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Interim Group Results for the six-months ended 31 December 2005

21 Februay 2006

The Directors have pleasure in presenting the Company’s unaudited accounts for the six months ended 31 December 2005.

Highlights

• Completion of the purchase of the entire share capital of King-Coal Corporation Ltd and Maple Coal Co Ltd
• Issue of 5,000,000 ordinary shares to Cambrian Mining Plc, raising £5 million
• Acquisition of 19.6% of Northern Energy Mining Inc, a mine development company quoted on the TSX-V and focused on the exploration and development of metallurgical coal assets in northeast British Columbia
• Subscription of 20% of the issued capital of Energybuild Holdings Ltd which through its subsidiaries holds the licence to operate the Aberpergwym deep mine located in the Vale of Neath, Wales
• Relationship agreement with Cambrian Mining Plc giving Coal International the right of first refusal of all coal projects (other than North American projects) sourced by Cambrian Mining Plc after April 2005

Post-period Highlights

• Re-establishment of underground mining operations at King-Coal’s Silo Mains underground mine and successful transfer of operations to a mining contractor that will assume responsibility for all mining and construction activities
• Initial production to date of approximately 7,000 ROM tons, stockpiled in anticipation of completion of the refurbishment of King-Coal’s Gauley Eagle coal preparation plant
• King-Coal commenced operations at the Crooked Run surface mine.

John Byrne, chairman of Coal International commented:

“These financial results and the investments made to date by the Company demonstrate the successful implementation of the Company’s strategy to create a group which could take advantage of the surge in international demand for coal. The Company has completed the refurbishment of a 6 million tons per annum washery at Gauley Eagle and is bringing a series of mines into production. Production from these mines is scheduled to grow to 1.8 million tons in fiscal year 2007, and more than double to 4.2 million tons in fiscal year 2008.”

Chief Executive’s Report

For the six months ended 31 December 2005

The Directors have pleasure in presenting the unaudited results of the Coal International group (the “Group”) for the six months ended 31 December 2005.

The Group recorded a pre-tax loss of £296,000 for the period to 31 December 2005.

Coal International has established a favourable asset base to date and is on track to achieve its goals.

In developing its new operations, the Group is working closely with state and federal environmental, health and safety experts in the re-establishment of mining operations at King-Coal’s Gauley Eagle property and at Maple Coal’s Powellton Mine. The regulatory environment in West Virginia remains workable in spite of recent mining accidents and increased regulatory scrutiny. New regulations are likely to be implemented on a reasonable basis.

Review of Mining and exploration activities

I am pleased to report continued progress in establishing production at the recently acquired King-Coal Corporation Ltd (“King-Coal”) and Maple Coal Co Ltd (“Maple Coal”) operations in West Virginia. In early January the Company re-established underground mining operations at its Silo Mains underground mine and has now successfully transferred operations to a mining contractor that will assume responsibility for all mining and construction activities. The contractor is currently obtaining staff to work multiple shifts. This will free up the Company’s development team to focus its efforts on reopening the Company’s second underground mine, Birch 2-A, on the Gauley Eagle property. Initial production to date is approximately 7,000 ROM tons, which has been stockpiled pending completion of the refurbishment of the Gauley Eagle coal preparation plant, which is expected shortly. Mining conditions to date have been better than anticipated. The existing coal preparation plant at Gauley Eagle, with a nominal capacity of 6,000,000 tons per annum, has been completely refurbished by King-Coal, at a cost of approximately $7 million and is expected to commence commissioning within the next week. The plant will be capable of washing all of King-Coal’s Gauley Eagle production, as well as providing coal preparation to local coal operators on a third-party basis.

King-Coal has also commenced operations at the Crooked Run surface mine, its first surface mine on the Gauley Eagle property. Following receipt of mining and blasting permits, and equipment mobilisation of its surface mining contractor, initial earth moving has begun this week. The Company expects to be able to ship both run-of-mine and washed coal to utility customers from its surface operations.

The Company is stockpiling coal from early production in anticipation of commencing its first shipments in the coming weeks. The Company has secured an initial contract with a local utility customer to deliver 20,000 tons per month for a three month period that offers good potential to be extended.

