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United States

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549





FORM 10-KSB





(Mark One)



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

for the fiscal year ended December 31, 2007

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

Commission File Number: 000-33433





KAISER VENTURES LLC

(Exact name of registrant as specified in its charter)







|                                                              |  |                                    
|------------------------------------------------------------- |  | -----------------------------------
|DELAWARE                                                      |  | 33-0972983                         
|(State or other jurisdiction ofincorporation or organization) |  | (I.R.S. EmployerIdentification No.)

3633 E. Inland Empire Blvd. Suite 480

Ontario, Ca 91764

(Address of
principal executive offices and zip code)

Registrants telephone number, including area code: (909) 483-8500

Securities registered pursuant to Section 12(g) of the Act: None

Securities registered pursuant to Section 12(b) of the Act:







|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of Each Class |  | Name of Each Exchange on which Registered
|Class A Units       |  | Not Applicable                           

Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange
Act.   ̈

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No   ̈

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-8 is not contained in this form, and will not be contained to the best of registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.   ̈

Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):    Yes   ̈    No  x

Issuers revenues for its most recent fiscal year: approximately $2,999,000.

The Class A Units are not publicly traded. The aggregate market value of the issuers Class A Units held by non-affiliates of the issuer would be
approximately $6,164,031 based upon the tax appraisal conducted on behalf of the Company as of November 30, 2001 reflecting a $1.50 per unit value. There has not been any public trading of Class A Units since that date. (For purposes of this
calculation, Class A Units held by each manager, executive officer, and by each person known by the registrant as owning 10% or more of the outstanding Class A Units have been excluded. This determination of affiliate status is not
necessarily a conclusive determination for other purposes).

At March 17, 2008, 7,157,807 Class A Units were outstanding including 104,267
Class A Units outstanding but reserved for distribution to the general unsecured creditors in the Kaiser Steel Corporation bankruptcy and 113,439 Class A Units deemed outstanding and reserved for issuance to holders of Kaiser Ventures Inc.
stock that have to convert such stock into Kaiser Ventures LLC Class A Units.

Documents Incorporated by Reference: Certain exhibits as
identified in the Exhibit List to this Report on Form 10-KSB are incorporated by reference.

Transitional Small Business Disclosure Format (Check
One):Yes ̈Nox









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TABLE OF CONTENTS TO FORM 10-KSB



|         |  |                                                                                                                 |  |     
|-------- |  | --------------------------------------------------------------------------------------------------------------- |  | ----
|         |  |                                                                                                                 |  | PAGE
|PART I   |  |                                                                                                                
|         |  |                                                                                                                
|         |  | FORWARD-LOOKING STATEMENTS                                                                                      |  | 1   
|         |  |                                                                                                                
|         |  | WHO WE ARE                                                                                                      |  | 1   
|         |  |                                                                                                                
|Item 1.  |  | DESCRIPTION OF BUSINESS                                                                                         |  | 1   
|         |  |                                                                                                                
|Item 2.  |  | DESCRIPTION OF PROPERTY                                                                                         |  | 15  
|         |  |                                                                                                                
|Item 3.  |  | LEGAL PROCEEDINGS                                                                                               |  | 17  
|         |  |                                                                                                                
|Item 4.  |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                             |  | 19  
|         | 
|PART II  |  |                                                                                                                
|         |  |                                                                                                                
|Item 5.  |  | MARKET FOR THE COMPANYS EQUITY, RELATED OWNER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES |  | 20  
|         |  |                                                                                                                
|Item 6.  |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF OPERATION                                                               |  | 22  
|         |  |                                                                                                                
|Item 7.  |  | FINANCIAL STATEMENTS                                                                                            |  | 30  
|         |  |                                                                                                                
|Item 8.  |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                            |  | 54  
|         |  |                                                                                                                
|Item 8A. |  | CONTROLS AND PROCEDURES                                                                                         |  | 54  
|         |  |                                                                                                                
|Item 8B. |  | OTHER INFORMATION                                                                                               |  | 55  
|         | 
|PART III |  |                                                                                                                
|         |  |                                                                                                                
|Item 9.  |  | MANAGERS AND EXECUTIVE OFFICERS OF THE COMPANY; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT               |  | 56  
|         |  |                                                                                                                
|Item 10. |  | EXECUTIVE COMPENSATION                                                                                          |  | 60  
|         |  |                                                                                                                
|Item 11. |  | SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                                                |  | 69  
|         |  |                                                                                                                
|Item 12. |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                                  |  | 70  
|         | 
|PART IV  |  |                                                                                                                
|         |  |                                                                                                                
|Item 13. |  | EXHIBITS                                                                                                        |  | 71  
|         |  |                                                                                                                
|Item 14. |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                          |  | 76  



