Half Yearly Report

Atlantic Coal plc / Index: AIM / Epic: ATC / Sector: Mining

Atlantic Coal plc ("Atlantic" or the "Company")

Interim results

Atlantic Coal, the AIM listed opencast anthracite coal production and processing company with primary activities in Pennsylvania, USA, announces its results for the six months ended 30 June 2014.

Overview

· Increase in production compared with H1 2013 despite production loss caused by adverse weather in Q1 (H1 2014 - 84,567 tons, H1 2013 - 81,965 tons)

· Sales held up well despite adverse weather in Q1 and traditionally low sales volumes in Q2 (H2 2014 -75,738 tons, H1 2013 - 77,075 tons)

· Total assets increase by 28% from US$ 29,014,187 to US$37,180,017

· Purchase of six new Komatsu 100 ton dump trucks and other capital equipment with aggregate value of $9,878,956.

Post-period end

· Early repayment of SEDA advance and early completion of equity swap

· On track to break the mine production record with the Stockton mine working double shift and the washing plant working three shifts;

· Increases in US steel production and Ukraine's switch from being an exporter to an importer of anthracite are already having a positive effect on sales prices boding well for the rest of the year;

· Increased prices of stove, nut and rice anthracite by $10/ton from 1st September;

· Chairman relocates to US to focus fully on funding acquisitions.

Atlantic Coal's Managing Director Steve Best said, "I am pleased to report a solid performance in H1 and a number of positive developments and trends that enable us to look forward to the rest of the year with confidence. The reporting period includes Q1 when our Stockton Mine faced the most challenging set of adverse weather and temperature conditions we have experienced with the mine facing a range of problems caused by the coldest and longest winter in Pennsylvania for 20 years. Washing coal at temperatures consistently well below freezing proved to be particularly problematic and health and safety concerns, as well as practical considerations, resulted in mining operations often having to be suspended or scaled back. Sales as well as production suffered with problems in getting anthracite to customers caused by problems on the highway network and railways over large parts of the US and Canada rendering it very difficult to fulfil the shipment of orders to our customers.

We did, however, recover well in Q2 with record production and sales levels. In these circumstances to have experienced such a small loss is extraordinary and reflects well on the Company's capability to bounce back after the Q1 weather problems.

Towards the end of the reporting period it became increasingly apparent that local anthracite production in Pennsylvania was not keeping pace with demand, a situation we correctly anticipated would continue. This gave the Directors the confidence to make a significant investment in capital equipment, the impact of which we are already seeing, and which will ensure our ability to meet this increasing demand. Our investment in capital equipment has come at a good time for Atlantic Coal as we are seeing not only a significant improvement in market demand but also in pricing for anthracite with US steel production increasing and the conflict in Ukraine increasingly turning that country from an exporter to an importer of anthracite. Consequently on 1 September 2014 we were able to increase the price of most grades of anthracite by $10/ton and, as winter approaches with the usual seasonal increase in demand and prices, I look forward with confidence to the remainder of the year."

Chairman's statement

Operations Review

This set of results for the six months to the 30 June 2014 reflects the difficulties we faced at Stockton because of severe snow and freezing temperatures in Q1. These conditions have certainly impacted on our financial results, as we were unable to mine, wash and sell the same volumes of coal we were able to do during the same period last year. It was not just Atlantic Coal that was impacted by the severe weather but also all other Pennsylvania anthracite miners. Indeed, the US economy as a whole contracted by 2.9% in the first quarter of 2014, much of which commentators put down to the severe adverse weather conditions.

After the adverse weather our workforce at Stockton responded well in Q2 which enabled us to post record production and sales figures for Q2 and increased production figures compared with H1 2013 and sales figures which were only marginally behind those of H1 2013.

We produce a first class anthracite product at Stockton with high carbon, low ash and low sulphur levels which place it among the highest quality anthracite in the world. This, together with the strengthening market and the Stockton workforce's ability to "rise to the occasion", gave the Directors the confidence to make a considerable investment in our mining equipment during the reporting period with the acquisition of six Komatsu 100 ton dump trucks and two Caterpillar D9 bulldozers. We are now well positioned to increase production with our much improved and efficient equipment. Our assets have increased by 28%, a reflection of the investment we have put into Stockton during the reporting period.

Post-period end, our record production and sales levels in Q2, gave us the ability and confidence to make an early repayment of the SEDA and to bring forward the expiry date of the equity swap facility.

