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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Ath Resources | LSE:ATH | London | Ordinary Share | GB00B013H730 | ORD 0.5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 0.325 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:6159Z ATH Resources plc 11 June 2004 Press Release 11 June 2004 ATH Resources plc ("ATH Resources" or "the Company") First day of dealings on the Alternative Investment Market ATH Resources plc, one of the UK's largest coal producers, today announces the commencement of dealings of its Ordinary Shares on the Alternative Investment Market (AIM) of the London Stock Exchange. Seymour Pierce Limited is acting as Nominated Adviser and Broker to the Company. The stock market EPIC will be ATH.L. Placing Statistics Total number of Ordinary Shares being placed 16,544,117 Number of Sale Shares being placed on behalf of the Selling Shareholder 7,352,941 Number of New Ordinary Shares being placed on behalf of the Company 9,191,176 Issue Price 136p Number of Ordinary Shares in issue immediately following Admission 29,770,176 Percentage of the Enlarged Share Capital being placed 55.57% Market capitalisation at the Issue Price #40.5 million Reasons for Admission to AIM and use of proceeds of the Placing The net proceeds of the Placing of the New Ordinary Shares, expected to amount to #11.25 million will be used by the Company primarily to repay existing debt within the Group to improve the balance sheet. The Company will repay the Discounted Loan Notes held by The Alchemy Plan. The amount to be repaid under these loan notes as at the date of Admission is approximately #6,140,239. In addition to the Discounted Loan Notes, the Company will repay the Fixed Rate Loan Notes. The amount to be repaid under these loan notes, including accrued interest, as at the date of Admission is approximately #1,679,566. The Company will also repay approximately #1m of bank debt and an amount of #271,000 in deferred dividend. The remaining proceeds will be used to fund the development of the Group. Tom Allchurch, Chief Executive of ATH Resources, said: "We are delighted that the flotation of the Company has been completed successfully. The listing will enable us to take ATH Resources to the next stage of its development and maximise any opportunities for the Group within the UK coal mining industry and overseas." For further information: ATH Resources Tom Allchurch, Chief Executive Tel: +44 (0) 1302 760 462 tom@ath.co.uk www.ath.co.uk Seymour Pierce Limited Sarah Wharry, Corporate Finance Tel: +44 (0) 207 107 8000 sarahwharry@seymourpierce.com www.seymourpierce.com Media enquiries: Bankside Sarah Hollins/Sebastian Lomax Tel: +44 (0) 113 390 6100 sarah.hollins@bankside.com www.bankside.com Introduction The Group is an operator of opencast coal mines in the UK with its current two operational mines, Skares Road and Garleffan, located near New Cumnock, East Ayrshire in Scotland. The Management Team believes the Group is currently the third largest producer of coal in the UK. The Management Team has been in place since 1998. Aardvark TMC was incorporated as the vehicle through which the Management Team acquired rights to operate (and subsequently acquired) the Skares Road mine with support from The Alchemy Plan and Bank of Scotland. Following ATH's incorporation in October 2003, and backed by a follow on investment from The Alchemy Plan, the Group acquired the Garleffan mine in November 2003. There are an estimated 3.28 million tonnes of coal reserves and resources at the Group's two operational mines, Skares Road and Garleffan, of which 2.72 million tonnes are in the categories of proven reserves and indicated resources. The two operational mines are together currently producing at the rate of approximately 1.6 million tonnes per annum. The Group has pre-sold most of the coal produced from these two sites to the electricity supply industry (ESI) through contracts at formulated prices. Production in excess of that sold to the ESI is sold to the industrial and house coal markets, generally attracting significantly higher prices. In addition to the Skares Road and Garleffan mines, the Group also has a number of other coal mining projects in Scotland and two in France, which are at different stages of development, but which the Management Team believes could yield in aggregate over 11.5 million tonnes of coal potentially supporting production well into the future. Exploratory drilling programmes have been carried out on some projects and more are planned for 2004-2005. The opencast coal industry in the UK The opencast coal industry in the UK commenced in the 1940s. With the privatisation of British Coal in the mid 1990s, the Industry became open to competition and a number of operators developed larger mines which prior to privatisation had largely been the preserve of British Coal. The opencast coal industry produced approximately 12.1 million tonnes of coal in 2003, approximately 6.9 million tones of this production was from Scotland and comprised 24 per cent of total UK coal production. Opencast coal sites are surface mining operations utilising large hydraulic excavators and off-road dumptrucks to strip overburden materials (boulder