NWR - EC 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.
RM-SYSTÉM, česká burza cenných papírů a.s.
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