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18 May 2009

Tanfield Group plc ("Tanfield" or the "Company")

Proposed cancellation of Share Premium Account and 1 for 5 Share Consolidation

Despatch of Annual Accounts

Tanfield announces that its Annual Report and Accounts for the year ended 31 December 2008, Notice of Annual General Meeting (AGM) to be held on 18 June 2009 and an Explanatory Circular of business at the AGM are today being posted to shareholders and will be made available on the Company's website at www.tanfieldgroup.com.

At the forthcoming AGM, the Directors will also propose that the Company's Share Premium Account be cancelled and that the Company's existing Ordinary Shares of 1p each be consolidated into New Ordinary Shares of 5p each.

The cancellation of the amount standing to the credit of the Company's Share Premium Account (currently some £138.5 million) will permit the Company to eliminate the accumulated deficit on its profit and loss account enabling the Company to pay dividends out of profits generated in the future earlier than would otherwise be the case. Any cancellation is subject to the approval of shareholders and confirmation by the High Court., and is expected to be effected by 31 July 2009.

The Directors believe that a consolidation of the Company's existing Ordinary Shares with a view to achieving a higher market price per share is likely to lead to a reduction in the current bid offer spread. Subject to shareholders' approval of the Share Consolidation at the AGM, shareholders on the register at the close of business on 18 June 2009 are expected to receive one New Ordinary Share of 5p each for every 5 Existing Ordinary Shares of 1p each that they then hold.

Other than the change in nominal value, the New Ordinary Shares will carry equivalent rights under the Articles of Association to the Existing Ordinary Shares currently in issue.  The New Ordinary Shares will have ISIN: GB00B4QHFM95.

No fractional entitlements will be allotted.  Fractional entitlements arising from the Share Consolidation will  be aggregated and sold in the market for the benefit of the relevant shareholders save that amounts of less than £3 may be retained by the Company.

Following the Share Consolidation the Company's issued ordinary share capital will comprise 74,072,218  New Ordinary Shares of 5p each.

It is intended that new share certificates will be sent to those shareholders who hold their Existing Ordinary Shares in certificated form on completion of the Share Consolidation. These new share certificates will set out the number of New Ordinary Shares owned by a shareholder on completion of the Share Consolidation and will replace a Shareholder's existing share certificate which, on receipt of the new share certificate, should be destroyed. Definitive certificates for the New Ordinary Shares to be issued in certificated form are expected to be despatched by 26 June 2009. Temporary documents of title will not be issued and, pending despatch of definitive share certificates, transfers of New Ordinary Shares will be certified against the register.

For shareholders holding shares in uncertificated form, it is intended that the relevant number of New Ordinary Shares will be credited to shareholders' existing CREST accounts on 19 June 2009.

Further information

Tanfield Group plc                                                            0845 155 7755

Darren Kell, CEO

Charles Brooks, FD

Arbuthnot Securities Limited (NOMAD and Broker)    020 7012 2000

James Steel / Katie Shelton