Good day, ladies and gentlemen, and welcome to the Second Quarter 2008 Alliance Resource Partners, L.P. and Alliance Holdings GP Conference Call. My name is Katie and I’ll be your coordinator for today. At this time all participants will be in a listen-only mode. We will be conducting a question-and-answer session towards the end of this conference. [Operator Instructions]. I would like to now turn the call over to your host for today, Mr. Brian Cantrell, Senior Vice President and Chief Financial Officer. Sir, you may begin.

Thank you, Katie and welcome everyone. We appreciate your interest in Alliance Resource Partners, which today we refer to as ARLP and Alliance Holdings GP, which we refer to as AHGP. We released our 2008 second quarter earnings earlier this morning and will now discuss these results and our outlook for the remainder of 2008. Following our prepared remarks we will open the call to your questions. Before we begin I’ll run through a few reminders. As is our practice since AHGP’s only assets are its ownership interest in ARLP, our comments today will be directed to ARLP’s results and outlook unless otherwise noted. In addition some of our remarks this morning may include statements, which are not historical in nature and may concern future expectations, plans and objectives of the Partnerships regarding their future operations. Any such comments constitute forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, and are based on the beliefs of the Partnerships and those of their respective general partners and management, as well as assumptions made by and information currently available to them. Although the Alliance Partnerships, their general partners and management, believe that forward-looking statements are reasonable at the time made, no assurances can be given that such statements will prove to be correct. These forward-looking statements are subject to a variety of risks, uncertainties and assumptions, which are contained in our filings from time to time with the Securities and Exchange Commission, and are also reflected in the press releases under Partnerships. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those we anticipated, estimated, projected or expected. In providing these remarks, neither ARLP nor AHGP has any obligations to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. Finally, we will also be discussing certain non-GAAP financial measures. Definitions and reconciliations of the differences between these non-GAAP measures and the most directly comparable GAAP financial measure are contained at the end of the ARLP press release, which has been posted on the Partnerships’ Website and furnished to the SEC on Form 8-K. Now that we’re through with the preliminaries, I’ll turn the call over to Joe Craft, our President and Chief Executive Officer. Joe.

Good morning everyone and thanks for joining our second quarter 2008 earnings review. The US coal markets remain stronger in the first half of 2008 and are expected to continue to benefit from favorable global and domestic coal supplier demand fundamentals with the foreseeable future. With coal continuing to be the fuel of choice to meet the growing electric power generation needs around the globe, demand for coal continues to outpace supply and has resulted in significant price increases in every coal market in the world. Domestically, coal consumption is rising, exports are growing year-over-year, and the utility stock powers are declining. Combining this rising demand with various constraints that continue to limit increases in coal supply, supports our optimistic outlook for coal prices for the foreseeable future. These markets are helping ARLP stay on track to meet its production and distribution growth targets. During the quarter we continued to experience increased demand for our coal and all over the markets ARLP serves and successfully added to our coal sales commitments beyond 2008 at attractive prices. We also made significant progress on the construction of our new River View mine and continue to have positive discussions with potential customers for our growth projects at Tunnel Ridge, Gibson South and Penn Ridge projects. Overall we remain encouraged about ARLP’s future growth opportunities and are committed to sharing the gains from these opportunities with unitholders. Towards that end management has set a goal of increasing ARLP unitholder distributions by 6% to 8% per quarter through 2010. For the 2008 quarter, the Board of Directors of each Partnership announced significant increases to their respective unitholder distributions for the second quarter just ended. The ARLP Board declared a quarterly cash distribution of $0.66 per unit for the 2008 quarter, a 12.8% increase over the distribution for the first quarter of this year and a 17.9% increase over the distribution for the 2007 second quarter. The AHGP Board declared a quarterly cash distribution for the 2008 second quarter of thirty five and a quarter cents per unit. As a result of the accelerated cash flow growth available to AHGP from its ownership interest in ARLP, the declared distribution represents a 22.6% increase over the cash distribution paid for the first quarter of this year and a 33% increase over the distribution for the second quarter of 2007. I know that many of you on the call today will be happy to hear that our Boards also reviewed their practice of considering changes to distributions on a biannual basis and decided they will now begin considering increases to unitholder cash distributions on a quarterly basis. At this time I’ll turn the call back to Brian for a more detailed look at our financial results after which I’ll return to further discuss the outlook for ARLP and AHGTP. Brian?

