Business
Highlights
 Coal
Production Overview
Coal fuels about 49% of the country's electrical generation
- Natural Gas 20%
- Nuclear 19%
- Hydroelectric 7%
- Fuel Oil 2%
- Other 3%
The country's abundant recoverable coal reserves of over
264 billion tons help to provide a lower-cost energy source
and offer U.S. energy independence
- Coal production in the U.S. in 2007 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 stay high
due to domestic supply limitations
Energy sector shows moderate growth, but growth could be
higher in coal industry if natural gas prices stay high and
coal gasification technology continues to develop
- 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 8th largest coal producer nationwide as of December
31, 2007, delivering 33.7 million tons of lignite coal in
2007
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, 2007)
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)
- 2007 deliveries of 26.9 million tons
Three Consolidated
Mining Operations (Louisiana, Texas and Mississippi)
- Louisiana and Mississippi Mines
- Fixed price with agreed cost 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)
- 2007 deliveries of 6.8 million tons
Six Limerock Dragline Mining Operations (Florida)
- Fixed fee or cost plus an agreed pre-tax profit per cubic yard of limerock removed from quarry,
including annual price escalator
- 2007 deliveries of 37.6 million cubic yards
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 for other utilities
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