National Coal Corp.

1
National Coal Corp.

• McCloskey
• Coal USA
• June 27, 2007

2
Forward-Looking Information

• This presentation contains forward-looking
  statements that include information relating to
  future events and future financial and operating
  performance. Examples of forward looking
  statements include the projected production,
  revenues, profitability and cash flows from new
  mines opened on the New River Tract.
  Forward-looking statements should not be read as
  a guarantee of future performance or results, and
  will not necessarily be accurate indications of
  the times at, or by which, that performance or
  those results will be achieved. Forward looking
  statements are based on information available at
  the time they are made and/or managements good
  faith belief as of that time with respect to
  future events, and are subject to risks and
  uncertainties that could cause actual performance
  or results to differ materially from those
  expressed in or suggested by the forward-looking
  statements. Important factors that could cause
  these differences include, but are not limited
  to
• the worldwide demand for coal
• the price of coal
• the price of alternative fuel sources
• the supply of coal and other competitive factors
  
• the costs to mine and transport coal
• the ability to obtain new mining permits
• the costs of reclamation of previously mined
  properties
• the risks of expanding coal production
• the ability to bring new mining properties
  on-line on schedule
• industry competition
• our ability to continue to execute our growth
  strategies and
• general economic conditions.
• These and other risks are more fully described in
  the Companys filings with the Securities and
  Exchange Commission including the Companys most
  recently filed Annual report on Form 10-K and
  Quarterly Reports on Form 10-Q, which should be
  read in conjunction herewith for a further
  discussion of important factors that could cause
  actual results to differ materially from those in
  the forward-looking statements.  Forward-looking
  statements speak only as of the date they are
  made.  You should not put undue reliance on any
  forward-looking statements.  We assume no
  obligation to update forward-looking statements
  to reflect actual results, changes in assumptions
  or changes in other factors affecting
  forward-looking information, except to the extent
  required by applicable securities laws.  If we do
  update one or more forward-looking statements, no
  inference should be drawn that we will make
  additional updates with respect to those or other
  forward-looking statements.

3
McCloskey Coal USA

• How it Looked from the Street
• How it Looks in the Cockpit
• Daniel Roling
• President CEO
• National Coal Corp.

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McCloskey Coal USA

• From the Street
• The Coal Industry looked different I am sure
  that is not a big surprise
• My perception was that the industry was changing
• Consolidation would bring producer discipline,
  reinvestment, and profitability
• Gross over supply and excess capacity were just
  about gone
• Large producers would level the playing field
  with the large customers
• Transportation of coal would always be an issue
  given the existing oligopoly for the
  transportation of coal
• Also, the coal industry seemed to be divided into
  various camps
• The Private companies and the Public companies
• The Small companies and the Large companies
• The well managed companies and the not so well
  managed companies
• But I was a firm believer in the thesis that
  consolidation was good for the industry, and
  therefore, for all of the participants
• In Summary I was bullish on the Coal Industry

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McCloskey Coal USA

• From the Cockpit
• The coal industry is in a rapidly changing
  transition period
• Consolidation is occurring
• A number of acquisitions have been announced
  recently
• Cleveland Cliffs buying PinnOak Resources
• CONSOL Energy buying AMVEST Corporation
• Alpha Natural Resources buying assets from Arch
  Coal
• National Coal buying Mann Steel Products
• But De-Consolidation is also occurring
• Peabody Energy spinning out Patriot Coal
• Magnum Coal created out of assets mainly from
  Arch Coal

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McCloskey Coal USA

• From the Cockpit continued
• Coal remains an over supplied commodity without
  industry leadership or discipline
• The days of over supply and excess capacity are
  not gone
• Major coal companies utilization rates are near
  capacity
• Utility customer coal stockpiles are near five
  year highs
• Clearly, supply is once again exceeding demand
• Large coal producers are not leveling the playing
  field with large customers
• Volume remains their driver with production
  targets being more important than profitability
• It appears that small companies have more
  flexibility, or willingness, to adjust production
  than the large producers

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McCloskey Coal USA

• From the Cockpit continued
• In Summary I remain bullish on coal because
• I believe demand will exceed supply in the not
  too distant future
• During 2006 supply exceeded demand, but during
  2007 demand will exceed supply as a result of
• mine closures
• Increased electricity generation
• Weak US Dollar imports are declining and
  exports are increasing
• Strong International demand for coal, China is
  now a net importer
• Inventories have peaked
• Consolidation is occurring and it is positive
• During 2006 the top 10 producers represented 77
  of total coal production versus only 33 during
  1980

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McCloskey Coal USA

• How many of these names do you recognize?

