The UK's biggest coal producer - which has a deep mine in Warwickshire - has flagged up a brighter future after it returned to profitability.
UK Coal is also hoping it will benefit from the Govern-ment's energy review.
The company, which runs a site at Daw Mill, at Atherstone, is hopeful the review will recognise the importance of domestically-mined coal in tackling concerns over security of supply and price stability.
It currently provides about seven per cent of the country's energy needs for electricity generation.
The company also showed signs of improving its own performance, reporting a profitable fourth quarter, although bottom-line losses widened from £33.5 million to £62.2 million in 2005 because of the costs associated with moves to close or mothball three of its eight deep mines.
Earlier this week UK Coal offered some hope of a revival at one of the three sites, following plans devised in conjunction with the workforce at Harworth near Doncaster to open up a new seam and change working practices.
The plans could leave the site with about 230 workers - half its previous workforce - but with the prospect of continued mining at Harworth. A colliery at Ellington was closed recently, while Rossington is in the process of being wound down in light of difficult operating conditions.
However, UK Coal is also considering sinking a new shaft at Arley in north Warwickshire at some point in the future to mine an estimated 20 to 30 million tonnes of coal at Hawkhurst Moor.
UK Coal described 2005 as an important year, after it demonstrated that its remaining mines could produce coal economically over an extended period.
The improvement came after a number of operational issues were identified during 2004, including a new wage structure and working hours, as well as a more structured daily maintenance regime.
Gaps in production have blighted the company in the past, but UK Coal said that "in the absence of unforeseen problems, continuous production at all mines should be possible".
The company's ongoing deep mines are at Daw Mill, Kellingley and Maltby in Yorkshire and Thoresby and Welbeck in Nottinghamshire.
The selling price of UK Coal's products improved to £1.35 per gigajoule, from £1.18 in 2004, as new longer-term contracts began to reflect the higher market rates.
Longer-term prospects for the coal industry have been lifted by plans by operators to introduce sulphur-reducing equipment in order to prolong the lives of their plants, in line with EU directives.
UK Coal chairman David Jones said the benefits of security of supply offered by UK-mined coal would be a positive factor in the energy review, which is due to be completed in the summer.
He added: "I believe the current political and market conditions herald a brighter future for coal as it is recognised that the country's needs must be supported by domestic production.
"The outcome of the review, which we expect will recognise the importance of an indigenous coal supply in a balanced energy portfolio, will be important for UK Coal."
UK Coal said it would pay a total of £100 million over the next ten years in a bid to reduce its pension deficit.
Chris Mawe, finance director, said the company had already contributed £6.5 million to its two final salary schemes in 2005, which have a total deficit of £117 million.
The company also runs defined contribution schemes for employees hired after its privatisation in 1994. The company paid £1.7 million into the DC pensions last year, compared with £2.1 million the previous year.
There is no final dividend. Shares closed up 6p at 155p.