Amsterdam, 12 February 2015
European Commission approves the Czech State’s financial support
for the closing of the Paskov Mine
New World Resources Plc (‘NWR’ or the ‘Company’) announces today that the European Commission has approved, under EU state aid rules, public funding by the Czech State to facilitate the closure of the Paskov mine operated by its wholly owned subsidiary OKD a.s. (‘OKD’).
The aid aims to ease the closure process and provide financial support to those working in the Paskov mine. The Czech state will contribute — under the conditions set out in the agreement reached with OKD in April 2014 —an amount of CZK 600 million to cover the social costs of the closure, provided that OKD would keep the mine open until the end of 2017. The agreement was conditional upon the approval of the European Commission and has now come into full force.
In 2013, as one of the outcomes of NWR’s strategic operational review, the Paskov mine was concluded to remain uncompetitive in the medium term due to its high-cost nature. Consequently in January 2014, the Company entered into discussions with the Czech government about the closure of the mine.
In April 2014, an agreement with the Czech government was reached: the State would provide an amount of CZK 600 million covering the social costs of the closure, provided that OKD would keep the mine open until 31 December 2017.
Further elements of the agreement are:
(a) If hard coking coal benchmark prices drop below 110 USD per tonne for three consecutive quarters in period of between 1 July 2014 and 31 December 2017, the agreement is invalid and both parties will renegotiate the agreement in good faith;
(b) OKD retains the flexibility to continue mining at Paskov after 2017 should it decide so;
(c) The agreement also becomes invalid if the net result of the Paskov mine is positive (in sum) for at least four consecutive quarters.
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New World Resources Plc is a Central European hard coal producer. NWR produces quality coking and thermal coal for the steel and energy sectors in Central Europe through its subsidiary OKD, the largest hard coal mining company in the Czech Republic.
Disclaimer and cautionary note on forward looking statements and notes on certain other matters
Certain statements in this announcement are not historical facts and are or are deemed to be “forward-looking”. The Company’s prospects, plans, financial position and business strategy, and statements pertaining to the capital resources, future expenditure for development projects and results of operations, may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology including, but not limited to; “may”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “will”, “could”, “may”, “might”, “believe” or “continue” or the negatives of these terms or variations of them or similar terminology. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. These forward-looking statements involve a number of risks, uncertainties and other facts that may cause actual results to be materially different from those expressed or implied in these forward-looking statements because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond NWR’s ability to control or predict. Forward-looking statements are not guarantees of future performances.
Factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected include, but are not limited to, the following: risks relating to changes in political, economic and social conditions in the Czech Republic, Poland and the CEE region; future prices and demand for the Company's products, and demand for the Company's customers' products; coal mine reserves; remaining life of the Company's mines; coal production; trends in the coal industry and domestic and international coal market conditions; risks in coal mining operations; future expansion plans and capital expenditures; the Company's relationship with, and conditions affecting, the Company's customers; competition; railroad and other transportation performance and costs; availability of specialist and qualified workers; and weather conditions or catastrophic damage; risks relating to Czech or Polish law, regulations and taxation, including laws, regulations, decrees and decisions governing the coal mining industry, the environment and currency and exchange controls relating to Czech and Polish entities and their official interpretation by governmental and other regulatory bodies and by the courts; and risks relating to global economic conditions and the global economic environment. Additional risk factors are as described in the Company’s annual report
Forward-looking statements are made only as of the date of this announcement. The Company expressly disclaims any obligation or undertaking to release, publicly or otherwise, any updates or revisions to any forward-looking statement contained in this announcement to reflect any change in its expectations or any change in events, conditions, assumptions or circumstances on which any such statement is based unless so required by applicable law.