UK COAL PRESS RELEASE

UK COAL has noted the speculation in today's Daily Mail relating to a purported proposal for a cash offer for the Group. UK COAL is not aware of any such proposal from the Group's major shareholder or any other source.

The Group is at a very early stage of investigating an approach it has received which could address the Group's exposure to the volatile performance of its deep mines through a merger transaction.  It is emphasised that this proposal is highly conditional and at a very preliminary stage and no view can be expressed as to whether a transaction will result.

As has been reported to the market, the Group has encountered continuing difficulties in the performance of its deep mines in recent months, which is having a material impact on its financial position. At Daw Mill, as previously reported, preparation for production at the new face was hindered by difficult geological conditions and, as a result, the start of production on the new face is now expected during April rather than around the end of March. The exposure of the Group to the volatile performance in its deep mines is a significant concern to the directors and mitigating the effects of this exposure, by operating improvements or structural means, is a priority.

TUESDAY 09 MARCH 2010