The loss has grown quarter-to-quarter, compared to a 2005 second quarter net loss of $1 million and $0.7 million loss for last year’s first half, the company said yesterday.

Though it fell short of expectations, the Virginia producer’s revenue increased nearly 24% to $140.2 million from $113.3 million. Coal production also jumped 35% to 3.2 million tons; but company executives looked to the regulation updates and weather-related problems for the loss of 300,000 tons, including 100,000 at its Blue Diamond facility.

Production guidance for its Central Appalachia mines were also lowered from 10.8-11.2Mt to 9.9-10.3Mt, while cost expectations increased to $40-$42/ton from previous projections of $38-$39/ton, the company said.

While saddled with obstacles, James River chairman Peter Socha highlighted its growth and development over the past year: “We completed our major investment projects, begun in 2005, we began production at our first highwall operation, [and] we finished rebuilding our largest preparation plant and loadout facility. Lastly, we completed a significant transaction to add to our reserves in the Midwest.”

Socha called the company’s conditions “good” for the quarter, save for the production loss, and called their regulatory-related production decreases a “temporary impact”

James River, he added, will spend about $10 million over the next several years to complete the upgrades for regulatory compliance, including those mandated in the recently-passed MINER Act.

A few positive items were also reported, including an increase of reserves and plant upgrade completion at the Leatherwood facility and a start-up of its third Central Appalachia (CAPP) surface mine during the fourth quarter. Additionally, he said, its two recently added CAPP company-operated surface complexes are operating at or above plan with a $30-$32 per ton cash cost.

James River was established in 1988, when it purchased Elkhorn Coal, Bell County Coal and Blue Crystal Coal Sales (now James River Coal Sales) from Transco Coal.

Since then, the company has attained a series of operations in Kentucky, including Johns Creek Coal, Kinney Branch Mining, Leeco, Bledsoe Coal, Blue Diamond Coal, Shamrock Coal and Triad Mining.