Phoenix Coal Inc. announces completion of NI 43-101 technical report on Gryphon Mining Complex



    - INCREASED RESERVE BASE BY 59% -

    LOUISVILLE, KY, May 12 /CNW/ - Phoenix Coal Inc. (TSX: PHC) ("Phoenix" or
"the Company"), a leading producer and consolidator of thermal coal reserves
in the Illinois Basin, announced today the completion and subsequent filing of
an independent technical report ("the Report") on the coal reserves at the
Gryphon Mining Complex ("Gryphon"), which now includes the Pratt reserve, the
recently-acquired Petersburg reserve, and the Panama South reserve. Unless
otherwise noted, all mineral reserves and mineral resources are expressed in
imperial tons.

    
    Highlights:

        -  Phoenix controls 68.4 million tons of proven and probable coal
           mineral reserves at Gryphon;

        -  Phoenix controls 3.7 million tons of underground measured and
           indicated coal resources and 0.2 million tons of inferred coal
           resources (tons in-situ basis) at Gryphon;

        -  The increase in Gryphon's proven and probable reserves from the
           Company's previous guidance of 43.1 million tons to 68.4 million
           tons is due to the addition of 22.3 million tons from the Panama
           South reserve that are now contiguous to the rest of the
           Gryphon area.
    

    "Since we completed our public offering in June of 2008, we have
increased our reserve base from 43.7 million tons to more than 80 million tons
of proven and probable coal reserves, including our surface mining assets,"
said David A. Wiley, President and CEO of Phoenix Coal. "In addition to the
increase in reserves, we have significantly enhanced the value of Gryphon with
our acquisition of a strategically located portal site and by the fact that it
is one of the largest contiguous blocks of underground coal in Western
Kentucky."
    In addition to the reserves and resources mentioned in the Report,
Phoenix controls 42.7 million tons of measured and indicated surface mineable
coal resources at Gryphon. The following tables summarize Phoenix's current
resource and reserve control at Gryphon:

    
    ---------------------------------------------------------------------
    Gryphon Mining Complex
    Summary of Resources (tons x 1,000)
    ---------------------------------------------------------------------
                                   Total Resources (In-situ)
                      ---------------------------------------------------
    Type               Measured       Indicated      Total       Inferred
    ---------------------------------------------------------------------
    Deep                  1,711           2,009      3,720          165
    Surface(*)           21,707          20,984     42,691          667
    ---------------------------------------------------------------------
    Total                23,418          22,993     46,411          832
    ---------------------------------------------------------------------
    (*) Data for surface resource tons was previously disclosed in Phoenix
        Coal's N.I. 43-101 Technical Report, effective December 31, 2007.


    ---------------------------------------------------------------------
    Gryphon Mining Complex
    Summary of Reserves (tons x 1,000)
    ---------------------------------------------------------------------
                           Total Reserves (Moist Recoverable Basis)
                      ---------------------------------------------------
                             Assigned             Unassigned
    Type                Proven     Probable    Proven   Probable    Total
    ---------------------------------------------------------------------
    Deep                     0            0    34,468     33,918   68,386
    Surface                  0            0         0          0        0
    ---------------------------------------------------------------------
    Total                    0            0    34,468     33,918   68,386
    ---------------------------------------------------------------------
    

    Mine development at Gryphon is underway. Phoenix is currently in the
process of completing a drilling program to yield data that is critical to
construction bid packages, ensuring the timely issuance of the required
permits for the new portal site, finalizing the surface layout for the portal
site, retaining a contractor for the construction of the preparation plant,
continuing a land leasing program to add additional contiguous reserves, and
solidifying financing plans. Once ramped up to full production, it is
anticipated that Gryphon will produce approximately 3 million saleable tons
per year.

