Presentation materials

Forward-Looking Statements

This presentation contains forward-looking statements and information that are based on the

beliefs of Alliance Resource Partners, L.P. and Alliance Holdings GP, L.P. (the “Partnerships”) and

those of their respective general partners (the “General Partners”), as well as assumptions made by

and information currently available to them. When used in this presentation, words such as

“anticipate,”

“project,”

“expect,”

“plan,”

“goal,”

“forecast,”

“intend,”

“could,”

“believe,”

“may,”

and similar expressions and statements regarding the plans and objectives of the Partnerships for

future operations, are intended to identify forward-looking statements.

Although the Partnerships and their General Partners believe that such expectations reflected in

such forward-looking statements are reasonable at the time such statements are made, neither the

Partnerships nor the General Partners can give assurances that such expectations will prove to be

correct. Such statements are subject to a variety of risks, uncertainties and assumptions. If one or

more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect,

actual results may vary materially from those the Partnerships anticipated, estimated, projected or

expected.

The Partnerships have no obligation to publicly update or revise

any forward-looking statement,

whether as a result of new information, future events or otherwise.

About Alliance

Diversified producer and marketer of steam coal to major U.S.

utilities and industrial users

Focused on consistent growth through internal development of

existing reserve base and disciplined acquisitions

Operations and reserves in the Illinois Basin, Central Appalachian

and Northern Appalachian markets

Industry leader in mine safety with innovative use of technology

Well positioned coal portfolio with meaningful exposure to scrubber

markets

Strong stable cash flows coupled with conservatively managed

balance sheet

Coal is the Cornerstone for America’s Energy

Future

Coal is a vital source of secure, affordable domestic energy

The U.S. has a 200+ year supply of coal

Coal comprises approximately 95% of U.S. energy reserves

Approximately 50% of U.S. electric power generation is coal fired

Oil, natural gas and uranium prices are at or near record levels

On an as-delivered basis, coal is significantly cheaper than other

fuels

Proven conversion technologies will only increase the demand for

coal over time

Alternative energy sources will help meet future energy demands but

will not replace coal

Source: Energy Information Administration

Coal is the Most Stable and Cost Effective

Source of Energy

$1.54

$8.21

$6.44

Coal

Natural Gas

Petroleum

Delivered Cost ($ / mm Btu)

Energy Benchmarks

Source: Energy

Information Administration and Factset

Central Appalachian Coal - NYMEX

Crude Oil, Light - NYMEX

Natural Gas-Henry Hub

MB-Uranium

100

200

300

400

500

600

700

800

900

1,000

Jan-2004

Dec-2004

Dec-2005

Nov-2006

Nov-2007

Weekly from 01-Jan-2004 to 12-Nov-2007

564.3%

191.0%

29.2%

14.3%

Analysis of Coal Fired Power Generation

Growth

Total Electricity Generation by

Type in the United States

(in Billion Kilowatthours)

Steam Coal Production in U.S.

(in million tons)

Source: Energy Information Administration

789

896

370

522

715

942

3,330

1,979

107

122

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2004

2030

Nuclear

Renewables

Natural Gas

Coal

Oil

3,975

5,797

1,705

1,112

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2004

2030

Key Long-Term Drivers in Coal Market

The long-term outlook for the US coal market is positive due to a

variety of emerging macro trends

Projected utility, industrial and steel growth, coupled with new

coal

initiatives such as coal gasification and CTL, will increase demand for

coal

In addition, the rising cost of alternative fuels, such as oil, natural gas,

and uranium, makes coal the cheapest source of energy

Stringent domestic environmental laws, coupled with tighter federal and

state regulations, will further constrain the supply of coal

Escalating mining costs and the depletion of high quality reserves will

also constrain low cost supply

Energy demands in China and India, and other developing countries, will

result in more US coal exports over time

Worldwide infrastructure congestion will constrain exports for many

years, which will only exacerbate demand

Coal Production and Pricing Outlook

Total year-to-date US coal production is down

2% versus 2006 owing to a variety of factors

Voluntary shut-ins at high cost mines,

particularly in the Central Appalachian region

Mine-specific issues such as geological and

production problems

The spot market continues to show

improvement and has reacted to a favorable

supply / demand outlook

Overseas demand and infrastructure

challenges are driving US coal offshore

Utilities are willing to sign long term

contracts to supply newly installed scrubber

technology

Scrubbing will play an increasingly important

role in coal pricing dynamics

High Btu, high sulfur coal located near

scrubbed power generation facilities should

command a higher price

Utilities will increasingly optimize their

purchase of coal by maximizing heat net of

transportation costs

Source: Energy Information Administration

YTD as of June.

