For ease and comparability purposes in comparing 2011 to 2010 results, the results of Rhino Resource Partners LP and Rhino Energy LLC for 2010 have been combined as if Rhino Resource Partners LP was in existence for the entirety of 2010. Since Rhino Resource Partners LP maintained the historical basis of the Rhino Predecessor's net assets, management believes that the combined Rhino Resource Partners LP and Rhino Predecessor results for 2011 are comparable with 2010. The following discussion of the historical financial condition and results of operations should be read in conjunction with the historical financial statements and accompanying notes included elsewhere in this report.

In addition, this discussion includes forward-looking statements that are subject to risks and uncertainties that may result in actual results differing from statements we make. See "Cautionary Note Regarding Forward- Looking Statements." Factors that could cause actual results to differ include those risks and uncertainties discussed in Part I, Item 1A. "Risk Factors."

Overview

We are a diversified energy limited partnership formed in Delaware that is focused on coal, oil and natural gas and related energy infrastructure. We produce, process and sell high quality coal of various steam and metallurgical grades. We market our steam coal primarily to electric utility companies as fuel for their steam powered generators. Customers for our metallurgical coal are primarily steel and coke producers who use our coal to produce coke, which is used as a raw material in the steel manufacturing process. In addition to operating coal properties, we manage and lease coal properties and collect royalties from those management and leasing activities. Our diversified energy portfolio also includes investments in oil and natural gas mineral rights in the Utica Shale and Cana Woodford regions. We receive our proportionate share (5%) of revenue from any hydrocarbons produced and sold by the operator on our Utica Shale acreage and we receive royalty revenue from any hydrocarbons produced and sold by operators on our Cana Woodford acreage. In addition, we have expanded our business to include infrastructure support services, including the formation of Razorback, a service company to provide drill pad construction for operators in the Utica Shale, as well as other joint venture investments to provide for the transportation of hydrocarbons and drilling support services in the Utica Shale region. In December 2012, we also invested in a joint venture that will provide sand for fracking operations to drillers in the Utica Shale region and other oil and natural gas basins in the U.S.

We have a geographically diverse asset base with coal reserves located in Central Appalachia, Northern Appalachia, the Illinois Basin and the Western Bituminous region and oil and natural gas investments in the Utica Shale regions of eastern Ohio and the Cana Woodford region in western Oklahoma. As of December 31, 2012, we controlled an estimated 463.7 million tons of proven and probable coal reserves, consisting of an estimated 442.8 million tons of steam coal and an estimated 20.9 million tons of metallurgical coal. In addition, as of December 31, 2012, we controlled an estimated 417.4 million tons of non-reserve coal deposits. As of December 31, 2012, Rhino Eastern LLC, a joint venture in which we have a 51% membership interest and for which we serve as manager, controlled an estimated 43.1 million tons of proven and probable coal reserves at the Rhino Eastern mining complex located in Central Appalachia, consisting entirely of premium mid-vol and

low-vol metallurgical coal, and an estimated 17.9 million tons of non-reserve coal deposits. As of December 31, 2012, we operated nine mines, including four underground and five surface mines, located in Kentucky, Ohio, West Virginia and Utah. In addition, our joint venture operates two underground mines in West Virginia. During 2010, we operated one underground mine in Colorado, but we temporarily idled this mine at the end of 2010 and the mine remained idle at the end of 2012. The number of mines that we operate may vary from time to time depending on a number of factors, including the demand for and price of coal, depletion of economically recoverable reserves and availability of experienced labor. Our oil and natural gas investments as of December 31, 2012 consisted of a 5% net interest in a portfolio of oil and natural gas leases in the Utica Shale that encompassed 137,000 total gross acres, or 6,850 net acres, as well as approximately 1,900 net mineral acres that we own in the Cana Woodford region.

Our principal business strategy is to safely, efficiently and profitably produce, sell and lease both steam and metallurgical coal from our diverse asset base in order to maintain and, over time, increase our quarterly cash distributions. In addition, we intend to continue to expand and diversify our operations through strategic acquisitions, including the acquisition of stable, cash generating natural resource assets, such as our oil and natural gas investments in the Utica Shale and Cana Woodford regions. We believe that such assets will allow us to grow our cash available for distribution and enhance stability of our cash flow.