Source Keystone Coal Industry Manual
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McCloskey Coal USA

• Consolidation is happening
• The Keystone Coal Industry Manual has shrunk by
  half

Source EIA, NMA
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McCloskey Coal USA

• Perception versus the Reality about Consolidation
  in the Coal Industry
• Perception
• The perception about the coal industry is that
  consolidation is occurring
• There is constant discussion about MA activity
• Some of it rumor, some of it fact some of it
  friendly, some of it hostile
• Reality
• A significant amount has already occurred
• The top 10 producers now account for 77 of
  production
• The top 10 producers accounted for only 33 of
  production during 1980
• But more needs to happen because
• Coal producers continue to out number customers
  by a significant amount
• Consolidation in the utility sector has been very
  significant
• Consolidation in the transportation sector has
  also been significant

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McCloskey Coal USA

• Perception versus the Reality in the Coal
  Industry
• Perception
• There is plenty of coal
• Reality
• Yes there is, but not all of it can be mined
  economically
• Perception
• Coal is fungible, substitution is easily done
  without consequences
• Reality
• Its not, and there are consequences
• Issues include de-rating of output, increased
  maintenance,
• non-performance e.g., fusion
• Perception
• Someone will always produce the coal
• Reality
• Not true, a number of producers have exited the
  business and others are on the verge of exiting
  it
• Capital reinvestment in the industry has been
  lacking during the past decade

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McCloskey Coal USA

• Central Appalachia (CAPP)
• An important area for coal reserves
• A major region containing high quality reserves
• But, the economic reserve base is declining
• Also, the production base is declining with
  increasing costs
• Deteriorating mining conditions, e.g., thinning
  seam thickness
• Higher costs associated with new safety
  regulations
• Higher operating costs due to increasing cost of
  supplies, e.g., steel diesel
• Production will continue to decline, possibly to
  180 million tons by 2010
• Reversal of this trend is a function of customer
  demand and prices
• CAPP is in need of consolidation, it is long
  overdue
• There are too few customers relative to the
  supply of producers
• Supply continues to exceed demand as producers
  focus on volume
• The last ton produced sets the stage for all tons
  sold

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McCloskey Coal USA

• Central Appalachian (CAPP) Coal Production peaked
  during 1997 at 287million tons, but declined to
  232 million tons during 2006
• Through May 2007 CAPP production has declined
  approximately 9 versus the prior year period to
  about 92 million tons
• Our estimate for 2007 CAPP production is only 214
  million tons, and still declining

Source Energy Publishing
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McCloskey Coal USA

• Inventories are close to the five-year high set
  during May of 2002
• Producers are contributing to the over-supply
  with their focus on volume

Source EIA
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McCloskey Coal USA

• Supply and Demand always set the price
• Over supply usually leads to higher inventories
  and reflects a weak market
• Lower inventory levels usually reflect a tighter
  market and strong demand
• The inverse relationship between price and
  inventory remains consistent

Source Argus, EIA Coal Pricing Big Sandy CSX
Rail, 12,500 Btu/lb, 2.0 lbs SO2
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McCloskey Coal USA

• National Coal Business Strategy
• Focus on safety and environmental stewardship
• Improve profitability cash flow
• Improve production efficiencies
• Increase production and develop reserves
• Continue to develop strong customer relationships
• Growth
• Organic
• Acquisition

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McCloskey Coal USA

• Revenue EBITDA
• Revenue has increased strongly during the past
  three years from 17M to 87.5M
• EBITDA declined during 2006 along with the price
  of coal

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McCloskey Coal USA

• Reduce Costs
• Average Cost-of-Sales of 48.31 during 2006 was
  primarily due to the three capital projects that
  were completed but then idled Mine 17, Baldwin
  preparation facility, and the short-line
  railroad.

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McCloskey Coal USA

• Reduced Operating Costs
• When market conditions improve, National Coal is
  able to expand production by utilizing existing
  preparation and load-out facilities to leverage
  fixed costs and reduce production costs.
• We will further reduce the average cost of
  production by maximizing utilization of highwall
  miners our lowest cost mining method available.
• As a company we will also maintain tight control
  on the cost and volume of coal purchased from
  third parties and will opportunistically purchase
  coal shipments at a lower cost to fulfill sales
  commitments.
• In February 2006, we purchased a second highwall
  miner on the Straight Creek Tracts in
  Southeastern Kentucky.
• National Coal acquired and renovated a 42-mile
  Tennessee rail line leading directly into its
  owned reserves on the New River Tract, with
  service to its Smoky Junction and Baldwin load
  out facilities.
• As a result of these improvements, it is
  estimated National Coal increased shipping
  capacity from 40,000 to more than 250,000 clean
  tons a month, may reduce transportation costs
  from 8 to 3 a ton, and may lower prep and wash
  plant costs by up to 50 in Tennessee.

