreement attached).

Solid Energy Chief Executive Officer, Dr Don Elder, says that if the company completes the purchase, it is committed to recovering the bodies of the men, provided it is safe, technically feasible and financially credible to do so.

Dr Elder said “After extensive work by our own technical team, including advice and review by international experts, Solid Energy has concluded that the only safe, feasible and credible option for recovering the men’s bodies will be as part of a future commercial mining operation. This will take some years to develop and implement. We have reflected this in an agreement with the Government, which shares this conclusion. This agreement commits Solid Energy to pursuing all reasonable steps to recover the men’s bodies as part of any commercial mining operations at Pike River, provided the company and the Government consider this can be achieved safely, is technically feasible and financially credible.

Dr Elder said, “As we stated to the Pike River Royal Commission, we have always believed that Pike River Mine was developed with completely inadequate knowledge of geology, or mining conditions and requirements. We will have to do very substantial further work, including geological assessment, drilling, and mine feasibility assessment, before we can determine whether there is a viable commercial mining opportunity in the Pike River coalfield. This work may take a number of years and it has no certainty of a positive outcome. We see no prospect of an early resumption of underground mining. Unfortunately, we also do not consider there is a reasonable standalone option - one that is safe, technically feasible and financially credible - to undertake body recovery in the near future, in advance of future commercial mining.”

Any future decisions Solid Energy makes in relation to recovering the men’s bodies will be reviewed by the Government which may set up a trust to review Solid Energy’s plans and oversee implementation of any body recovery activities. The Government has said it remains committed to financially assisting a safe and credible body recovery plan, and will consider what level of funding it will contribute to recovery when a plan is developed.

Dr Elder says, “If there is one thing that’s been confirmed now as a result of the tragic loss of 29 lives in November 2010, and the public exposure through the past 18 months, it is that the West Coast geology and mining conditions are among the hardest in the world and are unforgiving in every way. We’ve looked at all reasonable options, and we’re committed to taking all reasonable steps to bring the men home to their families. But we will not risk further tragedy in doing so. We know this is not the news some of the family members were hoping for, but it is the right answer and the only realistic answer.”

Sale and Purchase Agreement
Under the terms of the conditional Sale and Purchase Agreement Solid Energy will pay Pike River Coal Ltd (in Receivership) an initial purchase price of $7.5 million. The first payment of $2.5 million will be made tomorrow, with $1.25 million payable on 30 September (if completion has not occurred at that point) and the balance payable on completion. Solid Energy will pay a further $25 million by instalment commencing when extraction over a consecutive 12-month period reaches 250,000 tonnes or when the total aggregate extraction over any period reaches 1.25 million tonnes (whichever occurs first). Once that trigger date is reached, Solid Energy will commence payments in instalments.

http://img.scoop.co.nz/media/pdfs/1205/20120510_Agreement_Letter.pdf

ENDS

© Scoop Media