For the year ended December 31, 2012, we generated revenues of approximately $352.0 million and net income of approximately $40.2 million. Excluding results from the Rhino Eastern joint venture, for the year ended December 31, 2012, we produced approximately 4.3 million tons of coal, purchased approximately 0.4 million tons of coal and sold approximately 4.7 million tons of coal, approximately 89% of which were pursuant to supply contracts. Additionally, Rhino Eastern produced and sold approximately 0.3 million tons of premium mid-vol metallurgical coal for the year ended December 31, 2012.

Recent Developments

Patriot Coal Corporation Bankruptcy

We have a 51% equity interest in the Rhino Eastern joint venture, with Patriot owning the remaining membership interest. On July 9, 2012, Patriot filed for Chapter 11 bankruptcy protection. While the long term impact of the Patriot bankruptcy filing on the Rhino Eastern joint venture remains uncertain at this point, normal operations have continued at the Rhino Eastern joint venture and thus far the bankruptcy filing has not had a material negative effect on Rhino Eastern.

Coal Acquisitions

Acquisition of Coal Property

In May 2012, we completed the purchase of certain rights to coal leases and surface property located in Daviess and McLean counties in western Kentucky for approximately $1.5 million. In addition, we could potentially be required to pay an additional $3.0 million related to this acquisition if certain conditions are met. Of that amount, $2.0 million was initially recorded in in Property, plant and equipment and Accrued expenses related to this acquisition since this additional amount related to the purchase of these assets was probable and estimable. As of December 31, 2012, we have paid $1.6 million of the $2.0 million. The remaining $1.0 million in potential payments has not been recorded because the conditions requiring payment of this amount have not yet occurred.

The coal leases and property are estimated to contain approximately 32 million tons of proven and probable coal reserves that are contiguous to the Green River. The property is undeveloped, but fully

permitted, and provides us with access to Illinois Basin coal that is adjacent to a navigable waterway, which could be exported to non-U.S. customers.

In August 2011, we purchased non-reserve coal deposits at our Sands Hill operation for approximately $2.5 million, which is estimated to include approximately 2.5 million tons.

In June 2011, we acquired approximately 32,600 acres and associated surface rights in Randolph and Upshur Counties, West Virginia for approximately $7.5 million. These development stage properties are not permitted and contain no infrastructure. We plan to fully explore these properties and intend to prove up additional mineable underground metallurgical coal reserves for future mining.

Acquisition of The Elk Horn Coal Company, LLC

In June 2011, we completed the acquisition of 100% of the ownership interests in Elk Horn for approximately $119.7 million in cash consideration. Elk Horn is primarily a coal leasing company located in eastern Kentucky that provides us with royalty revenues. The Elk Horn acquisition was funded with borrowings available under our credit facility, which were subsequently partially repaid with proceeds from an offering of our common units.

Oil and Gas Investments

During the year ended 2011, we completed the acquisition of certain oil and natural gas mineral rights in the Cana Woodford region of western Oklahoma for a total purchase price of approximately $8.1 million. We began to receive royalty revenues from these mineral rights in early 2012.

We and an affiliate of Wexford Capital have participated with Gulfport, a publicly traded company, to acquire interests in a portfolio of oil and natural gas leases in the Utica Shale. During the year ended December 31, 2011, we completed the acquisitions of interests in a portfolio of leases in the Utica Shale region of eastern Ohio for a total purchase price of approximately $19.9 million. Gulfport is actively drilling in the Utica acreage and during the third and fourth quarters of 2012, Gulfport released results from seven test wells that had been drilled on our acreage, which we believe are very positive due to the amount of hydrocarbon liquids contained in these wells. Our 2013 projected expansion capital expenditures include an estimated $15 million to $20 million for our oil and natural gas investments, primarily for drilling costs related to our Utica Shale acreage.

Our initial position in the Utica Shale consisted of a 10.8% net interest in approximately 80,000 gross acres. During the third quarter of 2012, we completed an exchange of our initial 10.8% position for a pro rata interest in 125,000 gross acres under lease by Gulfport and an affiliate of Wexford Capital. Also during the third quarter of 2012, our position was adjusted to a 5% net interest in the 125,000 gross acres, or approximately 6,250 net acres. As of December 31, 2012, our Utica Shale position consisted of our 5% net interest in a total portfolio of approximately 137,000 gross acres, or approximately 6,850 net acres. In addition, per the joint operating agreement completed between us, Gulfport and an affiliate of Wexford Capital, we have funded our proportionate share of drilling costs to Gulfport for wells being drilled on our acreage. During the year ended December 31, 2012, we funded approximately $5.3 million of drilling costs that are included in Coal properties and oil and natural gas properties in our consolidated statements of financial position as of December 31, 2012. Two of the wells on our acreage began production in late 2012 and we recognized our initial revenue on our Utica Shale investment during December 2012.

