ATH Resources plc

("ATH" or "the Group")

Interim Results

ATH Resources plc, one of the UK's largest coal producers, reports its Interim Results for the six months ended 4 April 2010.

Highlights

The Board also announces that it has received an approach to purchase ATH Regeneration, the part of the Group which focuses on coal recovery, land remediation and regeneration.  The Board is reviewing the approach and considering its merits and will make a further announcement in due course.

Commenting on the Interim Results, Tom Allchurch, Chief Executive of ATH, said: "The business has taken longer than expected to recover following the unprecedented adverse weather over the autumn and winter period. However, the Group is now operating at expected levels of production and efficiency.  Despite the difficulties over this last winter, the Group has significantly advanced its reserve base to its highest ever levels with planning successes at Netherton, Duncanziemere and Langton.

"As the Group works through its newly improved contract base it will be able to access a rapidly improving coal market leading to significant improvements in future profitability."

- Ends -

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CHAIRMAN'S STATEMENT

Trading results

Revenue in the six months to 4 April 2010 was £34.4 million (2009: £35.7 million) on sales of 776,000 tonnes of coal (2009: 845,000 tonnes).  Loss before tax was £2.9 million (2009: Profit before tax £0.1 million) and cash generated from operations was £3.3 million (2009: £6.5 million). The loss per share was 5.23 pence per share (2009: earnings per share 0.15 pence per share).

The Surface Mining business suffered the effects of significant adverse weather during the winter and generated an operating profit of £0.1 million (2009: £3.5 million). ATH Regeneration, which is awaiting the opening up of the new Langton site, delivered a reduced operating loss of £0.7 million (2009: operating loss £1.5 million) as the cost base of the business was reduced.

Average selling prices continued to increase to over £44 per tonne (2009: £42 per tonne) although sales volumes were adversely affected by both a very wet autumn in 2009 and the worst winter frost and snowfall in 100 years at the main operational base in East Ayrshire, Scotland. The adverse weather conditions affected both the ability of the business to extract coal and logistics in delivering the coal to customers. The weather conditions increased operating costs and, together with the reduction in production volumes, contributed to an increase in unit costs.

International coal prices recovered strongly over the last six months with current spot prices in excess of $90 per tonne with further increases evident in the future price index. The strength of the market has allowed the Group to extend and renegotiate a number of long term coal supply agreements. The new arrangements add a further 0.4 million tonnes to the Group's long term contract base resulting in a total of 3.1 million tonnes under contract. The expected average price under these contracts has increased by 6% to £36 per tonne compared to the last period end.

Production levels are now at expected levels with plans in place to maximise production from the Group's mines including the working of additional shifts and other changes to working patterns and the deployment of additional production and coal processing equipment. However, volumes for the full year are expected to be 60,000 tonnes lower than previously expected at around 1.75 million tonnes.

Development - Surface Mining

Following the period end, planning consent was received for Netherton, a site close to the existing Skares Road site, adding Proved Reserves of 1.9 million tonnes with an additional 2.1 million tonnes estimated potential reserve at the mine subject to further investigation. In addition, as previously announced, a further 0.8 million tonnes was added to Proved Reserves following the receipt of planning consent at Duncanziemere, an extension to the Laigh Glenmuir mine.  Operations at the two mines will commence during the next financial year and replace production from current mining operations.

Following the period end, an extension of 0.4 million tonnes to the Glenmuckloch mine was added to Probable Reserves and a planning application was submitted during June 2010.

Development - ATH Regeneration

ATH Regeneration received planning consent for the 0.5 million tonnes Langton project following a successful appeal against an earlier refusal by Derbyshire County Council and coal production from the site is expected to commence by August 2010. Negotiations with a major generator for the sale of the coal from the mine are well advanced.

ATH Regeneration - Australia

ATH Regeneration continues to pursue opportunities in Australia although progress in securing a contract to construct and operate the first project has been slower than expected. The Group is currently working with a large international mining company to assess whether the construction of a processing plant in Queensland is viable.

Reserves

Proved Reserves at 30 June 2010 increased by over a third from the last year end to a record 6.7 million tonnes with additional planning consents received for 2.7 million tonnes in the Surface Mining business and 0.5 million tonnes in the ATH Regeneration business.  Proved Reserves represent around 3.5 years' production at current levels.

Proved and Probable Reserves at 4 April 2010 were 7.5 million tonnes and at 30 June 2010 are 8.4 million tonnes.

Funding

During the six month period to 4 April 2010, bank loans and hire purchase liabilities increased by £1.9 million to £41.2 million (4 October 2009: £39.3 million). The Group agreed a new £30 million revolving credit facility ("RCF") in a club deal with HSBC and Yorkshire Bank in November 2009. Drawings under the RCF at the period end, net of cash balances, were £21.2 million (4 October 2009: Net debt excluding hire purchase liabilities £19.8 million). Hire purchase liabilities were £20.0 million (4 October 2009: £19.6 million). The changes to the financing structure of the Group led to a cash inflow during the period of £9.1 million (2009: Net cash outflow £6.6 million).

The RCF extends for a three year period ending in November 2012. Maximum permitted borrowings under the RCF are £30 million during the first year of the new arrangements, £27.5 million during the second year and £22.5 million during the final year. 

The new arrangements secure attractive, long term funding for the Group and provide a more appropriate capital structure to continue developing projects within the UK.

In addition, a net £4.5 million was raised during the period through the refinancing of hire purchase liabilities on the Group's mobile plant fleet.

Dividends

The Board is proposing to reinstate the interim dividend of 1 pence per share (2009: nil), payable on 23 July 2010, to members on the share register at 9 July 2010.

Outlook

Coal prices have recovered strongly in the last six months despite somewhat uncertain economic conditions, with future market indices indicating that market prices will continue to increase well ahead of inflation over the next two to three years.  A record level of reserves will allow the Group to take advantage of these favourable market conditions in future years.

David Port

Non-executive Chairman

30 June 2010

The information in this report relating to exploration results, mineral resources or mineral reserves is based on information compiled by Mr. Peter Morgan, a full-time employee of the Group, who is a Fellow of the Institute of Materials, Minerals and Mining. Mr. Morgan has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration. He has reviewed and consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. A glossary of terms is available on our website - www.ath.co.uk.

Condensed consolidated income statement

for the six months ended 4 April 2010

There are no recognised gains and losses other than as stated in the income statement.