Atlantic Coal shares surge after Stockton Colliery boosts revenues

Shares in Pennsylvania-focused Atlantic Coal (LON:ATC) surged today after it revealed it had boosted revenues and returned to gross profit during the first half of its current financial year. Atlantic achieved this improvement thanks to progress at its Stockton Colliery, where it has been implementing investment and optimisation initiatives.

At 2:20pm this afternoon the firm’s shares were 10.8 per cent higher at 0.36 pence each, having been as high as 0.39 pence each earlier in the day.

Revenues from Stockton for the six months to the end of June 2011 increased 55 per cent to US$7.5 million, while gross profit came in at US$843,106 (H1 2010: US$1 million gross loss).

Atlantic reduced its net loss to US$1.1 million from US$1.5 million in H1 2010.

The firm’s 17-year old DeMag H185 excavator at Stockton was replaced in June with a new Liebherr 9250, 19-yard bucket hydraulic excavator. After this helped to increase production capacity, another Lievherr excavator is due to arrive later this year.

“We are making progress at Stockton as reflected by the increase in revenue and gross profit for the first six months of the current year,” said Steve Best, Atlantic Coal’s managing director. “Facilitated by the arrival of our first Liebherr in June 2010, production at the mine has increased and we look forward to the arrival of the second excavator at the end of this year which we expect, when operational in the first quarter of 2012, will enhance excavation capacity and facilitate increased [run-of-mine] tons supplied to the wash plant.”

Stockton has a current reserve of 3.1 million tonnes of run-of-mine anthracitic coal, equating approximately to 1.5 million tonnes of washed anthracite after processing. The firm’s current target is to produce 300,000 tonnes of run-of-mine coal in 2011 that will be washed and sized for delivery to customers in the US and abroad.

Atlantic previously announced in June that it had increased production and as well as the levels of overburden removed during the first half. It reported a 65 per cent increase in the production of run-of-mine coal to 121,251 tonnes (H1 2010: 73,550 ROM tonnes) and an 18 per cent increase in overburden removed to 1.6 million bank cubic yards (H1 2010: 1.4 million BCYs). 123,037 tonnes of ROM coal was washed, representing an increase of 21 per cent, producing 59,553 tonnes of clean coal (an increase of 62 per cent).

Best added that Atlantic believed that coal fundamentals remain solid and, in tandem with the firm’s mine development, it is committed to increasing its resource base via acquisition.  “Both our cash position and management team have been strengthened during the period and I am confident that we will be able to use these to build on our progress to date during the current period,” he said.  

In February the firm raised £12 million from institutional and other investors. At the end of June it had US$15.7 million of cash on its balance sheet.