Coalfield’s pledge on the future of its deep mines

Coalfield Resources, the former UK Coal, said its deep mines at Kellingley in North Yorkshire and Thoresby in Nottingham remain viable and will continue to play a part in the group’s future.

The Doncaster-based company said that Kellingley produced two million tonnes of coal in 2012 while Thoresby produced 1.2 million tonnes, both marginally underperfoming the previous year.

Coalfield Resources’ chairman Jonson Cox said: “These two mines are certainly viable. Kellingley has played a sterling part over the years and Thoresby produced its highest weekly output last week.”

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His comments follow the closure of Daw Mill Colliery in north Warwickshire following a major fire earlier this year, the largest in a UK mine in more than 30 years.

Mr Cox said that after returning UK Coal to profit in 2011, this success was set back in 2012 by the failure of the mining management team’s plan at Daw Mill Colliery.

A post-tax profit of £55.2m in 2011 was followed by a post-tax loss of £6.3m in 2012.

In a bid to ensure the group’s survival in the face of a £450m pension fund deficit, the group undertook a major restructuring.

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It has been split into three parts – UK Coal Mine Holdings, Harworth Estates Property Group, and Coalfield Resources.

The principal value in the company now relates to the 24.9 per cent interest in Harworth Estates.

The portfolio is largely made of former coalfield land for development and the intention is to seek long-term value through development.

A direct consequence of the Daw Mill fire is the company has sought to obtain a banking facility, secured against its shareholding in Harworth Estates. The bank has provided this facility on the basis of a limited guarantee from major shareholder, Peel Holdings Limited, and an undertaking of an equity fundraising if necessary.

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The group said Harworth Estates has carried out a successful sales programme which has contributed to a halving of the group’s bank debts.

It said the sale of Harworth Power for £20.3m in 2012 and progress with schemes such as Waverley, the former Orgreave Colliery, have reinforced the business. At Waverley, construction has begun on the first 250 of potentially 3,900 houses.

Rolls-Royce and the University of Sheffield also signed contracts to build major facilities on the site.

Harworth Estates currently has property assets of around £260m.

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“Following a very turbulent 2012, due mainly to the operational issues at Daw Mill, the restructuring of the group helped put Harworth Estates and Mine Holdings on a more stable footing,” said Mr Cox.

“The fire at Daw Mill, and subsequent closure, has been a bitter blow for Mine Holdings but we understand the remaining mines continue to be viable.”