ATH Resources seeks investment in mines

The Doncaster-based group said its “immediate focus” is securing new funds to mine existing sites and extensions, as a deadline approaches on its banking facilities.

As well as weaker coal prices, the miner has been hit by rising fuel costs and tough geology.

Its production of 1.6m tonnes for the year to the end of September was level with a year ago, and average sales prices for the year increased by around 14 per cent to about £57 per tonne from £50 per tonne.

Despite production costs increasing during the year, it said tight focus on costs elsewhere led to savings of about £3m.

It expects performance before exceptional items to be close to management expectations.

ATH has also cut net debt by £9.5m to £22m, but its banking facilities expire in May 2013.

The miner shrunk its facilities from £23.5m to £18m during the year, but said it must increase this level to meet its operational needs from December onwards.

“Whilst there is no certainty that adequate facilities can be secured, positive progress has been made towards agreeing new banking facilities with the group’s existing lenders based upon a revised mining plan that concentrates on existing sites and extensions only, with significantly lower levels of investment in new development projects for as long as current coal prices persist,” it said.

“Given this restriction in future investment, the board also needs to seek the agreement of other key stakeholders of the group.”

Due to weak coal markets, it expects production to be lower “for the foreseeable future”.

Coal prices are about 30 per cent below a year ago, with little prospect of improvement in the medium-term, it said.

“The immediate focus of the board is to secure the support of all stakeholders to a refinancing plan that concentrates on coal production from existing sites and extensions, with capital expenditure in respect of new site development kept to a minimum,” it added.

“The board is currently undertaking a review on how best to attract the investment required to develop these future sites.”