LOUISVILLE, KY, Oct. 1 /CNW/ - Phoenix Coal Inc. (TSX: PHC) ("Phoenix" or "the Company") announced today that the sale of its surface mining operations (the "Transaction") to Oxford Mining Company, LLC (the "Acquirer" or "Oxford"), a major privately-owned coal producer based in Ohio, closed on September 30, 2009.

"Closing the transaction achieves critical objectives for both companies," said David A. Wiley, President and CEO of Phoenix Coal Inc. "For Oxford, the Muhlenberg County surface mining business will bring diversification to an already strong foundation of assets and people in Ohio. Most importantly, Phoenix is now in an outstanding position to execute on its primary objective, which is to maximize the value of the Gryphon Mining Complex. We continue to advance the development of this project, respond to solicitations and inquiries from potential customers, and secure additional property control while we evaluate all of our strategic options, including alternatives to monetize or joint venture the asset. After eliminating our long-term debt and strengthening our cash position from the Oxford transaction, we can now capitalize on Gryphon and potential opportunities in the market."

"We are very excited about the acquisition of Phoenix' surface mining business," said Charles C. Ungurean, President and CEO of Oxford Mining Company-Kentucky, LLC. "This transaction provides us an entry into Kentucky and the Illinois Basin and will significantly increase Oxford's scale, both from a coal reserve life and volume capacity standpoint. The Illinois Basin has been a key regional expansion focus for us due to its proximity to our existing operations and its similar mining techniques and terrain. Following this acquisition, Oxford will have annual production of approximately 8 million tons of surface-mined, low-chlorine bituminous coal. Additionally, Oxford is focused on expanding its relationship with overlapping customers and developing long-term, mutually beneficial relationships with new customers."

After the Transaction, as of September 30, 2009, Phoenix will have a cash balance of approximately $22.4 million. An additional $3.3 million that has been escrowed due to certain provisions in the Transaction agreement is scheduled to be released over the next 18 months.

About Phoenix Coal Inc.

To address the increasing demand for energy in the Eastern United States, Phoenix Coal is focused on maximizing the value of its coal reserves in the Illinois Basin. The Company's Gryphon Mining Complex is one of the largest remaining contiguous coal reserves in Western Kentucky. The reserve contains high sulphur, low chlorine bituminous coal, which is in high demand by electric utilities. Gryphon contains proven and probable underground coal reserves totaling 68.4 million tons and measured and indicated surface and underground coal resources totaling 46.4 million tons. The Company's executive offices are located in Louisville, KY and its operational headquarters are stationed in Madisonville, KY. For additional information, visit www.phxcoal.com.

About Oxford Mining Company, LLC

Oxford Mining Company, LLC, is a privately-held master limited partnership and is the largest producer of surface mined coal in Ohio. Following this acquisition, Oxford will have approximately 8 million tons of annual production, 95 million tons of proven reserves and 800 employees spanning Ohio and Kentucky. Oxford's corporate headquarters are located in Coshocton, Ohio.