New York (Platts)--18Aug2008

Fueled by a sharp increase in sales volume, western Kentucky producer Phoenix
Coal posted a 29.3% increase in revenue in the second quarter -- $21.3 million
versus $16.4 million in the year-ago period.

The Louisville, Kentucky, company, which recently filed for an initial public
offering in Canada, also said revenue was up $22.2% for the first six months
of 2008 -- $39.8 million compared with $32.5 million in the year-ago
timeframe. Revenues/short ton sold for the second quarter and first half of
this year were similar at $33/st and $33.02/st, respectively.

For the three months ended June 30, 2008, coal sales climbed 24.1% to 646,000
st from 521,000 st the previous year.

"With the necessary permitting in place, we are ready to begin construction on
the Pratt mine, which has the potential to significantly increase our
production capacity in the years ahead," David Wiley, Phoenix president and
CEO, said in a statement. "Through our solid capital base and robust
infrastructure, our company is well positioned to increase our reserves
through additional acquisitions, add production capacity on our existing
properties, and drive increased efficiencies in our current operations."

Pratt, to be located near Sebree in Webster County, will be Phoenix's first
underground mine in western Kentucky (PCT 8/7). The mine is expected to open
in 2010 and hit peak production in 2011. It will be operated by Phoenix's Pact
Resources subsidiary.

Pratt's proven and probable reserve base is an estimated 28.9 million st in
the western Kentucky No. 9 seam. Development costs for Pratt and a related
coal preparation plant are estimated in excess of $75 million.

In July, a Phoenix subsidiary, R&L Winn, purchased all of the outstanding
common shares of C&R Coal. Under the terms of the agreement, R&L assumed all
assets and liabilities of C&R and will pay the former owners 60?/st for each
ton of coal sold from the C&R mines. The current mining area, Beech Creek and
Beech Creek South, contained about 500,000 reserve tons as of June 30, 2008,
Phoenix said.

Also in July, Phoenix acquired all the outstanding common shares of Renfro
Equipment for $1.5 million. The purchase includes all assets and liabilities
of Renfro, except certain equipment and associated debt specifically excluded
from the deal, Phoenix said.

Phoenix produced about 2.1 million st in 2007 in the Illinois Basin and is on
track for about 2.5 million st in 2008.

--Bob Matyi, bobmaty@roadrunner.com