DAVID Port, chairman of surface miner ATH Resources, has admitted its depressed valuation could attract another takeover bid after news of a £5.8 million loss for the year sent its share price down further.

ATH, whose sites are all north of the Border, started 2011 with its shares at 74p, but they plunged to a low of 27.75p after a series of problems at its sites and concerns about the impact of rising fuel prices on its costs.

The Doncaster-based company had unsuccessful talks with a potential suitor over the summer, but Mr Port indicated ATH's board anticipated future approaches if its share price remained subdued.

Mr Port said: "I think with the share price where it is, we as a board think it is undervalued. People could come out and think we are a good acquisition.

"If the price is appropriate, we will recommend it."

Asked why he thought the company was undervalued, Mr Port highlighted the sensitivity of shares listed on the junior Alternative Investment Market.

"Our vulnerability is to the Mrs Smiths of this world who have got to decide how to pay their gas bill and sell their shares," he said. "Every January our price goes down and it starts to go up again during the year."

Mr Port is to revert to being a non-executive chairman after the company's annual investor meeting at the end of February.

He took on executive responsibilities from June 2010 to oversee a restructuring of the company that led to the appointment of Alistair Black as chief executive and the disposal of its regeneration arm.

The change comes as the company continues to face pressure in the market with its shares dropping 1.5p, or 3.8%, to 38p yesterday after reporting a £4m profit in 2010 turned to a £5.8m pre-tax loss in the year to October 2.

Publication of the results was delayed after the company revealed it could struggle to raise insurance bonds that cover liabilities on its site.

After renegotiating banking facilities ATH said it was "confident" that bonds, which are placed with the relevant local authority, would now be available when needed.

ATH was hit by £6.2m of exceptional charges including £1.5m due to the rising price of gas oil pushing up restoration costs and a £4.1m provision to cover geological problems at its sites in Glenmuckloch in Dumfries and Galloway and Muir Dean in Fife.

It opted not to restart dividend payments halted last year.

Mr Port said: "I recognise that a lot of our investors are with us because of the dividends we paid over recent years.

"We do intend to go back to the dividend when that is possible."

Mr Black, who is based in Fife, said he was "quietly pleased" by the company's response to its problems.

"We have managed to post a pre-exceptional profit of £3m and continue to reduce our debt and continue with supplying our legacy contracts as we expected."

ATH's net debt fell by £3m to £31.5m over the year.

ATH's own broker Seymour Pierce yesterday highlighted the challenge facing the company from a seeming decoupling of fuel oil and coal prices, with the latter falling over recent months.

The investment case for ATH in coming months is largely based on the potential benefit it could reap from completing low-priced legacy contracts and selling its coal at market prices. Last year ATH opened a site at Netherton in East Ayrshire and is planning to increase production at another new site in the region, Duncanziemere.

Mr Black insisted the oil and coal decoupling was temporary and linked to a mild winter in Europe reducing demand for coal, while worries about the Middle East pushed up oil prices.

He said that in a couple of years ATH should be free of its legacy contracts and have a stronger balance sheet.

At that point, he said, ATH could participate in expected consolidation in the UK coal industry.