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PART I

FORWARD-LOOKING STATEMENTS

Except for the
historical statements and discussions contained herein, statements contained in this 10-KSB Report constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Any 10-K Report, 10-KSB Report, 10-Q Report, 10-QSB Report, 8-K Report, website posting or press release of the Company and any amendment thereof may include forward-looking
statements. In addition, other written or oral statements, which constitute forward-looking statements, have been made and may be made in the future by the Company. You should not put undue reliance on forward-looking statements. When used or
incorporated by reference in this 10-KSB Report or in other written or oral statements, the words anticipate, estimate, project, and similar expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks, uncertainties, and assumptions. We believe that our current assumptions are reasonable. Nonetheless, it is likely that at least some of these assumptions will not come true. Accordingly, should one or more of
these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, expected, or projected. For example, our actual results could materially differ from
those projected as a result of factors such as, but not limited to: Kaisers inability to complete the anticipated sale of its Eagle Mountain landfill project; litigation, including, among others, the averse decision of the U.S. District Court
in September 2005 impacting the Eagle Mountain landfill project and the outcome of the appeal of this adverse decision to the U.S. 9thCircuit Court of
Appeals, pre-bankruptcy activities of Kaiser Steel Corporation, the predecessor of Kaiser, and asbestos claims; insurance coverage disputes; the impact of federal, state, and local laws and regulations on our permitting and development activities;
competition; the challenge, reduction or loss of any claimed tax benefits; the impact of natural disasters on our assets; and/or general economic conditions in the United States and Southern California. The Company disclaims any intention to update
or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

WHO WE ARE

Unless otherwise noted: (1) the term Kaiser LLC refers to Kaiser Ventures LLC;
(2) the term Kaiser Inc. refers to the former Kaiser Ventures Inc.; (3) the terms Kaiser, the Company, we, us, and our, refer to past and ongoing business operations
conducted in the form of Kaiser Inc. or currently Kaiser LLC, and their respective subsidiaries. Kaiser Inc. merged with and into Kaiser LLC effective November 30, 2001; (4) the terms Class A Units and members refer
to Kaiser LLCs Class A Units and the beneficial owners thereof, respectively; and (5) the term the merger refers to the merger of Kaiser Inc. with and into Kaiser LLC effective November 30, 2001, in which Kaiser LLC
was the surviving company.



|Item 1. | DESCRIPTION OF BUSINESS
|------- | -----------------------

Business Strategy

General. Kaiser is the reorganized successor to Kaiser Steel Corporation, referred to as KSC, which was an integrated steel manufacturer that filed
for bankruptcy protection in 1987. Since KSCs bankruptcy, we have been developing certain assets remaining after the bankruptcy. In summary, our principal assets currently include:



| |  |  | An 83.13% ownership interest in Mine Reclamation, LLC, (referred to as MRC), which owns a permitted rail-haul municipal solid waste landfill at a property called
the Eagle Mountain Site located in the California desert. This landfill project is currently subject to a contract for its sale to County District No. 2 of Los Angeles County (which we refer to as the District) for
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | approximately $41 million plus accrued interest which is estimated to be approximately $8 million from May 2001 to the date of this Report on Form 10-KSB.
The sale is subject to a number of conditions, several of which remain to be fully satisfied. In September 2005 the Company received an adverse U.S. District Court decision that may materially impact the viability of the landfill project. We along
with the U.S Department of Interior have appealed the decision to the U.S. 9thCircuit Court of Appeals. Oral argument was completed in the appeal
in December 2007, and we are waiting for the decision in such appeal;
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A 50% ownership interest in the West Valley Materials Recovery Facility and Transfer Station, a transfer station and materials recovery facility located on land
acquired from Kaiser, which we refer to as the West Valley MRF; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Approximately 5,400 additional acres owned or controlled by Kaiser at the Eagle Mountain Site that are not included in the pending sale to the District. Millions of
tons of stockpiled rock are located on this acreage. However, the September 2005 adverse U.S. District Court decision reversing a completed land exchange between Kaiser and the United States Bureau of Land Management (BLM), if upheld on
appeal, will change the amount and nature of a material portion of Kaisers land holdings at the Eagle Mountain Site.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of December 31, 2007, we also had cash and cash equivalents, receivables and short-term investments of approximately $9.63 million.

