Business
Highlights
 Coal
Production Overview
Coal fuels about 49% of electrical generation in the United States
- Natural Gas 21%
- Nuclear 20%
- Hydroelectric 6%
- Other renewables 3%
- Other 1%
The country's abundant recoverable coal reserves of over
262 billion tons help to provide a lower-cost energy source
and offer U.S. energy independence
- Coal production in the U.S. in 2009 was approximately
1.1 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, which have dropped recently, 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 7th largest coal producer nationwide as of December
31, 2009, delivering 34.1 million tons of coal in
2009
NAC has 2.2 billion tons of coal reserves, including
Unconsolidated
Mining Operations, of which 1.2 billion tons
are committed to current customers as of December 31, 2009
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
Six Unconsolidated
Mining Operations (Louisiana, 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 customer; non-recourse
to NAC
- No coal market price risk
- Long-term contracts (2017-2045)
- Contract expiring in 2017 may be extended for four additional periods of five years, or until 2037, at NAC's option
- 2009 deliveries of 26.5 million tons
- Three of these mining operations are in the development stage and therefore do not mine or deliver coal
- Demery Resources Company
- Approximately 300,000 to 400,000 tons of coal annually for a new customer, with initial deliveries expected to commence in late 2010
- Camino Real Fuels
- Approximately 2.7 million tons of coal annually for a new customer, with initial deliveries expected to commence in 2012
- Caddo Creek Resources Company
- Approximately 650,000 tons of coal annually for a customer that currently purchases coal from The Sabine Mining Company, with initial deliveries expected to commence in 2013
Two Consolidated
Mining Operations (Texas and Mississippi)
- Mississippi Mine
- 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
- Contract expires in 2010. NAC intends to respond to customer's "Request for Proposal" to operate the mine beyond 2010
- Contracts extend from 2010-2032
- 2009 deliveries of 6.9 million tons
In late 2009, NAC sold the Red River Mining Company in Louisiana. During 2009, Red River delivered 0.7 million tons of coal.
Eight 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
- 2009 deliveries of 3.6 million cubic yards
- Deliveries significantly lower in 2009 as a result of an unfavorable legal ruling that set aside NAC's customers' mining permits. New permits were issued in early 2010.
Other Income Streams
- Agreements to provide consulting services based on North American Coal’s mining expertise
- Mineral royalty streams from North American Coal’s non-operating properties
Outstanding Mining Skills
- Use of technology to increase efficiency
- Award-winning environmental protection and safety record
Future Mining Project Potential
- Potential for further coal 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
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