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NATIONAL COAL CORP. REPORTS
FIRST QUARTER 2008 RESULTS
- Sale of Straight Creek property for $11.0 million in cash; the Company used $10.0 million of
the proceeds to repay its 12%, $10 million senior secured term
loan.
- As a result of this transaction, an additional $7.0 million
in cash will return to the Company, and $3.6 million of
reclamation liabilities and $2.6 million of equipment related debt
was assumed by buyer.
- First quarter revenues
increased 88% to $35.7 million from $19.0 million during the
year-ago quarter.
- Tons of coal sold
increased 62% to 596,732 tons, up from 368,332 tons during the year-ago quarter.
- At March 31, 2008,
National Coal had cash and cash equivalents of approximately $10.0
million, and cash flows provided by operations of approximately
$2.7 million.
- On May 12, 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 gross
proceeds of $10,843,800. Daniel Roling, Michael Castle, and
William Snodgrass, executive officers of the Company, purchased
55,000 shares in the offering; proceeds will be used to accelerate
growth plans.
Knoxville, Tenn. – (May 15, 2008)
– National Coal Corp. (Nasdaq: NCOC), a Central and Southern
Appalachian coal producer, reports that for the period ended March 31,
2008, it achieved total revenues of $35.7 million based primarily on
the sale of 596,732 tons of coal. In the same prior-year period,
National Coal generated revenues of $19.0 million primarily through the
sale of 368,332 tons of coal.
On March 31, 2008, National Coal completed the sale of its
Straight Creek assets located in Kentucky for $11.0 million in cash,
and the buyer assumed $3.6 million in reclamation liabilities and $2.6
million in equipment related debt. Further, an additional $7.0 million
in restricted cash will be returned to the Company. The sale included
property, plant, equipment, and mine development with a net book value
of approximately $16.1 million. National Coal used a portion of the
proceeds from this transaction to repay the 12%, $10.0 million senior
secured credit agreement entered into in October 2006, which otherwise
would have matured in December 2008.
Daniel A. Roling, President
and CEO of National Coal, said, “This transaction was a critical
portion of our results for the first quarter 2008, which should not be
overlooked. It is indicative of our desire to protect the interests of
our shareholders as we leverage our best resources to meet demand in
the strengthening market for coal. Following this transaction, we look
forward to tapping into the improved market conditions by restarting a
number of our idled facilities as well as open new facilities, which
will significantly contribute to our future results. That said, as
previously disclosed in our 2007 year-end release, the first quarter
presented its own challenges.”
For the three months ended
March 31, 2008, National Coal reported a net loss of $10.7 million and
a negative EBITDA of $0.8 million, versus a net loss of $6.0 million
and a negative EBITDA of $0.6 million reported in the year-ago quarter.
Roling explained that the losses were attributable to a number
of factors. “The closing on the Straight Creek transaction as well
as a number of anticipated operational difficulties experienced during
the first quarter influenced our results. We believe that the majority
of the operational difficulties experienced during the first quarter
have been resolved. In addition, we have engaged in several strategic
initiatives designed to improve liquidity, focus on organic growth, and
prove-up additional resources. The results of these efforts should, in
some cases, become visible as soon as the second quarter of
2008.”
As previously disclosed in
our year-end release, first quarter 2008 operations have been impacted
by a number of events including heavy rains in both Tennessee and
Alabama, cessation of operations due to the ending of an agreement with
a contract miner – which has since been resolved – and the
breakdown of the Company’s dragline in Alabama which may remain
idle through the second quarter.
During the period ended
March 31, 2008, management successfully negotiated a new contract for
future sales and renegotiated an existing coal supply agreement
resulting in an increased selling price per ton. The impact of the new
and renegotiated sales contracts are expected to begin during the
second quarter, but become fully effective during the second half of
the year. Management is presently in discussions with other customers
on other coal supply agreements and intends to pursue additional
opportunities as they arise during the remainder of 2008.
Also in the three months ended March 31, 2008, the Company
invested approximately $0.8 million in equipment and mine development.
Total estimated capital expenditures for 2008 are $16.0 million for
growth projects and $1.2 million to maintain existing assets.
Outlook
The Company’s
operating plan for the remainder of 2008 includes cash receipts from
sales committed under contracts or open purchase order arrangements
with long time customers and the release of restricted cash from the
sale of its Kentucky properties. Further, On May 12, 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 gross proceeds to the
Company of $10,843,800. Daniel Roling, Michael Castle, and William
Snodgrass, executive officers of the Company, purchased 55,000 shares
in the offering. Management intends to use the net proceeds received
from the sale to facilitate the acceleration of development of new
mines as well as for the acquisition of additional equipment.
Given the current strong market for coal, National Coal plans to
increase coal production through internal expansion. Accordingly,
the Company intends to make approximately $16 million in capital
expenditures during 2008 to expand operations, and an additional
approximately $1.2 million to maintain existing assets. Daniel Rolling
stated, “It is our intention to rapidly increase our production
from the 1.4 million ton level achieved during 2007, to 2.4 million
tons in 2008, and achieve a 3.0 million ton-per-year run-rate by
year-end 2009. By year-end 2010, it is our intention to produce
at a 5.0 million ton run rate.”
About National Coal Corp.
Headquartered in Knoxville,
Tenn., National Coal Corp., through its wholly owned subsidiary,
National Coal Corporation, is engaged in coal mining in East Tennessee,
and through its wholly owned subsidiary, National Coal of Alabama, is
engaged in coal mining in Alabama. Currently, National Coal
employs about 350 people. National Coal sells steam coal to electric
utilities and industrial companies in the Southeastern United
States. For more information and to sign-up for instant news
alerts visit www.nationalcoal.com.
Information about Forward
Looking Statements
This release contains
“forward-looking statements” that include information
relating to future events and future financial and operating
performance. Examples of forward looking-statements include
anticipated benefits of capital improvements and new mines and an
anticipated strengthening coal market in the future.
Forward-looking statements should not be read as a guarantee of future
performance or results, and will not necessarily be accurate
indications of the times at, or by which, that performance or those
results will be achieved. Forward-looking statements are based on
information available at the time they are made and/or
management’s good faith belief as of that time with respect to
future events, and are subject to risks and uncertainties that could
cause actual performance or results to differ materially from those
expressed in or suggested by the forward-looking statements. Important
factors that could cause these differences include, but are not limited
to: (i) the worldwide demand for coal; (ii) the price of coal; (iii)
the price of alternative fuel sources; (iv) the supply of coal and
other competitive factors; (v) the costs to mine and transport coal;
(vi) the ability to obtain new mining permits; (vii) the costs of
reclamation of previously mined properties; (viii) the risks of
expanding coal production; (ix) the ability to bring new mining
properties on-line on schedule; (x) industry competition; (xi) our
ability to continue to execute our growth strategies; and (xii) general
economic conditions. These and other risks are more fully
described in the Company’s filings with the Securities and Exchange
Commission including the Company’s most recently filed Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q, which should be
read in conjunction herewith for a further discussion of important
factors that could cause actual results to differ materially from those
in the forward-looking statements. Forward-looking statements
speak only as of the date they are made. You should not put undue
reliance on any forward-looking statements. We assume no
obligation to update forward-looking statements to reflect actual
results, changes in assumptions or changes in other factors affecting
forward-looking information, except to the extent required by
applicable securities laws. If we do update one or more
forward-looking statements, no inference should be drawn that we will
make additional updates with respect to those or other forward-looking
statements.