* Q1 sales volume up 104 pct

* Raises FY10 sales volume outlook

July 14 (Reuters) - Alberta-based Grande Cache Coal Corp GCE.TO reported a more than two-fold jump in its first-quarter sales volume, driven by strong demand from China, and raised its 2010 sales volume outlook.

"The increase (in outlook) is due to a higher level of spot sales experienced to date, together with a modest recovery in demand from traditional customers compared to the latter part of fiscal 2009," the company said.

For the three months ended June 30, the company sold 0.51 million tonnes of metallurgical coal, up from 0.25 million tonnes a year ago, as it was helped by a significant increase in spot sales, primarily into the Chinese market.

Grande Cache, which produces metallurgical coal for the steel industry, boosted its 2010 sales volume outlook to between 1.3 and 1.5 million tonnes of coal, from its prior estimate of 1.2 to 1.4 million tonnes of coal.

The company said it would take delivery of new equipment for the development of its No. 8 surface mine later this year and that this would increase its fiscal 2010 capital expenses by C$18 million to about C$85 million ($74.04 million).

Grande Cache shares closed at C$1.85 Monday on the Toronto Stock Exchange. ($1=1.148 Canadian dollar) (Reporting by R. Manikandan in Bangalore; Editing by Himani Sarkar)