UK Coal faced geological problems at the Rossington site

UK Coal says its site at Rossington, near Doncaster, South Yorkshire, will go the same way as the Harworth mine in Notts and close early next year.

Managers at the firm are also in early talks with a consortium interested in buying the company.

The approach from the group is at a tentative stage, UK Coal confirmed.

Staff redeployed

The company has the option of reopening both sites at a later date, but says �60m is needed to exploit reserves.

UK Coal also revealed in February that Ellington Colliery in Northumberland was closing because of flooding.

Rossington employs more than 300 people, while there are 400 working at Harworth, a number of whom the company hopes to redeploy at its other sites around the country.

A decline in sales volumes, caused mainly by the closure of pits in 2004 was only partially offset by higher coal prices.

The company said it was more confident of a consistent performance in the second half of the year with ongoing reorganisation of the workforce and better working practices.

Contract negotiations with major customers have been finalised, including the UK's largest coal-fired station at Drax in North Yorkshire.