'King Coal' strikes comeback seam

Richard Budge, ex-boss of Britain's privatised mines, plans a £35 million AIM placing for coal and power play Powerfuel.

Broker Collins Stewart is handling the placing, which will put a £56 million value on Powerfuel. The company's stated intention is to reopen Hatfield colliery near Doncaster, which Budge has owned through a private vehicle since 2001.

Hatfield, a deep mine which Budge argues could now produce more than two million tonnes of coal a year for 14 years, was capped and closed on the loss of Government support in 2004. Powerfuel now claims it has an indicated coal resource of 27 million tonnes.

Budge, whose former company RJB Mining took over the rump of British Coal but failed to win a state subsidy for 'clean coal technology', has now negotiated offtake agreements for 600,000 tonnes a year at £32 a tonne with German power group E.ON. In addition, he has reached agreements for one million to 1.5 million tonnes annually with Drax power station.

Powerfuel, which will need to go 70 metres further down at Hatfield, claims another string to its bow in the shape of land bought by Budge near the M18 motorway with preliminary planning permission for a 430 megawatt gasification power station. With rivers, canals and railway nearby, the proposed power station would be close to existing infrastructure.

Collins Stewart has set 6 or 7 March as target date for the float. Budge's stock market return should attract investors' interest.