Phoenix Coal Inc. advised of permit delays, declares force majeure to customers

    LOUISVILLE, KY, Oct. 6 /CNW/ - Phoenix Coal Inc. (TSX: PHC), a leading
producer and consolidator of thermal coal reserves in the Illinois Basin,
announced today that certain subsidiaries have provided notice of force
majeure to all of their customers due to permitting delays. The U.S. Army
Corps of Engineers ("COE") advised the Company on September 26, 2008, that
certain environmental groups filed a protest with the COE with respect to one
of the Company's three pending permit applications under Section 404 of the
Clean Water Act. It is anticipated that there will be similar protests to
Phoenix's two other pending permits. As a result, the Company will be unable
to bring into production the coal reserves associated with these permits to
satisfy a portion of the Company's contractual obligations until this
situation is resolved and the necessary permits are received. The protest does
not impact any of the permits that Phoenix currently has, including the
recently issued permit for the Pratt mine underground development project.
Phoenix is currently evaluating the extent of the ongoing force majeure events
and the impact to the total tonnage to be delivered.
    "It is our intention to aggressively address the issues raised in the
protest letter and work diligently to expedite permit issuance. Phoenix has
employed a considerable level of resources and planning, working with
reputable engineering firms to assemble permit packages," said David Wiley,
President and CEO of Phoenix Coal Inc. "In the meantime, Phoenix will deliver
the coal that is available from our existing permits on a pro rata basis to
all customers per our existing contracts and work with our customers to reach
an optimal outcome for all parties given the circumstances."

    About Phoenix Coal Inc.

    Phoenix Coal Inc. is an integrated mining operation producing
approximately 2.5 million tons of high sulphur, low chlorine, bituminous coal
annually from the Illinois Basin. To address the increasing demand for energy
in the Eastern US as well as in the export market, Phoenix Coal is pursuing
production growth through the focused acquisition, consolidation, and
extraction of coal assets. The Company's executive offices are located in
Louisville, KY and its operational headquarters are stationed in Madisonville,


    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,

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