Production by Basin (in ‘000 short tons)¹

(6.4)%

Growth

569,381

581,188

Total

(2.0)%

Growth

(0.5)%

Growth

67,555

72,138

Other

30,537

30,678

Uinta Basin

(0.3)%

Growth

238,274

239,089

Powder River Basin

6.6%

Growth

50,287

47,173

Illinois Basin

(6.5)%

Growth

60,045

64,206

Northern Appalachia

(4.1)%

Growth

122,683

127,904

Central Appalachia

2007 YTD

2006 YTD

Location

Historical and Spot Coal Prices

Historic Spot Price

Forward Curve

Source:

Energy Information Administration

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

Jan-05

Jul-05

Feb-06

Aug-06

Mar-07

Sep-07

Weekly from 01-Jan-2005 to 02-Nov-2007

Central Appalachia

Powder River

Northern Appalachia

Illinois Basin

$49.90

$11.05

$33.50

$46.50

Central Appalachia - 29-Sept-06

Central Appalachia - 30-Sept-07

PRB 8800 - 29-Sept-06

PRB 8800 - 30-Sept-07

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

Oct-06

Aug-07

Jun-08

Apr-09

Feb-10

Dec-10

Monthly from Oct-06 to Dec-10

$57.61

$50.15

$12.85

$12.40

Alliance Snapshot

Alliance operates eight underground

mining complexes in all major eastern

coal producing regions

Diversified reserve position in the Illinois

Basin, Central Appalachia and Northern

Appalachia regions

Four significant organic development

projects identified in the growing Illinois

Basin and Northern Appalachia high sulfur

coal markets

Illinois

Indiana

Ohio

Pennsylvania

Maryland

Virginia

West

Virginia

Kentucky

Current Mining Operation

Future Growth Project

Transfer Terminal

Pattiki Complex

River View Complex

Dotiki Complex

Mount Vernon

Transfer Terminal

Warrior Complex

Hopkins Complex

Gibson Complex

Pontiki Complex

MC Mining Complex

Tunnel Ridge Complex

Penn Ridge Complex

Mettiki Complex

Reserves –

2006

Central

Appalachia

Northern

Appalachia

23%

Illinois Basin

72%

Operations Summary

2006 Summary (MM Tons)

2006 Production

Northern

Appalachia

14%

Central

Appalachia

15%

Illinois Basin

71%

Select Customers

Reserve

Production

Illinois Basin

712.0

23.7

Total Company1

163.5

3.3

Region Total

Allegheny Energy

56.7

–

Penn Ridge

–

70.5

–

Tunnel Ridge

Virginia Electric Power

36.3

3.3

Mettiki / Mettiki WV

Northern Appalachia

37.4

3.5

Region Total

Progress; NRG; East KY

Power

20.7

1.9

MC Mining

Progress; Ontario Power

16.7

1.6

Pontiki

Central Appalachia

511.1

16.9

Region Total1

–

82.7

0.0

Gibson (South)

Duke Energy; Alabama

Electric

31.8

3.6

Gibson (North)

–

110.0

–

River View

Tampa Electric; TVA

63.5

1.6

Hopkins

Corn Products; LG&E

44.4

2.5

Pattiki

Synfuel

Solutions; LG&E

50.4

4.5

Warrior1

Seminole; TVA

128.3

4.7

Dotiki1

Includes Providence reserves (20-Jun-2007).

Alliance’s Long Term Growth Strategy

Capitalize on the expected strong demand growth in

scrubber quality coal

Continue to be a disciplined producer, bring on projects

only with sufficient sales commitments

Continuous operational optimization

Pursue opportunistic bolt-on acquisitions

Large Inventory of Organic Growth Projects

Permitting in progress

Estimated capital cost ~ $195 –

$210 million

Estimated reserves ~ 70 million tons high sulfur coal

Production capacity ~ 6 million tons/year

Initial production in 2009 –

2010

Tunnel Ridge

Initiating permitting process

Estimated capital cost ~ $165 –

$175 million

Estimated reserves ~ 57 million tons high sulfur coal

Production capacity ~ 5 million tons/year

Initial production in 2009 –

2011

Penn Ridge

Constructing slope and shaft

Estimated capital cost ~ $130 –

$160 million

Estimated reserves ~ 110 million tons high sulfur coal

Production capacity ~ 3.1 –

4.6 million tons/year

Initial production in 2009 –

2010

River View

Permitting in progress

Estimated capital cost ~ $100 –

$110 million

Estimated reserves ~ 83 million tons medium sulfur coal

Production capacity ~ 2.7 –

3.1 million tons/year

Initial production in 2009 –

2010

Gibson South

Illinois

Indiana

Ohio

Pennsylvania

Maryland

Virginia

West

Virginia

Kentucky

Note: Estimated capital costs are based on 2006 dollars and exclude capitalized development and interest expenses. Timing of anticipated

initial production dependent upon obtaining required permits and customer contracts

Focus on Safety

Safety is our #1 core

value

Alliance’s safety

performance has been

consistently better than

its industry peer group

Innovative use of

technology to improve

safety at all operations

State-of-the-art

Leaky Feeder mine

communication

systems

Fiber optic based

mine monitoring

systems

Proprietary Miner

Tracking systems

Alliance Safety Comparison 1997-2007 YTD

Nonfatal days lost (NFDL).