Cash Maximization Strategy. In September 2000, Kaiser Inc.s Board of Directors approved a strategy to maximize the cash distributed to Kaiser Inc.s stockholders. Under this strategy, Kaiser is
seeking to:



| |  |  | Complete the sale of the landfill project at the Eagle Mountain Site and to resolve the outstanding litigation in connection with the related federal land exchange
for such project;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Reduce the risk to Kaiser from outstanding environmental and other similar types of liabilities by purchasing additional insurance coverage and negotiating with
purchasers of our properties to assume liability risks as part of the sale transaction;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Continue to hold our 50% interest in West Valley MRF, which pays cash distributions to Kaiser, until we believe it is appropriate to sell this asset;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Explore other opportunities for use of the Eagle Mountain Site, including the development of the millions of tons of rock stockpiled at the site;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Sell miscellaneous assets, such as surplus property and mineral interests in Southern California; and
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | Minimize our general and administrative expenses by continuing to reduce our staff as we sell our remaining assets.
| | - |  | -------------------------------------------------------------------------------------------------------------------

Consistent with this strategy, Kaiser Inc. completed or entered into the following transactions:



| |  |  | In August 2000 MRC entered into an agreement to sell the landfill project at the Eagle Mountain Site to the District. This sale is subject to the satisfaction of
numerous conditions, not all of which have been satisfied and is subject to satisfactory resolution of outstanding litigation involving the landfill project. As a result, we cannot be sure that this sale will close on the terms negotiated with the
District, if at all. For additional information, see DESCRIPTION OF BUSINESS - Eagle Mountain Landfill Project and Pending Sale - Pending Sale of the Landfill Project.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Also in August 2000 we sold approximately 588 acres of the former KSC mill site property (referred to as the Mill Site Property) for $16 million in cash plus the
assumption of certain environmental liabilities. For additional information, see DESCRIPTION OF BUSINESS - Historical Operations and Completed Transactions -Mill Site Property - CCG Ontario, LLC.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In October 2000 we sold approximately 37 additional acres of the Mill Site Property for $3.8 million in cash. For additional information, see DESCRIPTION OF
BUSINESS - Historical Operations and Completed Transactions - Mill Site Property - Rancho Cucamonga Parcel.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In March 2001 in connection with the resolution of certain litigation, we sold our interest in Fontana Union Water Company, a mutual water company, for $87.5
million in cash, plus approximately $2.5 million in additional payments due under a related lease. For additional information, see DESCRIPTION OF BUSINESS - Historical Operations and Completed Transactions - Water Resources - Fontana Union
Stock Sale.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In June 2001 we purchased a twelve-year insurance policy effective June 30, 2001, expected to cover substantially all environmental claims related to the
historical operations of Kaiser for an aggregate cost of approximately $5.8 million, of which KSC Recovery, Inc., Kaiser Steels bankruptcy estate (referred to as KSC), paid $2 million and we paid the balance of approximately $3.8
million. For additional information, see DESCRIPTION OF BUSINESS - Historical Operations and Complete Transactions - Mill Site Environmental Matters.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Conversion to a Limited Liability Company. As a result of the actions outlined above, Kaiser Inc. had cash and cash equivalents of approximately
$80 million as of September 30, 2001. At that time, Kaiser Inc.s Board sought the best means of delivering this cash to its investors on a tax advantageous basis while also avoiding any future double taxation generally imposed on future
corporate distributions to investors. After considering various alternatives, Kaiser Inc.s Board determined that converting Kaiser Inc. into a limited liability company would best achieve these goals.

More specifically, by converting to a limited liability company on or before December 31, 2001, Kaiser ultimately saved approximately $16 million in
income taxes in 2001 by capturing the significant accumulated tax losses associated with MRC. These tax savings meant that Kaiser Inc. was able to increase the cash distributed to its stockholders by almost $2.00 per share. In addition, the
conversion enabled most of Kaiser Inc.s stockholders to offset their tax basis in each share of Kaiser Inc.s common stock against the cash distribution to them in the merger, with only the difference taxed at capital gains rates.

