1086600--3/2/2009--ALLIANCE_RESOURCE_PARTNERS

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Risks Inherent in an Investment in Us Cash distributions are not guaranteed and may fluctuate with our performance and other external factors. We may issue an unlimited number of limited partner interests, on terms and conditions established by our managing general partner, without the consent of our unitholders, which will dilute your ownership interest in us and may increase the risk that we will not have sufficient available cash to maintain or increase our per unit distribution level. The market price of our common units could be adversely affected by sales of substantial amounts of our common units in the public markets, including sales by our existing unitholders. An increase in interest rates may cause the market price of our common units to decline. The credit and risk profile of our managing general partner and its owners could adversely affect our credit ratings and profile. Our unitholders do not elect our managing general partner or vote on our managing general partner s officers or directors. As of December 31, 2008, AHGP owned approximately 42.5% of our outstanding units, a sufficient number to block any attempt to remove our general partner. The control of our managing general partner may be transferred to a third-party without unitholder consent. Unitholders may be required to sell their units to our managing general partner at an undesirable time or price. Cost reimbursements due to our general partners may be substantial and may reduce our ability to pay the distributions to unitholders. Your liability as a limited partner may not be limited, and our unitholders may have to repay distributions or make additional contributions to us under certain circumstances. Our partnership agreement limits our managing general partner s fiduciary duties to our unitholders and restricts the remedies available to unitholders for actions taken by our general partners that might otherwise constitute breaches of fiduciary duty. Some of our executive officers and directors face potential conflicts of interest in managing our business. Our managing general partner s discretion in determining the level of cash reserves may adversely affect our ability to make cash distributions to our unitholders. Our general partners have conflicts of interest and limited fiduciary responsibilities, which may permit our general partners to favor their own interests to the detriment of our unitholders. Risks Related to our Business The current global recession and turmoil in financial markets could have a material adverse effect on our financial condition and results of operations. A substantial or extended decline in coal prices could negatively impact our results of operations. Competition within the coal industry may adversely affect our ability to sell coal, and excess production capacity in the industry could put downward pressure on coal prices. Any change in consumption patterns by utilities away from the use of coal could affect our ability to sell the coal we produce. The stability and profitability of our operations could be adversely affected if our customers do not honor existing contracts or do not extend existing or enter into new long-term contracts for coal . Some of our long-term coal supply agreements contain provisions allowing for the renegotiation of prices and, in some instances, the termination of the contract or the suspension of purchases by customers. Extensive environmental laws and regulations affect coal consumers, and have corresponding effects on the demand for our coal as a fuel source. Increased regulation of greenhouse gas emissions could result in reduced demand for coal as a fuel source, which would reduce demand for our products and decrease our revenues. We depend on a few customers for a significant portion of our revenues, and the loss of one or more significant customers could affect our ability to maintain the sales volume and price of the coal we produce. Litigation resulting from disputes with our customers may result in substantial costs, liabilities and loss of revenues. Our ability to collect payments from our customers could be impaired if their creditworthiness declines or if they fail to honor their contracts with us. Our profitability may decline due to unanticipated mine operating conditions and other events that are not within our control and that may not be fully covered under our insurance policies. A shortage of skilled labor may make it difficult for us to maintain labor productivity and competitive costs and could adversely affect our profitability. Although none of our employees are members of unions, our work force may not remain union-free in the future. Our mining operations are subject to extensive and costly laws and regulations, and such current and future laws and regulations could increase current operating costs or limit our ability to produce coal. We may be unable to obtain and renew permits necessary for our operations, which could reduce our production, cash flow and profitability. Fluctuations in transportation costs and the availability or reliability of transportation could reduce revenues by causing us to reduce our production or by impairing our ability to supply coal to our customers. We may not be able to successfully grow through future acquisitions. Mine expansions and acquisitions involve a number of risks, any of which could cause us not to realize the anticipated benefits. Completion of growth projects and future expansion could require significant amounts of financing which may not be available to us on acceptable terms, or at all. The unavailability of an adequate supply of coal reserves that can be mined at competitive costs could cause our profitability to decline. The estimates of our coal reserves may prove inaccurate, and you should not place undue reliance on these estimates. Mining in certain areas in which we operate is more difficult and involves more regulatory constraints than mining in other areas of the U.S., which could affect the mining operations and cost structures of these areas. Some of our operating subsidiaries lease a portion of the surface properties upon which their mining facilities are located. Unexpected increases in raw material costs could significantly impair our operating profitability. Our indebtedness may limit our ability to borrow additional funds, make distributions to unitholders or capitalize on business opportunities. Federal and state laws require bonds to secure our obligations related to statutory reclamation requirements and workers compensation and black lung benefits. Our inability to acquire or failure to maintain surety bonds that are required by state and federal law would have a material adverse effect on us. Tax Risks to Our Common Unitholders If we were to become subject to entity-level taxation for federal or state tax purposes, our cash available for distribution to you would be substantially reduced. If the IRS were to contest the federal income tax positions we take, it may adversely impact the market for our common units, and the costs of any such contest would reduce cash available for distribution to our unitholders. Even if you do not receive any cash distributions from us, you will be required to pay taxes on your share of our taxable income. Tax gain or loss on the disposition of our units could be different than expected. Tax-exempt entities and non-U.S. persons owning our units face unique tax issues that may result in adverse tax consequences to them. We treat each purchaser of our units as having the same tax benefits without regard to the units purchased. The IRS may challenge this treatment, which could adversely affect the value of our units. We prorate our items of income, gain, loss and deduction between transferors and transferees of our units each month based upon the ownership of our units on the first day of each month, instead of on the basis of the date a particular unit is transferred. The IRS may challenge this treatment, which could change the allocation of items of income, gain, loss and deduction among our unitholders. A unitholder whose units are loaned to a short seller to cover a short sale of units may be considered as having disposed of those units. If so, he would no longer be treated for tax purposes as a partner with respect to those units during the period of the loan and may recognize gain or loss from the disposition. We have adopted certain valuation methodologies that may result in a shift of income, gain, loss and deduction between the general partner and the unitholders. The IRS may challenge this treatment, which could adversely affect the value of the common units. The sale or exchange of 50% or more of our capital and profits interests within a twelve-month period will result in the termination of our partnership for federal income tax purposes. You will likely be subject to state and local taxes and income tax return filing requirements in jurisdictions where you do not live as a result of investing in our units.

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1086600--3/2/2009--ALLIANCE_RESOURCE_PARTNERS_LP