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Preliminary Results for the period ended 30th June 2005

21 December 2005

The Directors have pleasure in presenting the accounts for the period ended 30th June 2005.

Highlights

• Listed on AIM on 28 April 2005 with initial capital of £20 million.
• Completed refurbishment of King-Coal preparation plant to achieve 6 million tons per year coal washing capacity (estimated US$5.5 million cost) to upgrade coal production and marketability and provide a centralized location for washing third party coal production.
• Assembled lead operating team.
• Acquired remaining shares in King-Coal and Maple Coal from minority investors, building a core of wholly-owned West Virginia operations.
• King-Coal commenced first coal production in December 2005 and expects sales in early 2006.
• Acquired 20% interest in Energy Build Holdings which controls significant surface and underground coal resources in Wales, located close to established local markets.
• Acquired 19.6% of NEMI, Northern Energy and Mining Inc., and emerging metallurgical coal producer in northeast British Columbia with significant growth potential.
• Raised £5 million in equity financing with share placement to Cambrian Mining Plc.

W. Durand Eppler, Chief Executive Officer of Coal International commented,

“We have had a strong start since coming to AIM earlier this year and have fulfilled our initial objectives of acquiring and investing in near production coal assets. We have already brought our first coal mine into production and aim to become a substantial coal producer within the next few years, enabling us to capitalise on the strong fundamentals which are driving the global markets for coal and steel.”

---

For further information, please contact:

John Byrne/ Randy Eppler
Coal International plc
Tel: +44 (0)20 7409 0890

Cathy Malins/Annabel Leather
Parkgreen Communications
Tel: +44 (0)20 7493 3713

Chairman's Statement

Dear Shareholder

Coal International has achieved its first year of development and is well positioned to take advantage of the surge in international demand for coal. Your company is building a portfolio in line with its strategy to own a number of coal properties capable of rapid growth with long term potential.

We have expanded our investment in coal properties in West Virginia and started up new operations. We are building an impressive management team to take our strategy forward.

The major source of coal demand is the power sector, accounting for over two thirds of world coal consumption. Demand for metallurgical coal has been driven by increasing global steel production, particularly in the Far East. High demand for both energy and steel, coupled with supply side constraints, has led to recent price increases in the coking and thermal coal markets.

Coal International was formed for the purpose of investing in coal assets and was admitted to trading on AIM on 28 April 2005 with an initial capital of £20 million. Our experienced Board collectively has over 90 years’ experience in the mining industry. W. Durand Eppler joined the Board as Chief Executive Officer and brings with him a wealth of commercial and investment banking experience in the minerals industry. The Company has retained the services of Dan Stickel, an experienced coal executive. Having assembled a lead operating team we will appoint further directors and staff to strengthen our management team in order to achieve our business goals.

Our initial investment portfolio of King-Coal (30.1%) and Maple Coal Co (58%) was expanded in December 2005 when the Company acquired the remaining shares from minority investors, in consideration for shares in Coal International. These acquisitions have established our presence in the West Virginian coal industry, traditionally a major coal producing region of the US.

King-Coal was formed to acquire the former Gauley Eagle operation of Island Creek Coal Company. Maple Coal was formed to acquire a new coal lease from Pardee Minerals LLC encompassing the Powellton property formerly operated by Cyprus Amax Coal Company. The Company successfully transferred all existing permits to enable production at both properties. The existing coal preparation facility at the Gauley Eagle property has been refurbished and will enable the Company to sell premium quality products as well as wash coals from other producers on a contract basis. In spite of their historic production, both properties contain substantial remaining reserves. King-Coal also operates a coal recovery operation at Pageton, West Virginia with current production.

A number of other investment opportunities have been reviewed and Coal International has taken its first steps towards creating an international coal portfolio. We acquired 20% of Energy Build Holdings, which controls significant surface and underground coal resources in Wales, located close to established local markets. We also acquired 19.6% of NEMI Northern Energy and Mining Inc. (“NEMI”), an emerging metallurgical coal producer in north east British Columbia, which has significant growth potential.

£5 million in equity financing was raised through a share placement to Cambrian Mining. This provides the Company with additional finance for working capital and to pursue further investment opportunities. Our costs are in line with forecasts and we are establishing new financial control measures.

