Pre-Close Trading Update
07 October 2010 - 5:00PM
UK Regulatory
TIDMATH
RNS Number : 9899T
ATH Resources plc
07 October 2010
+-------------------------------+-------------------------------+
| Press Release | 7 October 2010 |
+-------------------------------+-------------------------------+
ATH Resources plc
("ATH Resources" or "the Group")
Pre-Close Trading Update
ATH Resources plc (AIM:ATH), one of the UK's largest coal producers, today
issues the following trading statement ahead of the Group's preliminary results
for the year ended 3 October 2010 which are expected to be announced on
Wednesday, 8 December 2010.
Current trading
As reported in the Group's interim announcement on 30 June 2010, sales volumes
in the first half of the year were adversely affected by one of the worst
winters Scotland has had for over 100 years. The Board is pleased to confirm
that sales in the second half of the year recovered strongly, with volumes for
the full year approaching expected levels of 1.8 million tonnes. Sales prices
averaged over GBP43 per tonne in the second half of the year, in line with
expectations. However, unexpected geological conditions at the Group's
Glenmuckloch mine during the second half of the year reduced coal production in
the latter months and the Board has taken the decision to lower its estimate of
remaining reserves by 50,000 tonnes. Given that the mine is reaching the end of
its life, this has led to an accelerated write down in the value of work in
progress of around GBP750k. This write down, together with the one-off costs
associated with recovering sales volumes from the Group's other mines has
significantly impacted trading performance for the year. Despite this, the
Group's Proved and Probable reserves now stand at a higher level than at any
time in the Group's history at 8.5 million tonnes as reported below.
Whilst the Group's cash position has been managed well with net borrowings at
the year end in line with management expectations, during the next 12 months the
Group is required to commit GBP14m of investment opening up both of the new
Netherton and Duncanziemere sites. The Netherton site has been redesigned to
enable substantial long term restoration savings to be made but initial
opening-up costs will increase as a result. This investment, in conjunction with
the continuing impact of its legacy sales contracts, which are well below
current market prices, has led the Board to take an early review of the level of
the proposed final dividend payable in January 2011. It is the Board's current
intention, just for this year, to propose a reduction in the final dividend
during this investment phase to 2.0 pence per share, making dividends for the
full year, including the interim dividend, in total 3.0 pence per share (2009:
6.15 pence per share).
Coal reserve update
As previously announced important planning consents were received in June 2010
for Netherton, a site close to the existing Skares Road site, and Duncanziemere,
an extension to the Laigh Glenmuir mine, in total adding 2.7 million tonnes to
Proved Reserves. Since then a further 0.4 million tonnes at Netherton has been
added to Proved Reserves following further investigation at the site with
another 0.9 million tonnes added to Probable Reserves. In addition, 1.3 million
tonnes has been added to Probable Reserves from extensions to the Group's
existing mines.
The Group's Proved Reserves currently stand at 6 million tonnes with Total
Reserves of 8.5 million tonnes. This is an increase of 1.2 million tonnes (28%)
in Proved Reserves during the course of the year.
Outlook
The Board changes following the sale of the assets of ATH Regeneration in July
2010 are now complete with Alistair Black appointed Chief Executive and Andy
Weatherstone joining as Group Finance Director at the start of October 2010.
The new executive team believe that the investments being made in developing the
Group's new mines, and its strong reserve base when combined with significantly
improving selling prices which will become available as and when the legacy
contracts fall away, will generate substantial improvements to future revenues
and margins for the Group. The first of these legacy contracts expires during
the next 18 months and the Group is already looking at opportunities to enter
into new sales contracts with electricity generators.
Consideration of new accounting standards
In August 2010 the International Accounting Standards Board (IASB) issued a
draft IFRIC Interpretation: "Stripping Costs in the Production Phase of a
Surface Mine". The draft IFRIC, if issued in unamended final form, would have no
impact on cash generated from operations, and is likely to improve reported
profitability in the current year, but would result in a prior year write down
in the historical level of work in progress recorded on the Group's balance
sheet at the previous year end. It would also reduce the Group's current
corporation tax liabilities. The Board is considering the full implications
arising from any potential change and will update the market as soon as the
position is clear. It is, however, likely to consider an early change in
accounting in this area if it concludes that it is appropriate to do so in order
to remove any future uncertainty over the likely impact of the IFRIC. If
adopted, the reported profit under the new approach is likely to be at or above
current market expectations.
The information in this report relating to exploration results, mineral
resources or mineral reserves is based on information compiled by Mr. Peter
Morgan, a full-time employee of the Group, who is a Fellow of the Institute of
Materials, Minerals and Mining. Mr. Morgan has sufficient experience which is
relevant to the style of mineralisation and type of deposit under consideration.
He has reviewed and consents to the inclusion in the report of the matters based
on his information in the form and context in which it appears. A glossary of
terms is available on our website - www.ath.co.uk. The information in this
report relating to exploration results, mineral resources or mineral reserves is
reported in accordance with the Pan-European Code for the Reporting of
Exploration Results, Mineral Reserves (the PERC Reporting Code).
- Ends -
For further information:
+------------------------------------+--------------------------+
| ATH Resources plc | |
+------------------------------------+--------------------------+
| | |
| David Port, Executive Chairman | Tel: +44 (0) 7836 693798 |
| | |
| Alistair Black, Chief Executive | Tel: +44 (0) 1302 760 |
| | 462 |
+------------------------------------+--------------------------+
| | www.ath.co.uk |
+------------------------------------+--------------------------+
+------------------------------------+--------------------------+
| Seymour Pierce Ltd | |
+------------------------------------+--------------------------+
| Sarah Jacobs / John Cowie | Tel: +44 (0) 207 107 |
| (Nominated Adviser) | 8000 |
+------------------------------------+--------------------------+
| Richard Redmayne / Katie Ratner | |
| (Broker) | |
+------------------------------------+--------------------------+
| | www.seymourpierce.com |
+------------------------------------+--------------------------+
Media enquiries:
+------------------------------------+--------------------------+
| Abchurch | |
+------------------------------------+--------------------------+
| Sarah Hollins / Mark Dixon | Tel: +44 (0) 207 398 |
| | 7729 |
+------------------------------------+--------------------------+
| mark.dixon@abchurch-group.com | www.abchurch-group.com |
+------------------------------------+--------------------------+
Notes to Editors
ATH Resources was listed on the AIM market of the London Stock Exchange in June
2004 and operates three surface coal mines in Scotland; Skares Road, in East
Ayrshire, Glenmuckloch in Dumfries and Galloway and Muir Dean in Fife. The Group
is currently the third largest producer of coal in the UK producing
approximately 2 million tonnes per annum. Coal is used to generate around a
third of the UK's electricity and the Group holds coal supply contracts with
four of the UK's main electricity generating companies.
Further information on ATH Resources can be found at www.ath.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
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