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Surface coal mines operator ATH Resources (LSE:ATH) lost more than a fifth of its market value today, after the UK-based company disclosed it may be ending the current fiscal year with about £6 million in loss of revenues and costs.
Trading on the Alternative Investment Market of the London Stock Exchange, ATH Resources closed at an all-time low of 16.5 pence a share since the company became public, slipping 15 pence at 10:00 AM GMT following the announcement, valuing the company at £6.61 million.
In its half-year report released today, the Scottish miner said that despite increased production of coal compared to a year ago, the company is poised at a losing end as coal prices fell by more than 20% during the same period, coupled by the continuing rise in oil prices.
The mild winter experienced by the UK market weakened demand and, as a result, sales in the second half of the year will be impacted as customers still have leftover coals to burn.
Last year, ATH Resources posted £5.8 million loss before tax from continuing operations, which led the company to withhold dividend payments to their shareholders.
It also did not help that the coal producer will have to perform more work at the Muir Dean, a 180-hectare site that used to be a farmland and woodland soon to be shut down in September of this year.
ATH Resources undertakes restoration and rehabilitation of their sites alongside operations. The company expects a lower production for the year, however, should the “high level of old workings” will not be addressed soon.
ATH Resources, notwithstanding, was able to renegotiate its legacy contracts in consideration of the falling coal prices and the “rising gas oil costs”.
The company’s legacy contracts are in the supply of coal to the electricity supply industry at fixed prices that are below market values, which make up 32% of the total sales volume of the company in 2011.
Company Spotlight
ATH Resources operates three coal mines in Scotland, UK, producing more than 2 million tonnes of coal making it one of the largest coal producers in the UK.
ATH Resources markets its coal to several utility companies, including Drax Power, Scottish Power and EDF, and to domestic and industrial customers in the UK.
References
↑ ATH Resources Company Overview
↑ ATH Resources Business Operations