Thank you, Joe. For the 2008 quarter ARLP recorded EBITDA of $65.4 million and net income of $36.7 million or $0.68 of adjusted net income per diluted limited partner unit, which was inline with our expectations. Although these results were below those reported for the same period last year, to better compare ARLP’s operating results between the 2008 and 2007 quarters, we believe it is appropriate to consider the impact of several significant non-recurring items which effected both quarters. Specifically, our comparative results were impacted by gain on the sale of non-core coal reserves, the loss of synfuel-related benefits and the settlement gains for claims associated with the 2005 failure of the vertical belt system at our Pattiki mine, and the 2004 mine fire at our Excel No. 3 mine. After normalizing for these items ARLP’s EBITDA and net income in the 2008 quarter increased by 14.4% and 6.8% respectively when compared to the 2007 quarter. In addition, I would point out that ARLP’s declared distribution to unitholders for the 2008 quarter was well above analysts’ expectations, which impacted the comparison of ARLP’s $0.68 of adjusted earnings per unit to the Street’s consensus of $0.72 per unit for the 2008 quarter. By way of example, had the Board utilized the analysts’ consensus distribution of $0.62 per unit, ARLP’s adjusted net income per diluted LP unit for the quarter would have been $0.72 right on top of the Street’s expectations. Driven by record average coal sale prices of $39.50 per ton and higher coal sales volumes, ARLP’s revenues increased $12.9 million in the 2008 quarter to $276.2 million. Price realizations per ton in the Central and Northern Appalachian regions continued to benefit from both improved contract pricing as well as higher prices from sales under the spot and export markets during…

Thank you, Brian. In reflecting our results through the first half of 2008 and our current projections, ARLP is confirming its previous guidance for 2008 coal production in a range of 26.4 million to 27.3 million tons, essentially all of which is committed to contract pricing. We are also reiterating our previous guidance ranges for revenues, excluding transportation revenues of $1.03 billion to $1.1 billion. EBITDA of $250 million to $280 million, and net income of $130 to $160 million. As a result, we continue to expect 2008 financial results will be comparable to 2007, despite the loss of approximately $31.3 million for EBITDA and $28.5 million for net income in synfuel-related benefits realized last year. Counting our planned production increases in the Illinois Basin from the new River View mine, and the expanded operating capacity at our Warrior operation that we mentioned during our last earnings call, ARLP now estimates coal production will increase over 2008 levels by approximately 1.2 million tons in 2009 and an estimated additional 4 million tons in 2010. As I discussed earlier today, we have successfully increased our coal sales commitments beyond 2008 at attractive prices and continue to maintain exposure to the market with approximately 9% and 25% of our anticipated coal sales volumes remaining unpriced in 2009 and 2010 respectively. Our revenue expectations for the out years have improved since our last earnings call. Based on new commitments during the quarter and our current price estimates for our unsold coal, ARLP now anticipates its total average price realizations per sales ton will increase over estimated 2008 levels by 25% to 35% in 2009 and 40% to 50% in 2010. Like all other publicly traded coal producers, we expect our profits will grow significantly over the next two years, assuming we can realize these revenue projections. These projections also give us confidence, we can meet the goal I mentioned earlier that management has set of increasing ARLP unitholder distributions by 6% to 8% per quarter to 2010 starting with the third quarter in 2008. Even with these higher distribution payouts, we expect ARLP’s distribution coverage ratio will continue to be greater than the average publicly traded partnership over the next two years. Assuming AHGP maintains its existing distribution coverage ratio, and ARLP’s distribution growth goal is met, AHGP unitholders would see its quarterly distribution more than double through 2010, highlighting again the accelerated cash flow growth achievable at AHGP due to its ownership interest in ARLP. That concludes our prepared comments. We again appreciate your interest in ARLP and AHGP. And we will now open the call to your questions. Katie would you help us.

