PEABODY ENERGY CORPORATION



                                  $650,000,000



                          6 7/8% SENIOR NOTES DUE 2013



                               PURCHASE AGREEMENT



                                                                  March 14, 2003



Lehman Brothers Inc.

Morgan Stanley & Co. Incorporated

Wachovia Securities, Inc.

Fleet Securities, Inc.

U.S. Bancorp Piper Jaffray Inc.

PNC Capital Markets, Inc.

BMO Nesbitt Burns Corp.

Credit Lyonnais Securities (USA) Inc.

ABN AMRO Incorporated

As representatives of the Initial Purchasers



c/o Lehman Brothers Inc.

745 Seventh Avenue, 19th Floor

New York, New York 10019



and



c/o Morgan Stanley & Co. Incorporated

1585 Broadway

New York, New York, 10036



Ladies and Gentlemen:



                  Peabody Energy Corporation, a Delaware corporation (the

"COMPANY"), proposes to issue and sell to the several Initial Purchasers named

in Schedule 1 hereto (the "INITIAL PURCHASERS") $650,000,000 in aggregate

principal amount of its 6 7/8% Senior Notes due 2013 (the "NOTES") guaranteed

(the "GUARANTEES") by the Company's domestic subsidiaries signatory hereto

(collectively, the "SUBSIDIARY GUARANTORS") pursuant to the terms of an

indenture (the "INDENTURE"), to be dated as of March 21, 2003, among the

Company, the Subsidiary Guarantors and US Bank National Association, as trustee

(the "TRUSTEE").



                  The Notes will be offered and sold to you pursuant to an

exemption from the registration requirements under the Securities Act of 1933,

as amended (the "SECURITIES ACT"). The Company has prepared a preliminary

offering memorandum, dated March 7, 2003 (as amended or supplemented, the

"PRELIMINARY OFFERING MEMORANDUM"), and will prepare a final offering memorandum

(as amended or supplemented, the "OFFERING MEMORANDUM"), to be dated March 14,

2003, relating to the Company, the Notes and the Guarantees.







                  Upon original issuance thereof, and until such time as the

same is no longer required under the applicable requirements of the Securities

Act, the Notes (and all securities issued in exchange therefor or in

substitution therefor) shall bear substantially the following legend:



         THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE

         SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT

         BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, IN THE ABSENCE OF

         SUCH REGISTRATION UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT

         TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF

         THIS NOTE BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A

         "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE

         SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS

         NOTE IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 904 OF REGULATION S

         UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT PRIOR TO (A) THE

         DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY

         RULE 144(k) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION

         THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF

         ANY PREDECESSOR OF THIS NOTE) OR THE LAST DAY ON WHICH THE COMPANY OR

         ANY AFFILIATE OF THE COMPANY WERE THE OWNERS OF THIS NOTE (OR ANY

         PREDECESSOR OF THIS NOTE) AND (B) SUCH LATER DATE, IF ANY, AS MAY BE

         REQUIRED BY APPLICABLE LAW (THE "RESALE RESTRICTION TERMINATION DATE"),

         OFFER, SELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (I) TO THE COMPANY,

         (II) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED

         EFFECTIVE UNDER THE SECURITIES ACT, (III) FOR SO LONG AS THE NOTES ARE

         ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY

         BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A

         UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE

         ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT

         THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (IV) PURSUANT TO

         OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED

         STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR

         (V) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION

         REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO

         EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO

         THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY, THE TRUSTEE, AND

         THE REGISTRAR SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR

         TRANSFER PURSUANT TO CLAUSE (IV) OR (V) TO REQUIRE THAT AN OPINION OF

         COUNSEL, CERTIFICATIONS AND/OR OTHER



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         INFORMATION SATISFACTORY TO THE COMPANY, THE TRUSTEE AND THE REGISTRAR

         IS COMPLETED AND DELIVERED BY THE TRANSFEROR. THIS LEGEND WILL BE

         REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION

         TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"

         "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY

         REGULATION S UNDER THE SECURITIES ACT.



                  You have advised the Company that you will make offers and

sales (the "EXEMPT RESALES") of the Notes purchased hereunder on the terms set

forth in the Offering Memorandum solely to (i) persons whom you reasonably

believe to be "qualified institutional buyers" as defined in Rule 144A under the

Securities Act ("QIBs") and (ii) outside the United States to persons other than

U.S. Persons in offshore transactions meeting the requirements of Regulation S

under the Securities Act ("REGULATION S") (such persons specified in clauses (i)

and (ii) being referred to herein as the "ELIGIBLE PURCHASERS"). As used herein,

the terms "offshore transaction," "United States" and "U.S. person" have the

respective meanings given to them in Regulation S. You will offer the Notes to

Eligible Purchasers initially at a price equal to 98.25% of the principal amount

thereof. Thereafter, the offering price may be changed at any time without

notice.