    
    Recommendations of the Report:

    The Report recommends that Phoenix:

        -  Perform additional exploration drilling including coal washability
           testing in order to further define reserves and coal quality;

        -  Secure additional surface acreage adjacent to the Smith farm near
           the Petersburg coal reserve to accommodate the rail and truck
           loading facilities; and

        -  At the Panama South reserve area, conduct a geotechnical
           evaluation of the Lower Vermillionville sandstone and the coal
           seam roof and floor strata to better estimate the potential impact
           on mine cost and productivity.
    

    The Report was completed by Marshall Miller & Associates, Inc. ("MM&A"),
an independent geological and engineering consulting firm headquartered in
Bluefield, Virginia. MM&A has provided project feasibility studies and related
engineering and geological services at coal projects and mines worldwide since
1975. The Company commissioned and received the Report on the Gryphon Mining
Complex in accordance with National Instrument 43-101 Standards of Disclosure
for Mineral Projects. The May 8, 2009 Report was prepared by independent
Qualified Persons under NI 43-101, including George J. Oberlick, P.E., J.
Scott Nelson, C.P.G., Gerard J. Enigk, P.E. and Hugo L. Fournier, P.E. To
review this document in its entirety, please visit the Company's website
www.phxcoal.com or www.sedar.com.

    About Phoenix Coal Inc.

    Phoenix Coal Inc. is an integrated mining company producing high sulphur,
low chlorine, bituminous coal from the Illinois Basin. To address the
increasing demand for energy in the Eastern United States as well as in the
export market, Phoenix Coal is pursuing production growth through the focused
acquisition, consolidation, and extraction of coal assets. Phoenix Coal
currently operates surface coal mines in Muhlenberg County, Kentucky and a
barge loading facility on the Green River. Development plans for additional
surface operations, as well as an underground mine, are underway. The
Company's executive offices are located in Louisville, KY and its operational
headquarters are stationed in Madisonville, KY. For additional information,
visit www.phxcoal.com.

    FORWARD-LOOKING STATEMENTS

    Certain information set forth in this press release contains
"forward-looking statements", and "forward-looking information" under
applicable securities laws. Except for statements of historical fact, certain
information contained herein constitutes forward-looking statements which
include management's assessment of Phoenix's future plans and operations and
are based on Phoenix's current internal expectations, estimates, projections,
assumptions and beliefs, which may prove to be incorrect. Some of the
forward-looking statements may be identified by words such as "expects"
"anticipates", "believes", "projects", "plans", and similar expressions. These
statements are not guarantees of future performance and undue reliance should
not be placed on them. Such forward-looking statements necessarily involve
known and unknown risks and uncertainties, which may cause Phoenix's actual
performance and financial results in future periods to differ materially from
any projections of future performance or results expressed or implied by such
forward-looking statements. These risks and uncertainties include, but are not
limited to: liabilities inherent in coal mine development and production;
geological, mining and processing technical problems; Phoenix's inability to
obtain required mine licenses, mine permits and regulatory approvals required
in connection with mining and coal processing operations; dependence on third
party coal transportation systems; competition for, among other things,
capital, acquisitions of reserves, undeveloped lands and skilled personnel;
incorrect assessments of the value of acquisitions; changes in commodity
prices and exchange rates; changes in the regulations in respect to the use of
coal; the effects of competition and pricing pressures in the coal market; the
oversupply of, or lack of demand for, coal; currency and interest rate
fluctuations; various events which could disrupt operations and/or the
transportation of coal products, including labor stoppages and severe weather
conditions; the demand for and availability of rail, port and other
transportation services; and management's ability to anticipate and manage the
foregoing factors and risks. There can be no assurance that forward-looking
statements will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements. Phoenix
undertakes no obligation to update forward-looking statements if circumstances
or management's estimates or opinions should change except as required by
applicable securities laws. The reader is cautioned not to place undue
reliance on forward-looking statements.

    
    The TSX has neither approved nor disapproved of the contents of this
    press release.
    





For further information:

For further information: Joanna Longo, The Equicom Group, Investor
Relations, (416) 815-0700 ext. 233, jlongo@equicomgroup.com

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