The conversion was approved at Kaiser Inc.s November 28, 2001, annual meeting of its stockholders and consummated on
November 30, 2001. The conversion was accomplished through the merger of Kaiser Inc. with and into Kaiser LLC, with Kaiser LLC as the surviving company of the merger. In order to capture the benefits associated with the income tax flow-through
treatment offered by a limited liability structure and as a result of the requirements imposed by the Internal Revenue Code, the Class A Units received in the merger are not traded on any securities or secondary market and are subject to
significant transfer restrictions.

We continue to undertake activities that
evaluate and implement the cash maximization strategy. However, it is unlikely that staff and related expenses will be reduced further given our remaining assets and activities. In addition, the September 2005 adverse U.S. District Court decision
concerning the landfill project and the outcome of the appeal of that decision may ultimately alter and will certainly impact the timing of the continuing implementation of the cash maximization strategy. For additional information on the adverse
U.S. District Court decision and its appeal to the U.S. 9thCircuit Court of Appeals, please see Item 3. LEGAL PROCEEDINGS - Eagle Mountain
Landfill Project Litigation.



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EAGLE MOUNTAIN LANDFILL PROJECT AND PENDING SALE

Description of the Eagle Mountain Site. Kaisers Eagle Mountain Site located in the remote California desert approximately 200 miles east of
Los Angeles, currently consisting of approximately 10,800 acres that contains three large open pit mines, the Eagle Mountain Townsite and a 52-mile private rail line that accesses the site. In 1988, Kaiser leased what is now approximately 4,654
acres of the mine site and the rail line to MRC for development of a rail-haul solid-waste landfill. As discussed in more detail below, the amount and nature of the acreage owned and controlled at the Eagle Mountain Site would change in the event
the September 2005 U.S. District Court decision reversing a land exchange completed between the Company and the BLM in October 1999 is upheld on appeal.

In 1988, in anticipation of Southern Californias need for new environmentally safe landfill capacity, MRC began the planning and permitting for a 20,000 ton per day rail-haul, non-hazardous solid waste landfill
at Kaisers Eagle Mountain Site. The landfill project received all the major permits and approvals required for siting, constructing, and operating the landfill project in 1999. We believe that the Eagle Mountain Site has many unique attributes
which make it particularly well-suited for a rail-haul, solid waste landfill, including, among other attributes, its remote location, arid climate, available and suitable materials for the proposed liner system and daily cover, and rail access.

Acquisition of Our Interest in MRC. We initially acquired our interest in MRC in 1995, as a result of the withdrawal of MRCs
previous majority owner, a subsidiary of Browning Ferris Industries. Before and in connection with this withdrawal, Browning Ferris invested approximately $45 million in MRC. In 2000, Kaiser assigned all of the economic benefits of the MRC lease and
granted an option to buy the landfill property to MRC in exchange for an increase in Kaisers ownership interest in MRC. The MRC lease will terminate upon the sale of the landfill project to the District, assuming the sale is completed. We
presently own 83.13% of MRCs Class B Units (like common stock) and 100% of its Class A Units (like preferred stock). See Item 1. DESCRIPTION OF BUSINESS - Eagle Mountain Landfill Project and Pending Sale - MRC Financing below.

Pending Sale of the Landfill Project

Background.In August 2000, MRC entered into an agreement to sell the landfill project to the District for $41 million. Under the terms of that agreement, upon closing of the sale, $39 million of the total purchase price is to be
deposited into an escrow account. This money would then be released to MRC on the resolution of certain litigation contingencies. Currently the only existing litigation contingency arises out of the federal litigation challenging the completed
federal land exchange which is discussed below. Even though the closing has not taken place and these funds have not been deposited into an escrow account, interest began accruing on this portion of the purchase price on May 3, 2001. The
remaining $2 million of the purchase price would also be placed into an escrow account upon closing and was originally to be released upon the later of (1) the release of the $39 million as described above or (2) the permitting approvals
of the Districts Puente Hills landfill for its remaining 10 years of capacity. However, the District has received the necessary permits for the expansion of its Puente Hills landfill and thus, the full purchase price will be placed into escrow
when the initial closing has occurred. As discussed in more detail in Item 3. LEGAL PROCEEDINGS - Eagle Mountain Landfill Project Exchange Litigation, on September 20, 2005, the U.S. District Court for the Central District of
California, Eastern Division, issued an adverse decision in the federal land exchange litigation, which would, if fully affirmed on appeal, jeopardize the viability of the landfill project and its sale to the District. Accordingly, receipt of the
purchase price, in whole or in part, if at all, will continue to be delayed pending satisfactory resolution of these contingencies. At this time, we cannot estimate when or if the sale may be completed.

