It is reported that UK Coal has managed to hit its production target in 2011 despite problems, which significantly reduced production from its largest mine in December 2011.

The group saw its coal output decline from 2.3 million tonnes in the fourth quarter of 2010 to 1.6 million tonnes in the final three months of 2011.

However, full year production was 4% ahead of 2010 at 7.5 million tonnes, meeting the company's expectations, while operating profits for the year also were in line with forecasts.

The production shortfall was due to lower output at the Daw Mill mine in West Midlands, where UK Coal failed to mitigate a face gap. As a result, the mine’s contribution in December 2011 was negligible.

UK Coal said its key priority for 2012 is to recover production levels and improve development at Daw Mill. The impact from the problems at Daw Mill was offset by the strong performance of the Thoresby and Kellingley mines with the latter topping expectations in the fourth quarter.

Investors welcomed the news as shares in UK Coal rose 1.75 pence (6%) to 31.25 pence, valuing the group at GBP 93.55 million. Broker Collins Stewart had a generally positive reaction to the report, saying the setbacks at Daw Mill show that the company has to do more work to eliminate the key risks to its coal operation.

Mr John Mcgloin, analyst at Collins Stewart, said that "The turnaround at UK Coal appears to be headed in the right direction at last. Although the group still faces significant challenges, seeing debt level fall and the combined operations hitting production targets, provides some long lost hope for the group."

(Sourced from www.proactiveinvestors.co.uk)