National Coal Corp. (Nasdaq: NCOC):

• Second quarter revenues increased 11.7% to $35.3 million from $31.6 million during the year-ago quarter.
• Tons of coal sold decreased 3.2% to 457,082 tons, from 472,216 tons during the year-ago quarter, with a significant drop of 24.1% in Alabama tonnage.
• Average price per ton increased 16.8% to $75.15 from $64.32 in the same year-ago quarter.
• For the six months ended June 30, 2009, net cash flow provided by operating activities was a positive $2.5 million versus a negative $5.8 million during the year-ago period.
• On July 21, 2009, National Coal of Alabama (NCA) defaulted on its $60 million credit facility, and as of August 3, 2009, the lender foreclosed on NCA. As of June 30, 2009, National Coal of Alabama accounted for approximately 56% of National Coal Corp.’s debt and liabilities, approximately 39% of its consolidated revenues for the six months then ended, and about 17% of its December 2008 total reserves.
• Pro Forma Balance Sheet and Statement of Operations for National Coal Corp. are attached.

National Coal Corp. (Nasdaq: NCOC), a Central and Southern Appalachian coal producer, reports that for the three months ended June 30, 2009, it achieved total revenues of $35.3 million based primarily on the sale of 457,082 tons of coal. In the same prior-year period, National Coal generated revenues of $31.6 million primarily through the sale of 472,216 tons of coal.

For the three months ended June 30, 2009, National Coal reported a net loss of $6.34 million or $0.19 per share versus a net loss of $9.07 million or $0.30 per share during the year-ago quarter. The Company also reported an improved and positive adjusted EBITDA of $2.3 million versus a negative adjusted EBITDA of $1.3 million reported in the year-ago quarter.

“These results include those of NCA, a subsidiary that suffered a significant decline in sales and an increase in costs in the second quarter, which resulted in foreclosure early in the third quarter,” says Daniel A. Roling, President and CEO of National Coal Corp. “However, as I have previously mentioned, National Coal Corp. and our other subsidiaries, which operate in Tennessee, will continue to operate independent of what has occurred in Alabama.”

“There has been much speculation and rumor associated with this transaction and what it will do to our Company,” says Roling. “While we are obviously disappointed we couldn’t meet the obligations of the credit facility, we can now report that the weakest part of our organization will no longer factor into our future performance.”

Effects of NCA on National Coal Corp.

National Coal Corp. acquired its Alabama operations in October 2007, financed principally through the issuance of $60 million in 12% Notes due 2012. On July 21, 2009, NCA defaulted on this obligation. On August 3, 2009, the holders of the 12% Notes due 2012 foreclosed on the outstanding capital stock of NCA. As a result, the entire debt obligation in default of $64.3 million has been classified as a current liability in the accompanying balance sheet at June 30, 2009.

On a Pro Forma basis as of June 30, 2009 National Coal Corp. Stockholders’ equity would be $3.8 million higher than reported.

National Coal Corp. – Pro Forma Tennessee Stand Alone Financial Results

• Second quarter revenues from Tennessee operations increased 35.2% to $22.6 million up from $16.7 million during the year-ago quarter.
• Tons of coal sold increased 15.0% to 290,508 tons up from 252,696 tons during the year-ago quarter.
• The average price per ton increased 21.8% to $74.81 from $61.42 in the same year-ago quarter.

The following results are based on assumptions that reflect the elimination of all assets and liabilities from the disposition of NCA, the gain on the sale as if it had occurred on June 30, 2009, and the elimination of all revenues and expenses of NCA. National Coal Corp. reports that for the period ended June 30, 2009, it achieved total revenues of $22.6 million based primarily on the sale of 290,508 tons of coal. In the same prior-year period, National Coal generated revenues of $16.7 million primarily through the sale of 252,696 tons of coal.

For the three months ended June 30, 2009, National Coal reported a net loss of $3.2 million or $0.09 per share versus a net loss of $5.2 million or $0.17 per share during the prior-year period.

“As a result of the improved pricing and volumes, the Company has begun to generate cash from its operating activities compared to the year-ago period,” says Daniel Roling, “However, our ability to continue to show improvement will be a function of our customers’ ability to receive the tonnage they have contracted to take. At present, we see no further deterioration from current levels.”

Roling explains, “Even though our balance sheet remains challenged, a result of the disposition of NCA is that our total debt has declined from $113.1 million to $47.7 million. Also, Stockholders’ deficit declines from a negative $8.0 million to a negative $4.2 million, and is anticipated to have a net positive adjustment in the third quarter as a result of the disposition of NCA.”

