Colliery fire may mean funding gap

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Coalfield Resources faces the prospect of borrowing from its bankers and issuing new shares to fund its operating expenses, as a result of the fire that closed its former Daw Mill Colliery.

The Doncaster-based business, formed as a result of the restructuring programme to rescue what was UK Coal from pension debts totalling £450 million, could face a shortfall of up to £3 million, but expects the final figure to be below that.

Following the restructuring, the new company effectively became an investor in its former UK Coal mining activities and Harworth Estates.

Coalfield Resouces’ pension fund now owns 75 per cent of Haworth Estates, which owns a number of former mining sites, including land which forms part of the Advanced Manufacturing Park at Catcliffe.

Under the deal, a new company, UK Coal Mine Holdings, was formed to control the mining activities.

Surplus cash from Mine Holdings was to go towards reducing the pension fund deficit and to have paid Coalfield Resources’ own operating expenses and outstanding restructuring debts of £3.6 million.

However, Mine Holdings has now warned Coalfield Resources it may default on that deal.

According to Coalfield Resources’ chairman Jonson Cox, the fire at Daw Mill would have pulled the whole business down, had the restructuring not taken place and, but for the fire, the debts Mine Holdings owed Coalfield Resources would have been largely paid off.

Mr Cox said the main value in Coalfield Resources was its 24.9 per cent stake in Harworth Estates, which had a property portfolio worth £260.1 million, debts of £75.3 million and had launched a major housebulding programme on its Orgreave site.