National Coal Corporation Reports 2nd Quarter Earnings

Knoxville, Tenn. – (August 20, 2007) – National Coal Corp. (Nasdaq: NCOC), a Central Appalachian coal producer, reports that during the three months ended June 30, 2007, it generated total revenues of $18.9 million primarily through the sale of 372,341 tons of coal.

During the three months ended June 30, 2007, the Company produced 243,703 tons and purchased 109,466 tons of coal.

In the second quarter of 2006, the Company reported total revenues of $24.1 million primarily through the sale of 455,548 tons of coal.

That same quarter, National Coal produced 364,362 tons and purchased 89,856 tons of coal.

National Coal reports increased net and operating losses as compared to the second quarter 2006 and the first quarter 2007.

The operating loss for the three months ended June 30, 2007, increased to $4.7 million as compared to the loss of $3.5 million reported in the same prior-year period.

As compared to the first quarter 2007, the operating loss increased $0.4 million from the then $4.3 million operating loss reported.

Net loss for the three months ended June 30, 2007, increased 32.7% to $6.5 million as compared to the $4.9 million loss reported in the same prior-year period, and by 8.3% relative to the $6.0 million loss reported in the first quarter of 2007.

At June 30, 2007, we had cash and cash equivalents of approximately $5.5 million and negative working capital of approximately $1.2 million.

Net cash flows used in operations for the six months then ended highlighted improvement in operating efficiency and sales effectiveness during the period, totaling approximately $7.1 million, of which $5.4 million and $1.7 million related to the first and second quarters, respectively.

However, the Company’s operations do not generate positive cash flow and the ability to do so during the remainder of 2007 is dependent upon generating spot sales at reasonable prices and additional improvements to operating efficiency.

Daniel A. Roling, President and CEO of National Coal, said, “Recent market conditions have not been conducive to selling coal at a profit, therefore, we have chosen to reduce production and sales in order to conserve our coal reserves. Unfortunately, this has negatively impacted our year-to-date 2007 financial results. Looking forward, there are signs that the coal market may strengthen, including increased electricity generation, normal summer weather, strong international demand, and declining Central Appalachian coal production.”

The decrease in revenue from coal sales for the three months ended June 30, 2007, as compared to the same period in 2006, was the result of a decline in sales volume coupled with a $2.11 per ton decline in the average sales price.

Other revenues, consisting primarily of fees charged to another coal producer for use of the Company’s train loading facilities, represented approximately 0.8% of total revenues, slightly lower than the prior-year period at 1.0%.

Adjusted EBITDA for the three months ended June 30, 2007 totaled a loss of approximately $0.8 million compared to a positive $0.9 million in the year-ago quarter and a positive $0.03 million during the first quarter of 2007.

Cost of sales declined $3.2 million or 14.8% during the three months ended June 30, 2007, as compared to the same three month period in 2006.

The primary reason for the decrease in total cost of sales was an 18.3% reduction in volume of coal sold during the period.

Coal produced during the quarter totaled 243,703 tons, a decline of 33.1% from the prior year period and 19.0% from the preceding quarter.

This was a direct result of a decision by management to reduce production during a weak market.

Cost of sales per ton increased by $2.01 per ton versus the same three month period in 2006. Increases in cost of sales per ton include a 265.8% increase in costs associated with idle facilities.

These included a mine, a railroad, a highwall miner, and a newly renovated preparation facility.

Additionally, a major portion of the quarter was spent retrieving the cutter head and support beams for our highwall miner in Tennessee.

The cutter head was trapped in the coal seam two hundred and eighty feet from the point of entry.

The cutter head and five beams have been retrieved; however, the cost of retrieval and related repair expensed during the second quarter totaled $308,750.

The Company experienced a 25.1% decrease in general and administrative expenses for the three months ended June 30, 2007, as compared to the same period in 2006.

This is primarily attributable to a reduction in corporate positions resulting in a 17.5%, or approximately $135,000, reduction in salaries and related expenses, a 35.2%, or approximately $115,000, reduction in stock-based compensation expense, and an approximate $100,000 reduction in security expense.

During the quarter, two preferred shareholders converted 198.7 shares of Series A Cumulative Convertible Preferred Stock to shares of the Company’s common stock.

The Company provided an inducement of 74,169 shares of common stock to one preferred shareholder and cash of $47,485 to the other preferred shareholder.

The combined value of these inducements, totaling approximately $424,309, has been reflected in the Company’s financial statements as an increase in net loss attributable to common shareholders.

National Coal will be opening a new highwall mine in Kentucky during the third quarter which is expected to produce approximately 20,000 tons per month.

The Company has recently obtained two permits from the State of Kentucky which will make it possible to keep the miner employed for at least the next three years.

The production from this mine will absorb the approximately $545,000 of quarterly lease and insurance costs associated with the currently idle high wall mining equipment and other fixed costs and is expected to provide a positive contribution for the remainder of the year.

National Coal is progressing with due diligence and the financing process for the Mann Steel Products, Inc. transaction.

The conditions required to consummate the transaction, as delineated in our June 22, 2007 press release, are still open.