King-Coal commenced its first coal production in December 2005 and expects initial sales in 2006 following completion of refurbishment efforts at Gauley Eagle and production from surface coal reserves at Powellton early in 2006. Active efforts are underway to permit the development of underground reserves of high quality metallurgical coal at Powellton, significantly expanding our production capacity. Your Board will continue to seek new opportunities and build and expand our portfolio. I am pleased with our progress to date and enthusiastic about our long term growth potential.

John J Byrne

Chairman

Consolidated Profit and Loss Account for the period ended 30th June 2005

	Notes	Period 23rd November 2004 to 30th June 2005 £ '000
Administrative expenses		63
GROUP OPERATING LOSS	2	(63)
Interest receivable	3	127
Share of associate profit		68
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION		132
Taxation	4	32
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION		100
Minority interests		-
		100
Retained profit for the period attributable to Shareholders of the Company
Earnings per share :
- Basic	8	1.2p
– Fully diluted	8	1.2p

There are no recognised gains or losses other than the profit for the period.

All the operations are considered to be continuing.

The accompanying accounting policies and notes form an integral part of these financial statements.

Consolidated balance sheet as at 30th June 2005

	Notes	£'000	£'000
FIXED ASSETS
Investments	9		7,146
CURRENT ASSETS
Debtors	10	548
Cash at bank and in hand		16,164
		16,712
CREDITORS: Amounts due within one year	11	1,096
NET CURRENT ASSETS			15,616
NET ASSETS			22,762
SHARE CAPITAL AND RESERVES
Called up share capital	12		14,716
Share premium account	13		6,112
Profit and loss account	13		100
EQUITY SHAREHOLDERS’ FUNDS	14		20,928
Equity Minority Interests			1,834
			22,762

The accompanying accounting policies and notes form an integral part of these financial statements.

Company balance sheet as at 30th June 2005

	Notes	£'000	£'000
FIXED ASSETS
Investments	9		9,690
CURRENT ASSETS
Debtors	10	13
Cash at bank and in hand		12,273
		12,286
CREDITORS: Amounts due within one year	11	1,096
NET CURRENT ASSETS			11,190
NET ASSETS			20,880
SHARE CAPITAL AND RESERVES
Called up share capital	12		14,716
Share premium account	13		6,112
Profit and loss account	13		52
EQUITY SHAREHOLDERS’ FUNDS	14		20,880

The accompanying accounting policies and notes form an integral part of these financial statements.

Consolidated cash flow statement for the period ended 30th June 2005

	Notes	£ '000	Period 23rd November 2004 to 30th June 2005 £ '000
NET CASH (OUTFLOW) FROM OPERATING ACTIVITIES	15		(557)
RETURN ON INVESTMENTS
Interest received			127
INVESTMENTS
Purchase of associate undertaking		(4,635)
Purchase of listed investments		(1,433)
			(6,068)
CASH OUTFLOW BEFORE FINANCING			(6,498)
Financing	16		22,662
INCREASE IN CASH IN THE YEAR	17		16,164

The accompanying notes and accounting policies form an integral part of these financial statements.

Statement of accounting policies

for the period ended 30th June 2005

The principal accounting policies are summarised below. They have all been applied consistently throughout the period.

Basis of accounting

The accounts have been prepared under the historical cost convention and in accordance with applicable United Kingdom accounting standards.

Basis of consolidation

The group accounts consolidate the accounts of Coal International Plc, its subsidiary undertakings, drawn up to 30th June 2005. The group financial statements include the appropriate share of the associated undertakings results.

Turnover

The Company had no turnover during the period.

Foreign Currencies

Transactions denominated in foreign currencies are translated into sterling at contracted rates or, where no contract exists, at average monthly rates. Monetary assets and liabilities denominated in foreign currencies which are held at the year-end are translated into sterling at year-end exchange rates. Exchange differences on monetary items are taken to the Profit and Loss Account.

Investments

Fixed asset investments are stated at cost less any provision for impairment. Trade investments are stated at the lower of cost or mid-market valuation. Associate investments are shown at cost adjusted for the group’s portion of the results for the period.

Taxation

Corporation tax payable is provided on taxable profits at the current rate.

Deferred tax

Deferred tax is provided on a full provision basis on all timing differences which have arisen but not reversed at the balance sheet date.

Options

No charge to profit is made in respect of the options over the Company’s shares held by Directors and others.

 

Notes to financial statements for the period ended 30th June 2005

1. Turnover and segmental analysis

The Group had no turnover during the period. All the administration costs were incurred by the holding company in the United Kingdom.