The sale of the landfill project is subject to the results of the Districts due diligence and satisfaction of numerous contingencies. The
contingencies include, but are not limited to, obtaining the transfer of the landfill projects permits to the District, obtaining all necessary consents to the transaction, resolving title



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matters, and negotiating mutually acceptable joint use agreements and resolution of outstanding litigation. We have been working on resolving various title
issues, obtaining necessary consents and otherwise working toward a closing. However, resolution of all remaining issues will not occur until and unless there is a positive decision in the land exchange litigation which is currently on appeal to the
U.S. 9thCircuit Court of Appeals. Although the contractual expiration date is currently June 30, 2008, the date has already been extended
numerous times. The conditions to closing are not expected to be met by the current expiration date, and the parties will individually determine whether to extend the closing date one or more additional times. In addition, as discussed in more
detail below, the adverse decision in the federal land exchange may impact the sale of the landfill project to the District. There is no assurance or requirement that either party will continue to extend the closing date for the proposed sale of the
landfill project. See Item 1. DESCRIPTION OF BUSINESS - Eagle Mountain Landfill Project and Pending Sale - Risks Factors for a more detailed discussion of some of the material risk factors facing the landfill project and its sale.

Flood Damage to Railroad

The Company
owns an approximate 52-mile private railroad that runs from Ferrum Junction near the Salton Sea to the Eagle Mountain mine. In late August and early September of 2003, portions of the railroad and related protective structures sustained considerable
damage due to heavy rains and flash floods. This damage included having some rail sections being buried under silt while other areas had their rail bed undermined. Subsequent to the filing of our report on Form 10-Q for the quarter ended
September 30, 2003, we conducted a more complete investigation of the damage and of the costs to return the railroad to the condition that it was in prior to the flood damage. As a result of that investigation, we estimated that the cost to
repair the damage to be a minimum of $4.5 million for which an accrual has been made. Since the 2003 floods, work necessary to help preserve and protect the existing railroad has been undertaken. However, the major repairs required to return the
railroad to its condition prior to the flood damage will be deferred until a later date.

MRC Financing

Since 1995 MRC has been funded through a series of private placements to its existing equity holders. As a result of prior MRC private placements and in
exchange for releasing the economic benefits of the lease with MRC and granting MRC the option to acquire the landfill project site for $1.00, we have increased our original 70% ownership interest in MRC acquired in 1995 to 83.13%. A private
placement to MRCs existing members was completed in the third quarter of 2007. The private placement is payable in two installments with the second installment due by the end of March 2008. Future funding of MRC will be required during 2008
and 2009 to cover such items as the completion of the pending sale to the District and railroad repairs but there is no assurance that such funding will be obtained.

Current Status

Approval by Riverside County of the Landfill Project; Development Agreement.
Between 1992 and 1995, MRC faced legal challenges to its application and receipt of regulatory permits and consents required to operate the landfill project. In March 1995, MRC again initiated the necessary permitting process by filing its land use
applications with Riverside County and working with the County and U.S. Bureau of Land Management, referred to as the BLM, in securing the certification and approval of a new environmental impact report, or an EIR. After extensive public comment,
the new EIR was released to the public in January 1997, and received final approval from the Riverside Board of Supervisors in September 1997.

As a part of the process of considering the landfill project, Kaiser and MRC negotiated a Development Agreement with Riverside County. The Development Agreement provides the mechanism by which MRC acquires long-term vested land-use rights
for a landfill and generally governs the relationship among the parties to the Agreement. The Development Agreement also addresses such items



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as the duties and indemnification obligations to Riverside County; the extensive financial assurances to be provided to Riverside County; the reservation and
availability of landfill space for waste generated within Riverside County; and events of default and remedies, as well as a number of other items.

