SHARES in surface miner ATH Resources plunged as much as 31.3% after it halted a multi-million-pound extension of its Glenmuckloch mine in Ayrshire following a plunge in coal prices.

ATH also warned that depressed prices "will result in further reductions to the board's expectations of trading performance" and its house broker withdrew its forecasts.

This comes just weeks after a profit warning in late March when ATH also cut £2 million from the valuation of its mines in Ayrshire, Fife and Dumfries and Galloway.

ATH chief executive Alistair Black told The Herald the drop in the coal price from $125 a tonne last August to around $85 "has come out of the blue".

The fall been blamed on oversupply of coal in North America due to a mild winter and rapid development of the shale gas sector. This means many power companies are turning to cheap shale gas instead of coal, which is being sold on world markets.

ATH acquired Glenmuckloch near New Cumnock from Scottish Coal in 2005.

Mr Black said the planned extension to the site would have cost ATH between £2m and £3m.

"We have decided to defer that decision until later on this year," he said.

At that point it will either proceed with the development or restore the site.

ATH told investors that postponing the extension will have "little impact" on production levels in the current financial year.

However, if it decides not to proceed, volumes will fall by 500,000 tonnes in total over the following two years.

The company sold nearly 1.7 million tonnes of coal in its last financial year.

ATH, which employs 250 people, told investors: "Reduced coal prices also continue to impact on the company's margins and this will result in further reductions to the board's expectations of trading performance."

Asa Bridle, analyst at house broker Seymour Pierece, wrote in a note for clients: "A further update will be given with the interim results in late June, but with the company unable to give guidance at present on production levels, expenditure and pricing levels, we must withdraw our forecasts from the market at this point."

ATH's shares fell as much as 31.3% but later regained some poise to close at 10.25p, a new low, and a drop of 3p, or 22.6%, on the day.

This values the company, which was involved in potential takeover talks last summer, at just £4.1m. It has lost 76.6% of its value in 2012 to date.

Investors had hoped ATH was positioned to benefit from a jump in prices when long-running contracts come to an end over the next few years.

But Mr Black told The Herald that its legacy contracts, which were renegotiated just before the latest fall in the coal price, are now higher than spot prices.

ATH's latest problems come just weeks after investment company Palmaris Capital signalled it could make a "substantial reduction" in its valuation of Scottish Coal owner Scottish Resources Group which pulled out of an attempted flotation in the summer of 2010.