The mining and property group UK Coal is looking to cash in on the booming world coal price through heavy investment in developing new seams and higher contract prices.
The company said it was investing £55m in its Kellingley pit, extending its life to 2017, and a similar amount at Thoresby to open up some 12m tonnes of reserves.
However, the near doubling of world coal prices last year looks unlikely to save the company's Welbeck colliery in Nottinghamshire. The pit, which employs 450 people, may have to close when the current workable reserves are exhausted next year.
UK Coal has been negotiating with customers to raise prices closer to world levels as it seeks to replace contracts that were fixed when the price was significantly lower. Last year, average sale prices increased by 15% on the previous year.
David Jones, the UK Coal chairman, said: "This is significantly altering the underlying economics of our mining operations. There will always be unpredictabilities — particularly in deep mining — but the demand and price environment for coal has improved notably and has created a more positive backcloth than at any time in UK Coal's corporate life."
UK Coal said its pre-tax profit had risen by 292% to £69m, while the value of its property portfolio had risen by more than a fifth to £411m. It estimates the future value of the property could rise to £1bn by 2013. The company said the board would not be recommending a dividend given the planned investment in its mining and property businesses.