James River Coal (JRCC) Reports Second Quarter 2012 Operating Results

— Maintaining a Strong Balance Sheet with Available Liquidity of $191.9 Million — Q-2 Adjusted EBITDA of $22.3 Million; Capital Expenditures of $23.0 Million — Reached Agreements to Ship Approximately 816,000 Tons of Thermal/Industrial and Metallurgical Coal in 2012 at an Average Sales Price of $114.83 Per Ton — Received 5 New Surface Mining Permits from State and Federal Regulatory Agencies — Confirming All Current 2012 Operating and Financial Guidance; Capital Expenditures Remain Under Review — Conference Call Slides Posted to Company Website

RICHMOND, Va., Aug. 9, 2012 /PRNewswire/ — James River Coal Company (NASDAQ: JRCC),  today announced that it had net loss of $25.8 million or $0.74 per diluted share for the second quarter of 2012 and net loss of $41.4 million or $1.19 per diluted share for the six months ended June 30, 2012.  The 2012 results are compared to net income of $0.8 million or $0.02 per diluted share for the second quarter of 2011 and net loss of $6.8 million or $0.22 per diluted share for the six months ended June 30, 2011.

Peter T. Socha, Chairman and Chief Executive Officer commented: “We are both pleased and cautious this quarter.  In the operations area, we are very pleased to report that we have received five significant permits for our surface mining operations.  Our operations team has put a tremendous amount of time and effort into obtaining these permits.  They showed flexibility and creativity in working with state and federal regulatory authorities in finding solutions that would meet the needs of all parties.  Our operations team has also continued to demonstrate their ability to quickly adapt to changing market conditions.  Both the met and the thermal coal markets are in a state of transition.  The met market has softened recently due to global macroeconomic concerns and a slight oversupply situation.  We are cautious about the met market in the short term, but continue to be very enthusiastic about the demand for these coals going forward.  The construction of global infrastructure is continuing.  The thermal market is just beginning to show signs of recovery.  We believe that this is due to production cutbacks throughout the industry as well as improved demand for both coal and natural gas due to warmer than normal temperatures.  Our sales and marketing team has done a great job of shipping coal under existing contracts and finding pockets of opportunity in difficult markets. We continue to be pleased with our balanced approach to operating assets, customer markets, and financial stability.”

FINANCIAL RESULTS

The following tables show selected operating results for the quarter and six months ended June 30, 2012 compared to the quarter and six months ended June 30, 2011 (in 000’s except per ton amounts).

PERMITS

C.K. Lane, Senior Vice President and Chief Operating Officer commented: “James River Coal is continuing to use innovative approaches to permit design, along with working cooperatively with the Environmental Protection Agency (EPA), the Corp. of Engineer’s (COE) and State agencies to adapt to the realities of today’s permitting environment.  As a result we are pleased to announce that we have received 5 surface mining permits that will allow us to extend existing operations for several years.”  Below is a recap of the five permits:

• The Freelandville COE 404 permit allows the mining of approximately 4.2 million tons of surface coal currently under lease at Triad’s Freelandville mine.  There are additional leases that could be acquired to add on additional tonnage.
• The Rough Creek Surface Mining Control and Reclamation Act (SMCRA) permit which will allow Triad to surface mine Indiana No. 5 reserves at our Log Creek Complex that were originally slated to be mined by underground methods. In addition to the increased extraction of the Indiana No. 5 coal, additional reserves in the Indiana No. 6 and Indiana No. 5B will also be available.   Total reserves associated with this permit are approximately 5.8 million tons.
• The Stacy Branch COE 404 permit has been received.  This is one of the few hollow fill permits issued in the Central Appalachian region in the last five years.  This will open up approximately 3.4 million tons of high quality coal.
• The Kentucky Department of Natural Resources permit for the Wolfpen mine has been received.  This will extend the life of our lowest cost surface operation, Frasure Branch.  The Wolfpen permit gives access to 2.9 million tons of high quality low sulfur coal.
• The Canebrake permit has been approved by the EPA and is awaiting minor revisions by the West Virginia Department of Environmental Protection to accommodate a change in mine plans that is better suited for today’s market.  This permit opens up approximately 1.9 million tons of low cost metallurgical coal.

LIQUIDITY AND CASH FLOW

As of June 30, 2012, the Company had available liquidity of $191.9 million calculated as follows (in millions):

Availability under the $100 million Revolver was lower at June 30, 2012 than at March 31, 2012 due to minor disruptions in late June CAPP shipments.  The disruptions were caused by the timing of the annual miners’ vacation period and annual rail maintenance.  Capital expenditures for the second quarter were $23.0 million and $45.9 million for the six months ended June 30, 2012.

