ATH seals deal to sell fuel at higher price

Coal miner ATH Resources has renegotiated a second legacy contract which will allow it to sell coal at a higher price in future.

The Doncaster-based firm announced in December it had renegotiated one of its deals and yesterday it said agreement had been reached on new terms for a second contract.

ATH, one of the UK’s largest coal producers, said it has secured an increase in the price per tonne in return for additional options being granted over future coal supply.

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The group said this increase should alleviate the pressure on its margins caused by the recent fall in the price of coal at a time when gas oil prices are continuing to rise.

A third and final legacy contract will be fulfilled at the end of March.

ATH said it will provide a further update on trading at its annual general meeting, to be held on February 29.

ATH operates four surface coal mines in Scotland at Skares Road and Netherton in East Ayrshire, Glenmuckloch in Dumfries and Galloway and Muir Dean in Fife.

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The group provides 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 has coal supply contracts with four of the UK’s main electricity generating companies.

The group was listed on the AIM market of the London Stock Exchange in June 2004.

Last week activist investor Peter Gyllenhammar took a 20 per cent stake in ATH to become its biggest shareholder.

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The Swedish value investor hiked his stake in the surface mining group from three per cent in December.

He bought much of private equity firm Alchemy Partners’ stake, which now has less than three per cent.

ATH has been beset with geology problems and high fuel costs, but predicts a brighter future as legacy contracts end.

Last month it reported a loss of £5.8m as tough geology and high prices eroded earnings. The group warned that tensions in the Gulf are making its mining increasingly costly.

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The miner warned of a growing “disconnect” between surging gas oil prices – used to fuel its diggers – and falling coal prices. This will squeeze margins, said the miner, but despite this insisted it is on track to restoring profitability.

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