In addition, the financial payments to or for the benefit of Riverside County and others are
detailed in the Development Agreement as well as in the Purchase and Sale Agreement, which forms a part of the Development Agreement. The Purchase and Sale Agreement requires a per ton payment on non-County waste determined from a base rate which is
the greater of $2.70 per ton or ten percent (10%) of the landfill tip fee up to 12,000 tons of non-County waste. The 10% number increases to 121/2% for all non-County waste in excess of 12,000 tons per day. The per ton payment to the County also increases as volume increases. The per ton payments on non-County Waste to Riverside County are summarized as
follows:



|                                         |  |                                                                      
|---------------------------------------- |  | ---------------------------------------------------------------------
|Average Tons Per Day of Non-County Waste |  | Payment to Riverside County                                          
|0 - 7,000                                |  | Greater of 10% (12.5% once volumeexceeds 12,000 tpd or $2.70 (Base)
|7,000 - 10,000                           |  | Base + $ .80                                                         
|10,000 - 12,000                          |  | Base + $1.30                                                         
|12,000 - 16,000                          |  | Base + $2.30                                                         
|16,000 - 20,000                          |  | Base + $3.30                                                         

Of the payments made to Riverside County by MRC on non-County municipal solid waste, $.90 of the
per ton payment will be deposited into an environmental trust. In addition, MRC directly pays $.90 per ton into the environmental trust for in-County waste deposited into the landfill. Funds in the environmental trust are to be used within Riverside
County for: (a) the protection, acquisition, preservation and restoration of parks, open space, biological habitat, scenic, cultural and scientific resources; (b) the support of environmental education and research; (c) the mitigation
of the landfill projects environmental impacts; and (d) the long term monitoring of the above mentioned items.

Finally, MRC has
agreed to pay $.10 per ton of municipal solid waste deposited into the landfill to the National Parks Foundation for the benefit of the National Park Service.

Other major payments include: (i) partial funding for up to four rail crossings with $1 million due upon the occurrence of the earlier of: (y) the commencement of landfill construction; or (z) under
certain circumstances, within 90-days of the execution of the Development Agreement between Riverside County and MRC; (ii) an additional $1 million for upgrading rail crossings is to be paid over the course of landfill operations;
(iii) financial assistance of approximately $2 million for the host community, Lake Tamarisk, comprised of $500,000 due at the commencement of construction of the landfill plus approximately $1.5 million due over the course of landfill
operations; and (iv) funding for the non-California Environmental Quality Act reduction air emission programs of $600,000 over the course of operations.

The initial term of the Development Agreement is fifty years, although it may be extended to November 30, 2088, under certain conditions. The Development Agreement allows the landfill project to receive up to
20,000 tons per day, 6 days a week, of non-hazardous municipal solid waste. However, during its first ten years of operation, the landfill owner is limited to 10,000 tons per day of non-County waste plus the waste generated from within the County.
After ten years, the owner of the landfill may request an increase in its daily tonnage, and an independent scientific panel will review such request. The panels review is effectively limited to confirming substantial compliance with all
developmental approvals, mitigation measures and permits.

The Development Agreement
will be effective with the resolution of Kaisers ownership of the land which is the subject of the current land exchange litigation that is on appeal to the U.S. 9thCircuit Court



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of Appeals. We anticipate that the Development Agreement will be fully executed and recorded just prior to the anticipated closing of the sale of the
landfill project. Riverside County has approved the assumption of the Development Agreement by the District as part of the sale of the landfill by MRC.

In October 2005 following the adverse U.S. District Court decision on the land exchange litigation, one member of the Riverside Board of Supervisors attempted to terminate the existing Riverside County approvals for
the landfill project. Such attempt was defeated with the only supervisor voting in favor of the proposal to terminate the existing approvals being the supervisor that proposed the termination of the countys approvals. This same county
supervisor originally opposed and voted against the landfill project in 1997.

Successful Appeal of State EIR Litigation. After the
September 1997 approval of the new EIR for the landfill project, litigation with respect to MRCs EIR certification resumed. In February 1998, the San Diego County Superior Court issued a final ruling with respect to this litigation, finding
that the EIR certification did not adequately evaluate the landfill projects impact on the Joshua Tree National Park and the threatened desert tortoise. MRC, Kaiser and Riverside County appealed the Superior Courts decision; opponents
did not appeal.

On May 7, 1999, the Court of Appeal announced its decision to completely reverse the San Diego Superior Courts
prior adverse decision. The Court of Appeals decision, in effect, reinstated the EIR certification and reinstated the previous approval of the landfill project by Riverside County. In June 1999, opponents to the landfill project requested that
the California Supreme Court review and overturn the Court of Appeals decision. In July 1999, the California Supreme Court declined to review the Court of Appeals decision.

