ATH said it is to undertake a full review of its future production schedule and working capital requirements. As a result, its board expects to make significant writedowns.

ATH employs 330 people, most of them at its mines in Fife, Ayrshire and Dumfries and Galloway, although it also has a head office in Yorkshire. The company has already taken millions of pounds of writedowns due to faltering coal prices and rising fuel costs.

Earlier this year, ATH mothballed its Glenmuckloch site in Dumfries and Galloway, after postponing a decision on whether to extend the site.

Production of 1.6 million tonnes for the financial year to the end of September helped ATH cut its debt from £23.5m to £18m but the company said it needed an increase in this level to fund the business beyond December. The current banking deal expires in May.

ATH said: "The board anticipates trading conditions will remain challenging given the current weakness in the coal market and consequently, production volumes will be lower and will remain so for the forseeable future.

"The immediate focus of the board is to secure the support of all stakeholders to a refinancing plan."

Shares fell 0.625p or 17.9% to a new low of 2.875p.