(Operator Instructions). Your first question comes from the line of Jim Rollyson from Raymond James. Please proceed.

Good morning, gentlemen.

Good morning.

Good morning.

Just kind of following back up on the distribution growth. You mentioned 6% to 8% growth per quarter through 2010. Is that sequential growth or year-over-year growth?

It’s per quarter.

Sequential.

Okay. That’s what I thought you met. That is pretty stout growth. How do you feel once you get out to 2010, if you extrapolate this obviously you feel pretty comfortable that those type of distributions are sustainable, given whatever price you might look like when you get out to that stage. Is that obviously a fair assumption?

That’s a fair assumption. So, as we get closer in time, we will evaluate the markets. We will see how successful we are in placing committed tons with prices. And we will make that judgment as we get closer to that time, but based on our current committed sales prices, increased tonnage, we feel comfortable that we can meet that target based on what we see today.

Very good. What kind -- you look at the numbers you threw out for pricing expectations in ’09 and ’10 in terms of 25% to 35% and 40% to 50% growth over ’08 levels can you kind of give us some sense of what kind of regional price assumptions you’re using for the, I guess, the 9% that is still open at the 25%. Basically what are you guys thinking for prices as you look out in ’09 and ’10?

I think that we do not break that down by the region, but I think that, our prices are not too far off of what you would expect as you heard other coal producers. And we’re not projecting anything that’s greater than what you have read about in the general press. So, I would say that and based on what we are seeing in the market, we are very comfortable with our price projections that they are achievable at this moment in time.

Okay, last one for me, just may be spend a minute on cost, what kind of inflation obviously we have seen fuel cost etcetera, all moving up may be a little bit about what you guys are seeing, what you are trying to do to prevent that and just kind of how you think that proceeds going forward.

We are continuing to be pressured by cost on the labor front. We are giving increases to maintain our position as far as attracting labor. So that’s a factor that we anticipate will continue to show increases. We are still seeing steel price increases reflected through our operations, we are still seeing productivity impacts from regulatory changes at same time I think as you can tell by our quarterly results year-over-year being basically flat, we are doing a very good job of managing those and trying to keep those as close to current levels as possible even though in our projections we do anticipate inflationary pressures as we go forward over the next couple of years.

We do take a look at our supply chain and where we can, we try to manage those either from a liability of supply standpoint as well as managing costs. By way of example, you have probably seen we have a joint venture on a rock testing company, which helps us manage that area, we have the ability to manufacture our own roof bolts, so we are being proactive in those areas where we feel like we can go ahead and manage those costs little bit more tightly.

Right, if you put numbers on it, I guess some of your peers in the public market have kind of talked about high single digit maybe low double digit core inflation in ’08. Any thoughts of what you guys are seeing or what you are expecting and how that goes into ’09?

We are not projecting increases to that level in our cost that make its you know, its definitely fair to say that we will see inflationary pressures.

Okay, thanks guys. Good job.

We appreciate it.

Your next question comes from the line Paul Forward from Stifel Nicolaus. Please proceed.

Thanks, good morning. Just wanted to maybe a follow up on the new contracts that we signed with Allegheny, does your 2010 pricing increase of 40% to 50% does that include a contribution from this new agreement with Allegheny?

Yes it does.

Okay. And do you have any --

With several others, I mean, there were more than a half-dozen contracts we have signed in the past quarter or so.

Was that the biggest one or --?

No.

Okay, well that’s good. What about -- do you have any updated thoughts on when you can bring Tunnel Ridge online?

We are in negotiations with several parties on that tonnage so we’re hopeful that we could have an announcement on that soon. Right now, we have given expectations to bringing production on as early as 2009, 2010. So, we are still on track do that based on assuming that we can conclude the negotiations we’ve got ongoing for sales commitments for that production.

And talking about 2009, I assume that would be development tonnage of rather than the houseful?

