The company will issue 142 million new shares in a firm placing, placing and open offer at 75p per share.

The proceeds will be used to reduce debt and rebuild financial headroom upon completion of the company’s current investment in its deep mining business.

"In the recent past, UK Coal has been constrained by the pricing from legacy contracts and production difficulties in certain of its deep mines,” chairman David Jones said.

“Management has taken actions to address these issues, in particular investments to produce a modern, efficient mining business with substantial and economically accessible reserves; considerably increased development work to improve the reliability of future production volumes; and putting in place new contracts on significantly improved terms.

"The board is, therefore, confident that the combination of the improving prospects for our mining activities and the significant value upside in our property business provides UK Coal with the opportunity to deliver strong value growth to shareholders.”