The colliery, which could eventually employ 500 miners, will take 10 to 15 years to come into full operation and produce about 3 million tonnes of coal a year. RJB said that seismic surveys of the Witham district just north of Newark pointed to 655 million tonnes of workable coal in three seams. The company intends to extract about 150 million tonnes from one of these seams.
Mr Budge said that the start of production was scheduled to coincide with the exhausting of the giant Selby mining complex in Yorkshire. He dismissed suggestions that RJB would have difficulty making sufficient profits from the new colliery or that it was being developed because the company was running out of seams that could be mined easily at its 20 existing collieries.
Charles Kernot, mining analyst with brokers Paribas Capital Markets and a long-standing bear of RJB, said the outlook remained one of lower prices, lower output and lower earnings. "I remain wary about Budge's plans. The profit margins are not substantial and, in any case, it is going to cost a lot more than pounds 300m to keep RJB's output at the current level of 40 million tonnes a year."
In May he issued a highly critical note saying he was convinced that a new deep level mine would not be an economic proposition for RJB, adding: "The only way an investor in RJB Mining Shares can make a profit from buying them today is to be able to sell them to a more naive investor at a higher price tomorrow."
But Mr Budge rejected the criticisms. "These people wandering God's earth saying RJB is going to collapse are as wrong now as they were two years ago. The idea that we have only been mining the easy seams is also rubbish. If they are the easy ones then I would hate to see what the hard ones are like," he said.
He was speaking as RJB announced flat profits of pounds 86m for the first half after an operating loss of pounds 15.3m on the Ashfordby colliery on sales of 20 million tonnes.
Productivity improvements continued to outstrip reductions in prices charged to the two generators National Power and PowerGen and sales remained comfortably ahead of projections in its 1994 prospectus.