Interim Management Statement

RNS Number : 1323V

UK Coal PLC

28 October 2010

 



UK COAL PLC

("UK COAL" or "the Group")

Interim Management Statement

Strong third quarter production. Deep Mines producing in line with expectations. Surplus agricultural land disposals on track

UK COAL today issues its Interim Management Statement for the period from 26 June 2010 to the date of this announcement, incorporating a trading update for the third quarter ended 25 September 2010, together with an outlook statement for the full year. Other than the information contained in this Interim Management Statement there have been no material events or transactions in the period from 26 June 2010 to today's date which have affected UK COAL and its financial position.

Trading Review

Mining

The Group remains on track for around 6 million tonnes deep mine production for the full year and estimates around 1.5 million tonnes surface mine production for the full year.

m tonnes	Q3 2010	Q3 2009	YTD 2010	YTD 2009
On-going deep mines
Daw Mill	1.0	0.7	1.5	2.4
Kellingley	0.3	0.3	1.2	0.7
Thoresby	0.4	0.2	1.0	0.6
Total on-going Deep Mines	1.7	1.2	3.7	3.7
Surface Mines	0.5	0.3	1.0	1.0
Total on-going Production	2.2	1.5	4.7	4.7
Welbeck Total Production	- 2.2	0.3 1.8	0.2 4.9	0.7 5.4

Deep mines output has continued in line with expectations. Daw Mill and Thoresby have continued to produce above expectations, and Kellingley is working its way towards improved conditions.

Excluding the now closed mine at Welbeck, third quarter deep mine production of 1.7 million tonnes was up over 40% on the same period last year (Q3 2009: 1.2 million tonnes) and year to date output was 3.7 million tonnes, in line with 2009, despite the major production delays reported on at Daw Mill in the first half of 2010 (2009 YTD: 3.7 million tonnes).

Surface mine output in the third quarter was two thirds higher compared to the same quarter last year at 0.5 million tonnes (Q3 2009: 0.3 million tonnes), reflecting output from the new Potland Burn and Park Wall North sites starting in the quarter. September year to date production was 1.0 million tonnes (2009 YTD: 1.0 million tonnes).

Work has now started on the new Huntington Lane surface mine near Telford following delays in obtaining agreement to the fulfilment of planning conditions. Whilst soil stripping and other preparatory works are underway, the timing of the start of coaling will depend upon the weather conditions over the next few weeks.

Property

Good planning progress continues to be made. Since the half year we have received the formal planning decision notice for 150 residential units at Ball Hill, South Normanton. Our major planning application at Harworth, North Nottinghamshire, is expected to be determined at Bassetlaw District Council's Planning Committee in December. This comprises 996 homes, a 2,044 sq.m food retail unit - and 76,500 sq.m of new industrial employment space.

We continue making good progress on our programme to dispose of around 8,000 acres of surplus agricultural land, out of our total agricultural portfolio of around 30,000 acres. We have accepted offers from buyers on over 5,000 acres, and these offers are proceeding through the contractual process, with sales proceeds of over £24 million expected to be received before the end of the year.  Offers have also been received on further sites, representing around 2,000 acres. Marketing is continuing on other sites in the portfolio.

Net Borrowings

Overall net bank and other debt (excluding restricted cash balances) at the end of September 2010 was approximately £265 million, including prepayments and loans from generators of £93 million (September 2009: £225 million, including £57 million of prepayments and loans from generators).

It is expected that the combination of positive operating profit for the fourth quarter and the receipt of proceeds from the sale of surplus agricultural land will reduce overall net bank and other debt by the end of the full year.

Executive Chairman

The search for a new Executive Chairman, announced on 26 July 2010, has been continuing and is nearing a conclusion. The Board therefore expects to be able to make an announcement concerning this appointment in the near future.

Outlook for 2010

We remain on track to achieve our previously announced deep mines output for the full year of around 6 million tonnes. With the delay in the opening of Huntington Lane, we are now expecting production from the surface mines of 1.5 million tonnes, some 100k tonnes below our previous expectation. Our expected average realised sales price for the whole of 2010 is now expected to be marginally below the previous expectation of around £2.00/GJ.

Overall, with Q3 showing a small operating profit, mining output starting to show more consistent performance, and our asset sales on track, we remain cautiously optimistic about the remainder of 2010 and 2011.

For further information please contact:

Media:

Anthony Carlisle, Citigate Dewe Rogerson

Tel: [phone] Mobile: [phone]

Analysts and investors:

Jon Lloyd	Tel: [phone]
David Brocksom (Finance Director, UK COAL)	Tel: [phone]
Nick Cox-Johnson (Citigate Dewe Rogerson)	Tel: [phone]

 

END

 

 

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