No creditor of NCA, including the holders of the 12% Notes due 2012, has any recourse to National Coal Corp. or its other subsidiaries including our Tennessee operating entities for any liabilities of NCA, including liabilities arising under the credit agreement. Therefore, the operations of National Coal Corp. and its other subsidiaries will continue independently of any actions taken with respect to NCA and its assets.

Outlook

“National Coal Corporation has a strong asset base and significant future organic growth potential,” says Roling. “The Company’s assets include a strategic reserve position of 65,000 contiguous acres where it owns all the coal mineral rights, two preparation plants, a railroad load-out facility, and a 42 mile short line railroad that connects to the Norfolk Southern main line. In addition, it owns another railroad load-out on the Norfolk Southern main line, and leases an additional 14,000 acres.”

“Looking towards the future, National Coal has a strong reserve position of about 34 million recoverable tons, with the potential to increase that through an active drilling program. At present, the Company is working towards obtaining additional permits for new operations. It is management’s belief that National Coal is well positioned operationally to significantly increase production through organic growth over the next five years, subject to market conditions.”

“The challenge facing National Coal is its ability to continue to show steady improvement in its operational performance, improve our liquidity, and strengthen our financial position. Also, lowering our costs is a key objective,” states Roling. “Costs are always a focus, but we are renewing our focus to reduce costs in all areas, including reduction in compensation for top management and members of our Board of Directors.”

During the remainder of 2009, management expects to spend approximately $1.0 million to $1.5 million to maintain existing assets in Tennessee. National Coal Corp. expects to report a gain on the disposition of NCA in the third quarter 2009 due to its negative equity position in NCA. (See footnotes to Pro-Forma Financial Statements.)

"As a result of shipping 568,585 tons from prior and new contracts during the first half, realized prices of $71.89/t were lower than those we anticipate receiving during the second half of the year. Tons committed under contract for the balance of the year total 617,886 tons at $74.45/t; the Company does not anticipate selling any additional tons on the spot market at this time."

About National Coal Corp.

Headquartered in Knoxville, Tenn., National Coal Corp., through its wholly owned subsidiary, National Coal Corporation, is engaged in coal mining in East Tennessee. Currently, National Coal employs about 325 people. National Coal sells steam coal to electric utilities and industrial companies in the Southeastern United States. For more information and to sign-up for instant news alerts visit www.nationalcoal.com.

Information about Forward Looking Statements

This release contains “forward-looking statements” that include information relating to future events and future financial and operating performance. Examples of forward looking-statements include anticipated benefits of capital improvements and new mines and an anticipated strengthening coal market in the future. 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 management’s 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: (i) the worldwide demand for coal; (ii) the price of coal; (iii) the price of alternative fuel sources; (iv) the supply of coal and other competitive factors; (v) the costs to mine and transport coal; (vi) the ability to obtain new mining permits; (vii) the costs of reclamation of previously mined properties; (viii) the risks of expanding coal production; (ix) the ability to bring new mining properties on-line on schedule; (x) industry competition; (xi) our ability to continue to execute our growth strategies; and (xii) general economic conditions. These and other risks are more fully described in the Company’s filings with the Securities and Exchange Commission including the Company’s 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.

National Coal Corp.
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

The notes to the unaudited pro forma condensed consolidated financial statements that follow are intended to provide additional information regarding the effect of the pro forma adjustments on the unaudited pro forma condensed consolidated financial statements.

(a) Reflects the elimination of all assets and liabilities of the sale.

(b) Reflects the gain on the sale if it had occurred on June 30, 2009. The actual gain or loss to be recognized will be based on the carrying amounts of the assets sold and liabilities released on the date of the transaction and may be materially different than the loss noted herein. Based on preliminary estimates, National Coal Corp. anticipates a $25.1 million gain will be recognized in the final accounting for the sale, which consists principally of: (i) $3.8 million of negative equity as of June 30, 2009 and (ii) a projected $21.3 million loss for the subsequent period ending August 3, 2009, which includes a $19.8 accrual for Make-Whole interest pursuant to the Credit Agreement. The pro forma presentations included herein should not be relied upon as indicative of the actual gain or loss to be recorded.

(c) Reflects the elimination of all revenues and expenses of National Coal of Alabama, Inc.

for National Coal Corp.
Christine Pietryla, 865-690-6900, ext. 150
(Investor Relations)