Alpha Natural Resources Divests Property in Kentucky and Interest in Lime Joint Venture, Expects $25 Million Pre-Tax Gain in Third Quarter

October 13, 2008 4:16 PM EDT

ABINGDON, Va., Oct. 13 /PRNewswire-FirstCall/ -- Alpha Natural Resources, Inc. (NYSE: ANR) has completed the sale of its majority interest in the Gallatin Materials lime joint venture and a non-strategic block of coal reserves in eastern Kentucky. Alpha expects that the two transactions will result in a pre-tax book gain in the company's fiscal third quarter of approximately $25 million, or approximately $15 million after tax.

Gallatin Materials

A private lime producer has purchased Gallatin Materials LLC and its lime manufacturing plant in Verona, Ky. The purchase price was not disclosed.

Kevin Crutchfield, Alpha's president, said that several lime producers had contacted Alpha earlier this year expressing interest in Gallatin Materials, which Alpha formed with its minority partners in late 2006. "At the time we were approached, Alpha was facing a decision to either commit considerable capital to expand Gallatin to a two-kiln operation or explore other options for the business," Crutchfield said. "One of the parties subsequently tabled a very reasonable offer, one that provided us with an excellent short-term return on the project, and we decided to accept it and exit the business."

Alpha had a 77.5 percent interest in the Gallatin joint venture and expects to record a pre-tax gain in the third quarter of approximately $14 million on the sale.

Kentucky May Property

Alpha has completed the sale of approximately 17.6 million tons of underground coal reserves in eastern Kentucky to a private coal producer for approximately $13 million in cash. Alpha expects to record a pre-tax gain on the sale of approximately $11 million in the third quarter.

The reserves were included in an estimated 73 million tons of reserves and other assets acquired from Progress Fuels Corp. in May 2006 for $23 million plus a $3.7 million adjustment for working capital. The reserve block being divested was isolated from Alpha's coal processing and transportation infrastructure and thus was never considered strategic.

Alpha's Enterprise Mining Co. LLC is completing infrastructure work and has begun initial production of coal from a 35 million-ton block of the Progress reserves. Production from the new EMC No. 9 underground mine is projected to ramp up to approximately one million tons next year and 1.7 million tons in 2010.

About Alpha Natural Resources

Alpha Natural Resources is a leading supplier of high-quality Appalachian coal to electric utilities, steel producers and heavy industry. Approximately 89 percent of the company's reserve base is high Btu coal and 82 percent is low sulfur, qualities that are in high demand among electric utilities which use steam coal. Alpha is also the nation's largest supplier and exporter of metallurgical coal, a key ingredient in steel manufacturing. Alpha and its subsidiaries currently operate mining complexes in four states, consisting of 58 mines feeding 11 coal preparation and blending plants. The company and its subsidiaries employ more than 3,600 people.

Forward Looking Statements

This news release includes forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on Alpha's expectations and beliefs concerning future events and involve risks and uncertainties that may cause actual results to differ materially from current expectations. These factors are difficult to predict accurately and may be beyond Alpha's control. The following factors are among those that may cause actual results to differ materially from our forward-looking statements: market demand for coal, electricity and steel; future global economic, capital market or political conditions; weather conditions or catastrophic weather-related damage; our production capabilities; the consummation of financing, acquisition or disposition transactions and the effect thereof on our business; our ability to successfully integrate acquired or developed operations with our existing operations and implement our business plans for these new operations; our plans and objectives for future operations and expansion or consolidation; our relationships with, and other conditions affecting, our customers; timing of changes in customer coal inventories; changes in, renewal of and acquiring new long-term coal supply arrangements; inherent risks of coal mining beyond our control; environmental laws, including those directly affecting our coal mining and production, and those affecting our customers' coal usage; competition in coal markets; railroad, barge, truck and other transportation availability, performance and costs; the geological characteristics of Central and Northern Appalachian coal reserves; availability of mining and processing equipment and parts; our assumptions concerning economically recoverable coal reserve estimates; our ability to obtain or maintain any necessary permits or rights; availability of skilled employees and other employee workforce factors; regulatory and court decisions; future legislation and changes in regulations, governmental policies or taxes; unfavorable government interventions in, or nationalization of, foreign investments; changes in postretirement benefit obligations; our liquidity, results of operations and financial condition; decline in coal prices; derivative contracts not accounted for as a hedge that are marked to market; indemnification of certain obligations not being met; continued funding of the road construction business and related costs; disruption in coal supplies; restrictive covenants in our credit facility indenture governing our convertible notes; sales of additional shares of our common stock; future conversions of any of the convertible notes; provisions in our certificate of incorporation and bylaws and the indenture for our convertible notes may discourage a takeover attempt even if doing so might be beneficial to our stockholders; certain terms of our convertible notes may adversely impact our liquidity; and our reported interest expense may increase due to a proposed accounting change for cash settled convertible debt instruments like our convertible notes; These and other risks and uncertainties are discussed in greater detail in Alpha's Annual Report on Form 10-K and other documents filed with the Securities and Exchange Commission. Forward-looking statements in this news release or elsewhere speak only as of the date made. New uncertainties and risks come up from time to time, and it is impossible for Alpha to predict these events or how they may affect the company. Alpha has no duty to, and does not intend to, update or revise the forward-looking statements in this news release after the date it is issued. In light of these risks and uncertainties, investors should keep in mind that the results, events or developments disclosed in any forward-looking statement made in this news release may not occur.

ANRG

SOURCE Alpha Natural Resources, Inc.

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