Environmental Matters in the Commonwealth of Kentucky

James River Coal Company entered into a definitive Asset Purchase Agreement pursuant to which it will acquire certain coal reserves and permits from Cheyenne Resources, Inc.  The transaction includes approximately 10.2 million tons of proven and probable surface reserves and 3.6 million tons of proven and probable underground reserves, plus additional surface resources. Permits necessary to begin mining a portion of the reserves immediately are currently in place. No equipment, workforce or other assets will be acquired in the transaction.

The purchase price to be paid for the assets is $40 million, comprised of $24 million in cash and $16 million in either cash or newly issued common stock of James River Coal Company.