Hargreaves on target with results despite Maltby Colliery setback

Hargreaves said that following an encouraging start, underground production at Maltby was "disappointing" in the second half due to teething problems with its new mining equipment.

While both surface coal production and shipments of smaller coal particles have "progressed well", they have only partly offset the lower underground production.

Full year production was 19,000 tonnes less than expected at 1,056,000 tonnes.

The next face change is planned for July and the group said development work and equipment installation at the new face is on target.

Hargreaves, which ended merger talks with Britain's biggest coal miner UK Coal last week, said the failed talks had cost it 230,000.

The group said it will continue to work closely with Doncaster-based UK Coal, which owns the Kellingley deep mine near Pontefract, and it looks forward to a continuing positive trading relationship. Hargreaves works with UK Coal on logistics, transporting the company's coal around the UK.

Hargreaves said that its Monckton coke works near Barnsley continued to perform well throughout the second half.

Monckton recently won a three-year contract with Xstrata in South Africa to sell up to 100,000 tonnes of coke a year.

Analyst Nick Spoliar at Altium Securities said: "Monckton has signed contracts with a new client, Xstrata, at prices we believe to be well ahead of the previous deal."

Hargreaves said that international coke markets have recovered strongly and the group is well placed to gain from increasing stability and rising prices.

The group's new renewables venture will become fully operational in August. Hargreaves has commissioned the first of five engines at a site in Wakefield which will run on green recycled fuel.

The previous Government encouraged operators to increase electricity supply through green fuels by providing subsidies. Hargreaves said it will wait for the new Government's review on renewables before committing significant investment to its next two proposed sites.

The Wakefield venture is the first of five sites in Yorkshire and Lancashire.

Analysts have pencilled in group pre-tax profits of around 33m-34m for the year to May 31.

"Hargreaves has released an encouraging pre-close trading update ahead of final results in September," said Mr Spoliar. "There have been teething problems with equipment at Maltby, but the financial impact is small and easily offset by the outperformance elsewhere."