In March 2012, we completed an out-lease agreement with a third party for approximately 1,232 acres we own in the Utica Shale region of Harrison County Ohio. The lease agreement is for an initial five year term with an optional three year renewal period and conveys rights to the lessee to perform drilling and operating activities for producing oil, natural gas or other hydrocarbons. As part of the lease agreement, the third party agreed to pay us the sum of $6,000 per acre as a lease bonus, of which

$0.5 million was paid at the signing of the lease agreement. An additional $6.9 million was paid in the second quarter of 2012 totaling approximately $7.4 million of lease bonus payments for approximately 1,232 acres. We are working to resolve title issues on approximately 250 remaining acres to be included in the lease. In addition, the lease agreement stipulates that the third party shall pay us a 20% royalty based upon the gross proceeds received from the sale of oil and/or natural gas recovered from the leased property.

Other Investments

In December 2012, we made an initial investment of approximately $2.0 million in a new joint venture, Muskie Proppants LLC ("Muskie"), with affiliates of Wexford Capital. Muskie was formed to provide sand for fracking operations to drillers in the Utica Shale region and other oil and natural gas basins in the U.S. We recorded our proportionate portion of the operating loss for 2012, approximately $257,000, for Muskie, which is still undergoing operational development.

In March 2012, we made an initial investment of approximately $0.1 million in a new joint venture, Timber Wolf Terminals LLC ("Timber Wolf"), with affiliates of Wexford Capital. Timber Wolf was formed to construct and operate a condensate river terminal that will provide barge trans-loading services for parties conducting activities in the Utica Shale region of eastern Ohio. The initial investment was our proportionate minority ownership share to purchase land for the construction site of the condensate river terminal. Timber Wolf had no operating activities during 2012.

In addition, during the second quarter of 2012 we formed Razorback, a services company to provide drill pad construction services in the Utica Shale for drilling operators. Razorback completed the construction of three drill pads during 2012.

Sale of Land Surface Rights

In December 2012, we completed the sale of the surface rights to approximately 134 acres located in Harrison County, Ohio for approximately $1.5 million. We recorded a gain of approximately $1.5 million related to this sale that is included on the (Gain) loss on sale/acquisition of assets-net line of our consolidated statements of operations and comprehensive income.

Sale of Triad Operations

In August 2012, we sold the operations and tangible assets of our roof bolt manufacturing company, Triad, to a third party for $0.5 million of cash consideration. As part of the sale, we retained the rights to certain intellectual property and entered into an exclusive license and option to purchase agreement for this intellectual property with the same third party for potential additional cash consideration. We have not recorded any portion of this additional consideration since this amount is contingent upon the third party determining the viability of the related intellectual property to their specifications which has since expired. In connection with this sale, we recorded an approximate $0.2 million gain that is recorded on the (Gain) loss on sale/acquisition of assets-net line of our consolidated statements of operations and comprehensive income.

Sale of Mining Assets

In December 2012, we sold certain non-core mining assets located in Pike County, Kentucky to a third party for approximately $0.2 million. The transaction also extinguished certain liabilities related to the assets sold. In relation to the sale of these assets and extinguishment of liabilities, we recorded a gain of approximately $0.9 million, which was higher than the sales amount due to the extinguishment of the liabilities. This gain is included on the (Gain) loss on sale/acquisition of assets-net line of the Partnership's consolidated statements of operations and comprehensive income.

In February 2012, we sold certain non-core mining assets located in Pike County, Kentucky to a third party for approximately $0.6 million. The transaction also extinguished certain liabilities related to the assets sold. In relation to the sale of these assets and extinguishment of liabilities, we recorded a gain of approximately $0.9 million, which was higher than the sales amount due to the extinguishment of the liabilities.