Federal Land Exchange Litigation And Other Threatened Litigation. In October 1999, Kaisers wholly owned subsidiary, Kaiser Eagle Mountain,
Inc. (now Kaiser Eagle Mountain, LLC), completed a land exchange with the BLM. In this exchange, Kaiser transferred approximately 2,800 acres of Kaiser-owned property along its railroad right-of-way to the BLM and a nominal cash equalization payment
in exchange for approximately 3,500 acres of land within the landfill project area. The land exchanged by Kaiser was identified as prime desert tortoise habitat and was a prerequisite to completion of the permitting of the landfill project. With the
land exchange completed, the Eagle Mountain Site consists of approximately 10,108 acres with 8,636 acres held in fee (which includes the Eagle Mountain Townsite) and approximately 1,472 acres held as various mining claims. The land exchange also
involved the grant of two rights-of-way by the BLM and the termination of a reversionary interest involving approximately 460 acres of the Eagle Mountain Townsite that was contained in the original grant of such property.

Following completion of the land exchange, two lawsuits were filed challenging it and requesting
its reversal. The plaintiffs argue that the land exchange should be reversed because the BLM failed to comply with the National Environmental Policy Act and the Federal Land Management Policy Act. Nearly three years after the final brief in the case
was filed, on September 20, 2005, the U.S. District Court for the Central District of California, Eastern Division, issued its opinion inDonna Charpied,et al., Plaintiffs v. United States Department of Interior, et al.,
Defendants (Case No. ED CV 99-0454 RT (Mex)) and in National Parks and Conservation Association, Plaintiff v. Bureau of Land Management, et al., Defendants (ED CV 00-0041 RT (Mex)). The decision was adverse to the landfill project in
that it set aside the land exchange completed between the Company and BLM as well as two BLM rights-of-way. The Company along with the U.S. Department of Interior appealed the decision to the U.S. 9thCircuit Court of Appeals. The briefing for the appeal was completed in 2007 and oral argument was heard before a three judge panel on December 6, 2007. While a decision may be
announced at any time, the U.S. 9thCircuit Court of Appeals generally announces its decisions six to twelve months following oral argument.
However, on occasion, the announcement of a decision may take substantially longer. If the U.S. District Courts decision is fully affirmed on appeal, such a decision would jeopardize the viability of the landfill project. In addition, such a
decision could adversely impact the agreement to sell the landfill project to the District, including termination of the agreement. For a more detailed discussion of this litigation and



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the risks associated with this litigation, see Item 3. LEGAL PROCEEDINGS - Eagle Mountain Landfill Project Land Exchange Litigation.

In April 2007 Donna Charpied, et al, filed a motion with the same U.S. District Court that handled the land exchange litigation seeking to enforce the
courts order in such case. The allegations are that additional actions are necessary to set aside the land exchange and to prevent the use of property at Eagle Mountain that would change the character and use of the exchanged properties
. The motion seeks to prevent our use of even the land we owned prior to the land exchange. We believe we are in full compliance with the U.S. Districts Courts order and that many of the assertions of the Charpieds are in
error. However, this litigation has temporarily halted certain uses of the land including any military training on our fee owned land. For additional information on this matter, see Item 3. LEGAL PROCEEDINGS - Eagle Mountain Landfill Project
Land Exchange Litigation.

In addition to the federal land exchange litigation, the Company has been threatened from time to time
with additional litigation over the landfill project involving such matters as the federal Endangered Species Act. However, as of the date of the filing of this Annual Report on Form 10-KSB none of the previous threats have resulted in the
commencement of a legal action against the Company.

Eagle Crest Energy Company. In November 2000, Eagle Crest Energy Company,
referred to as ECEC, a previous opponent to the landfill project, filed an application for a preliminary permit with the Federal Energy Regulatory Commission, referred to as FERC, for a proposed 1,000 mega-watt hydroelectric pumped storage project
and ancillary facilities. The proposed ECEC project would utilize two of the mining pits and other property at the Eagle Mountain Site, portions of which are currently leased to MRC and the subject of the pending sale to the District. This project
has been proposed in one form or another since 1989. The Company has not agreed to sell or lease this property to ECEC. This project was essentially the same project that ECEC previously proposed and was dismissed by the FERC in July 1999. However,
as a result of the October 1999 completed land exchange with the BLM, there is no title reservation on any portion of the property. As discussed below this may change if the land exchange is ultimately reversed. FERC issued a preliminary permit to
ECEC in June 2001. We, along with others, objected to the ECEC project and intervened in the matter. ECECs preliminary permit expired in the second quarter of 2004. However, shortly after the expiration of such preliminary permit, ECEC filed
an application with FERC for a new preliminary permit for the same project and on March 7, 2005, FERC granted a preliminary permit to ECEC. This was the third time ECEC was granted a preliminary permit for this potential project. We, along with
others, again intervened in this matter and oppose the ECEC project.