5.6

7.6

4.8

6.4

4.7

5.7

3.1

3.4

3.8

2.7

8.6

9.1

8.4

8.5

7.3

7.4

6.7

5.9

5.5

5.1

4.8

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Alliance NFDL

Industry Average

Well Positioned in Scrubber Markets

Future growth potential for scrubber market bodes well for Alliance’s high

sulfur operations

Source: The McIlvaine

Company

Assumption used to convert gigawatts

of capacity to million tons of coal: 9,600 Btu/Kwhr

plant heat rate, 75% plant capacity factor,

12,500 Btu coal.

Projected Eastern U.S. Installed Scrubber Capacity

122

129

188

200

238

248

272

308

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Baseline Scrubber Capacity

Incremental Scrubber Capacity

12,500 Btu Equivalent

Indiana

Ohio

Maryland

Virginia

West

Virginia

Kentucky

Approximately 676 million tons is “Scrubber”

Quality Coal

Illinois Basin:

Second largest producer in the basin

Currently accounts for ~74% of total Alliance coal production

Northern Appalachian:

Strong reserve base of ~164 million tons of high and medium sulfur coal

Currently accounts for ~13% of total Alliance coal production

Well Positioned in Scrubber Markets

Current Mining Operations

Future Growth Project

Transfer Terminal

Pennsylvania

Illinois

Consistent Track Record of Growth At Alliance

($ in millions)

Note: EBITDA is a non-GAAP measure defined as income before net interest expense, income taxes and depreciation, depletion and amortization.

See reconciliation slide of EBITDA to Net Income

Based on the midpoint of management guidance.

EBITDA

Cash Flow from Operations

$110.3

$145.1

$193.6

$245.0

$270.0

2003

2004

2005

2006

2007E¹

Production

Revenue

$523.2

$623.5

$799.6

$920.0

$992.5

2003

2004

2005

2006

2007E¹

$119.0

$147.9

$230.1

$250.0

$260.0

2003

2004

2005

2006

2007E¹

24.4

23.7

22.3

20.4

19.2

2003

2004

2005

2006

2007E¹

17.2%

19.4%

16.2%

13.7%

11.3%

2003

2004

2005

2006

2007YTD

21.9%

22.6%

27.4%

25.9%

2003

2004

2005

2006

2007YTD

Efficient Operator

Alliance is a low-cost, efficient coal operator, delivering sector-leading

EBITDA margins

5 Year Average: Alliance: 24.7% vs. Peers: 15.6%

Source: Public filings

Note: EBITDA margin represents EBITDA / Total Revenues. EBITDA

is a non-GAAP measure. See reconciliation slide of EBITDA to Net Income

Coal Peers include: Alpha, Arch, Consol, Foundation, Massey and Peabody.

Alliance

Coal Peers¹

Average: 24.7%

Average: 15.6%

53.7%

40.7%

18.2%

15.6%

5.8%

3.6%

8.4%

34.1%

14.6%

$3,191

$2,190

$341

$304

$84

$67

$132

$733

$136

Overview of Coal Sector Legacy Liabilities

Source: Latest Company Filings

Includes market cap of Alliance Resource and Alliance Holdings, adjusted for Alliance Holdings’

ownership in Alliance Resource.

Gross Legacy Liabilities ($mm)

Legacy Liabilities as % of Market Cap

Peer A

Peer B

Peer C

Peer E

Peer F

Alliance

Peer H

Peer D

Peer G

Alliance1

Peer A

Peer F

Peer E

Peer B

Peer C

Peer G

Peer D

Peer H

Two Ways to Invest in Alliance Partnerships

56.9%

L.P.

Interest

42.1% L.P.

Interest

1.98% General

Partner

Interest2

Alliance Holdings

GP, L.P.

(NASDAQ: AHGP)

59.9 million units outstanding

Alliance Resource

Partners, L.P.

(NASDAQ: ARLP)

36.6 million units outstanding

Public

Unitholders

Management

/ Others¹

80.0%

L.P.

Interest

Public

Unitholders

20.0%

L.P.

Interest

IDRs

Distribution growth from Alliance Resource benefits all unitholders

Strong alignment of interests throughout the Alliance Partnerships

Management owns significant interests directly in Alliance Holdings and indirectly

in Alliance Resource

Includes control group comprised of present and former members

of Alliance Resource management.

Includes general partner interest held directly in Alliance Resource’s Intermediate Partnership.