In August 2011, we sold and assigned certain non-core mining assets and related liabilities located in the Phelps, Kentucky area of our Tug River mining complex for approximately $20 million. The mining assets included leasehold interests and permits to surface and mineral interests that included steam coal reserves and non-reserve coal deposits. Additionally, the sales agreement includes the potential for additional payments of approximately $8.75 million dependent upon the future issuance of certain permits and the commencement of mining activities by the purchaser. These contingent payments are being accounted for as gain contingencies and will be recognized in the future when and if the contingencies are resolved. The transaction also transferred certain liabilities related to the assets sold. Since we had limited mining operations on the assets that were sold, we believe the sale of these assets have not had a negative impact on our financial results. In relation to the sale of these assets and transfer of liabilities, we recorded a gain of approximately $2.4 million.

Follow-on Offering

On July 18, 2011, we completed a public offering of 2,875,000 common units, representing limited partner interests in us, at a price of $24.50 per common unit. Of the common units issued, 375,000 units were issued in connection with the exercise of the underwriters' option to purchase additional units. Net proceeds from the offering were approximately $66.4 million, after deducting underwriting discounts and offering expenses of approximately $4.1 million. We used the net proceeds from this offering, and a related capital contribution by our general partner of approximately $1.4 million, to repay approximately $67.8 million of outstanding indebtedness under our credit facility.

Credit Facility

On July 29, 2011, we executed an amended and restated senior secured credit facility with PNC Bank, N.A., as administrative agent, and a group of lenders, which are parties thereto. The maximum availability under the amended and restated credit facility is $300.0 million, with a one-time option to increase the availability by an amount not to exceed $50.0 million.

Factors That Impact Our Business

Our results of operations in the near term could be impacted by a number of factors, including (1) adverse weather conditions and natural disasters,
(2) poor mining conditions resulting from geological conditions or the effects of prior mining, (3) equipment problems at mining locations, (4) the availability of transportation for coal shipments or (5) the availability and costs of key supplies and commodities such as steel, diesel fuel and explosives.

On a long-term basis, our results of operations could be impacted by, among other factors, (1) changes in governmental regulation, (2) the availability and prices of competing electricity-generation fuels, (3) the world-wide demand for steel, which utilizes metallurgical coal and can affect the demand and prices of metallurgical coal that we produce, (4) our ability to secure or acquire high-quality coal reserves and (5) our ability to find buyers for coal under favorable supply contracts.

We have historically sold a majority of our coal through supply contracts and anticipate that we will continue to do so. As of December 31, 2012, we had commitments under supply contracts to deliver annually scheduled base quantities of 3.9 million, 2.5 million, 1.4 million, 1.1 million and 1.1 million tons of coal to 16 customers in 2013, 7 customers in 2014, 4 customers in 2015, 2 customers

in 2016 and 2 customers in 2017, respectively. Some of the contracts have sales price adjustment provisions, subject to certain limitations and adjustments, based on a variety of factors and indices.

Results of Operations

We conduct business through four reportable business segments: Central Appalachia, Northern Appalachia, Eastern Met and Rhino Western. Additionally, we have an Other category that includes our ancillary businesses and oil and natural gas investments. Our Central Appalachia segment consists of four mining complexes: Tug River, Rob Fork and Deane, which, as of December 31, 2012, together included two underground mines, three surface mines and three preparation plants and loadout facilities in eastern Kentucky and southern West Virginia. Additionally, our Central Appalachia segment includes the Elk Horn operations. Our Northern Appalachia segment consists of the Hopedale mining complex, the Sands Hill mining complex, the Leesville field and the Springdale field. The Hopedale mining complex, located in northern Ohio, included one underground mine and one preparation plant and loadout facility as of December 31, 2012. Our Sands Hill mining complex, located in southern Ohio, included two surface mines, a preparation plant and a river terminal as of December 31, 2012. The Eastern Met segment includes our 51% equity interest in the results of operations of the Rhino Eastern joint venture, which owns the Rhino Eastern mining complex, located in West Virginia, and for which we serve as manager. As of December 31, 2012, this complex was comprised of two underground mines and a preparation plant and loadout facility (owned by our joint venture partner). Our Rhino Western segment includes our two underground mines in the Western Bituminous region that consist of our McClane Canyon mine in Colorado that has been temporarily idled since the end of 2010, and remained idle at the end of 2012, and our Castle Valley mining complex in Utah that began production in January 2011. Our Other category includes our ancillary businesses that consist of our limestone operations and various businesses that provide support services such as reclamation, maintenance and transportation, the cost of which is reflected in our cost of operations, as well as our oil and natural gas investments.

