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STOCKS NEWS EUROPE-UK Coal up; Evolution says "buy"

Thu May 7, 2009 6:57am EDT

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Shares in UK Coal (UKC.L) climb 3.9 percent as Evolution Securities repeats its "buy" rating and raises its target price to 289 pence from 170 pence as it says the company "is set to benefit from new, more realistic, supply contracts with the electricity generators".

"These contracts (announced on April 27) ease the group's funding requirements as they come with a 100 million pounds "loan" that the group can apply to the further development of its deep mining operations," says the broker.

Evolution also says the new contracts will allow a significant increase in price received for coal which should generate an increase in earnings and cash-flow. As a result it ups its valuation of the coal mining business to 216 pence from 58 pence.

Reuters Messaging rm://david.brett.reuters.com@reuters.net


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