                  In connection with the offering of the Notes, the Company and

the Subsidiary Guarantors will enter into a new revolving credit facility in the

amount of $600.0 million and a $450.0 million term loan B facility pursuant to a

credit agreement among the Company, the Subsidiary Guarantors, Wachovia

Securities, Inc., Fleet Securities, Inc. and Lehman Brothers Inc. as Arrangers,

Wachovia Bank, National Association and Lehman Commercial Paper Inc., as the

Syndication Agents, Fleet National Bank, as the Administrative Agent, Morgan

Stanley Senior Funding, Inc., as Documentation Agent, and the other lenders

party thereto, (the "NEW CREDIT FACILITY"). The net proceeds from the sale of

the Notes, along with borrowings under the New Credit Facility, will be used to

repurchase the Company's outstanding 8 7/8% Senior Notes due 2008 and 9 5/8%

Senior Subordinated Notes due 2008 (collectively, the "OLD NOTES"), to repay

substantially all of the indebtedness of the Company's subsidiary, Black Beauty

Coal Company and fees and expenses related to the Transactions (as defined

below), as described in the "Use of Proceeds" section of the Offering

Memorandum. The repurchase of the Old Notes, the repayment of the other

indebtedness, the entering into of the New Credit Facility and the offering of

the Notes as provided in the "Use of Proceeds" section of the Offering

Memorandum are collectively referred to herein as the "TRANSACTIONS."



                  Holders (including subsequent transferees) of the Notes will

have the registration rights set forth in the registration rights agreement (the

"REGISTRATION RIGHTS AGREEMENT") among the Company, the Subsidiary Guarantors

and the Initial Purchasers, to be dated as of the Closing Date, in the form of

Exhibit A hereto, for so long as such Notes constitute "TRANSFER RESTRICTED

SECURITIES" (as defined in the Registration Rights Agreement). Pursuant to the

Registration Rights Agreement, the Company and the Subsidiary Guarantors will

agree to file with the Securities and Exchange Commission (the "COMMISSION")

under the circumstances set forth therein, (i) a registration statement under

the Securities Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") relating to a

separate series of the Company's 6 7/8% Senior Notes due



                                       3







2013 (the "EXCHANGE NOTES") to be offered in exchange for the Notes (such offer

to exchange being referred to collectively as the "REGISTERED EXCHANGE OFFER")

and (ii) if required by the terms of the Registration Rights Agreement, a shelf

registration statement pursuant to Rule 415 under the Securities Act (the "SHELF

REGISTRATION STATEMENT") relating to the resale by certain holders of the Notes,

and to use their reasonable best efforts to cause such Registration Statements

to be declared effective. This Agreement, the Notes, the Exchange Notes, the

Guarantees, the Exchange Note Guarantees (as defined below), the Indenture and

Registration Rights Agreement are hereinafter referred to collectively as the

"OPERATIVE DOCUMENTS." This is to confirm the agreements concerning the purchase

of the Notes from the Company by the Initial Purchasers.



                  SECTION 1.        Representations, Warranties and Agreements

of the Company and the Subsidiary Guarantors. The Company and the Subsidiary

Guarantors, jointly and severally, represent, warrant and agree that:



                  (a)      The Preliminary Offering Memorandum and the Offering

         Memorandum have been or will be prepared by the Company and Subsidiary

         Guarantors for use by the Initial Purchasers in connection with the

         Exempt Resales. No order or decree preventing the use of the

         Preliminary Offering Memorandum or the Offering Memorandum, or any

         order asserting that the transactions contemplated by this Agreement

         are subject to the registration requirements of the Securities Act has

         been issued and no proceeding for that purpose has commenced or is

         pending or, to the knowledge of the Company and Subsidiary Guarantors,

         is threatened.



                  (b)      The Preliminary Offering Memorandum and the Offering

         Memorandum as of their respective dates did not, and the Offering

         Memorandum as of the Closing Date will not, contain an untrue statement

         of a material fact or omit to state a material fact necessary, in order

         to make the statements made therein, in the light of the circumstances

         under which they were made, not misleading, except that this

         representation and warranty does not apply to statements in or

         omissions from the Preliminary Offering Memorandum and the Offering

         Memorandum made in reliance upon and in conformity with information

         relating to the Initial Purchasers furnished to the Company in writing

         by or on behalf of the Initial Purchasers expressly for use therein, as

         specifically identified in Section 8(e) hereof.