Mine planning and engineering are advancing at Coal International’s Maple Coal property with the goal of establishing the Company’s first surface mining operation during 2006. The Company is also undertaking mine planning and permitting activities to establish a significant underground mine within the next 24 months. Alternatives for coal preparation, transportation and marketing are also being evaluated and development plans established. To date, there has been significant market interest in the Company’s planned production.

At Coal International’s Deepgreen Coal Recovery operation, the influence of new management has already resulted in a significant turnaround in operating performance. The new operating team has suggested a number of process improvements and has established operating standards that have materially improved product quality. As a result, prices for Deepgreen’s products have more than doubled.

A key element of Coal International’s strategy has been to determine the potential of its operating assets. The core assets of Coal International have been acquired at an attractive valuation, with the expectation that these assets could be brought into efficient and profitable production within a near-term time frame. It is also expected that there is significant upside in the resource base of these assets. Since acquiring control of its West Virginia properties in December, Coal International has commissioned Marshall Miller and Associates, a respected mining engineering firm with extensive experience in Appalachian coal, to audit the Company’s reserves, resources and corporate business plan to internationally established standards of excellence. Upon completion, the Company will make its Statement of Reserves and Operations, prepared by Marshall Miller and Associates, available to shareholders.

It is truly remarkable to see the progress that Dan Stickel and his team have made since coming aboard in August 2005. Developing a new coal business in this competitive marketplace is a tremendous accomplishment.

I thank you for your support to date.

W. Durand Eppler
Chief Executive

Independent Review Report to Coal International PLC

Introduction

We have been instructed by the Company to review the financial information comprising the consolidated income statement, consolidated balance sheet, consolidated cashflow statement and notes thereon and we have read the other information contained in the interim report and considered whether it contains any apparent mis-statements or material inconsistencies with the financial information.

This report, including the conclusion, has been prepared for and only for the Company for the purpose of their interim report and for no other purpose. We do not, therefore, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Directors’ responsibilities

The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the Directors.

Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board as if that Bulletin applied. A review consists principally of making enquiries of the Directors and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information.

Review conclusion

On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 31st December 2005.

CHAPMAN DAVIS LLP
Chartered Accountants
2 Chapel Court
London SE1 1HH

Consolidated Income Statement(Unaudited)

For the 6 months ended 31 December 2005

	Notes	Six months ended 31 Dec 2005 (Unaudited) £'000	Six months ended 30 Jun 2005 (Audited) £'000
Administrative expenses		(450)	(63)
OPERATING LOSS		(450)	(63)
Bank Interest received		154	127
Share of associate profit		-	68
(LOSS)/PROFIT BEFORE TAXATION		(296)	132
Taxation	2		32
(LOSS)/PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION		(296)	100
(Loss)/profit per share :	4
- Basic		(0.89)p	1.2p

The financial year end of COAL INTERNATIONAL PLC is 30 June. The comparatives in the consolidated Profit and Loss account are for the period from 23 November 2004 to June 30 2005.

Consolidated Balance Sheet (Unaudited)

At 31st December 2005

	Notes	31 Dec 2005 (Unaudited) £'000	30 Jun 2005 (Audited) £'000
FIXED ASSETS
Intangible Assets		28,074	-
Tangible Assests		9,545	-
Investments		8,506	7,146
Total Fixed Assets		46,125	7,146
CURRENT ASSETS
Debtors		6,115	548
Cash at bank and in hand		3,237	16,164
Total Current Assets		9,352	16,712
CURRENT LIABILITIES
CREDITORS: Amounts falling due within one year		1,013	1,096
Total Current Liabilities		1,013	1,096
NET CURRENT ASSETS		8,339	15,616
NET ASSETS		54,464	22,762
CAPITAL AND RESERVES
Called up share capital	6	32,024	14,716
Share premium		22,636	6,112
Profit and loss account		(196)	100
EQUITY SHAREHOLDERS’ FUNDS	7	54,464	20,928
Equity Minority Interests		-	1,834
SHAREHOLDERS’ FUNDS		54,464	22,762

Consolidated Cash Flow Statement (Unaudited)