2. Group operating loss

	Group £'000	Company £ '000
Operating loss is stated after charging:
Auditors’ remuneration - audit	10	10
Directors’ emoluments	2	2

Auditors’ remuneration for non-audit services provided during the period amounting to £15,000 relates to the provision of an accountant’s report for the purpose of the Company’s AIM Admission Document and was charged to the share premium account as part of share issue expenses.

3. Interest

	Group £ '000	Company £ '000
Bank interest receivable	127	127

4. Taxation

Current year taxation	Group £ '000	Company £ '000
UK corporation tax at 30% on profits for the period	39	19
FACTORS AFFECTING THE TAX CHARGE FOR THE PERIOD
Effects of tax benefit of using the small company rate	(7)	(7)
Current period taxation	32	12

5. Staff costs

The Group had no employees during the year; the two executive Directors provide professional services as required on a part time basis.

6. Directors’ emoluments

	Group £ '000	Company £ '000
DIRECTOR
John J Byrne	1	1
John J Conlon	1	1
Total	2	2

No pension benefits are provided for any director.

Directors’ share options

No share options were granted to Directors during the period to 30th June 2005.

In the current year options were granted to Directors over a total of 2,250,000 ordinary shares as set out in Note 12

7. Profit attributable to parent undertaking

The profit for the period attributable to the parent undertaking amounted to £52,000. As permitted by Section 230 if the Companies Act 1985, no separate profit and loss account is presented in respect of the parent Company.

8. Earnings per share

The basic earnings per share is derived by dividing the profit for the period attributable to ordinary shareholders by the weighted average number of shares in issue.

Profit for the period	£100,000
Weighted average number of Ordinary shares of 50p in issue	8.04 million
Earnings per share – basic	1.2 pence
Weighted average number of Ordinary shares of 50p in issue inclusive of outstanding options	8.04 million
Earnings per share – diluted	1.2 pence

9. Fixed asset investments

	Group £ '000	Company £ '000
ADDITIONS DURING THE PERIOD
Maple Coal Co Limited - Subsidiary	-	2,592
King-Coal Corporation Limited – Associate	5,365	5,317
NEMI Northern Energy and Mining Inc – Listed Investment	1,781	1,781
Net book value at 30th June 2005	7,146	9,690

No provision for permanent diminution in value in respect of any investment is required at 30th June 2005

Maple Coal Co Limited acquisition at fair value on 30th June 2005:	100%
Cash	3,934
Prepayment	536
Total	4,470

The parent Company of the Group holds more than 20% of the ordinary share capital of the following companies:

Company	Country of registration	Proportion held by group	Nature of business
DIRECT
Maple Coal Co Limited	England	58%	Holding Company
King-Coal Corporation Limited	England	36%	Holding Company
INDIRECT
Via Maple Coal Co Limited
Maple Coal Co Limited	USA	58%	Coal Mining
Via King-Coal Corporation Limited
Atlantic Development and Capital LLC	USA	36%	Holding Company
Atlantic Leaseco LLC	USA	36%	Coal Mining

Further information is set out below in respect of the Company’s significant interest in King-Coal Corporation Limited at 30th June 2005

	36% £ '000	100% £ '000
Fixed assets	4,275	11,874
Current Assets	1,266	3,516
Liabilities due within one year	52	145
Liabilities due after one year	280	778
Aggregate Amount of Capital and Reserves	4,208	14,467
Turnover	-	-
Profit before tax	68	189
Taxation	20	57
Profit after tax	48	132

10. Debtors

	Group £ '000	Company £ '000
Prepayments	548	12

11. Creditors

	Group £ '000	Company £ '000
AMOUNTS FALLING DUE WITHIN ONE YEAR
Investment creditors	1,030	1,030
Accruals	54	54
Corporation Tax	12	12
Total	1,096	1,096

12. Share capital

The authorised share capital of the Company and the called up and fully paid amounts at 30th June 2005 were as follows:-

	£’000
Authorised:	3,934
250,000,000 ordinary shares of 50p each	125,000,000
Allotted, called up and fully paid:
29,433,333 ordinary shares of 50p each	14,716,667

The Company was incorporated on 23rd November 2004 with an authorised share capital of £12,500,000 divided into 250,000,000 ordinary shares of 5p each, of which 40 shares were issued fully paid to the subscribers to the Memorandum of Association of the Company. On 16th March 2005 the subscriber shares were transferred to the founders. On 30th March 2005 the authorised share capital of the Company was increased from 250,000,000 ordinary shares of 5p each to 2,500,000,000 ordinary shares of 5p each and subsequently consolidated into 250,000,000 ordinary shares of 50p each.

