SEC Response to Comments

H. Roger Schwall
Associate Director
Division of Corporation Finance
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0405

            RE:     James River Coal Company
                        Form S-1 filed August 13, 2004
                        File No. 333-118190

At the request and on behalf of our client, James River Coal Company (the “Company”), we hereby file this letter, via EDGAR, in response to the comment letter dated November 4, 2004 from the Staff, concerning the above-referenced registration statement.

We provide below responses to the Staff’s comments on behalf of the Company. As requested, these responses are keyed to correspond to the Staff’s comment letter, which we do by setting out below each of the Staff’s comments (in bold face type) followed by our response. A copy of this letter is being sent to the Staff by courier delivery.

Unless the context requires otherwise, references to we, our, us, James River or the Company in this letter refer to James River Coal Company.

Accordingly, we believe that the impact of the Convenience Period is not material to our results, and that the use of April 30, 2004 for convenience purposes is appropriate. We also note that we have disclosed in several places in the Prospectus that we have used April 30, 2004 as the convenience date, and that the use of this date did not have a material effect on our financial statements.

However, we believe that the impact of the $20.0 million in proceeds from the senior secured credit facility is not material to the financial statements at the date we implemented fresh start accounting. It is important to note that we used $10.1 million of the proceeds to repay current liabilities, and retained the remaining $9.9 million as cash. The following table illustrates the impact of the senior secured credit facility on the opening balance sheet of the Successor Company.

	As Stated	Results Adjusted for Facility	Percentage Impact
Current Assets	$ 63,834	$ 73,746	13.4%
Current Liabilities (excludes DIP Loan)	50,896	47,208	7.2%
DIP Loan	6,400	0	N/A
Senior Secured Credit Facility	0	20,000	N/A
Total Assets	323,118	333,030	3.0%
Total Liabilities	259,827	269,739	3.7%
Net Assets (Equity)	63,291	63,291	0%

The impact of this transaction represents approximately 3.0% and 3.7% of total assets and total liabilities, respectively, which we believe is immaterial to our financial statements. We have also considered SAB 99, which states that while the Staff would not object to using a “rule of thumb” such as 5% in determining materiality, it cannot be substituted for a full analysis of all relevant considerations. We note further from SAB 99 that a matter is considered material if there is a substantial likelihood that a reasonable person would consider it important. Thus, in making our assessment, we also considered the following:

Therefore, based on the above, we believe that using April 30, 2004 for convenience purposes, as allowed by Paragraph 48 of SFAS 141, is appropriate.

Location	Costs	Last Month Used	Discussion
Blue Diamond – Mine #71	$135,000 (fixed assets) and $1.1 million (development costs)	January 2002	This mine was an operational mine into 2002. During 2002, a determination was made to close the mine and access the remaining reserves through a different mine (Mine #75), resulting in the write-off of the previously capitalized costs.
Blue Diamond – Royalties	$4 million (prepaid royalty)	January 2002	An advance payment was made for prepaid royalties in 1997 (as part of acquiring a mineral lease). The related lease provided the right to mine the coal. In 2002, the reserves were deemed exhausted and the unamortized costs were written off.
Blue Diamond – Mine #77	$2.5 million (development costs)	April 2002	This mine was an operational mine into 2002. During 2002, an underground mine fire occurred in a primary route to one area of the mine. We determined that the damaged route was no longer useable and that an alternate route would need to be developed (and in fact was developed). The write-off relates to the costs associated with the closed route.
Blue Diamond – Refuse Impoundment	$654,000 (fixed assets)	1999	In 1999, this facility began to leak and could not be used without government approved plans for repair. We subsequently submitted a plan to remediate the facility so that it could continue to be used. In 2002, we determined it would not be cost effective to pursue the plan to remediate the facility, and therefore decided to abandon the facility.

We performed an impairment test of our long lived assets as of December 31, 2002 under the provisions of SFAS No. 141. Our impairment analysis for 2002 did not contemplate any cash flows generated from the above assets. No impairment charges were recognized because the undiscounted cash flows provided from the use of the long-lived assets exceeded their recorded book values.

The Staff is requested to direct any questions regarding this amendment and the responses made in this letter to the undersigned at (404) 815-6444 or to Neil Falis at (404) 815‑6609.

Location	Costs	Last Month Used	Discussion
Bell County – BC#1 Tunnel and Garmeada	$1.2 million (development costs)	June 2001	This mine was temporarily idled during 2001 after geologic conditions deteriorated in the mine. At the time of the closure, there remained significant reserves to be mined. In 2002, after further evaluation of the costs to reopen the mine, it was determined that the reserves would need to be accessed from a different mine location, resulting in write-off of these development costs (the closing of the mine also resulted in the tunnel being of no use).
Bell County – Coal Silo	$756,000 (fixed assets)	July 2001 – inspection August 2002 – Management determines to write-off silo	We inspected and found that these clean coal silos were structurally deficient in 2001, and determined that the silos could only be used at a reduced capacity. In August 2002, we decided to correct the deficiencies in the silo, and the costs associated with the damaged silo were written off.
Bledsoe – Shell Branch Mine and Preparation Plant	$211,000 (development costs) and $2.4 million (fixed assets – preparation plants).	Shell Branch – March 2002 Preparation Plant – May 2002	This mine (Shell Branch) was a productive mine until a drop in the market caused us to close the mine in 2002. As a result of the closure of this mine, the preparation plant was also abandoned due to the lack of economical reserves in this area. The costs associated to relocate this plant made moving it uneconomical, and it had no salvage value.

Location	Costs	Last Month Used	Discussion
Bledsoe – Seam #7	$618,000 (development costs)	September 2002	In 2002, we determined that the quality of coal was lower than anticipated, and that geologic conditions were worse than anticipated. As a result of these factors, we decided to abandon the mine in 2002.
McCoy Elkhorn – Tipple and related facilities	$758,000 (fixed assets)	1999	During 1999, this preparation plant was used until it was replaced by a preparation plant facility closer to the mines. In 2002, we determined that these facilities would not be reactivated, and, as a result of the abandonment, the costs were written off.
Leeco – Mine #78	$492,000 (assets)	February 2002	Mine #78 was acquired in January 2001. The mine was activated and produced coal into 2002. The opening to the mine also provided access to Mine #68. This mine was not successfully operated as a stand-alone mine, and the production-related facilities were shut down in 2002. The remaining reserves associated with this mine were accessed from a different mine (Mine #68).