ICI sells Monckton Coke to RJB Mining for pounds 4.7m: Smokeless fuel sales expected to rise - Clipstone coal to be used

SHARES in RJB Mining surged 15p to 390p after the coal-mining company run by Richard Budge announced the pounds 4.7m acquisition of Monckton Coke & Chemical from Imperial Chemical Industries.

The deal was accompanied by a pounds 9.3m placing and open offer by RJB at 340p a share.

Monckton, founded in 1874, makes and sells coke and smokeless fuel to industrial and household consumers. The business processes about 300,000 tons of coal a year and will use coal from Clipstone colliery, Nottinghamshire, for which British Coal recently granted a licence to RJB.

The colliery was shut down last May with the loss of 500 jobs but RJB plans to use about pounds 3m of its new money to develop Clipstone, securing about 250 jobs at the site.

The balance of the new money is to be used to cut debts incurred as a result of the pounds 5.2m purchase of the UK operations of Young Group, the mining company, last year.

Monckton, which employs about 190 staff, has experienced a sharp fall in taxable profits from pounds 2m in 1991 to pounds 611,000 last year, on sales down from nearly pounds 19m to pounds 17.5m over the same period.

However, RJB said its performance would improve partly because of growing sales at its smokeless fuel business, Sunbrite, and higher productivity arising after a voluntary redundancy scheme, involving 30 jobs, to be completed later this year.

RJB, floated on the stock market last July, is forecasting a 10 per cent rise in taxable profits to pounds 12.2m for last year. Pro forma earnings per share are expected to be 22.7p and it plans to pay a 7p final dividend, making a 12p total. Mr Budge said: 'The acquisition of Monckton is a further step in our strategy of reducing dependence on contract mining for British Coal. Monckton will provide a long-term market for our coal and we are confident we can improve its profitability.'