UK Coal has five remaining deep mines

UK Coal, which supplies 7% of the UK's electricity generation needs, saw half-yearly profits of �7m.

The firm, which has deep mines in Yorkshire, Nottinghamshire and Coventry, reported losses of �30.5m for the same period in 2005.

Chairman David Jones said the medium-term outlook for deep mines now appeared "attractive".

UK Coal, which owns the former assets of British Coal, last made profits in 2003.

Mr Jones put the improvements down to a series of initiatives, including a reduction in the amount of time lost to production gaps and a cut in costs following restructuring efforts.

UK Coal has mothballed three of its deep mines: Rossington, near Doncaster: Ellington in Northumberland; and Harworth in Nottinghamshire.

Remaining UK Coal deep mines Kellingley, West Yorks Maltby, South Yorks Daw Mill, near Coventry Welbeck, Notts Thoresby, Notts

The company has five remaining deep mines in use and said that despite under-performance in July and August, the sites were likely to be operating at a profitable level over the remainder of this year.

UK Coal said existing long-term contracts would expire over the next 18 months and were likely to be renewed at much higher market prices.