ATH Resources shares plunged by more than 47% after it warned that weakening coal prices and the cost of buying carbon credits would have a material adverse impact on its trading performance.

The company points out that international coal prices have fallen by some 21% since the beginning of the calendar year and by over 28% since the beginning of the group's financial year.

It said that "Whilst ATH has been able to successfully renegotiate a significant improvement to its two remaining legacy contracts and enter into some new fixed price contracts at prices well above those currently available, further reserve losses in recent weeks at Muir Dean, together with those previously announced in March due to increased old workings, coupled with reduced demand and pricing of its premium products have exceeded any gains made.”

It added that "The ongoing weakening of international coal prices continue to adversely impact group income and with commodity markets forecasting that this trend is set to continue, the group is reviewing its mining plans in order to maximize cash generation through this difficult period.

It also said "New sites will continue to be developed through the planning process, however, the opening of some sites may be delayed and capital expenditure kept to a minimum whilst coal prices remain subdued."

ATH says that as a result sales volumes this year are unlikely to exceed 1.6 million tonnes.

The group said it had lodged an application for a judicial review of the Government's Carbon Reduction Commitment Scheme but yesterday received confirmation from the Environment Agency that it will have to purchase Carbon Credits totaling approximately GBP 1.1 million per year in nest month and July 2013 which would be reclaimable should the appeal be successful.

The group is seeking legal advice as to whether to seek interim relief from the Courts in respect of making these purchases.

Source - Moneyam

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