clay and rock) to expose coal seams for subsequent extraction by teams of smaller excavators and trucks. Overburden from the initial excavation at a site is placed in tips outside the excavation area to provide sufficient working space or void. The working void progresses over time across the site as coal is extracted and further overburden is excavated and placed in the de-coaled void in a continuous mining and restoration operation. Soils from the initial excavation are stripped and stored separately and, as the mining operation progresses, soils from subsequent excavations are placed directly to bed on the overburden placed in the de-coaled void, leaving only the initial extraction of overburden and soils to be restored to the final void on completion of coal extraction. Operators typically take care of the restored landform for 5 years after soil replacement to carry out activities such as soil improvement, fencing, tree and hedge planting and field drainage. Sites are returned to a number of uses including agriculture, forestry, nature conservation and other forms of development. Markets Coal was used to generate 34.7 per cent of the UK's electricity in 2003. In addition, coal is utilised in industrial processes such as cement manufacturing and sugar processing and in the heating of hospitals, schools and public buildings. Coal is also used in domestic heating systems and on open fires. The coal supply industry generally functions in two ways. Producers mainly hold coal supply contracts directly with electricity generators, but often sell smaller volumes of industrial and household coal through wholesalers who supply the end users. The Group holds coal supply contracts with four of the UK's main electricity generating companies. These contracts are at formulated prices, with some tonnages supplied fixed and some future tonnage contracted at the customer's option. The Group has sufficient fixed contract tonnage to meet its anticipated sales requirements for the next two years. The Group also supplies into the higher margin industrial and household coal markets. In the 52 weeks ended 28 September 2003 this yielded approximately 31 per cent of the Group's income from 21 per cent of its production. This product is marketed to the end user through wholesalers. The coal sold to these markets requires additional preparation to ensure higher quality. The Management Team believes that the Group is one of the largest indigenous producers of household coal and the third largest producer of coal in the UK. Industry process and regulation The UK is comprehensively geologically mapped. Coal bearing strata identified on geological maps allows for relatively straightforward mining prospect identification. Once a prospect is identified a developer typically negotiates access rights to the surface and the subjacent strata through the negotiation of options to buy or lease the area required. Having completed satisfactory geological research, including the drilling of boreholes to intersect the coal reserves and enable accurate quantification and analysis, the developer must obtain the necessary statutory consents to operate the mine. In Scotland, the opencast coal mining industry is subject to regulation in respect of planning control and environmental impact by the local planning authorities and the Scottish Environment Protection Agency (SEPA). Applications for planning consents for coal mining are normally accompanied by an Environmental Statement. This is a comprehensive assessment of the potential environmental impacts of the proposal and it sets out mitigation measures designed to minimise environmental impact to an acceptable level. The planning authorities consult amongst statutory and non-statutory bodies, as well as local residents and local interest groups, to ensure that all foreseeable environmental impacts have been addressed and are considered to be acceptable. Prior to commencing site operations, a 'Consent to Discharge' is required. This consent permits the discharge of water from a site into watercourses. The consent is issued by SEPA and specifies minimum standards for the quality of the discharge water in order to protect the receptor watercourse. The discharge water is regularly monitored and water samples are analysed to confirm that the discharge is of acceptable quality. Under the provisions of the Environmental Protection Act 1990, sites also require authorisation to operate a coal processing plant. This is referred to as a 'Part B Authorisation'. The Part B Authorisation is issued by SEPA and is designed to ensure that processes which might emit coal dust are subject to proper control, in order to minimise any impact of dust on the environment. The Group's operational opencast coal sites Skares Road The rights to operate the Skares Road mine were acquired by the Company's subsidiary Aardvark TMC in May 1998 supported by funding from The Alchemy Plan and Bank of Scotland Structured Finance. The mine, which commenced production in December 1998 with a then estimated reserve of 3.0 million tonnes of coal, is situated approximately 10km north-west of New Cumnock and covers an area of approximately 495 hectares. The Management Team has developed the coal reserves of the