Closure of UK Coal Mine Holdings' Daw Mill

RNS Number : 4550Z

Coalfield Resources PLC

07 March 2013

 



7 March 2013                                                                                                                    

Coalfield Resources plc

Closure of UK Coal Mine Holdings' Daw Mill Colliery following major underground fire

Coalfield Resources plc brings to the attention of the market the press statement below issued today by UK Coal Mine Holdings Ltd.

Since restructuring in late 2012, Coalfield Resources has retained only a limited economic interest in UK Coal Mine Holdings (UKCMH)¹.  However, together with its controlling co-shareholder, the UK Coal Employee Benefit Trust, Coalfield Resources plc has played a full part in helping the new management of UKCMH following the major underground fire at Daw Mill.

Statement by UK Coal Mine Holdings Ltd: Closure of Daw Mill Colliery

UK Coal Mine Holdings announces the closure of Daw Mill Colliery in Warwickshire following the major fire that broke out on 22 February 2013.

This fire is the largest seen in a UK coal mine in over 30 years and continues to burn ferociously at a depth of 740m with no signs of it reducing despite the ventilation being turned off to starve the fire of oxygen.

The 650 workforce has already been put at risk of redundancy, although a small, core team will remain on site to safely secure the mine over the coming months. 

Kevin McCullough, Chief Executive for UK Coal Mine Holdings said "This has been a terrible week, not just for the company and its employees but also for the energy security of the country, as it brings an end to 47 years of coal production at Daw Mill. 

"Having successfully completed the restructuring, and being only weeks away from returning to healthy production, this ferocious fire has dealt a blow to everything we tried to achieve over the last 12 months - in just ten days.

"The deep mines at Kellingley and Thoresby, together with the surface mines, continue to produce coal for use in the UK's power stations.

 "We are now exploring the possible transfer of some colleagues to our other mines.  Regrettably however, this news is likely to see the majority of the Daw Mill workforce being made redundant and our thoughts and best wishes are with these colleagues and their families at this difficult time."

Constructive and supportive discussions are continuing with Government, led by officials at the Department of Energy and Climate Change, with a view to helping the company manage the closure of Daw Mill and seeking a way forward for the remaining mines.

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Further information:

1.    As mentioned in previous RNS announcements and the Circular to Shareholders dated 18th October 2012 the economic interest is largely limited to the liability for the payment of the Blenkinsopp section of the pension obligation and other residual liabilities including guarantees in respect of leased equipment and professional fees incurred as part of the restructuring. As part of the restructuring UKCMH indemnified Coalfield Resources for these liabilities and they were expected to reduce over time to approximately £1m by June 2013. Following the announcements concerning Daw Mill we still expect these liabilities to be extinguished but over a longer timeframe than previously envisaged.

2.    Daw Mill has been at risk of closure since March 2012 when it was also announced that a restructuring was needed to safeguard the entire business.

3.    While small underground heating events are not uncommon, particularly in the Warwickshire coalfield, this fire is on a scale not seen before.  There had previously been heating on the 32s face which had caused UK Coal, in agreement with the HSE, to cease coaling from the face and begin to salvage the mining equipment.

Enquiries:  Media

Anthony Cardew              Cardew Group                                                                                   Tel: [phone]

Andrew Mackintosh       Director of Communications, Coalfield Resources           Tel: [phone]

 

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