LOUISVILLE, KY, Aug. 14 /PRNewswire-FirstCall/ - Phoenix Coal Inc.
(TSX: PHC), a leading producer and consolidator of thermal coal reserves in
the Illinois Basin, announced today its financial results for the three and
six month periods ended June 30, 2008. Unless otherwise noted, all reserves
and resources are expressed in imperial tons, and all financial information
is expressed in U.S. dollars.



    Highlights for the second quarter of 2008:

    -   Completed a reverse takeover ("RTO") by Phoenix Coal Corporation
        ("Phoenix") of Marimba Capital Corp. ("MCC") concurrently raising
        $97,784,678, net of issuance costs;

    -   Coal sales increased 24.1% to 646,000 tons from 521,000 tons the
        previous year;

    -   Revenue increased 29.3% to $21,326,102 from $16,494,604 with an
        average revenue per ton of coal sold of $33.00;

    -   Secured the permit for the Company's underground mining project, the
        Pratt Mine, and started planning for mine construction and equipment
        purchases. The Pratt mine represents a reserve of coal that is
        currently uncommitted, and is expected to realize the benefits from
        higher prevailing market prices for thermal coal when the mine comes
        into production; and

    -   Subsequent to the quarter end, the Company acquired C&R Coal Inc. and
        Renfro Equipment Inc.
    "With the necessary permitting in place, we are ready to begin
construction on the Pratt Mine, which has the potential to significantly
increase our production capacity in the years ahead," said David A. Wiley,
Phoenix President and CEO. "Through our solid capital base and robust
infrastructure, our company is well positioned to increase our reserves
through additional acquisitions, add production capacity on our existing
properties, and drive increased efficiencies in our current operations."

    Financial Review:

    For the three months ended June 30, 2008, Phoenix's revenue increased
by 29.3% to $21,326,102 from $16,494,604 in the prior year comparative
three month period. The growth in revenue was attributable to a 24.1%
increase in sales volume and 4.2% increase in revenue per ton sold in the
second quarter 2008 versus 2007. For the six months ended June 30, 2008,
Phoenix's revenue increased by 22.2% to $39,821,562 from $32,589,816 in the
prior year six month period. Sales volume was up 18.2% and revenue per ton
sold grew 3.3% from 2007 to 2008. For the second quarter ended June 30,
2008 and the six months ended June 30, 2008, revenue per ton sold was very
similar at $33.00 and $33.02, respectively. The increase over 2007 was due
to contractual price increases from existing sales contracts and new sales
contracts with better pricing terms.

    For the three months ended June 30, 2008, Phoenix's cost of goods sold
increased by 39% to $21,199,549 from $15,241,838 for the same period in
2007. Comparing the same periods on a cost per ton sold basis, cost of
goods sold was $32.80 versus $29.27 for an increase of 12%. For the six
months ended June 30, 2008, cost of goods sold was $38,684,869 versus
$28,325,576 for the same period in 2007, or $32.07 per ton sold compared to
$27.77. Diesel fuel and explosives had the largest impact on operating
costs which was somewhat offset by lower maintenance and coal preparation
costs.

    For the three months ended June 30, 2008, Phoenix's Selling expenses
were $2,074,001 versus $1,842,529 for the same period in 2007. For the six
months ended June 30, 2008, Phoenix's Selling expenses were $4,144,935
versus $3,455,681 for the same period in 2007. Phoenix's selling costs are
variable with respect to coal sales and ranged from approximately 10% to
11% of coal sales for the above mentioned periods.

    General & Administrative (G&A) costs for the three months and six
months ended June 30, 2008 were $3,813,178 and $5,412,290, respectively
compared to $1,581,672 and $2,736,724, respectively, during similar periods
in 2007. The primary variance is a non-cash charge to employee stock-based
compensation, which was $2,151,277 for the second quarter 2008 and
$2,291,277 for the six-month period ended June 30, 2008. On June 27, 2008,
the board of directors granted 6,847,000 employee stock options, of which
one-third vested on the grant date.

    Depreciation and amortization expense for the three and six months
ended June 30, 2008 were $2,043,344 and $3,107,176 respectively, compared
to $712,721 and $1,283,565 for the corresponding periods in 2007.
Depreciation expense for 2008 increased $253,750 for the quarter ended June
30 and $543,245 for the six months ended June 30 when compared to 2007.
This increase in depreciation expense is directly related to $17,600,000
invested in mining equipment since September 30, 2007. Mining rights and
mine development amortization expense increased year over year by
$1,076,873 for the quarter and $1,280,366 for the six month period ended
June 30 due to the amortization of mining rights resulting from the
reclassification of goodwill to mining rights, and Stony Point operating
for only part of the second quarter in 2007, and depleting its reserve in
2008 sooner than originally estimated. Additionally, amortization of
development expenses at Back in Black did not begin until July 2007.

    EBITDA for the three and six months ended June 30, 2008 were
($5,750,645) and ($8,541,117) respectively, compared to ($1,320,660) and
($1,100,592) during the same periods in 2007.

