Hope is fading for 29 miners missing in a damaged New Zealand mine as rescuers struggle to establish contact and video footage showed the scale of an explosion that ripped through underground tunnels four days ago.

"The situation gets bleaker by the hour and for everyone that's a frustrating situation," said New Zealand police commissioner Howard Broad, who is involved in the rescue. Families are now being cautioned by police that the men inside the remote mine may already be dead.

The rescue effort was hit Tuesday when an army robot, normally used to disarm bombs, broke down inside the mine as it attempted to make contact with those trapped. A second remote device will now be sent into the mine to search for survivors and gauge levels of poisonous gas including carbon-monoxide thought still to be present underground, police said.

Experts say there is a possibility that pockets of air still exist in the mine, but optimism of a rescue is waning. Miners trapped in a 2006 West Virginia coal mine explosion were rescued 41 hours after the disaster in one of the longest examples of people surviving carbon-monoxide poisoning.

"We are hoping the men in this case have reached a point of safety and are waiting," said Paul Healey, general manager of Australia's New South Wales Mines Rescue. "But as the days pass that is becoming more unlikely."

The trapped miners include 24 New Zealanders, two Australians, two British nationals and one South African.

Rescuers are also working on boring a hole about 150 meters-long, which will help locate the miners and measure conditions. Rescuers say the bore is close to completion but progress has slowed as engineers fear triggering a second explosion in the shaft.

The mine's operator, Pike River Coal Ltd. (PRC.NZ) is about 29% owned by New Zealand Oil & Gas Ltd. (NZO.NZ), with India's Saurashtra World Holding Private Ltd. and Gujarat NRE Coke Ltd. owning 5.5% and 7.1%. Shares in New Zealand Oil & Gas plunged 28% to 0.87 New Zealand dollars (US$0.67) when trading closed Tuesday. The abrupt drop in the share price has raised concerns of Pike River's financial future amid the rescue effort.

"It is possible that the suspension could remain in force for a number of months given the seriousness of the incident and a promised government inquiry," said Macquarie Equities Research in a note. Macquarie now has a neutral rating on the stock down from outperform due to the uncertainty. "Effectively we have removed our recommendation."

At its own request, trading in Pike River's shares in Wellington and Sydney is suspended indefinitely in the aftermath of the disaster, which marks the latest in a series setbacks for New Zealand's largest listed mining company. Not least a NZ$39 million New Zealand dollar loss for the financial year ended June 30 as higher-than-expected expenses and repeated delays hit production targets at its damaged mine.

Earlier, the company's chairman John Dow told Dow Jones Newswires that Pike River has insurance in place to cover business interruptions and trauma, without giving further details.

-By Lucy Craymer, Dow Jones Newswires; 64-4-471-5990; rebecca.howard@dowjones.com

(Rebecca Howard in Wellington contributed to this story.)
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