During 2012, we changed the method that allocates certain corporate overhead and interest charges to our reportable segments from a method based on production tons to a method based upon the amount invested in fixed assets. We changed the allocation method as a result of additional investments that we made in our non-coal operations. The reportable segment figures in the following discussion and analysis have been re-cast for 2011 and 2010 for comparability purposes.

Our management uses a variety of financial measurements to analyze our performance, including (1) Adjusted EBITDA, (2) coal revenues per ton and
(3) cost of operations per ton.

Adjusted EBITDA. The discussion of our results of operations below includes references to, and analysis of, our segments' Adjusted EBITDA results. Adjusted EBITDA represents net income before deducting interest expense, income taxes and depreciation, depletion and amortization, including our proportionate share of these expense items from our Rhino Eastern LLC joint venture, while also excluding certain non-recurring items. Adjusted EBITDA is used by management primarily as a measure of our segments' operating performance. Adjusted EBITDA should not be considered an alternative to net income, income from operations, cash flows from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Because not all companies calculate EBITDA identically, our calculation may not be comparable to similarly titled measures of other companies. Please read "-Reconciliation of Adjusted EBITDA to Net Income by Segment" for reconciliations of Adjusted EBITDA to net income by segment for each of the periods indicated.

Coal Revenues Per Ton. Coal revenues per ton represents coal revenues divided by tons of coal sold. Coal revenues per ton are a key indicator of our effectiveness in obtaining favorable prices for our product.

Cost of Operations Per Ton. Cost of operations per ton sold represents the cost of operations (exclusive of DD&A) divided by tons of coal sold. Management uses this measurement as a key indicator of the efficiency of operations.

Summary

    The following table sets forth certain information regarding our revenues,
operating expenses, other income and expenses, and operational data for years
ended December 31, 2012, 2011 and 2010:

                                                             Year Ended December 31,
                                                            2012        2011      2010
                                                                  (in millions)
Statement of Operations Data:
Total revenues                                             $  352.0    $ 367.2   $ 305.6
Costs and expenses:
Cost of operations (exclusive of DD&A shown separately
below)                                                        247.1      267.2     220.8
Freight and handling costs                                      5.8        4.3       2.6
Depreciation, depletion and amortization                       41.4       36.3      34.1
Selling, general and administrative (exclusive of DD&A
shown separately above)                                        20.5       21.8      16.4
Asset impairment loss                                             -          -       0.7
(Gain) on sale/acquisition of assets                           (4.9 )     (3.2 )   (10.7 )

Income from operations                                         42.1       40.8      41.7
Interest and other income (expense):
Interest expense and other                                     (7.8 )     (6.1 )    (5.3 )
Interest income and other                                       0.1        0.1         -
Equity in net income of unconsolidated affiliates               5.8        3.3       4.7

Total interest and other income (expense)                      (1.9 )     (2.7 )    (0.6 )

Net income                                                 $   40.2    $  38.1   $  41.1

Other Financial Data
Adjusted EBITDA                                            $   90.5    $  82.0   $  71.5

Summary. For the year ended December 31, 2012, our total revenues decreased to $352.0 million from $367.2 million for the year ended December 31, 2011. We sold 4.7 million tons of coal for the year ended December 31, 2012, which is 0.2 million tons less, or a 4.2% decrease, than the 4.9 million tons of coal sold for the year ended December 31, 2011. This decrease in tons sold was the result of weak demand in the met and steam coal markets, which resulted in lower coal revenues for 2012 compared to 2011. We believe the weak demand in the steam coal markets was primarily driven by an unseasonably mild winter along with an over-supply of low priced natural gas, both of which resulted in an increase of coal inventory supplies at electric utilities and fewer tons of steam coal being utilized in electricity generation. We believe the weak demand in the met coal markets was primarily driven by a decrease in world-wide steel production due to economic weakness in China and Europe.

For the year ended December 31, 2012, our coal inventories increased by approximately 29,000 tons from the year ended December 31, 2011 due to weak demand in the steam and met coal markets.

Net income was $40.2 million for the year ended December 31, 2012 compared . . .