NSM shares sink to 8p

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The Independent Online
NSM saw its already lowly share price fall by a third yesterday after the heavily indebted mining group revealed a huge half-year loss and admitted the future of its deep coal mine in south Wales rested on the successful outcome of crisis talks with bankers. NSM's shares, as high as 80p a year ago, closed 4p lower at 8p.

The news served to highlight the growing difficulties facing Britain's small knot of mining companies. Last week almost pounds 200m was wiped off the stock market value of RJB Mining, Britain's biggest coal producer, after the company's own broker warned about the impact of cheap overseas imports of coal in the wake of sterling's recent strength.

Earlier this year administrators were called in at Coal Investments, the mining venture headed by Malcolm Edwards, a former British Coal director.

In the year to September NSM racked up losses of pounds 71.9m, all but pounds 500,000 of which relate to a provision on the sale of businesses which have either been completed or are expected to be finalised.

NSM again warned that the sale of its US coal operations, which is being handled by US stockbrokers Paine Webber, would be at a substantial discount to net asset value. John Jermine, the chairman, said several "unforeseen operational difficulties and delays" had significantly affected working capital requirements. "Consequently, the company has been in detailed discussions with its bankers regarding its immediate and long-term funding which have yet to be determined."

Mr Jermine said trading in the US was "extremely difficult" and blamed two "once-in-a 100 years" storms in successive years, previously unknown geological problems in the deep mines and low selling prices.

If the talks are successful, NSM's future will largely depend on the pit in south Wales.

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