SOURCE: Paragon Financial Limited

Paragon Financial Limited

July 18, 2012 08:20 ET

Coal Stocks Struggle as High Inventories Have Resulted in Multi-Year Low Prices

The Paragon Report Provides Stock Research on James River Coal and Patriot Coal

NEW YORK, NY--(Marketwire - Jul 18, 2012) - Coal stocks had a dismal year as demand fundamentals continue to struggle. The Market Vectors-Coal ETF (KOL) -- which replicates an index that provides exposure to publicly traded companies worldwide that derive greater than 50% of their revenues from the coal industry -- has plummeted over 27 percent this year. The Paragon Report examines investing opportunities in the Coal Industry and provides equity research on James River Coal Company (NASDAQ: JRCC) and Patriot Coal Corporation (PINKSHEETS: PCXCQ).

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Coal stocks took a hit Monday after Bank of America Merrill Lynch analysts stated that prices for thermal coal have sunk to the lowest levels in two years as a result of rising inventories. Analysts had suggested companies to continue to slash production and delay expansion plans. "Although such output curtailments will provide support to prices, it will take time and discipline to work through the glut," Bank of America Merrill Lynch analysts wrote in a recent note.

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James River Coal Company is one of the leading coal producers in Central Appalachia and the Illinois Basin. The company sells metallurgical, bituminous steam and industrial-grade coal to electric utility companies and industrial customers both domestically and internationally. The company is scheduled to release its second quarter results for 2012 before the market opens on August 9, 2012. Shares of James River Coal have fallen over 70 percent this year.

Patriot Coal recently announced that it has filed for Chapter 11 Bankruptcy. Patriot expects its mining operations and customer shipments to continue in the ordinary course throughout the reorganization process. "The coal industry is undergoing a major transformation and Patriot's existing capital structure prevents it from making the necessary adjustments to achieve long-term success," Chairman and CEO Irl Engelhardt said in a statement on the day of the Chapter 11 filing.

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