Questor share tip: Hargreaves must prove its problems are geological "This is a very unusual situation and to our knowledge this has never happened before in Maltby's 100-year history," said Gerry Huitson, director of Hargreaves' production division. No one on the mining team, including our independent expert geologist with 32 years' experience at many different UK mines, has come across these conditions before. Coal from Maltby is sold to the massive Drax power station and also turned into coke at Hargreaves' Monckton works, the UK's last independent coke producer. It is believed that Monckton's production will not be affected as it has sufficient stockpiles. Hargreaves also has a coal distribution business and its new open-cast pit at the Tower Colliery in the Rhondda Valley in Wales has started delivering coal to Aberthow Power Station. Operational risk is something all investors in mining companies have to face - and Maltby is a deep coal mine, which can make such problems a part of life. Also, since the company listed in 2005, it has met or exceeded expectations on a consistent basis. The recent problem isn't a management issue, it is a geological issue. However, management have to demonstrate that this really is the case. This isn't going to happen until we have moved through 2013 and into 2014. The company will have to hit milestones along the way to demonstrate once and for all that this issue is resolved. The last time Questor gave an update on the company was on March 20 when the shares were at £12.20. A hold rating was given but investors were also advised to "top-slice" and sell half of their equity as the shares were first tipped at 542½p in February 2009. In retrospect this looks like a prudent suggestion, but it was just sensible investing. It is also a perfect example of why top-slicing is an excellent strategy. Selling half of your holding means that if the shares fall you have protected your capital - and potentially also banked a gain. If the shares continue to rise you still have some exposure and will make further profits. At the current level, the shares are undoubtedly cheap. They are trading on a 2013 earnings multiple of 5.7 times, falling to 4.7 in 2014. The prospective yield is 2.3pc. However, Questor says hold.