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Despite the increase in revenue, shipments and production, National Coal continues to operate in a net loss position. Net loss for the period was $7.7 million, compared to $2.2 million in the first quarter of 2005.
“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,” explained National Coal president Jon Nix.
However, Nix added, he is confident in the company’s quick recovery. “Accidents of this nature are a part of the coal mining industry and, in our case, we’re fortunate that its effects are temporary. We are executing an aggressive business plan and are still very much on point with regard to our long-term goals of sales growth and cost containment.”
In March of this year, a rock collapse damaged a highwall miner, resulting in three months of lost service and $1.8 million in repair expense. The company said it had hoped to recover some or all of this expense, but its insurance claim was denied.
In addition, National Coal changed its estimate of the useful lives of mining equipment from seven years to approximately three years, resulting in increased depreciation expense of $1.5 million compared to the same period in 2005.
The company also said it plans to open a surface mine, a highwall mine and an underground mine on its reserves on the New River Tract sometime this summer. Due to lower extraction costs and increased production, the company expects these new mines to add significantly to the profitability of the second half of 2006.
Last month, National Coal announced a move to the Nasdaq National Market, where its common stock would be traded under the same ticker symbol of NCOC. The company had been trading on the Nasdaq SmallCap Market since April of 2005.
With a payroll of more than 250 people, National Coal produces from two mines in Tennessee and four in Kentucky, selling steam coal to electric utilities in the southeastern portion of the US.
