TIDMATH

RNS Number : 3029F

ATH Resources plc

21 April 2011

 
 Press Release   21 April 2011

ATH Resources plc

("ATH Resources" or the "Group")

Pre-Close Trading Update

ATH Resources plc (AIM:ATH), one of the UK's largest coal producers, today issues the following trading update ahead of its interim results for the six months to 3 April 2011 which will be announced on 14 June 2011.

Trading update

During the first six months of the financial year the Group coped well with the difficult weather conditions, particularly those experienced in the first quarter. However, as highlighted in the AGM statement in January, the two fundamental issues facing the Group were the significant rise in gas oil prices which are now approximately 35 per cent. higher than in October 2010, and difficult geological conditions at Glenmuckloch.

Glenmuckloch continued to impact production and this has led to a reassessment of remaining reserves at the site. This is likely to lead to an exceptional write down of deferred (non-cash) stripping costs (work in progress) of approximately GBP2 million. The main site at Glenmuckloch is now expected to be completely mined out by the autumn of 2011.

The Group's net borrowings at the end of March 2011 were in line with expectations.

Through a combination of forward hedging, lower operating costs and an increase in average selling prices, excluding the impact of the WIP write off, the Group has been able to mitigate much of the impact of higher gas oil prices and the production problems affecting Glenmuckloch in the first half.

Outlook

The Group has made good progress opening up its new site at Netherton in East Ayrshire. With over GBP8 million invested in its development it will become the cornerstone of future Group production and it is anticipated that output will now progressively increase until the site achieves its full rate of production during the final quarter of the financial year. In addition, the Group has hedged the majority of its gas oil requirements for the second half albeit at prices significantly higher than experienced during the first six months.

The Group now expects that sales for the year will be in the region of 1.8 million tonnes. Whilst the impact of higher average selling prices is expected to maintain turnover in line with expectations, with higher gas oil prices and the impact of the exceptional write off of WIP at Glenmuckloch, earnings for the full year are expected to be below current market expectations.

The Group remains on track to complete the first of its fixed price legacy contracts in March 2012, after which access to significantly higher priced coal, linked to market prices, should provide a natural hedge for gas oil price movements going forward.

Demand for ATH's products remains strong in a market buoyed by positive projected dynamics for coal prices and the Board believes the steep rise in all energy commodities will only serve further to boost margins once the Group is free of its legacy contract positions. The Board remains confident that the medium and long-term prospects for the Group are strong.

- Ends -

For further information:

 
 ATH Resources plc 
 David Port, Executive Chairman       Tel: +44 (0) 7836 693798 
  Alistair Black, Chief Executive    Tel: +44 (0) 1302 760 462 
                                                 www.ath.co.uk 
 
 
 Seymour Pierce Ltd 
 Sarah Jacobs / John Cowie (Nominated   Tel: +44 (0) 207 107 8000 
  Adviser) 
 Richard Redmayne / Katie Ratner 
  (Broker) 
                                            www.seymourpierce.com

Media enquiries:

 
 Abchurch 
 Joanne Shears / Mark Dixon      Tel: +44 (0) 207 398 7729 
 mark.dixon@abchurch-group.com      www.abchurch-group.com

Notes to Editors

ATH Resources was listed on the AIM market of the London Stock Exchange in June 2004 and operates four surface coal mines in Scotland; Skares Road and Netherton in East Ayrshire, Glenmuckloch in Dumfries and Galloway and Muir Dean in Fife. The Group is currently one of the largest producers of coal in the UK providing coal principally to the electricity supply industry and also the industrial and house coal markets. Coal is used to generate around a third of the UK's electricity and the Group holds coal supply contracts with four of the UK's main electricity generating companies.

Further information on ATH Resources can be found at www.ath.co.uk

This information is provided by RNS

The company news service from the London Stock Exchange

END

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