Third quarter 2006 net income was $US7.7 million.

Company chief James Roberts said Foundation was able to partially offset weaker than expected results at certain mines with strong performance from its Powder River Basin operations and better than expected performance from its Northern Appalachian business unit.

“Over the longer term, we are taking practical steps to enhance our profitability as we drive operational improvements at our Wabash and West Virginia mines," Roberts said.

The higher cost of coal sales during the quarter was attributed to a scheduled longwall move at Cumberland and sporadic difficult mining conditions at the Emerald Mine and in Central Appalachia.

Foundation revised its 2006 full-year guidance, predicting a net income of $65-78 million.

The guidance assumed fourth-quarter Powder River Basin shipments remained steady and Wabash Mine production remained at the currently reduced level as production crews have been diverted to maintenance activities in the older areas of the mine, which will be eliminated once the slope project is complete.

The company has also taken into account production and shipments from the Emerald Mine are lower due to a longwall move and lower production resulting from difficult mining conditions encountered recently could reduce adjusted EBITDA for the fourth quarter by up to $10 million. The longwall move is now scheduled to occur just before year end.

Foundation also said its Central Appalachian mines continued to experience higher costs and reduced production.