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James River reports loss




CHARLESTON, W.Va.

Shares of James River Coal, which recently purchased holdings in Letcher County, plunged about 8 percent this week after the Richmond, Va.-based mine operator’s second-quarter financial results fell well short of expectations.

James River lost $24 million, or 97 cents per share, in the period, compared with a loss of $18.6 million, or $1.17 per share, in second-quarter 2007.

Revenue increased to $137.7 million, from $131.9 million in second-quarter 2007.

Wall Street was looking for better things out of James River, which recently purchased Viccobased Cheyenne Resources and operates the Blue Diamond Mining complex at Leatherwood. Analysts polled by Thomson Financial had expected a loss of 30 cents per share and the poor showing sent the company’s stock down $2.88, or 8.2 percent, to $32.19 in morning trading on Tuesday. The stock rebounded to $33.40 at the end of trading on Tuesday.

Chief Executive Peter Socha blamed higher costs and longterm delivery contracts. The contracts were signed before U.S. coal prices more than doubled over the past year due to strong international demand and weak supply.

James River’s cost of coal sold rose to $128.8 million in the second quarter, compared with $122.5 million in the same period last year.

“While we have seen very little benefit from these prices thus far in 2008 due to lower priced contracts that were signed in 2006 and 2007,” Socha said in a statement, “we believe that our shareholders will begin to see the benefits during the remaining months of 2008 and a much greater benefit beginning in early 2009.”

However, James River lowered shipment targets for the year. It now expects to ship between 8.6 million and 8.8 million tons from its Kentucky mines this year. Originally, James River expected Kentucky shipments to range between 9.5 million and 9.7 million tons. Shipments from southern Indiana are expected to dip to 3.1 million tons from an earlier projection of 3.2 million to 3.4 million.

Costs, meanwhile, have been revised upward. In Kentucky, James River expects the cash cost per ton of coal to range beteween $48 and $50 the rest of the year, up from an original range of $44 to $45. Indiana costs are expected to range from $29 to $31 a ton the rest of the year, up from $25 to $26 a ton.


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