December 2005 Ol’ King Coal High oil and natural gas prices have helped National Coal Corp. shoot out of the gate By Sara C. Shoemaker
Photo Courtesy of National Coal Corp.
National Coal Corp. is entering its third year in business, yet a glance at its revenue history makes the company look like anything but a startup.
Considering the millions of dollars needed to mine coal, the company decided upon a strategy of acquiring existing facilities in the coal-rich Southern Appalachian region, within desirable range of railroads and interstates. National Coal’s founders knew that strong financial backing up front and geography were crucial.
National Coal’s debut in January 2003 was right on time.
With oil and natural gas prices on the rise beginning in 2002, coal was once again an attractive commodity. Despite its reputation as the “dirtiest” fuel source, coal is used to produce more than half the electricity Americans use daily.
“The market is good for coal right now, and it’s an exciting time to be in it. The industry is in a position where it can actually make money versus just trying to survive,” says Mark A. Oldham, National Coal’s chief financial officer.
This year, the company’s Wall Street-seasoned founder and CEO Jon Nix, and his band of veteran coal executives, boosted the Knoxville-based company’s revenues from $4.5 million to $16 million, a 254% jump. National Coal added five mines, growing to seven total, and became cash-flow positive for the first time in August.
Although the company prefers not to disclose its customers, who are mostly utilities, it’s obvious that the location of its New River Tract (in Anderson, Campbell and Scott counties), the southern-most operation in the Appalachians, would appeal to coal-burning power plants in Georgia, the Carolinas and Florida.
Energy financial analysts are singing National Coal’s praises but warn that the company is still young and in growth mode.
National Coal “should be able to continue its upward curve of production growth by opening roughly one new mine per quarter to keep up with customers’ demand,” according to Richard R. Wolfe, senior analyst with independent research firm, J. M. Dutton & Associates. In his September update, he reiterated the publicly traded company’s rating as a “buy.” (National Coal changed its ticker symbol to “NCOC” and joined the Nasdaq SmallCap in April.)
“We’re always looking for other opportunities that will allow us to grow,” Oldham says. “At the same time, we’re absorbing the acquisitions that we did last year.”
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