For the 6 months ended 31st December 2005

	Notes	Six months ended 31 Dec 2005 (Unaudited) £'000	Six months ended 30 Jun 2005 (Audited) £'000
CASH OUTFLOW FROM OPERATING ACTIVITIES		(417)	(557)
Returns on investments and servicing of finance		154	127
Investments		(14,768)	(6,068)
CASH OUTFLOW BEFORE FINANCING		(15,031)	(6,498)
Financing		2,104	22,662
INCREASE IN CASH IN THE PERIOD	5	(12,927)	16,164

Notes to the Interim Report

For the 6 months ended 31st December 2005

1. Accounting Policies

(a) Presentation of interim results

This interim report was approved by the Directors on 20 February 2006. The interim results have not been audited, but were the subject of an independent review carried out by the Company’s auditors, Chapman Davis LLP. Their review confirmed that the figures were prepared using applicable accounting policies and practices consistent with those to be adopted in the annual report. The financial information contained in this interim report does not constitute statutory accounts as defined by Section 240 of the Companies Act 1985.

(b) Basis of preparation

These financial statements have been prepared under the historical cost convention and in accordance with the applicable UK accounting standards.

(c) Basis of consolidation

The financial statements of controlled entities are included in the consolidated financial statements from the date control commences until the date control ceases.

The Group profit and loss account and balance sheet combine the accounts of the Company and its subsidiaries, using the acquisition method of accounting.

(d) Goodwill

Goodwill on consolidation is capitalised and shown within fixed assets. Positive goodwill is subject to annual impairment review with movements charged in the profit and loss account. Negative goodwill is reassessed by the Directors and attributed to the relevant assets to which it relates

2. Taxation

No taxation has been provided due to losses in the period.

3. Dividends

The Directors do not recommend the payment of a dividend.

4. Loss per share

	Six months ended 31 Dec 2005 (Unaudited) £'000	Six months ended 30 Jun 2005 (Audited) £'000
Basic Loss for the period
(Loss)/profit (£’000)	(296)	100
Weighted Average Number of Shares	33.2 million	8.04 million
(Loss)/profit Per Share - pence	(0.89)p	1.2p

The basic earnings per share has been calculated on a loss on ordinary activities after taxation of £296,000 (30 June 2005: £100,000 profit) and on 33,195,946 (30 June 2005: 8.04million) ordinary shares being the weighted average number of shares in issue and ranking for dividend during the period.  No diluted loss per share is presented as the effect of exercise of outstanding options is to decrease the loss per share.

5. Reconciliation of net cashflow to movement in net funds

	Six months ended 31 Dec 2005 (Unaudited) £'000	Six months ended 30 Jun 2005 (Audited) £'000
(Decrease)/increase in cash in the period	(12,927)	16,164
Net funds at beginning of period	16,164	-
Net funds at end of period	3,237	16,164

6. Share Capital

The authorised share capital of the Company and the called up and fully paid amounts at 31 December 2005 were as follows:-

	31 Dec 2005 (Unaudited) £'000	30 Jun 2005 (Audited) £'000
Authorised:
250,000,000 ordinary shares of 50p each	125,000	125,000
Allotted, called up and fully paid:
64,049,371 ordinary shares of 50p each	32,024	14,716

7. Reconciliation of net cashflow to movement in Shareholders' funds

	Share capital £	Share premium account £	Profit and loss account £	Total £
At 1st July 2005	14,716	6,112	100	20,928
(Loss) for the period	-	-	(296)	(296)
Shares issued during the period	17,308	16,524	-	33,832
At 31st December 2005	32,024	22,636	(196)	54,464

 

COMPANY INFORMATION

Directors

• John J. Byrne
• John J. Conlon
• W. Durand Eppler

Secretary

Alwyn Davey
4th Floor Windsor House
55 St James’s Street
London SW1A 1LA

Registered Office

2 Chapel Court,
London SE1 1HH

Nominated Adviser and Broker

Cenkos Securities Ltd,

6.7.8 Tokenhouse Yard
London EC2R 7AS

Auditors

Chapman Davis LLP
2 Chapel Court
London SE1 1HH

Solicitors

Trowers & Hamlins
Sceptre Court
40 Tower Hill
London EC3N 4DX

Registrars

Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU

Registered number

05293936

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