UK Coal production 'living up to expectations'
UK Coal today said production was 'living up to expectations' after operations began on two new seams at two of the country's biggest collieries.
Miners at Daw Mill: One of the mines in line with expectations
The company, based in Doncaster, has said that half-year volumes at Kellingley in Yorkshire were twice the level seen a year earlier, and output at Thoresby in Nottinghamshire were up 50% following recent investment.
While UK Coal is on track to produce 7.6m tons of coal this year, the cost of moving to more viable seams left its mark on half-year results today.
First quarter production was sharply lower due to transition work which meant interim losses widened to £93.2m from £81.5m just a year earlier. Net debt however, has soared to £170.1m from £114.3m.
Chairman David Jones said 'with the transition completed, production in the second quarter rose sharply and is now living up to our expectations and demonstrating the benefits of the substantial investments we have made.'
Stronger coal prices and the replacement of legacy contracts with new long-term supply deals, including recently-signed agreements with the likes of Scottish & Southern Energy, have also boosted prospects.
Shares jumped by 7% today as investors welcomed the production update and the prospect of significant agricultural land sales before the end of the year.
UK Coal have placed an estimate on the worth of its estate in 2014, including land with planning consents currently in the pipeline, at £820m.
The company is one of the UK's largest brownfield site property developers, as well as the supplier of 15% of all the coal burned in the UK – which is equivalent to the energy required for around 5% of the UK's electricity requirements.
UK Coal said that production at their third deep mine at Daw Mill near Coventry was in line with expectations, and similar to high levels achieved in 2008 and 2009, after work began at a new face in May.
The Welbeck colliery in Nottinghamshire brought its last coal to the surface in May due to the exhaustion of workable reserves.
As well as these deep mines, the firm also has active surface mines at Steadsburn in Northumberland, Cutacre in Bolton, Lodge House in Derbyshire and Lond Moor in Leicestershire.
It bought the English coalfield assets of British Coal for £815m in December 1994 when the state-owned business was privatised. Hargreaves Services, which owns Yorkshire's Maltby Colliery recently ended its interest in a tie-up with UK Coal.
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