The principal objectives of the restructuring plan is to ensure a financial framework that can support ongoing investment in each deep mine 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 said it would suspend developments for exploitation at Daw Mill beyond the end of 2013 but retains the option to resume developments, re-open the mine or extend its life under a lower risk operating model.
Production at Daw Mill is now 175,000 tons behind budget although UK Coal’s other mines are performing broadly in line with expectations.
Daw Mill needs to rise production to target levels on its 303s coalface by May and resume production on the 32s coalface in order to meet UK Coal’s plans for 2012.
The mining firm is in talks with key stakeholders to test support for these structural changes including the pension trustees, its bankers, the Department of Energy and Climate Change, the Coal Authority and power generator customers.
UK Coal said 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.
