ATH Resources sees uplift in volume and values

MINING company ATH Resources has said profits will be close to expectations, as both sales volumes and prices increased in the second half of the year.

Doncaster-based ATH, which is one of the UK’s largest coal producers, said sales prices for the year increased by around 15% to more than £50 a tonne (2010: £43.68 a tonne). It added that sales volumes were significantly higher in the second half of the year at 960,000 tonnes, compared with 706,000 tonnes.

Earlier this year, ATH confirmed it was in discussions with unnamed potential bidders for the company but those talks were abandoned earlier this month.

The company said that trading profits before exceptional items, but including the costs of the unsuccessful takeover talks, will be close to market expectations for the full year to October 2, 2011.

Although ATH has benefited from an increase in sales prices, it has also seen costs increase significantly – with expenditure on gas oil and tyres some £6m higher than in the same period last year.

On this basis, the company has increased the provision for the future restoration of its sites by an additional £1.6m, which will increase the loss before tax indicated at the half year.

The company said its new site at Netherton is now in full production and is producing coal at expected volumes and quality, while work has begun at a new site at Duncanziemere with production due to commence in the first quarter of the new financial year.

Muir Dean has recently secured a new extension and Glenmuckloch continues production in line with management expectations, it added.

The company added: “It is expected that the exceptional non-cash write offs which have been a feature of recent group results have now been completed.

“This, together with the imminent completion of the first of the three legacy contracts which have significantly held back the profitability of the group and with average selling prices continuing to increase, will result in an early return to profitability for ATH. 

“The end of the second legacy contract in March 2013 should see a further significant lift in earnings with a commensurate step change in the group’s profitability.”