We have long stated that our ambition is to grow both our reserve base of anthracite and our production capacity and have been actively looking for further high quality and economically viable anthracite coal properties. This process continues and I am pleased to report to shareholders that I am proposing to relocate to the US and apply for the appropriate working visa so that I can support Steve Best and our technical team in not only finding the right properties for us to purchase, but also to make sure Atlantic secures a cost effective financing package so we can execute on this strategy. We have also been positively progressing the mine planning and engineering process on the Pott and Bannon reserve site with a view to bringing the site into production. We are, however, also looking at the programme for opening up the site in the context of our potential acquisition of both new anthracite reserves and operational mines.

Commercially we are pleased to see the return of more buoyant pricing and demand for anthracite as US steel production picks up and the disappearance of Ukrainian anthracite from the market caused by the conflict in that country and which had a depressive effect on prices in both export and US markets. These factors combine to create improved financing possibilities for Atlantic to set about its expansion strategy and, of course, any future price rises we achieve for our product go straight to the "bottom line".

Whilst it is disappointing to post a small net loss for the reporting period, it should be noted that the performance would have been much improved had it not been for the severe weather in Q1 and the foreign exchange losses. Despite the severe weather in Q1 which left us behind schedule we are pleased to report that we are now well on course to break the mine production record of 161,529 tons. We are delighted that Atlantic has been able to manage our Stockton operation in such an effective manner in what has been a very difficult operational environment. Shareholders should remain confident that the Company is well positioned to benefit from a positive upturn in demand and pricing for its anthracite.

Outlook

Commercially, there are two leading factors that are creating much better pricing and demand fundamentals for anthracite. Firstly, there has been a noticeable improvement in US steel production that is serving to drive demand and helping lift prices. Secondly, we are now seeing the impact of the removal from the market of the influencing factors of Ukrainian anthracite supply and pricing benchmarks that in the past have served to depress prices paid by customers for anthracite not only in export markets but also in the US and Canadian markets. These factors combine to create improved pricing and demand for the Pennsylvania anthracite industry which we anticipate will be of positive benefit to our financial performance moving forward.

Our production and sales volumes are good and, despite the severe weather in Q1 which left us behind schedule, we remain well on course to break the mine production record of 161,529 tons. As we proceed through the next reporting period we are surrounded by a better set of market conditions for anthracite and a much improved mining and equipment fleet that, with the support of our operational team, is well positioned to exploit exciting and expanding new customer channels. I look forward to updating shareholders as we work to unlock value from the improving market and operational conditions.

Finally, I would like to take this opportunity to thank our team, shareholders and associates for their support over recent months. We look forward to providing further updates at the appropriate time.

Adam Wilson

Chairman

For further information on the Company, visit www.atlanticcoal.com or contact:

All activities are classified as continuing.

Condensed Consolidated Statement of

Changes in Equity

Significant non-cash transactions

During the period ended 30 June 2014, the Group purchase various items of plant and equipment with an aggregate value of $9,878,956 (30 June 2013: $428,077) through finance leases.

Notes to the unaudited interim results

1. General information

The principal activity of Atlantic Coal plc ('the Company') and its subsidiary (together 'the Group') is the development and operation of the Stockton Colliery which comprises the Stockton Mine and an anthracite washing plant in Pennsylvania. There is no significant seasonality or cyclicality of the Group's operations between interim periods.

The Company's shares are listed on the AIM Market of the London Stock Exchange (AIM). The Company is incorporated and domiciled in the United Kingdom. The address of its registered office is 200 Strand, London WC2R 1DJ.

2. Basis of preparation

The condensed consolidated interim financial statements have been prepared in accordance with the requirements of the AIM Rules for Companies. As permitted, the Company has chosen not to adopt IAS 34 "Interim Financial Statements" in preparing this interim financial information. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2013, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

The interim financial information set out above does not constitute statutory accounts within the meaning of the Companies Act 2006. It has been prepared on a going concern basis in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) as adopted by the European Union. Statutory financial statements for the year ended 31 December 2013 were approved by the Board of Directors on 4 June 2014 and delivered to the Registrar of Companies. The report of the auditors on those financial statements was unqualified.

The 2014 interim financial report of the Company has not been audited but has been reviewed by the Company's auditor, PKF Littlejohn LLP, whose independent review report is included in this Interim Report.

Going concern

The Directors, having made appropriate enquiries, consider that adequate resources exist for the Group to continue in operational existence for the foreseeable future and that, therefore, it is appropriate to adopt the going concern basis in preparing the condensed interim financial statements for the period ended 30 June 2014.

Risks and uncertainties

The Board continuously assesses and monitors the key risks of the business. The key risks that could affect the Group's medium term performance and the factors that mitigate those risks have not substantially changed from those set out in the Group's 2013 Annual Report and Financial Statements, a copy of which is available on the Group's website: www.atlanticcoal.com. The key financial risks are liquidity risk, foreign exchange risk, credit risk, price risk and interest rate risk.

