Pre-Close Trading Update (0023Q)
October 12 2011 - 1:00AM
UK Regulatory
TIDMATH
RNS Number : 0023Q
ATH Resources plc
12 October 2011
Press Release 12 October 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 the
Group's preliminary results for the year ended 2 October 2011 which
are expected to be announced on Wednesday, 7 December 2011.
Current Trading
Sales volumes in the second half of the year of 960,000 tonnes
were significantly higher than the six months to March 2011
(706,000 tonnes). Average sales prices for the year increased by
around 15% to over GBP50 per tonne (2010: GBP43.68 per tonne) and
trading profits before exceptional items, but including the costs
of the unsuccessful takeover talks, will be close to market
expectations.
Costs have increased significantly during the year, with
expenditure on gas oil and tyres some GBP6 million higher than in
the same period last year. The Board now believes that there is
little likelihood that the current level of these costs will reduce
in the foreseeable future and has therefore increased the provision
for the future restoration of its sites by an additional GBP1.6
million. This additional exceptional item will increase the loss
before tax indicated at the half year.
The Group's cash position has been managed well, with year end
debt levels reduced by some GBP3 million. Additionally, the Group
has renegotiated its bank facilities with its existing lenders to
extend the life of these facilities whilst also providing greater
flexibility. However, given the continued impact of the legacy
contracts and the significant increase in costs, particularly in
gas oil, the Board does not anticipate reinstating the dividend
payment at this time. It will however review the position at the
time of next year's interim results.
Coal reserve update
In line with expectations, production this year will exceed new
sites entering the planning system and therefore year end proved
and probable reserves will be lower at 7.9 million tonnes (2010:
8.6 million tonnes). During the next 12 months it is expected that
new applications totalling around 2 million tonnes will enter the
planning system.
Carbon Reduction Commitment ("CRC") Scheme
The Board remains of the view that the electricity consumption
of its 12 kilometre conveyor should be exempt from the CRC Scheme.
However, the Government is challenging the Group's decision not to
opt into the Scheme and a hearing to clarify the situation is
expected towards the end of the current calendar year. The
potential impact to the Group if it fails to win exemption from the
CRC Scheme would be an increase in its costs by a further GBP1.4
million per annum for each of the three years from April 2011.
Outlook
It is expected that the exceptional non-cash write offs which
have been a feature of recent Group results have now been
completed. This, together with the imminent completion of the first
of the three legacy contracts which have significantly held back
the profitability of the Group and with average selling prices
continuing to increase, will result in an early return to
profitability for ATH. The new site at Netherton is now in full
production and is producing coal at expected volumes and quality
whilst work has begun at a new site at Duncanziemere with
production due to commence in the first quarter of the new
financial year. Muir Dean has recently secured a new extension and
Glenmuckloch continues production in line with management
expectations. The end of the second legacy contract in March 2013
should see a further significant lift in earnings with a
commensurate step change in the Group's profitability.
The information in this report relating to exploration results,
mineral resources or mineral reserves is based on information
compiled by Mr. Peter Morgan, a full-time employee of the Group,
who is a Fellow of the Institute of Materials, Minerals and Mining.
Mr. Morgan has sufficient experience which is relevant to the style
of mineralisation and type of deposit under consideration. He has
reviewed and consents to the inclusion in the report of the matters
based on his information in the form and context in which it
appears. A glossary of terms is available on our website -
www.ath.co.uk.
- 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 / Oliver Tel: +44 (0) 207 398 7729
Baxendale
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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