Yahoo Finance UK Coal To Close Mine As Profit Collapses
Mining (Euronext: SMI.NX - news) firm UK Coal Plc has reported a loss for the first half of the year, dragged down in part by a mine it now intends to close.
UK Coal (LSE: UKC.L - news) posted a pre-tax loss of £20.6m for the January-June period, compared with a profit of £22.1m for the same period a year earlier.
First (OTC BB: FSTC.OB - news) -half revenue fell 23% to £198.3m and total production fell 19.5% to 3.3 million tonnes, whereas the average sales price rose 3% to £2.43 per gigajoule.
Dogged by debt and years of losses, Britain's biggest producer of coal said it had reached an agreement in principle with its key stakeholders on a restructuring plan.
The company said it remained on course to shut Warwickshire's Daw Mill in early 2014 or earlier, unless it could achieve key targets, affecting an estimated 800 workers.
It said the reduced results were also impacted by weakening coal prices.
UK Coal's shares, which have lost three quarters of their value since the start of the year, were down more than 10% at 6p in morning trading on the London Stock Exchange (LSE: LSE.L - news) .
The company supplies 40% of the nation's total coal output and employs around 2,500 people.
Some 95% of its output is used by the electricity generation sector, producing around 5% of the nation's energy needs.
In 2010 the company lost £125m, while last March it announced a decision to halt production at Daw Mill in 2013.
Director of Communications Andrew Mackintosh said at the time: "We've worked hard to make Daw Mill a more efficient and consistent mine, but have faced a range of challenges from poor planning decisions in earlier years to an increasingly high cost base.
"Moving to a new financial structure is something the company should have done years ago."
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