Preliminary Results

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

14 May 2012

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

Unaudited Preliminary Results

Atlantic Coal plc, the AIM listed open cast coal production and processing company with activities in Pennsylvania, USA, is pleased to announce its unaudited preliminary results for the year ended 31 December 2011. 

2011 Highlights:

·; Increased production and sales experienced at Stockton during 2011 - 207,005 tons of run-of mine ("ROM") coal mined and sales of 106,403 tons reached (2010: 207,873 and 97,342 respectively)

·; Strengthened revenues of US$13,991,971 generated for the period (2010: US$10,720,103) and a net gross profit of US$226,946 (2010: loss of US$3,774,021)

·; Reduced Group loss of US$3,149,606 (2010: loss of US$5,091,659)

·; Purchase of a Komatsu PC2000 Hydraulic Excavator and a Reichdrill blasthole drill rig

·; Strengthened board in part to facilitate the roll out of consolidation strategy

·; Admitted shares to trading on the OTCQX Market International platform of the Pink Sheets LLC ("OTCQX") in New York to broaden investor base

Current Year Highlights:

·; Progress made to consolidate Atlantic's land position in Pennsylvania to capitalise on growing regional demand for coal

o Option to lease the Pott & Bannon anthracite coal mining property in Schuykill County believed to contain 4.1 million tons ("Mt") of clean coal

o Option to acquire anthracite mining assets for a purchase price of US$35 million

·; 12% increase in production at Stockton and 24% increase in average sales price experienced in Q1 2012 to 31,729 tons at $166.30 (Q1 2011: 28,376 tons at $134.25)

·; Completion of the Norfolk & Southern Railroad diversion providing access to approximately 1.0 million tons of previously unworkable coal

Chairman's Statement

In tandem with overseeing and improving the production profile of our Stockton Colliery anthracite mine, regional consolidation in the Pennsylvanian anthracite fields was Atlantic's predominant focus with much of the year spent evaluating various opportunities. We were therefore delighted to announce post-period end that we had acquired options over a number of sites, which, if acquired, the Board believes would fulfil this strategy. Due diligence is currently underway at the various option sites and further updates will be made at the appropriate time.

Stockton

The Stockton mine site covers an area of approximately 900 hectares located in the Hazel Creek Valley, a prime anthracite region with high quality coal reserves with demand for our product in the industrial and heating markets. The buoyancy of the market is demonstrated by the increased average price of US$142.33 (2010: $124.43) received for our product during the year. Post period end, prices increased further and during the first quarter of 2012, we received an average price of $166.30.

During 2011 Atlantic mined 207,005 tons of run-of-mine coal (2010: 207,873) and removed 3,257,776 bank cubic yards ("BCY") of overburden (2010: 2,837,863). 233,241 tons of ROM coal was washed (2010: 229,293) which produced 100,713 tons of clean coal (2010: 88,620). Sales for the year were 106,403 tons (2010: 97,349). The run-of-the mine coal mined in 2011 is marginally lower than the 208,730 BCY and 105,403 tons of clean coal announced for the same period in January 2012 as a result of adjustments made during the audit for the year ended 31 December 2011.

As a result of various mechanical difficulties experienced with the Company's excavators and a delay in the diversion of the Norfolk and Southern railroad previously running through the Company's site, we did not reach our targeted annual production of 300,000 tons of ROM for 2011. To address this we invested in a second hand Komatsu PC2000 hydraulic excavator and ordered a second Liebherr R9250 19-yard bucket hydraulic excavator. This excavator is scheduled for delivery in H2 2012. Additionally, we carried out an overhaul programme of the existing truck fleet and outsourced the reclamation work at the Company's Gowen site which freed up two Cat 777 trucks to provide additional haul truck capacity for the two excavators working at the Stockton site.

Most importantly our production capacity was further improved in April 2012 following the railroad diversion completion allowing access to approximately 1.0Mt of ROM coal. 

With this in mind, we commissioned an independent mining report by Mine Engineers Inc. to evaluate our mine plan and operations at Stockton. The report highlighted that, with the diversion of the railroad now complete, production of 160,000 tons of clean coal is achievable for the year to 31 December 2012. The projected 2012 strip ratio of 17:7 set out in the independent mining report also compares very favourably with the 2010 and 2011 strip ratios of approximately 32:1.

Acquisition Update

In January 2012 we announced the entry into a lease option agreement with Pennsylvania based Reading Anthracite Company which holds a permitted 410 acre anthracite mining property. We estimate the site to contain Reserves of 12Mt ROM coal at 3.9 ratio. This equates to 4.1Mt of clean coal, thus providing the potential to more than double our existing anthracite reserves. Further detail on the reserve estimates are contained in the announcement made in January together with a statement by a qualified person within the meaning of the AIM Rules for Companies. Importantly, the site is located 25 miles from the Company's Stockton site which has established infrastructure and domestic and international demand for anthracite coal. We have a six month period during which to conduct due diligence and, should we decide to proceed with the acquisition, a consideration of c. US$6.0 million in cash and shares will be paid to Reading Anthracite Company, along with the grant of US$3.0 million of warrants in Atlantic at 0.75 pence per share.

Additionally, on 15 February 2012 we announced that we had entered into an option agreement to acquire additional anthracite mining assets in Pennsylvania. This option, which is exercisable entirely at the Company's discretion, has an exercise price of US$35 million and the exercise period ends on 31 October 2012. As a result of the size of the exercise price, the acquisition of the assets in question would be likely to constitute a reverse takeover under the AIM Rules for Companies and would therefore be, inter alia, subject to shareholder approval. Due diligence is on-going and further announcements will be made at the appropriate time.