Critical accounting estimates

The preparation of condensed interim financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the end of the reporting period. Significant items subject to such estimates are set out in note 2 of the Group's 2013 Annual Report and Financial Statements. The nature and amounts of such estimates have not changed significantly during the interim period.

3. Accounting policies

The same accounting policies, presentation and methods of computation have been followed in these condensed interim financial statements as were applied in the preparation of the Group's financial statements for the year ended 31 December 2013, except for the impact of the adoption of the Standards and interpretations described below.

Changes in accounting policy and disclosures

New and amended standards adopted by the Group:

Amendment to IAS 32, 'Offsetting Financial Assets and Financial Liabilities', add application guidance to address inconsistencies identified in applying some of the criteria when offsetting financial assets and financial liabilities. This includes clarifying the meaning of "currently has a legally enforceable right of set-off" and that some gross settlement systems may be considered equivalent to net settlement.

Amendment to IAS 36, 'Recoverable Amount Disclosures for Non-Financial Assets', to reduce the circumstances in which the recoverable amount of assets or cash-generating units is required to be disclosed, clarify the disclosures required, and to introduce an explicit requirement to disclose the discount rate used in determining impairment (or reversals) where recoverable amount (based on fair value less costs of disposal) is determined using a present value technique.

IFRS 10, 'Consolidated financial statements', builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess.

4. Loss for the period

Loss for the period includes the following items which are unusual because of their nature, size or incidence:

5. Dividends

No dividend is proposed for the period.

6. Loss per share

The calculation of loss per share of 0.01 cents (30 June 2013: profit per share of 0.06 cents) is based on a retained loss of $271,921 for the period ended 30 June 2014 (30 June 2013: profit of $2,488,465) and the weighted average number of shares in issue in the period ended 30 June 2014 of 4,662,538,502 (30 June 2013: 3,868,772,016). The diluted earnings per share are the same as the basic earnings per share as they would have the same weighted average number of shares in issue.

Details of share options that could potentially dilute earnings per share in future periods are disclosed in note 9 to these condensed interim financial statements.

7. Property plant and equipment

During the period the Group acquired various items of mining equipment with an aggregate value of $9,878,956 (30 June 2013: $428,077). Assets with a net book value of $nil (30 June 2013: $nil) were disposed of during the period. The proceeds of sale were $151,134.

8. Land, Coal Rights and Restoration Costs

The retirement and depreciation provision for the Stockton mine property is calculated using current cost estimates provided by an independent third party consultant. The current cost estimates are applied to the required reclamation activities up to the date of closure of the mine.

9. Called up share capital

There has been no movement in the authorised share capital during the period. The movements in issued share capital are as follows:

Share options and warrants

A reconciliation of the movements in the number of options and warrants outstanding and exercisable during the period is as follows:

10. Borrowings

In November 2013 the Group drew a second tranche of loan of $500,000 under its standby equity distribution agreement ("SEDA") with YA Global Master SPV Ltd.

11. Events after the balance sheet date

On 8 August 2014 the Group announced that it had completed the repayment of all outstanding loans under its SEDA backed loan agreement with YA Global Master SPV Ltd. The first tranche was repaid on time and the second tranche was repaid early.

12. Approval of interim financial statements

The Condensed interim financial statements were approved by the Board of Directors on 23 September 2014.

13. Copies of report:

Copies of these Interim results will be sent to shareholders upon request. Otherwise, shareholders will be able to download a copy of the interim results from the Company's website www.atlanticcoal.com. Further copies will be available from the Company Secretary, at Atlantic Coal Plc, 200 Strand, London WC2R 1DJ.

Independent Review Report to Atlantic Coal Plc

Introduction

We have been engaged by Atlantic Coal Plc to review the condensed set of Financial Statements in the half-yearly financial report for the six months ended 30 June 2014 which comprise the condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated balance sheet, consolidated statement of changes in equity, condensed consolidated cash flow statement and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of Financial Statements.

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rules for Companies.

The annual Financial Statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of Financial Statements included in this half-yearly financial report has been prepared in accordance with the requirements of the AIM Rules for Companies.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of Financial Statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the AIM Rules for Companies and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with the International Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of Financial Statements in the half-yearly financial report for the six months ended 30 June 2014 is not prepared, in all material respects, in accordance with the AIM Rules for Companies.

PKF Littlejohn LLP

Chartered Accountants and Registered Auditors

1 Westferry Circus

Canary Wharf

London

E14 4HD

23 September 2014