Operating profit was up 200% to £82.7 million in 2007 but group revenues were slightly lower than in 2006 primarily due to the sale of the Maltby deep mine in February last year and low output at Daw Mill.

This was partially offset by strong growth in its surface mines' revenues and the growth in power division revenues.

A fatality at the Daw Mill colliery in January last year closed the mine for a month, which was followed by two months of low production as the operation carried out safety work.

The safety work and lost production is estimated to have cost UK Coal £20 million.

Despite further output troubles in the second half of 2007, Daw Mill is now working well on a new panel, according to the company.

“With the new face now in full production and no further face changes until late in 2009, the outlook for Daw Mill is robust," UK Coal said.

Adverse geological conditions at the Kellingley colliery have been experienced, lowering output. UK Coal expects these conditions to continue until a move to a new area of reserves in the Beeston seam in mid-2009.

The move will cost UK Coal £55 million but will extend the life of the mine to at least 2017.

At the Thoresby colliery the Parkgate seam will continue to be extracted from until late 2009, during which time the geology will be difficult and production restrained, the company said.

While UK Coal's Welbeck operation was originally due to close last year, identification of four further coal panels – together with the improvement in coal prices – has extended the life of the mine until at least 2009.

Operations were affected by a fatality caused by a fall of rock on a coal face being salvaged in November. This greatly slowed down a face transfer and has delayed the start date of the new coal face in 2008.

UK Coal said it expected revenues to grow significantly this year.

“In mining, last year, the world coal price has almost doubled, we have successfully moved our overall sales prices closer to the market price and we are progressively securing a balance of contracts at floating, capped and collared, and fixed prices," chairman David Jones said.

“This is significantly altering the underlying economics of our mining operations and enabling us to invest in accessing more reserves in both our deep and surface mines."

With the new prices UK Coal has been able to commit around £55 million each in new investment over the next three years to its Thoresby and Kellingley collieries.

“This investment will extend the lives of the mines by some 10 years beyond their previously anticipated closure dates and add over 3 million tonnes a year to our planned deep mine production from 2009 to around 2018," UK Coal said.