SALES POSITION AND MARKET COMMENTS

As of August 8, 2012, we had the following agreements to ship coal at a fixed and known price (in 000’s except per ton amounts):

2012 GUIDANCE

We are reaffirming 2012 guidance with the exception of Capital Expenditure guidance which was withdrawn on May 3, 2012.  The Company is in the process of assessing its capital needs for the remainder of the year.

CONFERENCE CALL, WEBCAST AND REPLAY:  The Company will hold a conference call with management to discuss the second quarter earnings August 9, 2012 at 11:00 a.m. Eastern Time.  The conference call can be accessed by dialing 877-340-2553, or through the James River Coal Company website at http://www.jamesrivercoal.com.  International callers, please dial 678-224-7860.  A replay of the conference call will be available on the Company’s website and also by telephone, at 855-859-2056 for domestic callers.  International callers, please dial 404-537-3406: pass code 95471315.

James River Coal Company is one of the leading coal producers in Central Appalachia and the Illinois Basin.  The company sells metallurgical, bituminous steam and industrial-grade coal to electric utility companies and industrial customers both domestically and internationally.  The Company’s operations are managed through eight operating subsidiaries located throughout eastern Kentucky, southern West Virginia and southern Indiana.    Additional information about James River Coal can be found at its web site www.jamesrivercoal.com

FORWARD-LOOKING STATEMENTS: Certain statements in this press release and other written or oral statements made by or on behalf of us are “forward-looking statements” within the meaning of the federal securities laws. Statements regarding future events and developments and our future performance, as well as management’s expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. Forward looking statements include, without limitation, statements regarding future sales and contracting activity, projected fuel escalators and all guidance figures.  These forward-looking statements are subject to a number of risks and uncertainties. These risks and uncertainties include, but are not limited to, the following: our cash flows, results of operation or financial condition; the consummation of acquisition, disposition or financing transactions and the effect thereof on our business; our ability to successfully integrate International Resource Partners LP and its related entities (IRP); governmental policies, regulatory actions and court decisions affecting the coal industry or our customers’ coal usage; legal and administrative proceedings, settlements, investigations and claims; our ability to obtain and renew permits necessary for our existing and planned operation in a timely manner; environmental concerns related to coal mining and combustion and the cost and perceived benefits of alternative sources of energy; inherent risks of coal mining beyond our control, including weather and geologic conditions or catastrophic weather-related damage; our production capabilities; availability of transportation; our ability to timely obtain necessary supplies and equipment; market demand for coal, electricity and steel; competition; our relationships with, and other conditions affecting, our customers; employee workforce factors; our assumptions concerning economically recoverable coal reserve estimates; future economic or capital market conditions; our plans and objectives for future operations and expansion or consolidation; and the other risks detailed in our reports filed with the Securities and Exchange Commission (SEC). Management believes that these forward-looking statements are reasonable; however, you should not place undue reliance on such statements. These statements are based on current expectations and speak only as of the date of such statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of future events, new information or otherwise.

JAMES RIVER COAL COMPANY
AND SUBSIDIARIES
Reconciliation of Non GAAP Measures
(in thousands)
(unaudited)

EBITDA is used by management to measure operating performance.  We define EBITDA as net income or loss plus interest expense (net), income tax expense (benefit) and depreciation, depletion and amortization (EBITDA), to better measure our operating performance.  We regularly use EBITDA to evaluate our performance as compared to other companies in our industry that have different financing and capital structures and/or tax rates.  In addition, we use EBITDA in evaluating acquisition targets.

Adjusted EBITDA is defined as EBITDA as further adjusted for certain cash and non-cash charges as specified in our revolving credit facility and is used in several of the covenants in that facility.  Adjusted EBITDA plus acquisition costs further adjusts Adjusted EBITDA to add back certain non-recurring costs incurred in connection with the IRP acquisition that may not reflect the trend of future results.  We believe that Adjusted EBITDA plus acquisition cost presents a useful measure of our ability to service and incur debt on an ongoing basis.

EBITDA, Adjusted EBITDA, Adjusted EBITDA plus acquisition costs are not recognized terms under GAAP and are not an alternative to net income, operating income or any other performance measures derived in accordance with GAAP or an alternative to cash flow from operating activities as a measure of operating liquidity.  Because not all companies use identical calculations, this presentation of EBITDA, Adjusted EBITDA, Adjusted EBITDA plus acquisition costs may not be comparable to other similarly titled measures of other companies.  Additionally, EBITDA, Adjusted EBITDA, Adjusted EBITDA plus acquisition costs are not intended to be a measure of free cash flow for management’s discretionary use, as they do not reflect certain cash requirements such as tax payments, interest payments and other contractual obligations.

CONTACT:

James River Coal Company
Elizabeth M. Cook
Director of Investor Relations
(804) 780-3000