UK Coal began producing from new seams at the Kellingley and Thoresby deep mines this year and was able to secure new long-term supply contracts at better prices than 2009.

It also appointed Gareth Williams a board-level director of mining.

“Together, these steps hold the potential to transform the safety, performance and profitability of our deep mining business, and we shall continue working hard to these ends during 2010 and beyond,” UK Coal chairman David Jones said.

UK Coal posted a 2009 operating loss of £106.2 million and loss after tax of £127.5 million, compared with £2.2 million and £15.7 million respectively in 2008, after it was hit by deep mine geological issues which reduced production against the background of a subdued market price for coal in Europe.

“These difficulties were exacerbated in the last quarter by equipment unreliability and failures, noting in particular the incident leading to the loss of a life at Kellingley,” Jones said.

“These geological issues continued into the current year until the new seams at Kellingley and Thoresby, and the new face at Daw Mill, have been brought into production. This has inevitably reduced first quarter production compared to the same period last year.”

UK Coal mines produced 1 million tonnes in the March 2010 quarter and secured an extra £30 million in finance to increase headroom.

"With Kellingley now in full production in its new seam, Thoresby ramping up in its new seam and with Daw Mill having started its ramp-up, we believe that the particular difficulties which have affected us over the past months are now behind us,” Jones said.

With Daw Mill now expected to reach historical production levels with its new 357m wide face, the company expects to produce 6Mt from its deep mines and 1.6Mt from its surface mines in 2010.

Daw Mill’s start-up was originally scheduled for January this year, but has only now just started due to an unpredictable break in the rock strata above the new face line in December last year.

The company said protecting the new face required a significant amount of roof reinforcement – initially over 500 timber supports were positioned and ultimately over 1200 additional cable bolts were inserted.

While this work was being undertaken, the geology continued to move and the floor rose by more than 2m.

“This floor blow had to be removed before the powered roof supports could be put in place. All this work has now been safely and successfully completed,” the company said.

At Kellingley, the ramp-up of the new face in the new Beeston seam is taking place with the old face now in salvage phase.

Production is now hitting 40,000 tonnes a week, in line with expectations and significantly above Kellingley's performance over the past two years.

Thoresby has also now started producing from the first of its new deep soft faces, only slightly behind the original March schedule, and is currently in the last week of its ramp-up period.

“Before this, Thoresby had been operating in very difficult conditions, producing from 57's panel in the old Parkgate seam, nearly 13 kilometres from the pit bottom,” the company said.

“Aware of the risk of interference from previous mine workings, from which we had suffered in 2008, we rehanded this panel, moving the large equipment from the gate most likely to suffer the impact of the former workings to the other gate. This was complex and time consuming.”

“As we mined the panel back, we encountered a significantly larger than expected increase in the thickness of the dirt band which was present.”

In contrast, Thoresby’s new panel is only around 3km from the pit bottom, has only two coal conveyors to the pit bottom in contrast to the 57's nine coal conveyors.

At Welbeck, mining is taking place in the final panel before the scheduled closure in May 2010.