News Archive

02 April 2008

Trading Update

ATH Resources plc, one of the UK's largest coal producers, today issues the following trading update ahead of Interim Results for the six months to 30 March 2008 which will be announced on 10 June 2008. 

Development of the business has progressed well in the six month period and trading is in line with market expectations for the full year.   

Operations at the Grievehill Extension and Muir Dean sites commenced recently and the opening of both mines is progressing to plan. In the case of Grievehill, there was a delay in the receipt of planning consent which has resulted in lower coal production in the current period when compared to the equivalent period in the last financial year.  Deliveries of new mobile plant have started, as scheduled, which will provide additional production capacity to recover the shortfall in the second half of the year from this and other sites. 

Sales volumes in the six month period reflect the reduced production from Grievehill and are expected to be around 800,000 tonnes. Average prices are ahead of Director's expectations and the trend in prior years, with the average selling price of coal increasing by more than 10% to over £35/tonne.    

This price increase partly reflects the buoyant international market for coal which has seen spot prices more than double over the last 12 months as worldwide demand for coal increases, especially in the Far East. 

The business is poised to take advantage of the strong market with a number of new contracts in the industrial sector at significantly improved prices. This is expected to increase further the average selling price in the second half. In the longer term, the business will also benefit when new contracts for coal produced at Muir Dean and other new sites are concluded. 

As with coal, oil has seen a further price increase in the period raising the cost of gas oil, an important component of the cost base. The Directors, though, are confident this cost increase can be absorbed given the strength of the coal market and the current hedging strategy.   

The development of the land regeneration and coal tip washing business, ATH Regeneration, has continued. The business is awaiting a planning consent for the Langton site in Nottinghamshire where operations are expected to commence later in the year. In addition, negotiations with clients for the washing of 2 additional sites are progressing well and are expected to conclude in the near future.

ATH Regeneration is also pursuing a number of opportunities to deploy its intellectual property in Australia. Discussions are currently underway with two large, diversified mining companies for ATH to build, own and operate washing plants at operational mines in Queensland.  The Directors believe this much larger market will provide a significant opportunity to grow the business in the medium term.

During the six month period, the business received important planning consents for the Grievehill Extension and Muir Dean sites which resulted in permitted reserves increasing by 2.5 million tonnes to over 6 million tonnes. 

A further extension to the Skares mine of 0.6 million tonnes has recently been added to the total reserve base which now stands at around 8.4 million tonnes.

 

For further information please contact:

ATH Resources plc
Tom Allchurch, Chief Executive	Tel: +44 (0) 1302 760 462
tom.allchurch@ath.co.uk	www.ath.co.uk

 

Evolution Securities Limited
Joanne Lake/Peter Steel	Tel: +44 (0)113 243 1619

 

Media enquiries:

Abchurch
Sarah Hollins / George Parker	Tel: +44 (0) 113 203 1341
george.parker@abchurch-group.com	www.abchurch-group.com

 

Notes to Editors

ATH Resources is an AIM-listed operator of opencast coal mines in the UK with its current four operational mines, Skares Road, Grievehill, Glenmucklock and Laigh Glenmuir in East Ayrshire in Scotland.  The Company is currently the third largest producer of coal in the UK producing approximately 1.7 million tonnes per annum.  Coal was used to generate 34 per cent of the UK's electricity in 2005 and the Company holds coal supply contracts with four of the UK's main electricity generating companies.

The management team has been in place since 1998.  It acquired the rights to operate (and subsequently acquire) the Skares Road mine with support from The Alchemy Plan. Following ATH Resources' incorporation in October 2003, and backed by a follow on investment from The Alchemy Plan, the Company acquired the Garleffan mine in November 2003. Garleffan is currently being restored having finished coaling in June 2006. ATH Resources listed on the AIM market of the London Stock Exchange in June 2004.

In June 2005, having raised £18 million by way of an Open Offer, the Group acquired two new opencast sites, Grievehill and Glenmuckloch in Scotland. The acquisition increased the Group's reserve base by 160% and provided longer term stability to the business.

In addition to its operating mines, the Company also has a number of other coal mining projects in Scotland and two through its French subsidiary, SRMMC including a series of six existing coal concessions in south-central France, covering an area of 36km, 2 with an estimated resource of approximately 4.5 million tonnes of recoverable coal.

In May 2006, the Group acquired Doncaster-based A Ogden & Sons Limited a successful coal recovery, land remediation and regeneration business with a particular focus on colliery spoil heap reclamation projects.  ATH paid net £9.5 million for the business.  The acquisition, which was earnings enhancing, allowed ATH to build on its skills as a regenerator of land, whilst developing strong relationships with key English planning authorities.  The Company has been successfully integrated into the Group. The operational diversification that the acquisition brings to the Group will be a significant driver of ATH's organic growth going forward.

For the year ending 30 September 2007, the Group achieved turnover of £70.5 million, an increase of 30% on its 2006 year end, while EBITDA was up 31% to £25.1 million for the same period.

Further information on ATH Resources can be found at www.ath.co.uk

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