Czech miner NWR, ministry agree to extend mining at loss-making Paskov

(Adds details of agreement, share price, analyst comment)

PRAGUE, April 22 (Reuters) - The Czech industry ministry reached a deal with coal miner New World Resources (NWR) on Tuesday on extending operations at NWR's loss-making Paskov mine until 2017, protecting jobs at a cost to the company, government and company officials said.

The hard coal-mining firm has suffered losses due to a sharp fall in global coal prices, and is in talks with bondholders on a capital restructuring.

It had planned to close the Paskov mine, which has the worst performance out of the firm's four active shafts, at the end of 2014 but has been under pressure from workers and the cabinet to extend its life.

Industry Minister Jan Mladek told a news conference that under the agreement, which still needs to be approved by the full cabinet, NWR would retain at least 1,800 workers at the mine and keep it operating until the end of 2017.

The government will contribute 600 million crowns ($30.16 million) in social programmes for miners that lose work.

The full cabinet is due to discuss the deal on April 28, and Mladek said he could not be entirely sure it would go through.

NWR said it lost 1.2 billion crowns at Paskov last year but has been able to cut costs significantly to reduce losses in the past months, NWR External Relations Director Petr Jonak said.

The agreement is also conditional on what happens to coal prices.

Jonak told reporters that if prices of hard coking coal, measured by an international benchmark price, fall under $110 per tonne and remain there for three quarters, the agreement falls through. He said the break-even point for a long-term operation Paskov was $180 per tonne.

The benchmark for the second quarter was $120, Jonak said.

Conversely, the agreement will also cease if the Paskov mine shows a profit for four consecutive quarters.

Shares in NWR dipped 0.4 percent after the news of the deal. Some analysts have said an agreement under the proposed conditions would be costly for the firm.

"Under the current conditions the mine will be burning cash, and that is negative from my point of view," said Bohumil Trampota, analyst at J&T Bank.

($1 = 19.8938 Czech Crowns) (Reporting by Jan Strouhal, addtional reporting by Robert Muller, writing by Jan Lopatka, editing by David Evans)