    During the three and six months ended June 30, 2008, Phoenix incurred
cash costs of $1,188,995 and $1,849,904 respectively in relation to
operations that have been depleted or shuttered. These costs include
post-mining reclamation expenses, royalty charges incurred in the
termination of a lease, and operating losses at a depleted property. In
addition to the above mentioned non-recurring losses, non-cash stock-based
compensation expenses for the three and six months ended June 30, 2008 were
$2,151,277 and $2,291,277 respectively.

    The Adjusted EBITDA of Phoenix's ongoing operations for the three and
six months ended June 30, 2008 were ($2,410,373) and ($4,399,936)
respectively. The following table summarizes the adjusted EBITDA
calculation.



                                                             Q2      YTD 6/30
                                                           2008          2008
                                                          -----         -----
    EBITDA                                         ($5,750,645)  ($8,541,117)
    Non-recurring operating losses                   1,188,995     1,849,904
    Stock based compensation                         2,151,277     2,291,277
                                                   ------------  ------------
    Adjusted EBITDA                                ($2,410,373)  ($4,399,936)
    Net loss in the three and six month periods ended June 30, 2008 were
$10,695,632 and $16,711,098 respectively compared to $3,315,600 and
$4,471,806 for the same periods in 2007.

    As of June 30, 2008, Phoenix had $71,154,101 in cash and cash
equivalents, compared to $381,374 at December 31, 2007. On June 27, the
Company completed a reverse takeover ("RTO") raising $97,784,678 net of
issuance costs. $25,000,000 of the proceeds was subsequently paid as final
payment relating to the acquisition of Pact Resources LLC ("PACT"). Phoenix
also had restricted cash as collateral for letters of credit for
reclamation bonding in the amount of $2,226,075 at June 30, 2008 versus
$2,312,500 at December 31, 2007.

    Other Developments

    Subsequent to the quarter end, the Company announced on August 5th that
the Kentucky State Department of Natural Resources had issued a mine permit
to Phoenix's subsidiary Pact Resources, LLC for its Pratt Mine in Webster
County, Kentucky. The Pratt underground reserve is estimated to possess
28.9 million tons of proven and probable reserves with an additional 5.2
million tons of measured and indicated resource. Phoenix is in the process
of establishing equipment specifications with manufacturers, and delivery
dates have been targeted in advance of the planned mine opening in 2010.

    In July 2008, the Company's subsidiary, R&L Winn Inc. ("R&L Winn"),
purchased all of the outstanding common shares of C&R Coal Inc ("C&R").
Under the terms of the agreement, R&L Winn assumed all assets and
liabilities of C&R and will pay the former owners $0.60 per ton for each
ton of coal sold from the C&R mines. The current mining area, Beech Creek
and Beech Creek South, contained approximately 500,000 reserve tons
(697,000 reserves tons as of December 31, 2007 per the Company's National
Instrument 43-101 revised technical report less coal mined in the first
half of 2008) as of June 30, 2008. R&L Winn also acquired other leases in
the transaction from C&R and R&G Leasing, LLC, a company that is affiliated
with C&R through common ownership. Based on exploration completed to date
by the Company, management estimates the leases contain approximately five
to seven million tons of coal. The potential quantity is conceptual in
nature as there has been insufficient exploration to define a mineral
resource and it is uncertain that further exploration will result in the
delineation of a mineral resource. The Company has engaged a third party
engineering firm to issue a technical report that is compliant with
National Instrument 43-101.

    In July 2008, Phoenix purchased all of the outstanding common shares of
Renfro Equipment, Inc. ("Renfro") for a purchase price of $1,500,000. The
purchase includes all assets and liabilities of Renfro, except certain
equipment and associated debt specifically excluded from the purchase. The
purchase price will be adjusted for net working capital as of the closing
date. Based on exploration completed to date by the Company, management
estimates Renfro controls approximately 1.5 million tons of coal via lease.
The potential quantity is conceptual in nature as there has been
insufficient exploration to define a mineral resource and it is uncertain
that further exploration will result in the delineation of a mineral
resource. The Company has engaged a third party engineering firm to issue a
technical report that is compliant with National Instrument 43-101.
Additionally, if by the second anniversary of the closing date, Phoenix
acquires at least 1.5 million reserve tons as defined by National
Instrument 43-101 due to the direct efforts of the sellers (the "Additional
Reserves"), the Company will pay the sellers $1,000,000 for the first 1.5
million tons of reserves, plus $0.50 per ton for each reserve ton in excess
of 1.5 million. The share purchase agreement defines a specific territory
from which the Additional Reserves can be acquired. The acquisition of the
Additional Reserves is on terms and conditions acceptable to Phoenix in its
sole, reasonable discretion.

    Management's discussion and analysis (MD&A), consolidated financial
statements and notes thereto for the second quarter are available at
http://www.sedar.com.

    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, KY.

    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.

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