Right and those tons are not included in the numbers I gave you earlier and because we are not committed to that at this moment.

And let’s say the timetable slips on Tunnel Ridge, what’s your ability to ship Illinois Basin coal up the river to meet our obligations up in that region?

It’s real and that’s primarily the flexibility that was granted under the Allegheny contract so if we don’t build Tunnel Ridge we will supply that out of the Illinois Basin.

And I trust there’s no possibility you would give us any sort of pricing information on these contracts?

No, sir.

That’s a fair comment.

Alright, it didn’t really think so. Okay, well, thanks a lot.

Your next question comes from the line of Ron Londe from Wachovia. Please proceed.

Yes. Could you just give us a feel for how many of your tons might reach the export market?

In 2008 we don’t have substantial tonnage going to export. For 2009 it is possible that we could see maybe 0.5 million tons go to the export market, maybe more. Again, we don’t have -- well, that is probably what I would guess, somewhere in the 0.5 million to 1 million ton range.

So, you wouldn’t have the flexibility to kind of step that up?

We do have the flexibility to do that; however, we are seeing strong enough demand. Domestically our strategy right now is to try to commit as much of the tonnage we have under long-term contracts. And the domestic players seem to be willing to go longer in terms and what we’ve been able to talk to people in the export market today. So, our strategy is to try to have that sustainable long-term cash flow. And if we’ve got what we call Tier 1 category one customer, our focus would be to look for those long term relationships and sell into those markets.

When you talk long term, how long term are you talking?

Five to ten years to 20 years something in that zip code.

Okay, thank you.

Thanks Ron.

Your next question comes from the line of Luther Lu from FBR Capital Markets.

Good morning.

Good morning.

Good morning, Lu.

I want to follow up with Paul’s question about Tunnel Ridge. Do you guys have the permit already or it is still in progress?

We have the mining permit, we still have refuse permit to go.

Okay. The refuse permit is a 404 permit, isn’t it?

I am not exactly sure on it.

Okay, and with the mining permit in hand have you committed the purchase of the longwall?

Not at this moment now.

Okay, so you have not ordered longwall yet. Okay, what about --

We have talked to suppliers about slots. So we have reserved slots, but we haven’ issued the PO.

Okay, okay. So if you were to issue the PO today when do you think that you can get the longwall? What is the leadtime on that?

I think fourth quarter 2010.

Okay.

That’s right.

Okay, what about the Gibson South Project, any update on that one?

We are continuing to negotiate for that as well, so we are also in conversations for that operation as well, so I think the timing on that probably has slipped the year since we are looking at probably 2011, assuming we can get the contracts negotiated not exactly sure what our last.

I think that still within the range.

Okay, so we are probably on 2011 time period there. The issue gets into timing of contractors to construct slopes and shafts. As much as it is market, it is more construction timeline than it is market demand opportunities.

Okay. And with recent drop in the sulfur credits, are you guys seeing in the market place that a narrowing -- there is a narrowing in gap between the high sulfur Illinois product and the medium-sulfur Illinois product?

We are not seeing much immediate change there, I think the utilities are trying to determine what that means to them. But, we continue to see our what we call our low-sulfur Illinois basin product still compete very well relative to a Central App substitute. Unfortunately, we just don’t have lot of tons to sell to take advantage of that. So we’re not really seeing any change within the last week or two. But, I think the utilities are trying to evaluate what this change means, I think in general for high sulfur coal and for the scrubber markets, it still going to be and we will see negative effects out of this, and with especially where the SO2 credits are trading today.

Okay. And one more question, if I may, in your prepared remarks, you mentioned that you guys are experiencing reduced productivity due to some more regulatory issues or what are those issues?

It’s just the mine self [ph], basically with their enforcement and then the attention that they are spending. And they have just stepped up their oversight to the point when they come in they like to disrupt production.

They like to -- okay, thank you very much.

Your next question comes from the line of Rob Mullin from Duquesne Capital. Please proceed.