Alliance Partnership Profiles

8.2%

29.8%

$1,639mm

$1,487mm

1.74x

$2.24

$40.67

ARLP

$24.35

Unit Price (11/12/07):

$1,458mm

Equity Market Cap:

0.0%

Net Debt / Book Cap:

$1,458mm

Enterprise Value:

$1.06

Distribution:

AHGP

NASDAQ Symbol:`

0.0%

Net Debt / Enterprise Value:

1.01x

Total Unit Coverage:

Ownership Interests in Alliance Resource

1.98% G.P. Interest

100% of Incentive Distribution Rights

15.5 mm Alliance Resource common

units

4th largest eastern coal producer

operating 8 underground mining

complexes

712 million tons of reserves at June

20, 2007 following Providence

reserve acquisition

Asset Profile:

Alliance Holdings Leverage to Alliance

Resource Growth

Incentive distribution rights provide Alliance Holdings unitholders with

significant financial leverage to Alliance Resource distribution

growth

Note: This graph shows the impact to Alliance Holdings as a result of Alliance Resource raising or lowering its quarterly distribution

from the current announced quarterly distribution of $0.56 per common unit ($2.24 annualized). This information is presented for

illustrative purposes only and is not intended to be a prediction of future performance

$20,000

$40,000

$60,000

$80,000

$100,000

$1.84

$1.94

$2.04

$2.14

$2.24

$2.34

$2.44

$2.54

$2.64

Hypothetical Alliance Resource Annual Distribution per L.P. Unit

L.P. Interest

G.P. Interest

IDRs

Current Alliance

Resource

Distribution

($2.24 per unit)

Alliance Resource

Distribution at

Alliance Holdings

IPO

($1.84 per unit)

Hypothetical

Distributions to

Alliance Holdings

Share Price Performance Versus Peers

Source: Factset

Note: Coal Peers include: Alpha, Arch, Consol, Foundation, International Coal, James River, Massey, Natural Resource Partners, Peabody and Penn

Virginia.

3-Year

Year-To-Date

Alliance Resource

Alliance Holdings

Coal Peers

Alerian MLP Index

S&P 500 Index

90%

100%

110%

120%

130%

140%

150%

160%

170%

Jan-2007

Mar-2007

Jun-2007

Aug-2007

Nov-2007

Daily from 01-Jan-2007 to 12-Nov-2007

17.8%

23.2%

1.5%

6.5%

20.7%

60%

80%

100%

120%

140%

160%

180%

200%

220%

Nov-2004

Aug-2005

May-2006

Feb-2007

Nov-2007

Daily from 12-Nov-2004 to 12-Nov-2007

30.3%

(3.0%)

21.5%

20.6%

54.5%

Alliance EBITDA Reconciliation

2007E

Mid-Point

2006

2005

2004

2003

$160,000

$172,927

$160,010

$76,621

$47,902

Net Income

(200)

161

–

Minority Interest Income

–

112

–

Cumulative Effect of Accounting Change

(2,400)

(2,443)

(2,682)

(2,641)

(2,577)

Income Taxes

(10,600)

(9,175)

(11,816)

(14,963)

(15,981)

Interest Expense

(87,200)

(66,489)

(55,637)

(53,664)

(52,495)

Depreciation, Depletion and Amortization

$260,000

$250,761

$230,145

$147,889

$118,955

EBITDA

2,400

2,443

2,682

2,641

2,577

Income Taxes

10,600

9,175

11,816

14,963

15,981

Interest Expense

(31,400)

(9,429)

26,577

(12,405)

(8,240)

Net Effect of Changes in Operating Assets and Liabilities

(300)

(2,057)

(255)

353

Other

–

(319)

(573)

(488)

(687)

Coal Inventory Adjustment to Market

(2,400)

(2,101)

(1,918)

(1,622)

(1,341)

Reclamation and Mine Closing

$270,000

$250,923

$193,618

$145,055

$110,312

Cash Flow Provided by Operating Activities

Note:

EBITDA

defined

income

before

net

interest

expense,

income

taxes

and

depreciation,

depletion

and

amortization.

Management

believes

EBITDA

useful

indicator

its

ability

meet

debt

service

and

capital

expenditure

requirements

and

uses

EBITDA

measure

operating

performance.

EBITDA

should

not

considered

alternative

net

income,

income

from

operations,

cash

flows

from

operating

activities

any

other

measure

financial

performance

presented

accordance

with

generally

accepted

accounting

principles.

EBITDA

not

intended

represent

cash

flow

and

does

not

represent

the

measure

cash

available

for

distribution.

The

Partnership's

method

computing

EBITDA

may

not

the

same

method

used

compute

similar

measures

reported

other

companies,

EBITDA

may

computed

differently

the

Partnership

different

contexts

(i.e.

public

reporting

versus

computation

under

financing

agreements).

Estimate

midpoint

reflects

the

Partnership’s

most

recent

guidance