Shares tumble by a fifth as ATH Resources warns over full-year trading

The Doncaster-based miner blamed higher gas oil prices, lower coal prices, mild winter weather which hit domestic demand and issues at its Muir Dean site.

While sales volumes for the first six months of the year are expected to rise by 12 per cent to 790,000 tonnes, the group has been hit by the continued rise in gas oil prices, which are now 10 per cent higher than at the start of the year, combined with a weakening international price of coal which has fallen by over 20 per cent during the same period.

In recent weeks sales of high margin domestic coal have not recovered from low demand over the mild winter and ATH said they are unlikely to pick up.

On top of these factors the group is seeing a much higher level of old workings, the term given to old mine shafts left over from the original mine, at Muir Dean.

If this situation continues to the end of the mine’s life in September, the group’s total annual expected sales volumes will fall to 1.65 million tonnes, slightly below last year’s total of 1.67 million tonnes.

These issues are expected to result in a loss of revenues of over £4m for the remainder of the year. The loss of reserves is also likely to lead to an exceptional write down of £2m.

The group has been able to partly mitigate these issues by renegotiating the price of its two remaining legacy contracts. A third legacy contract has also now been fulfilled.

But the group said its trading this year will be “substantially below expectations” and the shares fell 4.9p to 16.5p.

ATH said it is cautiously optimistic that the Carbon Reduction Commitment Scheme will be abolished this autumn following the Chancellor’s recent Budget statement, but it has decided to proceed in registering its participation within the scheme to avoid incurring any penalties should the group ultimately have to participate in the scheme.

The latest estimate of the cost of participation could be £1.1m a year for three years.