Rising gas oil prices and weak coal prices could hit full year trading performance at mining group ATH Resources.
Chairman David Port will tell shareholders at the group’s annual general meeting today that production in the four months to the end of January was 20 per cent ahead of the same period last year.
However, Mr Port will say production for the full year is expected to be only slightly ahead of last year.
Three “legacy contracts” have hampered its ability to respond to pressures from increased gas oil costs.
In a statement this morning, Mr Port said: “Despite the board having successfully renegotiated pricing on two of the group’s legacy contracts and with the remaining legacy contract finishing in the next few weeks, the escalating gas oil price and weakness in international coal prices are continuing to exert pressure on the group’s operating margins and, if this persists, will impact on the group’s trading performance for the full year,” he said.
“The group is working to improve margins through a combination of cost efficiencies and improving its sales mix. However, given the uncertainties over commodity prices, the board remains cautious in its view of trading performance for the full year.”
ATH is still waiting for a decision on an appeal it has made against a requirement to register for the Government’s Carbon Reduction Commitment Scheme.
Mr Port said: “Development of the group’s project pipeline remains on track with planning applications for over 2m tonnes expected to be submitted during 2012.”