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McCloskey Coal USA

• Increase Profitable Production Efficiency
• The addition of the 42-mile railroad provided
  rail access to proven and owned reserves that
  were previously uneconomical to mine due to high
  trucking costs and road limitations. It also
  provides National Coal with an opportunity to
  become competitive in the area of transportation,
  as a dedicated rail line is more cost effective
  for our customers, and should help in
  renegotiating expired transportation contracts.
• Suspending activity at three facilities and
  focusing on developing production from lower-cost
  sites, such as the highwall mines, will increase
  the profitability of each ton produced.
• We have permits in place to open or re-open five
  coal mines close to our current operations
• We have one inactive unit train coal loading
  facility, and two inactive coal preparation
  facilities
• Lastly, our short line railroad is fully
  operational, but not in service at present

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McCloskey Coal USA

• Average Cost of Sales Average Sales Price
• Average Cost-of-Sales of 48.31 for 2006
• Average sales price of 52.86 for 2006

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McCloskey Coal USA

• No Legacy Costs Good Prices
• National Coal is 100 union-free and therefore is
  not burdened with union pension liabilities or
  post-retirement medical benefit obligations.
• Our relatively new status within the marketplace
  means we are not held back by long-term contracts
  at prices significantly below the market in
  fact, our current supply contracts average 50.86
  per ton for 2007, which is comparable to our
  closest competitors.
• Alpha Natural Resources calculated as average
  realized price all others average committed
  price

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McCloskey Coal USA

• Committed Tons and Prices
• National Coal has not locked in any meaningful
  amounts of coal to be sold under contract for
  2008 and beyond.
• For 2007, we have approximately 1,402,500 tons of
  committed and priced sales volumes at an average
  contract price of 50.86 per ton.
• For 2008, we have approximately 210,000 tons of
  committed and priced sales volumes at an average
  contract price of 52.49 per ton.

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McCloskey Coal USA

• High Quality Well Positioned Reserves
• The Company engaged Marshall Miller Associates,
  Inc., an independent mining engineering firm, to
  evaluate its reserves.
• As of December 31, 2006, NCOC controls
  approximately 36.2 million tons of proven and
  probable reserves that are recoverable at this
  time.
• The study found that the reserves are primarily
  made up of high Btu, low and mid-sulfur deposits,
  and at present have a lifetime of 10 to 20 years.
• Our strong reserve locations provide freight cost
  advantage and pricing flexibility.
• Over 65 of total acreage on which these reserves
  are located is owned by NCOC which is a distinct
  advantage over leasing because there are no
  royalty payments on owned reserves.
• The Southeastern part of the United States is the
  largest electricity market in the country.

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McCloskey Coal USA

• Growth Strategy Organic Acquired
• As part of its ongoing growth strategy, National
  Coal has plans to opportunistically acquire
  nearby mines and coal reserves to leverage its
  investments in existing railroad and wash plant
  facilities.
• It is the natural acquirer of contiguous reserves
  and of existing, synergistic operations that have
  proximity to its current operations.
• Therefore, the Companys ongoing plans to acquire
  available Central Appalachian properties through
  a combination of financing strategies and
  operational initiatives, is anticipated to
  contribute positively to the current trend toward
  consolidation, and may contribute to future
  growth.
• National Coal has purchased an exploration rig to
  accelerate exploration and further expand proven
  and probable coal reserves.
• Capital expenditures the last three years totaled
  71 million, setting the stage for strong organic
  growth in a strong coal market
• Capital expenditures for 2007 are budgeted for 5
  million

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McCloskey Coal USA

• National Coal purchases Mann Steel Products
• We entered into a stock purchase agreement with
  Mann Steel Products to acquire 100 of the stock
  of the company for 55 million
• The acquisition is expected to close by the end
  of the third quarter
• The acquisition will add about 1 million tons of
  capacity to our existing annual capacity of about
  2 million tons
• Production currently is estimated at about 1
  million tons
• Mann Steel Products has three active surface
  mines in Alabama and produces steam and
  industrial coal for the domestic market

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McCloskey Coal USA

• National Coal is an Enduring Supplier
• High Quality and Well Positioned Reserves
• Close Proximity to Blue Chip Customers
• Diversified Asset Base
• Commitment to Safety and Environment
• Strong Leadership

On a dry basis
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McCloskey Coal USA

• National Coal Supplies the Southeast
• At present, National Coal has contracts in place
  with these neighboring utilities to sell
  approximately 2.0 million tons of coal into 2010.
  
• We are actively pursuing new contracts in the
  market at present.

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McCloskey Coal USA

• Becoming A Leader
• National Coal remains a new, innovative and
  growing company with a bright future ahead. Our
  youth provides us with the opportunity to carry
  out a fresh approach to coal production.
• Energy demand is anticipated to remain strong in
  the developed world and increase in emerging
  markets. The infrastructure we have built over
  the last three years will support us as we
  capitalize on the opportunity available in the
  Southeastern U.S.
• Consolidation in the coal industry is forecast to
  continue and may even accelerate given the recent
  weakness in prices and valuations. We are in an
  advantageous position to acquire continuous
  properties and take to advantage of this market
  phenomenon.
• National Coals strong reserve position will
  serve the company well going forward.
• Coal is the economic fuel for electricity
  generation today, tomorrow and well into the
  future. Companies like National Coal that are
  prepared to supply coal at competitive prices
  will lead the industry into the next decade.

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National Coal Corp.

• McCloskey
• Coal USA
• June 27, 2007