                  (c)      The documents incorporated by reference in the

         Offering Memorandum, when they were filed with the Commission conformed

         in all material respects to the requirements of the Exchange Act, and

         the Rules and Regulations, and none of such documents contained an

         untrue statement of a material fact or omitted to state a material fact

         necessary to make the statements therein not misleading in light of the

         circumstances in which they were made; and any further documents so

         filed and incorporated by reference in the Prospectus, when such

         documents are filed with the Commission, will conform in all material

         respects to the requirements of the Exchange Act and the rules and

         regulations thereunder, and will not contain an untrue statement of a

         material fact or omit to state a material fact necessary to make the

         statements therein not misleading in light of the circumstances in

         which they were made.



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                  (d)      The Company and each of its subsidiaries (as defined

         in Section 15) have been duly incorporated or organized, as the case

         may be, and are validly existing as their respective business entities

         and in good standing under the laws of their respective jurisdictions

         of incorporation or organization, as the case may be, are duly

         qualified to do business and are in good standing as foreign

         corporations in each jurisdiction in which their respective ownership

         or lease of property or the conduct of their respective businesses

         requires such qualification, and have all power and authority necessary

         to own or hold their respective properties and to conduct the

         businesses in which they are engaged, except where the failure to so

         qualify to be in good standing would not reasonably be expected to have

         a material adverse effect on the financial condition, business,

         properties or results of operations of the Company and its subsidiaries

         taken as a whole (a "MATERIAL ADVERSE EFFECT"); and none of the

         subsidiaries of the Company other than Black Beauty Coal Company,

         Caballo Coal Company, Coal Properties Corp., Gold Fields Mining

         Corporation, Peabody Coal Company, Peabody Development Company, Peabody

         Holding Company, Inc., Peabody Natural Resources Company, Peabody

         Western Coal Company and Powder River Coal Company is a "significant

         subsidiary," as such term is defined in Rule 405 under the Securities

         Act.



                  (e)      The Company has an authorized capitalization as set

         forth in the Preliminary Offering Memorandum, and all of the issued

         shares of capital stock of the Company have been duly and validly

         authorized and issued, are fully paid and non-assessable and conforms

         in all material respects to the description thereof contained in the

         Offering Memorandum; and all of the issued shares of capital stock or

         membership interests, as the case may be, of each wholly-owned

         subsidiary of the Company have been duly and validly authorized and

         issued and are fully paid and non-assessable and (except for directors'

         qualifying shares) are owned directly or indirectly by the Company,

         free and clear of all liens, encumbrances, equities or claims, other

         than liens, encumbrances, equities or claims under the Company's

         existing credit facility (which will be assigned to the lenders under

         the New Credit Facility on the Closing Date) and contemplated under the

         New Credit Facility or otherwise described in the Offering Memorandum,

         and none of such shares of capital stock or membership interests, as

         the case may be, were issued in violation of a preemptive or other

         similar rights arising by operation of law, under the charter and

         by-laws of the Company or under any agreement to which the Company or

         any Subsidiary Guarantor is a party or otherwise.



                  (f)      Each of the Company and the Subsidiary Guarantors has

         all requisite power and authority to execute, deliver and perform its

         respective obligations under this Agreement and each of the other

         Operative Documents to which it is a party.



                  (g)      This Agreement has been duly authorized, executed and

         delivered by the Company and the Subsidiary Guarantors.



                  (h)      The Registration Rights Agreement has been duly

         authorized by the Company and each of the Subsidiary Guarantors, and

         when duly executed by the proper officers of the Company and each of

         the Subsidiary Guarantors (assuming due execution and delivery by the

         Initial Purchasers) and delivered by the Company and each of the

         Subsidiary Guarantors, will constitute a legal, valid and binding

         agreement of the



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         Company and each of the Subsidiary Guarantors, enforceable against the

         Company and each of the Subsidiary Guarantors in accordance with its

         terms, subject to applicable bankruptcy, insolvency, fraudulent

         conveyance, reorganization, moratorium and other similar laws relating

         to or affecting creditors' rights and remedies generally, and subject,

         as to enforceability, to general principles of equity, including

         principles of commercial reasonableness, good faith and fair dealing

         (regardless of whether enforcement is sought in a proceeding at law or

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