HARWORTH COLLIERY MOTHBALLING CONFIRMED

UK COAL today confirms that it is to proceed with the mothballing of Harworth Colliery as previously announced.

The decision is a result of being unable to secure a sales contract to justify the investment request to access further coal reserves at the Colliery.

A statutory notice advising of redundancies following a 90-day consultation period is being issued. UK COAL will, however, continue to work towards a commercial solution within this period.

At the time of the initial mothballing decision, the Group reported it had retained fixed assets at the colliery with a value of £12 million. Since then a further £3 million has been invested to develop access to further reserves. These asset values will be reviewed for impairment and dependent upon the expected value of the remaining underground reserves there may be a future non-cash write off.

UK COAL Chief Executive Gerry Spindler said: “Everyone has worked tirelessly to find a solution. The performance and dedication of the workforce at Harworth has been exemplary. We have all worked extremely hard to save the colliery at a time of increasing demand for coal, and will continue to do so.”

MEDIA CONTACTS:

Financial

Gavin Anderson & Company 020 7554 1400

Ken Cronin

Michael Turner

Operational

Stuart Oliver 01525 381759

07774 231178

Notes to Editors

Harworth is one of six collieries operated by UK COAL and one of the first mines to complete its operational review in 2005. The Company introduced new working practices with a workforce involvement then unique in British mining and mining techniques, which have substantially improved performance levels.

However, the mine experienced high methane levels in the first quarter of 2005 slowing coal extraction and also encountered extremely difficult geological conditions in the region of reserves being worked. Following experience on this face, it was considered unlikely that further reserves could be economically extracted from this area of the mine.

The panel at the centre of commercial discussions contains 1.45 million tonnes of coal in the Deep Soft seam. Work on driving the roadways to open up the reserves has been taking place for several months, with the objective of having the face ready for production early next year. The colliery has further substantial reserves in an adjacent seam.

Operations to date have been funded from ongoing production from a face, which will shortly run out of coal. As part of the project to develop the additional reserves at a cost of around £16m, men had agreed extended shift arrangements to enable equipment to be utilised an extra nine hours a week and had agreed to 70 jobs being phased out.

Located in the village of Bircotes nine miles south of Doncaster, Harworth Colliery has a history dating back to 1919 when the shafts were sunk by the Barber Walker Mining Company. Coal production began during 1924. Recent modernisation schemes include new headgear structures to increase winding capacity and facilities to utilise most of the methane gas extracted from the mine for safety reasons.

Workings at the colliery, which employs 310 people, are the deepest in the country, with the No 2 shaft, used to wind men and materials, 1,005 metres deep. The No 1 shaft is 897m deep, with coal extraction centred on the Deep Soft seam some 1,000 metres below ground.