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National Coal Shares Fall

Posted on: Monday, 15 May 2006, 15:07 CDT

NEW YORK - National Coal Corp. stock fell Monday in the first day of trading after the coal mining company reported an increase in its net loss on repercussions of a mining accident in March.

Shares of National Coal fell 69 cents, or 7.3 percent, to $8.75 in midday trading on the Nasdaq Stock Market. Shares traded as low as $7.40 earlier Monday. The 52-week low is $5.45 set June 27.

The Knoxville, Tenn.-base company after the market closed Friday said it lost $7.7 million, or 57 cents a share, on revenue of $20 million in the first quarter.

In the same period a year earlier, it lost $2.2 million, or 18 cents a share, on revenue of $12.6 million.

Adjusted earnings showed a loss of $1.97 million down from breakeven for the prior-year quarter.

"The increased net loss is primarily attributable to an accident that occurred with one of our highwall miners in March and all of the consequences of that accident, including significant repair costs and loss of production," said Jon Nix, the company's chief executive.

A highwall mining system uses a continuous miner which extracts coal and removes it via an auger.

The rise in sales was offset when, in March, one of the company's two highwall miners was damaged by a rock collapse.

The accident caused roughly three months of lost service and $1.8 million in repairs. Repairs to the highwall miner were recorded as a cost of sales in the quarter. National Coal's insurance claim was also denied. Management said it will take legal action against the insurance provider.

The highwall miner is expected to be back in place and operating at the start of the third quarter, but the lost production had a "significant impact" on profitability due to a 34 percent loss of volume of lower cost coal from the fourth quarter.

Also, in April, the company changed its estimate of the useful lives of mining equipment from seven years to about three, resulting in an increase of $1.5 million in net losses for first quarter from the same period a year earlier.

National Coal also said three mines are expected to open in the next six months, adding 55,000 tons of coal per month to its production levels.

Source: Associated Press/AP Online

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