mine through identifying additional working areas, negotiating agreements with landowners and successfully applying for planning permission to extend the operations. As at 28 March 2004 some 3.8 million tonnes of coal had been extracted. This year the mine is expected to produce approximately 600,000 tonnes of coal and the Management Team expects the mine to continue production until 2006. As at 28 March 2004 there was an estimated 980,000 tonne proven reserve remaining at the mine. The majority of the coal produced at this mine has been forward sold to the ESI under contracts at formulated prices, although significant proportions of production are sold into the household coal market (14 per cent of production overall) and the industrial and non electricity markets (11 per cent of production overall). The coal sold to the ESI is transported to coal burning power stations in England via a third party's railhead at Killoch and also via the Group's own railhead at Crowbandsgate near New Cumnock. The coal sold into the household and industrial non-electricity markets is transported by road. Transporting the coal sold to the ESI by rail is the most cost effective means of transportation. In addition to the Group saving costs by using its own railhead, the Management Team believes it may also generate additional revenue in the future by using spare capacity to transport coal mined by other operators in the region. Garleffan The Group acquired the Garleffan mine in November 2003. The mine, based approximately 5km north of New Cumnock, covers an area of approximately 170 hectares and has been in production since 1999. The Management Team believes that the mine will produce approximately 1 million tonnes of coal next year which has been forward sold to the ESI. As at 28 March 2004 there were an estimated 1.5 million tonnes of proven reserves with approximately 215,000 tonnes of additional indicated resources at the Garleffan mine. The Management Team has also identified a further extension to the mine which has inferred resources of 560,000 tonnes and an exploratory drilling programme is underway to provide more geological detail. The Management Team intends to negotiate access rights and apply for the appropriate consents should the results of the drilling exploration programme confirm the inferred resource. This would extend the operation in a similar manner to that achieved at Skares Road. The Group transports its production from the Garleffan mine to coal burning power stations in England via the Group's Crowbandsgate railhead. Prospective mining projects The Group has identified a number of projects for future opencast coal mines to replace production at the Group's two operational mines. * The Muir Dean site covers an area of approximately 180 hectares in Fife. The Group currently controls the majority of the site through a combination of freehold ownership and options to lease or purchase. There has already been extensive borehole drilling on the Muir Dean site which was carried out by British Coal and by a private operator. The Group itself has undertaken a significant drilling programme and this, together with past drilling records, has demonstrated a potentially workable site containing seven coal seams. Analysis indicates that there is a measured resource at the Muir Dean site of 2.2 million tonnes of coal and the Management Team believes that the site is likely to receive planning permission in response to an appropriate application. * The Laigh Glenmuir project of some 35 hectares is located approximately 2 km to the north of the operational Garleffan opencast coal mine. Analysis of the results of 146 boreholes demonstrates an indicated resource of approximately 840,000 tonnes of coal. The site is similar to the nearby Garleffan opencast mine in that there appear to be no old mine workings beneath the site, resulting in an advantageous overburden ratio of approximately 11.9 m3 overburden to 1 tonne of recoverable coal. The Group holds the land under an option. * The Directors are evaluating a site, Project A, in close proximity to one of its existing mines. The Group has an option to lease part of this site and is in negotiation to gain access to the remainder of it. * The Group has exclusive exploration and negotiating rights over the Rigg Estate and Kyle Farm, which comprise approximately 2,300 hectares in the vicinity of the Garleffan mine and the Crowbandsgate railhead. Exploration on both sites is expected to commence in 2004. * The Group has identified a site in North Lanarkshire where the Management Team has estimated there is an inferred resource in excess of 500,000 tonnes of coal. The Group would need to acquire a combination of freehold and leasehold interests and necessary consents to operate this site. The Group has a French subsidiary, Societe des Ressources Minieres du Massif Central SA (SRMMC), which together with Aardvark TFC is in the process of acquiring coal concessions in France which the Group plans to develop into two opencast coal mines. * Bertholene, is a series of six existing coal concessions approximately 18km eastwards from the town of Rodez in south-central France. The French state has approved the transfer of these concessions to SRMMC and Aardvark