ATH shares plunge

SHARES in coal miner ATH Resources plunged this morning after the company issued a profits warning.

The Doncaster-based group, whose mining interests are based in Scotland, blamed a 21 per cent fall in international coal prices since the start of the year and geological problems at its Muir Dean mine.

The company said that sales volumes this year are unlikely to exceed 1.6 million tonnes.

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ATH said that while it has negotiated a “significant improvement” to its two remaining legacy contracts and enter into some new fixed price contracts at prices well above those currently available, further reserve losses in recent weeks at Muir Dean, together with those previously announced in March due to increased old workings, coupled with reduced demand and pricing of its premium products have exceeded any gains made.

It added that the ongoing weakening of international coal prices continues to hit group income and, with commodity markets forecasting that this trend is set to continue, the company is reviewing its mining plans in order to maximise cash generation through this difficult period.

New sites will continue to be developed through the planning process, although the opening of some sites may be delayed and capital expenditure kept to a minimum whilst coal prices remain subdued.

ATH said the Environment Agency told the group yesterday that it will have to purchase Carbon Credits totalling £1.1m per year in July 2012 and July 2013.

ATH has lodged an application for a judicial review of the Government’s Carbon Reduction Commitment Scheme.

It added that the £1.1m a year would be reclaimable if the appeal is successful.

ATH is seeking legal advice as to whether to seek interim relief from the courts in respect of making these purchases.

The company said that as a consequence of all these factors, its trading performance will be “materially adversely impacted”.

It is holding discussions with its banking syndicate in order to secure adequate facilities.

“Amid a challenging operating environment, the board will provide further details of the review of its development plans and financing arrangements in its forthcoming interim results,” it said in a statement.

These are due out at the end of June.