10th Feb 2005 12:30
UK Coal PLC10 February 2005 10th February 2005 PRODUCTION TO BE PHASED OUT AT WELBECK COLLIERY ----------------------------------------------- UK COAL today announced that following a comprehensive review of revised miningplans conducted over the past three months, and involving the entire workforceat Welbeck, measures to allow the remaining five million tonnes of reserves tobe extracted viably have not been identified. As a consequence, mining willcease when around 1.6 million tonnes of coal on the current and subsequent facenow being developed, has been extracted. Production is to be phased out over thenext 12 months. UK COAL Chief Executive Gerry Spindler says: "Despite the best endeavours of theworkforce at Welbeck, we have failed to secure ways of reducing the high-costgaps in production which are forecast in the current mining plans." The colliery lost £20m last year after geological problems, which resulted inthe loss of planned production capacity, reducing its annual output to 0.8million tonnes - half of its target of 1.6 million tonnes. Welbeck has been awarded a total of £7.8m in two tranches by the Dti under theCoal Investment Aid scheme towards projects costing £27.5m to access reserves inthe Deep Soft seam and infrastructure improvements. UK COAL has so far qualifiedfor £3.5m of the award. As a result of the run down of operations, UK COAL is reviewing the carryingvalue of the assets associated with Welbeck Colliery. This will result in acharge of around £13m which will fall in the 2004 accounting period. In accordance with UK generally accepted accounting practices, redundancy costs,depending on the level of transfers to other collieries, of up to £12m will bemade in the 2005 accounting period. MEDIA CONTACTS: Financial: Ken Cronin Tel: 0207 554 1400(Gavin Anderson & Company) Mob: 07887 591 499 Operational: Stuart Oliver Tel: 01525 381759 Mob: 07774 231178 Chris Crouch Tel: 01664 434897 Mob: 07909 993832 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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