DAW MILL UPDATE AND BUSINESS RESTRUCTURING (3153Z)
March 14 2012 - 3:01AM
UK Regulatory
TIDMUKC
RNS Number : 3153Z
UK Coal PLC
14 March 2012
UK COAL PLC
DAW MILL UPDATE AND BUSINESS RESTRUCTURING
UK Coal plc today announces plans to restructure the business
and to start consultation over the future of its Daw Mill mine. The
Board believes that this restructuring will provide a stable
platform in the medium term for the group's mining and property
businesses and will achieve the best value in the group for its
stakeholders.
The principal objectives of the restructuring plan are to ensure
a financial framework that is capable of supporting ongoing
investment in each deep mine over its remaining economic life and
to address the risks and volatility inherent in the mining
industry. The plan is intended to isolate the operating risk of
each deep mine from the group as a whole and mitigate future
financial uncertainty arising from operations at Daw Mill.
The Company has today commenced consultation on the potential
closure of Daw Mill by early 2014 at the point when current and
largely-developed coal panels will have been mined. The Company has
suspended developments for exploitation beyond the end of 2013 but
retains the option to resume developments, re-open the mine or
extend its life, to exploit the mines considerable long-term
resources. This would only happen under a lower risk operating
model.
Although UK Coal's other mines are performing broadly in line
with expectations, production at Daw Mill is around 175,000 tonnes
behind budget. To achieve UK Coal's plans for 2012, Daw Mill needs
safely to increase production to target levels on its 303s coalface
by May and to recover and resume production on the 32s coalface.
Intrusive intervention since January 2012 has continued to identify
material opportunities for improvement. New managers and leaders
for each coal face have been appointed under the personal
leadership of Managing Director of Mining, Gareth Williams.
UK Coal has initiated preliminary consultation with key
stakeholders to test support for these structural changes. These
stakeholders include the pension trustees, our bankers, the
Department of Energy and Climate Change, the Coal Authority and our
power generator customers. All stakeholders have approached the
discussions constructively and the Board believes these parties
will support the Company's restructuring initiative. The Company
has also been in helpful discussions with the Pensions
Regulator.
If the restructuring plan is successfully implemented in the
interest of securing a more stable platform for the Company,
shareholders may face dilution of their holdings.
The Company has entered into a collaborative and constructive
process with its principal banking partner, Lloyds Banking Group,
and is exploring the options available to address the funding
requirements of the Group in light of the possible structural
changes. The Company is confident that renewed facilities to 31
December 2013 will be agreed with Lloyds Banking Group, who remain
supportive of the current process.
The Board expects to publish its 2011 audited accounts towards
the end of April 2012.
The Board will make a further announcement when appropriate.
- END -
Enquiries:
Analysts and investors
Jonson Cox Chairman Tel: 01302 755 002
David Brocksom Group Finance Director Tel: 01302 755 002
Media
Rob Ballantyne Cardew Group Tel: 020 7930 0777 / 07899 878
210
Emma Crawshaw Cardew Group Tel: 020 7930 0777 / 07971 468
308
Anthony Cardew Cardew Group Tel: 020 7930 0777 / 07770 720
389
This information is provided by RNS
The company news service from the London Stock Exchange
END
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