On admission to AIM on 28th April 2005 26,666,666 new ordinary shares of 50p each were placed at a price of 75p per share.

On 28th April 2005 an option was granted to Williams de Broë for 535,333 ordinary shares at an exercise price equal to 75p for a period of 2 years.

On 31st May 2005 a further 2,666,667 new ordinary shares of 50p each were placed at a price of 75p per share.

On 16th November 2005 the Company entered into option deeds which granted the following share options:

	No. of Options
DIRECTORS
- John J Byrne	1,000,000
- John Conlon	1,000,000
OTHERS	1,620,000

Each option allows the holder to subscribe for one share at a price of 90p for a period of three years from 12th December 2005.

On 12th December 2005 the following shares were issued:-

• (i) 4,375,000 ordinary shares of 50p each at a price of £1.00 per share to acquire the shares held by the minority shareholders in its subsidiary Maple Coal Co Limited for a total consideration of £4,375,000.
• (ii) 25,174,296 ordinary shares of 50p each at a price of £1.00 per share to acquire the shares not held by the Company in its associate King-Coal Corporation Limited for a total consideration of £25,174,296.
• (iii) 5,000,000 ordinary shares of 50p each to Cambrian Mining plc at a price of £1.00 per share for a total cash consideration of £5,000,000.

13. Reserves

The movements on reserves during the period were as follows:

	Share capital £ '000	Share premium account £ '000	Profit and loss account £ '000
GROUP
Issue of shares	14,716	7,359	-
Share issue expenses	-	(1,247)	-
Profit for the period	-	-	100
As at 30th June 2005	14,716	6,112	100
COMPANY
Issue of shares	14,716	7,359	-
Share issue expenses	-	(1,247)	-
Profit for the period	-	-	52
As at 30th June 2005	14,716	6,112	52

14. Movement on equity shareholders’ funds

	Group £ '000	Company £ '000
Profit for the period	100	52
Proceeds of share issues	22,075	22,075
Share issue expenses	(1,247)	(1,247)
Closing equity shareholders’ funds	20,928	20,880

15. Reconciliation of operating loss to operating cash flows

	Group £ '000
Operating loss	(63)
Increase in debtors	(548)
Increase in operating creditors	54
Net cash outflow from operating activities	(557)

16. Analysis of cash flows

	Group £ '000
Financing
COMPANY
Issue of ordinary share capital	22,075
Share issue expenses	(1,247)
	20,828
SUBSIDIARY
Issue of ordinary share capital to Minority Interest	1,834
	22,662

17. Analysis and reconciliation of net funds

	Group 23rd November 2004 £'000	Group Cash Flow £ '000	Group 30th June 2005 £ '000
Cash in hand and at bank	-	16,164	16,164

18. Commitments

As at 30th June 2005, the Company had no material capital commitments.

19. Related party transactions

There were no material related party transactions in the period.

20. Post balance sheet events

On 5th October 2005 the Company entered into a Coal Licence Sale and Purchase and Subscription Agreement pursuant to which the Company has acquired 20 per cent interest in the issued share capital of Energybuild Holdings Limited (“EBH”) in consideration for the payment of £0.6 million. The Company has also agreed to facilitate a bond to a maximum of £3.1 million required under Welsh Council planning conditions to allow the EBH group to extract coal in certain areas of Wales.

On 12th December 2005 the Company purchased the shares held by others in its subsidiary Maple Coal Co Limited for a total consideration of £4.4 million and its associate King-Coal Corporation Limited for a total consideration of £25.2 million. Both purchases were funded by the issue of ordinary shares as outlined in Note 12.

On the same day the Company raised £5.0 million by the issue of ordinary shares as outlined in Note 12.

In the current period to date the Company has increased its interest in the issued share capital of NEMI Northern Energy and Mining Inc to 19.6 per cent for an aggregate consideration of approximately £7.0 million.

21. Financial instruments

The Group has taken advantage of the exemption in Financial Reporting Standard 13, “Derivatives and Other Financial Instruments”, in respect of short term debtors and creditors.

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