TFC. These concessions cover an area of approximately 4,500 hectares and the Group intends to undertake an exploratory drilling programme once the acquisition is complete. The Group has made a preliminary assessment that indicates an inferred resource of some 4.5 million tonnes of coal on one of the concessions and the Management Team believes the remainder of the site has considerable potential. * An application has been made by SRMMC and Aardvark TFC for a concession (Project B) covering 287 hectares of land in central France and the Management Team expects this should be granted by the end of 2004. Underground mining has been undertaken on this site in the past and the surface outcrop zones of the coal seams were excavated in open cast trenches which are now flooded to form deep lakes. The Group intends to carry out a large scale opencast coal mining and land reclamation project. Following the acquisition of the concession and once authorisation procedures have been completed, the Group intends to carry out further confirmatory drilling before starting on the detailed assessment and planning of the opencast mine. Preliminary assessments indicate an inferred coal resource of approximately 3.2 million tonnes. Non-coal prospects The Group is currently progressing a project to develop a quarry on the southern fringes of its Skares Road site. The Management Team estimates from the results of initial exploration drilling that the site could yield approximately 9 million tonnes of aggregate suitable for construction and railway uses. The Group controls access to the site, owns approximately 30 per cent of the surface land and is in discussion with the remaining surface and mineral owners to acquire options over the remainder. The Group succeeded in gaining planning permission for the development of 36 houses on a restored opencast coal site in East Ayrshire and is in negotiations to dispose of this asset. Financial record and current trading and prospects Three years ended 30 52 weeks 52 weeks 26 weeks September ended ended ended 2001 29 September 2002 28 September 2003 28 March 2004 Turnover #51.8 million #17.6 million #19.4 million #16.7 million Operating profit before exceptional costs #7.8 million #0.5 million #1.4 million #0.3 million Exceptional costs #4.2 million - #0.2 million #0.4 million Profit/(loss) before interest & taxation #3.6 million #0.5 million #1.2 million #(0.1) million The exceptional costs during the three years ended 30 September 2001 relate to payments made to the Aardvark Qualifying Employee Share Ownership Trust, an Inland Revenue approved employee share ownership plan ("ESOP") which is now closed. The exceptional costs during the 52 weeks ended 28 September 2003 and the 26 weeks to 28 March 2004 relate to the costs incurred in the acquisition of the Garleffan site in November 2003. The results to 28 March 2004 have been prepared on a pro-forma basis and include the two months of trading of Aardvark TMC prior to the establishment of the Group in November 2003. The Group's trading performance for the 26 weeks to 28 March 2004 was in line with Directors' expectations and ahead of budget for the period which was influenced by the planned re-engineering of the recently acquired Garleffan opencast coal mine in order to improve operational efficiencies, supported by a strong performance at the Skares Road opencast coal mine. Trading for the year to date is in line with the Directors' expectations and the Directors anticipate that this will continue to be the case for the remainder of this financial period. Strategy The Management Team intend that, following Admission, the Group will continue to grow organically, drawing on the proven track record and experience in identifying high yielding coal producing sites. This organic growth is expected to be concentrated in Scotland. Following Admission the Management Team also intend to pursue suitable acquisition targets in the UK coal mining industry which would be complementary to the Group's existing operations and prospects. The Company intends to fund acquisitions following Admission through a combination of shares, debt and cash. Dividend policy The Directors' intention is that the Company will follow a progressive dividend policy in forthcoming years while continuing to retain a sufficient proportion of the Group's earnings to facilitate the Board's plans for the continued growth of the Group both organically and through acquisition. It is intended that the first dividend to be paid by the Company following Admission will be the final dividend in respect of the period ended 26 September 2004. The Board will continue to review its dividend policy as the Group develops. Directors The Management Team have between them over 100 years of experience in the coal mining industry. David Port, Non-Executive Chairman, aged 57 David Port qualified as a chartered management accountant whilst with National Freight Company Limited (now Exel plc) where he rose to become Group Chief Accountant. Following three years at Northern Foods Plc as Finance Director of the dairy division he joined British Fuels Limited as Finance Director and rose to Chief Executive and Chairman leading the management buyout from British Coal during the