• Second quarter revenues increased 67% to $31.6 million from $18.9 million during the year-ago quarter; revenue has increased at a compound annual growth rate of 63% per year since the Company was founded.
• Tons of coal sold increased 23% to 458,245 tons, up from 372,341 tons during the year-ago quarter.
• In Tennessee, the Baldwin preparation plant and loading facility and one underground mine were brought back into production during the second quarter, and an additional underground mine will be re-started early in the third quarter.
• In Alabama, the Crescent Valley surface mine began production on July 1, 2008, work started on the new Davis Creek mine, and additional areas were permitted and bonded at two existing surface mines.
• National Coal of Alabama�s dragline was put back into service in late July 2008 and is expected to increase production by approximately 30,000 tons per month.
• In two separate transactions, one in May for $0.5 million in cash and one in August for $7.0 million, the Company acquired approximately 1,500 acres in Eastern Tennessee. The August purchase consisted of $2.0 million in cash and $5.0 million in shares (756,430) of the Company�s common stock. These tracts have approximately 3.7 million tons of recoverable high-quality coal that is adjacent to other mineral tracts controlled by the Company.
• During the quarter, the Company redeemed $10.0 million in principal amount of its 10.5% Senior Secured Notes due December 15, 2010 for common stock, reducing the outstanding balance to $42.0 million.

Knoxville, Tenn. � (August 14, 2008) � National Coal Corp. (Nasdaq: NCOC), a Central and Southern Appalachian coal producer, reports that for the period ended June 30, 2008, it achieved total revenues of $31.6 million based primarily on the sale of 458,245 tons of coal.  In the same prior-year period, National Coal generated revenues of $18.9 million primarily through the sale of 372,341 tons of coal. For the three months ended June 30, 2008, National Coal reported a net loss of $9.9 million and a negative EBITDA of $2.1 million, versus a net loss of $6.5 million and a negative EBITDA of $1.0 million reported in the year-ago quarter.

Daniel A. Roling, President and CEO of National Coal, said of the net loss, �These results were primarily attributable to the dragline breakdown, which impacted second quarter revenues by approximately $5.5 million and reduced production by about 80,000 tons. The full impact of the dragline being out of service for five months was a loss in production of about 110,000 tons, and an estimated impact on revenues of about $7.7 million. The dragline is the most cost efficient piece of equipment we use on our surface mines in Alabama. When it was taken out of service, the Company was forced to utilize more truck and loader equipment spreads in applications that are typically more appropriate for dragline operations. This necessitated our need to get additional properties permitted and bonded ahead of schedule. However, the dragline went back into full production on July 28 on the newly expanded Poplar Springs surface mine.  Resuming this production, in addition to the production coming from the newly opened Crescent Valley and Davis Creek surface mines in Alabama and the opening of two underground mines in Tennessee, should have a significant and positive impact on our third quarter results.�

The Company also incurred increased costs in several areas including fuel, transportation, explosives and labor. The cost of fuel more than doubled during the past year, while the cost of explosives increased approximately one-third. In addition, the cost of labor increased and is anticipated to continue to rise.

Further, production, and therefore costs, continues to be impacted by the ongoing and increased level of regulatory oversight. In addition to the $5.5 million impact on revenues related to the dragline breakdown, the Company recorded expenses totaling approximately $2.1 million related to other specific items that were not associated with ongoing production during the quarter. These items include $0.9 million in allowances and contingency reserves, $0.6 million associated with the early retirement of debt, and $0.6 million associated with the debt equity swaps. For the six months ended June 30, 2008, these other specific items totaled $2.6 million, which included $0.9 million in allowances and contingency reserves, $1.2 million associated with the early retirement of debt, and $0.5 million associated with the debt equity swaps.

Higher Production

Roling said production is otherwise increasing in line with Company expectations, which have been higher this year due to increased demand. �Because we had mines permitted and bonded in Tennessee, we were able to bring on additional production without making significant added investments in infrastructure improvements. When faced with unexpected challenges, the Company was in a strong position that did not require it to back down from planned operational improvements.�

In May, the Company acquired, for $0.5 million, approximately 1.4 million tons of recoverable high-quality reserves, and on August 8, 2008, the Company purchased, for $7.0 million, an adjoining tract that includes an additional 2.3 million tons of recoverable high-quality reserves. Both of these tracts are located in Eastern Tennessee and are adjacent to property already controlled and permitted by the Company.  The $7.0 million purchase price was paid with $2.0 million in cash and $5.0 million through the issuance of 756,430 shares of the Company�s common stock.  The addition of these tracts contributes to the Company�s objective to add significant, high-quality, economically recoverable reserves that are strategically located near other National Coal properties. In addition, Roling said, �It is highly probable there is potential to significantly increase the reserve base on these newly acquired tracts through additional exploration.�

During the second quarter, the Company reached an agreement and closed on $1.2 million of used surface mining equipment in exchange for $0.1 million cash, a $0.24 million note payable, and the assumption of $0.83 million in equipment loans from Mallards Creek Energy, Inc.

Other Developments

During the three months ended June 30, 2008, the Company completed the sale of 2,332,000 shares of common stock at a price of $4.65 per share in a private placement for approximately $10.8 million. Daniel Roling, Mike Castle, CFO, and Bill Snodgrass, COO, participated in the offering.

Since the closing on March 31, 2008 of its Straight Creek assets in Kentucky, the Company has received approximately $5.0 million of cash previously pledged to secure reclamation bonds, of which $4.0 million was received during the second quarter. Additionally, the sale of the Straight Creek mining operations relieved the Company of approximately $3.6 million in reclamation liabilities, and approximately $2.6 million of equipment related debt. After a negative working capital adjustment of approximately $0.3 million, this transaction resulted in a loss of approximately $0.4 million, which is reflected in the Company�s condensed consolidated statement of operations for the six months ended June 30, 2008.

In early 2008, management successfully negotiated new contracts for future sales and renegotiated an existing coal supply agreement resulting in increased selling prices per ton. The impact of the new and renegotiated sales contracts began during the second quarter, but will become more evident during the second half of the year as those shipments increase. In addition, the Company is in the process of reopening its captive railroad to facilitate the shipping of this increased volume, which is scheduled to be processed at the Baldwin facility. Both the railroad and the Baldwin facility are expected to become fully operational during the third quarter of 2008. Management is presently in advanced discussions with other customers on other coal supply agreements and intends to pursue additional opportunities as they arise during the remainder of 2008.

Outlook

National Coal is in the process of opening a number of new production facilities, as well as reopening facilities that had been previously idled.