Britain's biggest coal mine, Daw Mill in North Warwickshire, faces closure as its owner, UK Coal (UKC) seeks to stem losses that have crippled the firm.
The company has begun a consultation on possible closure of the site by early 2014, the point at which the current coal panels will have been mined.
Daw Mill is 175,000 tonnes behind budget and has now been set a deadline of May to bring production up to target levels.
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There have been concerns over industrial unrest at the pit but if Daw Mill were to close 800 workers could lose their jobs.
UK Coal also says it is in "constructive" talks with its bank, Lloyds, over future funding requirements.
News of the restructuring, which UKC warns could dilute share holders' holdings, has seen the stock plummet 22.5% in morning trading.
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