Coal production from ICG operations this year is now projected at approximately 18 million tonnes, with sales of approximately 22Mt, down slightly from the previously announced output projection of 19-20Mt with total sales of 22-23Mt.

“We have faced an unprecedented number of operating challenges thus far in 2006, many of which have demanded an extraordinary amount of time and attention from our management team,” said ICG president and chief executive Ben Hatfield.

Hatfield said total revenue for 2006 is now projected to be in the range of $US980 million-1.05 billion, down from the $1.02-1.1 billion range previously projected.

The company’s first quarter earnings were first hit hard by the fatal accident at its Sago mine, with the company attributing $11.7 million in costs to the January 2 disaster that killed 12 miners.

Further operating challenges include a conveyor fire in early April at the ICG Illinois Viper mine, which resulted in a 30-day loss of production and significant repair costs.

The closure of ICG’s Vindex Energy subsidiary’s Stony River deep mine has become permanent after a recently completed exploration program failed to identify a viable option for accessing the remaining coal reserves.

“The Stony River mine experienced extremely adverse roof conditions and a major roof fall in early February that resulted in the mine being idled for drilling and evaluation of an alternate mine plan,” ICG said.

The bankruptcy filing of a key coal supplier to Vindex Energy has also heavily impacted on the company. The third party ceased operations and filed for bankruptcy protection, requiring Vindex to divert coal shipments from higher-priced orders to the order previously supplied by the third party.

ICG says Vindex Energy is now taking steps to remedy this situation by acquiring the assets of Barton Mining and George’s Creek Land.

ICG’s Wolf Run subsidiary has also suffered adverse geologic conditions at its Sycamore II mine in Harrison County, West Virginia during the first half of 2006.

Hatfield said the difficult mining conditions resulted in high production costs and reduced tonnage on the Number 1 section, and forced a four-month delay in startup of the Number 2 mining section.

“But within recent weeks, mining conditions have improved and the Number 2 mining section has begun producing coal,” the company said.

ICG said the Sentinel mine at ICG’s Philippi complex will undergo an eight-month construction outage this year to extend the mine shafts and slope to access recently acquired Clarion seam reserves. The Sentinel mine was idled in April and is not expected to resume production until December.

The company first predicted diesel fuel costs would moderate from the unprecedented levels seen in the 2005 fourth quarter but are now forecasting no reduction in fuel costs during the remainder of the year.

“Recent political tensions and supply factors have driven fuel prices to even higher levels, with a significantly adverse impact upon surface mine operating and trucking costs during 2006.

“We remain confident in our long-range growth plan for our operations. The fundamentals in the coal markets and in our business generally remain sound and our long-term strategies position us to grow our business in 2007 and beyond,” Hatfield said.