privatisation process and disposing profitably of the business in a trade sale in 1997. From 1997 to 2001 David was Executive Chairman of Sylvan International Limited, a #200 million turnover timber business with operations in France. David is currently Chairman of Petrol Express Limited, Non-executive Director of Global Natural Gas Limited and Non-executive Director of Global Natural Energy Plc. David has been Non-Executive Chairman of the Group since its establishment in 1998. Tom Allchurch, Chief Executive, aged 40 Tom Allchurch is a graduate mining engineer and has spent his entire career in the development and operation of opencast coal mines. Tom initially trained as a site engineer with Shand Mining Limited, a contractor to British Coal, before joining Bayford Mining Limited, a smaller private mining company, in 1986. In 1991 Tom joined Rackwood Colliery Company Limited as projects manager and was responsible for the development of a number of UK and French projects including Skares Road. Tom left Rackwood Colliery Company Limited in 1998 leading the Management Team in acquiring the rights to operate (and subsequently acquire) the Skares Road mine. Tom was Chairman of the coal industry trade association, the Confederation of UK Coal Producers, in 2001 and 2002. Tom has been Managing Director of the Group since 1998. Richard Croston, Finance Director, aged 38 Richard Croston qualified as a chartered accountant in 1992 with Price Waterhouse and worked in their audit department. Richard had periods of secondment to clients including British Gas Energy Centres Limited and Debenhams plc as a financial accountant and Beverley Building Society as financial controller. Richard joined the Group in 1998 as Financial Controller and has been Finance Director of the Group since 2000. Mike Tod, Development Director, aged 40 Mike Tod is a chartered minerals surveyor and commenced his career gold mining with Gencor in South Africa and subsequently moved to uranium mining in Namibia with RTZ. In 1990, Mike returned to the UK to work as a consultant for Wardell Armstrong, a leading UK mining and minerals consultancy firm. Mike joined Tom Allchurch's project team at Rackwood Colliery Company Limited in 1995 and was instrumental in the development of and subsequent acquisition by the Management Team of Skares Road and its management buyout from Rackwood Colliery Company Limited in 1998. Mike has been the Development Director of the Group since 1998. Alistair Black, Operations Director, aged 34 Alistair commenced his training as a site engineer with Coal Contractors Limited in 1986, progressing to site manager of the Roughcastle North site in 1994. In 1996 Alistair joined Rackwood Colliery Company Limited as regional production manager responsible for two opencast and one underground mine in Scotland. Alistair joined the Group in 1998 as operations manager for the Skares Road mine and became Operations Director in 2000. Alistair gained his MBA from Heriot Watt University in 1999. He is also the Health and Safety Director for the Group. John Hodgson, Marketing Director, aged 56 John Hodgson commenced his career with the National Coal Board in 1964 as a chemist in the scientific department, from where he progressed to assistant regional marketing and preparation officer in 1975. In 1981 John joined Burnett & Hallamshire Fuels plc as production director responsible for the production and marketing of coal from twelve coal washing operations. In 1984 John transferred to Rushcliffe Fuels Limited and was managing director from 1989 to 1993. John joined British Fuels in 1993 as general manager of the International and Sourcing Division, responsible for sourcing the entire company's solid fuel requirements. John joined the Group in 1998 as its Marketing Director. Vaughan Williams, Non-Executive Director, aged 60 Vaughan Williams has a degree in politics from Exeter University. Vaughan spent 4 years at British Steel from 1968 to 1972 before joining a predecessor company of BHP Minerals Europe Limited as coal sales manager, later promoted to director responsible for coal sales in Europe, CIS, Middle East and Africa. Vaughan then moved to BHP Coal Australia Pty Limited in 1986 as manager of their marketing operations. After returning from Australia, Vaughan became deputy managing director at BHP Minerals Europe Limited in 1988 and subsequently managing director in 1990. Vaughan then became vice president marketing at BHP Billiton Diamonds Inc in 2000 where he remained until 2003. Ivana Slade, Non-Executive Director, aged 28 Ivana Slade is the representative of The Alchemy Plan on the Board. Ivana has been an investment executive at Alchemy Partners since 2001. Previously at Bear Stearns in London and New York, Ivana worked in the mergers and acquisitions team. She holds a masters degree in Business Administration and Economics from the University of St Gallen, Switzerland. The Alchemy Plan is entitled to appoint a director to the Board for as long as it retains an interest in 10 per cent or more of the Company's issued share capital. - Ends - This information is provided by RNS The company news service from the London Stock Exchange END MSCFMMLTMMMBMAI
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