The AIM-traded coal mining and bulk materials logistics company said it believed expanding its UK surface mining assets and development pipeline would have significant benefits for its wider operation.

In a statement announcing the raising Hargreaves non-executive chairman Tim Ross said the company’s proposed surface mine expansion would consolidate its place in the industry and provide significant benefits.

"The UK coal industry is undergoing a major restructuring and we believe that this provides Hargreaves with an exceptional opportunity to acquire surface coal mining assets.

“The fundraising which we have announced today will enable us to accelerate our strategy of expanding Hargreaves' portfolio of UK surface mining assets and development pipeline through acquisition.”

The placement of 5.46 million new shares at £7.75 each with new and existing institutional investors was conducted through an accelerated book-building process by joint brokers N+1 Singer and Jefferies.

It represents about 18% of the expanded equity of the group, with about 30.23 million shares in issue after the new shares are admitted for dealing.

The funds raised will be used to develop current assets and target acquisitions.

Three sites in North East England are in the planning or development phase for open pit mining.

“The board believes that there is a unique opportunity to selectively acquire key surface mining assets, together with a strong development pipeline, as the sector undergoes a major restructuring,” Hargreaves said in a statement.

“The company is already engaged in active negotiations with principals and other key stakeholders which, if successful, could lead to the acquisition of surface mining assets with current annual production of between one and two million tonnes and the board's view is that further attractive acquisition opportunities are likely to emerge in the near term.”

Hargreaves said security of supply was a key factor that led the company to explore the potential to acquire or develop its own surface mines.

The company supplies coal to the power generation, industrial and household markets and receives a significant portion of its coal for supply from UK Coal.

UK Coal recently underwent a significant restructure after financial difficulties and was forced to close its Daw Mill colliery after it was ravaged by an underground fire.