Actually as a follow-up question I guess from the last question, I just kind of, wanted to get not just the price of sulfur, but with CAIR -- the legal status of CAIR being kind of thrown up in the air, what you guys take is on that. Is it -- do you see that as structurally positive, structurally negative? Not so much what your customers’ reaction are what you guys’ reaction to the vacation -- the fact that the courts vacated the CAIR process?

I think long-term it is not going to have any impact. I think that our expectations there will be an attempt to legislatively bring the controls back in place, absent that, I think that Illinois Basin coal, Pet-8 coal is still very low cost relative to Central App. So, I personally think that obviously from a Clean Air Act perspective they can burn the coal probably easier today than they could with CAIR. So, it is going to create uncertainty in the short term, but long term I think it will all balance out to where, as far as our objectives of bringing on production in those two regions, it hasn’t changed our customers’ view and it hasn’t changed our view as to the demand for that product. As we have mentioned on numerous times, the investment we make there will be driven off commitments from customers. So I think, as evidenced by the Allegheny announcement and the current conversations we’re having for Tunnel Ridge, the utilities continue to have an appetite for the higher sulfur Pet-8 and Illinois Basin coals.

And in terms of the overall scrubber build that you are anticipating sort of how much of that is sort of already committed to regardless of this CAIR ruling, you would expect than demand of scrub plans to be 80% of what you have expected, if CAIR just went away or?

And in terms of the overall scrubber build that you are anticipating sort of how much of that is sort of already committed to regardless of this CAIR ruling, you would expect than demand of scrub plans to be 80% of what you have expected, if CAIR just went away or?

You got a macro question and a micro question. I think what we have -- on a macro basis there is probably -- there will be a delay. On a micro, as far as the markets that we’re focused on for the construction of the mines that we’re constructing and we sell into, we’re not really seeing any change in demand, as we speak today.

Great, thank you very much for your time. I appreciate it.

You bet.

Thanks Rob

Your next question comes from the line of Mike Tang from Morningstar. Please proceed.

Yes. Hi, great quarter. I just have one quick follow up question about the committed tonnage. What differences do you have across basins for examples are there more uncommitted tons in Central Appalachia or Northern Appalachia as a percentage versus Illinois Basin?

We don’t really break that out, so I am sorry, but for competitive reasons we don’t disclose that.

Okay. Just one quick other question. Do you have any potential to still shift blending or shift production in order to get more lower quality in metallurgical coal versus high quality steam coal from this point forward?

We do at our Maryland operation. Again we are substantially committed for 2008, so its not going to benefit as this year.

Right, but what about next year and the year after?

Second quarter 2009 those contracts come open to where that is a possibility.

Okay, thank you.

Your next question comes from the line of Franklin Ross from Ling Foundation. Please proceed.

How are you guys doing.

Great. How are you?

Great quarter, you guys. I guess my question is really centered around River View and in terms of how much coal you price there, and how much you have committed and kept unpriced going forward?

We have committed substantially all of it for a period of time, three to five years and some of those contracts would come open in price in the three year timeframe, but as far as commitments, I mean we are committed for most of the tonnage through -- for about five years I believe it is.

Okay. And when you look at your 5 to 20 year contracts that you have signed over last quarter, how do you protect yourself to capture rising prices if the market goes that way?

We got indices-based and/or stated inflationary numbers -- specific inflation numbers, a fixed number say, to try to protect that margin with mark to market escalators.

So, those numbers -- are those cost escalators are those dynamic or static are they fixed or --?

Some of them are dynamic and some of them are static. Some of them are fixed and some of them try to track our cost.

It’s just on individual case basis on negations with the particular counterparty.

Some people want certainty and some want to just be willing to take indices.

And, on the unpriced positions, are those totally uncommitted those unpriced positions?

Some of them are committed tons with subject to reopener.

Okay. Great, thank you very much.

Thanks Franklin.

At, this time I’m showing you have no further questions. I would like to now turn the call back over to management for closing remarks.

Once again we appreciate everybody’s time this morning and your interest in both of our companies and we look forward to talking again soon. Thank you very much.

Thank you.