ATH Ath Resources

TIDMATH

RNS Number : 4622T

ATH Resources plc

07 December 2011

 
 Press Release   7 December 2011 
 

ATH Resources plc

("ATH Resources" or the "Group")

Trading update

ATH Resources, one of the UK's largest coal miners, issues the following trading update in respect of its year ended 2 October 2011.

Group sales for the period increased by 7 per cent to GBP84.2 million (2010: GBP78.3 million) on sales volumes of 1.67 million tonnes (2010: 1.79 million tonnes). Greater emphasis has been placed on maximising supply of tonnage due under legacy contracts together with further reductions in debt in order to improve shareholder value over the longer term. The Group has therefore concentrated its mining strategy on those areas of recoverable reserves which give rise to higher quality coals at lower mining ratios and remains on track to fulfil the first of these legacy contracts by the end of March 2012 with the second during 2013.

Average selling prices rose by 15 per cent. to GBP50.43 per tonne (2010: GBP43.70 per tonne) with the Group's legacy contracts, which accounted for 32% of sales, continuing to constrain performance. Further significant improvements to average selling prices are anticipated in the current financial year.

Pre-exceptional operating profits were reduced to GBP3.0 million (2010: GBP7.0 million) as the full impact of higher input costs, principally gas oil, which increased by 28% over the same period last year, took effect. With higher gas oil prices likely to remain at, or above, their current levels for the foreseeable future, the Board felt it appropriate to increase restoration provisions by some GBP1.6 million. Additionally difficult and unexpected geological conditions at Glenmuckloch and Muir Dean sites caused a write down of the Group's work in progress provisions of some GBP4 million. This has resulted in a pre-tax loss of GBP5.8 million (2010: profit GBP4.0 million).

During the year the Group invested some GBP8 million in successfully opening its new operation at Netherton. Although areas of heat affected coal in initial areas impacted on both volume and quality, the site contributed nearly 30 per cent. of total production in the year. With the site now in full production and operations having advanced away from the heat affected areas, Netherton is expected to account for almost 40% per cent of the current year's production.

The Group is continuing to be cash generative and has reduced debt for the third year running. After making capital investments of GBP10.6 million, net debt was down GBP3 million at GBP31.5 million.

Following the successful opening of Netherton, the Group has commenced initial site preparations to develop Ducanziemere, which will become fully operational this year. In addition, the Group was successful in achieving planning permission for extensions at Glenmuckloch and Muir Dean for 505,000 tonnes and 350,000 tonnes respectively, both of which form part of current production plans.

The Group is required to provide the relevant local authority with an insurance bond every time it opens a new site or extends an existing one. Recent weeks have seen the number of providers in this market reduce and whilst the Group has received confirmation that its immediate requirements will be met, the Group is continuing to negotiate new facilities to meet its future needs and will publish its Report and Accounts when these negotiations are completed.

During the year the Group was able to successfully re-negotiate its banking facilities, increasing the overall facility and extending its duration to May 2013.

-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 (Nominated Adviser)   Tel: +44 (0) 207 107 8000 
 Richard Redmayne / Katie Ratner 
  (Broker) 
                                        www.seymourpierce.com 
 

Media enquiries:

 
 Abchurch 
 Sarah Hollins / 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; Netherton and Duncanziemere 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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