* Pretax loss narrows to 124.6 million sterling vs 129.1 million
* New chairman declares 3 years of unacceptable performance
* Strategic review due to be completed for June AGM
* Shares down 8.4 percent on Tuesday
(Adds further comments from chairman, details)
By Julie Crust
LONDON, April 19 (Reuters) - Britain's biggest coal miner UK Coal posted another annual loss for 2010, what its new chairman branded a third year of woeful underperformance, as the business undergoes a strategic review.
Pretax losses narrowed to 124.6 million pounds ($202 million) from 129.1 million in 2009, taking cumulative losses over the last three years to 269.3 million pounds, during which time the company has lost about 90 percent of its value.
"It's a story of woeful and sustained underperformance that's been tolerated for far too long," Jonson Cox, who took over as chairman last November, told Reuters on Tuesday.
The strategic review is expected to be completed in time for the company's annual general meeting in June, although some of the findings are already being put into practice.
"It is clear that the group is in a poor position: over-financed by debt, encumbered with production costs which are too high and overexposed to the market for brownfield property," the company said.
Shares in UK Coal fell as much as 12.3 percent before paring losses to trade down 8.4 percent at 35.849 pence by 0830 GMT. The stock traded above 500 pence in 2008.
"Shareholders deserve a far better return than they have had in recent years," said Cox. "It's very clear that this business is very heavily leveraged and the future sustainable financing of this group is from equity not from debt."
UK Coal said Lloyds Banking Group has agreed to extend its borrowing facilities.
"The company remains dependent on its creditors and customers for survival," said Libertas analyst Roger Bade.
Net debt grew to 242 million pounds at the end of 2010.
LEGACY SALES CONTRACTS
UK Coal's fixed-price contracts have prevented the company from taking advantage of higher market prices for coal, even as its production rose last year to 7.2 million tonnes from 7 million the year earlier.
About 4.1 million tonnes of coal last year were sold under the lower-priced fixed contracts, and around 2.7 million tonnes remain to be fulfilled under these volume-defined contracts, Cox said. He expects the company to work off about 90 percent of the outstanding 2.7 million tonnes this year.
It produced 2.1 million tonnes in the first quarter of 2011.
"I'm not allowed to give out targets this year," said Cox, although he said the quarter was on track and that the company was working to produce at similar levels.
The troubled miner has made several downward revisions to its annual production target in recent years.
Over the last three months the company has taken steps to improve its performance. It expects cost cutting to shave 12 million pounds from its original 2011 budget and it is looking to close its final-salary pension scheme.
Last July, the company restructured its board and split responsibility for its coal and property operations.
Cox said the group's first step over the next 12-18 months was to improve productivity and it can then start thinking about whether it makes sense to have a property and a mining company sitting together. (Editing by Matt Scuffham and William Waterman) ($1=.6163 Pound)