Financials

During 2011 we raised a total of £12.3 million (before expenses). This included a placing of £300,000 with the Blackrock UK Smaller Companies Fund in January 2011 to satisfy market demand. In February 2011 we successfully completed a further fundraising of £12.0 million (before expenses), allowing us to order new equipment and implement our mine plan at Stockton. Additionally, we have been able to leverage our cash position to pursue acquisition opportunities. 

These funds to date have been used to:

·; Improve the capitalisation of the Stockton mine, including truck engine rebuilds, fleet additions, completion of the railroad diversion and outsourcing of the Gowen reclamation obligation

·; Secure options to acquire additional anthracite mining assets

·; Debt repayment

Corporate

On 30 August 2011, we announced that the Company's shares had been admitted to trading on the OTCQX. We are confident that our shareholders will benefit from this exposure and increased visibility within the US where our primary asset is located.

Board Changes

In June and July 2011 we strengthened the Company's Board and management team. Eddie Nelson joined the Board as Non-executive Director in July 2011. Mr. Nelson is a qualified mining engineer and his extensive experience in the coal sector throughout his 38 year career is beneficial to the Company.

We also appointed Mr. Barney Corrigan as Project Development Officer during the period to focus on increasing our project portfolio, resource base and production profile.

Outlook

The year ahead is set to be positive for Atlantic. With the diversion of the railroad now complete, we are confident that our production profile at Stockton will improve as underpinned by an independent report which assesses our current mine plan and equipment on site. Expansion is also at the forefront of our strategy. With due diligence progressing well at both option sites, we believe that the Company is in a strong position to build on its current footprint in Pennsylvania. Through this we anticipate that Atlantic will be positioned to capitalise on the rising demand for coal in the US and internationally.

In the three months ended 31 March 2012, production at Stockton increased 12% to 31,729 tons of clean coal compared to the equivalent period in 2011 (Q1 2011: 28,376). During the period Atlantic removed 715,691 BCY of overburden (Q1 2011: 658,785) and 85,911 tons of ROM coal was washed (Q1 2011: 62,000). At the same time there has been a substantial increase in the average sale price of Pennsylvanian anthracite with a Q1 2012 average price of $166.30 per ton compared with a Q1 2011 price of $134.25, an increase of approximately 24%.

Adam Wilson

Chairman

**ENDS**

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

BALANCE SHEETS

As at 31 December 2011

GROUP INCOME STATEMENT

For the year ended 31 December 2011

All activities are classified as continuing.

GROUP CASH FLOW STATEMENT

For the year ended 31 December 2011

The increase in deposits held in Escrow was the result of the deposit paid on the Pott & Bannon option.

Significant Non Cash Transactions

During 2011 the Convertible Note was part converted into 107,264,476 ordinary shares

COMPANY CASH FLOW STATEMENT

For the year ended 31 December 2011

The increase in deposits held in Escrow was the result of the deposit paid on the Pott & Bannon option.

Significant Non Cash Transactions

During 2011 the Convertible Note was part converted into 107,264,476 ordinary shares

Notes to the Financial Statements

Basis of Preparation of Financial Statements

The Financial Statements have been prepared in accordance with EU-endorsed International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations and the parts of the Companies Act 2006 applicable to companies reporting under IFRS. The Financial Statements have also been prepared under the historical cost convention other than financial assets and financial liabilities at fair value through profit or loss.

The Financial Statements are presented in US Dollars rounded to the nearest dollar.

Atlantic Coal Plc, the legal parent, is domiciled and incorporated in the United Kingdom.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's Accounting Policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements are disclosed in Note 2.

The financial information set out above does not constitute the Company's statutory accounts within the meaning of Section 435 of the Companies Act 2006. The figures for the year ended 31 December 2011 are based on unaudited accounts for the year ended 31 December 2011. The directors anticipate that the auditor's report, to be issued with the Group's statutory accounts for the year ended 31 December 2011 will be unqualified.

The unaudited preliminary announcement has been prepared on the basis of accounting policies set out in the Group's statutory accounts for the year ended 31 December 2010.

The comparatives for the year ended 31 December 2010 are derived from the statutory accounts for the year ended 31 December 2010. These statutory accounts, which contain an unqualified audit report under Section 495 of the Companies Act 2006 and which did not make any statement under Section 498 of the Companies Act 2006, have been delivered to the registrar of companies in accordance with Section 441 of the Companies Act 2006.

The Company will announce its full audited financial statements and accompanying notes later in May 2012.

Segmental Information

Management has determined the operating segments based on reports reviewed by the Board of Directors that are used to make strategic decisions. During the year Group had interests in two geographical segments, the United Kingdom and the United States of America ("USA"). Activities in the UK are mainly administrative in nature whilst the activities in the USA relate to coal sales and production.

The reportable operating segments derive their revenue from the sale of prepared coal to industrial and retail customers.

A reconciliation of operating loss to loss before taxation is provided as follows:

Information about major customers

Revenues of approximately $2.633 million (2010: $1.565 million) were derived from a single external customer. These revenues were all generated in the USA.

Cash and Cash Equivalents

Loss per Share

The calculation of the basic loss per share of 0.09 cents (31 December 2010 loss per share: 0.31 cents) is based on the loss attributable to ordinary shareholders of $3,149,606 (31 December 2010 loss: $5,091,659) and on the weighted average number of ordinary shares of 3,583,708,122 (31 December 2010: 1,653,929,227) in issue during the year.

The basic and diluted loss per share is the same, as the effect of the exercise of share options and warrants would be to decrease the loss per share.