Business Highlights

Coal Production Overview

Coal fuels about 49% of electrical generation in the United States

• Natural Gas 21%
• Nuclear 19%
• Hydroelectric 6%
• Fuel Oil 2%
• Other 3%

The country's abundant recoverable coal reserves of over 263 billion tons help to provide a lower-cost energy source and offer U.S. energy independence

• Coal production in the U.S. in 2008 was approximately 1.2 billion tons
• Coal is one of the lowest cost fuels for base-load electric power generation‚ considerably less expensive than natural gas or oil
• Natural gas prices are likely to continue to rise as more expensive domestic resources are used to meet demand

Energy sector shows moderate growth.

• Coal will continue to be an important energy source as new technologies, including coal gasification, show promise in cost-effectively capturing CO₂

NAC Focuses on Lignite Coal

NAC is the nation's largest miner of lignite coal, and the 9th largest coal producer nationwide as of December 31, 2008, delivering 33.0 million tons of lignite coal in 2008

NAC has 2.3 billion tons of lignite coal reserves, including unconsolidated project mining operations, of which 1.2 billion tons are committed to current customers as of December 31, 2008

Click on the diagram at right to see a comparison of lignite coal to other types of coal

Diverse Mining Locations

Click on the map at right to see NAC's mine locations

Dependable Financial Performance

• Steady operating income and cash flow before financing activities
• High returns on equity

Minimal Exposure to Coal Prices

• Contracts structured to minimize exposure to fluctuations in coal prices
• Long-term agreements establish mining services NAC will perform and mechanisms for compensation

Stable Operating Income Streams

Three Unconsolidated Project Mining Operations (North Dakota and Texas)

• Cost plus an agreed pre-tax profit or management fee per ton
• Modest up front equity investment by NAC
• Debt financing guaranteed by utility customer; non-recourse to NAC
• No coal market price risk
• Long-term contracts (2012-2045)
  • Contract expiring in 2012 may be extended for five additional periods of five years, or until 2037, at NAC's option
• 2008 deliveries of 26.3 million tons

Three Consolidated Mining Operations (Louisiana, Texas and Mississippi)

• Louisiana and Mississippi Mines
  • Fixed price with agreed cost and price escalators
  • NAC assumes operating risks; greater initial capital investment and greater profit opportunity
  • Financing by NAC and not the customer
• Texas Mine
  • Management fee contract with performance incentive
  • Financing provided by customer; non-recourse to NAC
  • No coal market price risk
• Long-term contracts (2010-2032)
• 2008 deliveries of 6.7 million tons

Seven Limerock Dragline Mining Operations (Florida)

• Cost plus an agreed pre-tax profit or fixed fee per cubic yard of limerock removed from quarry
• 2008 deliveries of 22.0 million cubic yards

Other Income Streams

• Engagements to provide consulting services based on North American Coal’s mining expertise
• Mineral royalty streams from North American Coal’s non-operated properties
  

Outstanding Mining Skills

• Use of technology to increase efficiency
• Award-winning environmental protection and safety record

Future Mining Project Potential

• Potential for further lignite mining projects
• Potential for additional limerock dragline or other natural resources mining projects

New Project Opportunities

• Pursue various projects related to new coal-based energy technologies, including coal-to-liquids conversion, coal gasification and other clean coal technologies
• Pursue managing coal mining projects worldwide