ATH Resources Trading Update

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Opencast coal producer reports 7% increase in group sales for the year to 2 October 2011   

IN their trading update for the 12 months ended 2 October 2011, ATH Resources say group sales for the period increased by 7% to £84.2 million (2010: £78.3 million) on sales volumes of 1.67 million tonnes (2010: 1.79 million tonnes).

Average selling prices rose by 15% to £50.43 per tonne (2010: £43.70 per tonne) although the Group’s legacy contracts, which accounted for 32% of sales, continued to constrain performance. According to ATH, further significant improvements to average selling prices are anticipated in the current financial year.

Pre-exceptional operating profits were reduced to £3.0 million (2010: £7.0 million) as the full impact of higher input costs, principally gas oil, which increased by 28% over the same period last year, took effect.

In addition, difficult and unexpected geological conditions at the company’s Glenmuckloch and Muir Dean opencast sites caused a write-down of the Group’s work in progress provisions of some £4 million, resulting in a pre-tax loss of £5.8 million (2010: profit £4.0 million).

ATH say the Group continues to be cash generative and has reduced debt for the third year running. After making capital investments of £10.6 million, net debt was down £3 million at £31.5 million.

During the 12 months ended 2 October 2011, the Group invested around £8 million in successfully opening its new operation at Netherton, which contributed nearly 30% of total production in the year and is expected to account for almost 40% of the current year’s production.

ATH Resources have also commenced initial site preparations to develop Duncanziemere, which will become fully operational this year. In addition, the Group was successful in achieving planning permission for extensions at Glenmuckloch and Muir Dean for 505,000 tonnes and 350,000 tonnes respectively, both of which form part of current production plans.