In January 2008 ECEC filed a preliminary application document with
FERC in which it asserts that it will now be taking the steps necessary to seek a license from FERC. We anticipate that we, along with others, will be submitting extensive comments on the preliminary application document. For example, we continue to
maintain that the landfill project and the proposed pump storage project are incompatible.

Since its existing preliminary permit was
expiring, ECEC filed for a new preliminary permit on March 3, 2008.

If the completed land exchange is ultimately and permanently
reversed in accordance with the September 2005 U.S. District Court decision, certain lands currently owned in fee by Kaiser will revert back to federal lands, although a substantial amount of such lands will then be controlled by Kaiser because of
its federal mining claims. As a result of any final reversal to federal ownership, a portion of the land may be subject to a title encumbrance associated with the issuance of the preliminary permit to ECEC by FERC.



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Risk Factors

As discussed in this Annual Report on Form 10-KSB, there are numerous risks associated with MRC and the landfill project. The landfill project has been and continues to be the subject of extensive litigation which has
and will continue to substantially delay the landfill project and which could ultimately lead to termination of the landfill project. If the current land exchange litigation is not favorably resolved or resolved in a manner that a cure can be
reasonably undertaken, the landfill project will not be viable as currently permitted. Even if the appeal of the adverse U.S. District Court decision is successful, we may not be able to cure all of the concerns with regard to other title or due
diligence matters in a timely fashion to permit the sale to the District to be completed. If the litigation is not favorably resolved and/or the Company cannot otherwise cure various alleged title and other closing issues in a timely fashion, then
the Districts purchase of the landfill project would not be completed and the Company might have to abandon Eagle Mountain and its investment in MRC. If this should occur, the Company will likely seek to pursue any other possible opportunities
or to re-solicit bids for the purchase of the landfill project, which may not result in a sale of the landfill project on favorable terms, if at all.

The ECEC pumped storage project may also be a risk to the successful completion of the landfill project and significant expenditures could be required to oppose this potential project.

In addition to the litigation and other closing risks, there are risks that the landfill project will be impacted by natural disasters like the floods
that caused significant damage to the rail line in 2003. Certain risks may be uninsurable or are not insurable on terms which we believe are economical.

As stated above, MRC will need additional funding to complete the landfill project and its potential sale, including funds to repair the flood damage sustained by the Eagle Mountain rail line. There is no assurance
that MRC can obtain additional funds through debt or equity financing on acceptable terms.

The landfill project also faces competition
from other landfills as well as the Mesquite rail-haul landfill project which the District owns and is developing.

We are also dependent
upon the continued services of our executive officers given the complex nature of the landfill project, the challenges it faces, and the importance of historical information. The loss of the services of our executive officers, especially without
advance notice, could materially and adversely impact this project and well as our other business.

WEST VALLEY MATERIALS RECOVERY FACILITY AND TRANSFER
STATION

Background

West Valley
MRF, LLC, referred to as West Valley, was formed in June 1997 by Kaiser Recycling, Inc. (now Kaiser Recycling, LLC ), a wholly-owned subsidiary of Kaiser, and West Valley Recycling & Transfer, Inc., a wholly-owned subsidiary of
Burrtec Waste Industries, Inc. This entity was formed to construct and operate the materials recovery facility referred to as the West Valley MRF. Under the terms of the parties business arrangements, Kaiser Recycling and Kaiser remain
responsible for any pre-existing environmental conditions and West Valley MRF is responsible for environmental issues that may arise related to any future deposit or release of hazardous substances. Kaiser and Burrtec have each separately guaranteed
the prompt performance of their respective subsidiarys obligations.

Phase 1 of the West Valley MRF, which included a 62,000 square
foot building, sorting equipment and related facilities for waste transfer and recycling services was built and equipped in 1997. Phase 2 of the West Valley MRF was completed in 2001 and increased the processing facility by an additional 80,000
square feet and included the installation of new recycling lines that increased the capacity of the facility to approximately 5,000 tons per day. West Valley MRF is currently processing, on average,



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approximately 4,200 - 4,400 tons of municipal solid and green waste per operating day. In 2007 West Valley MRF was successful in expanding its permitted
waste processing capacity to 7,500 tons per day.

The West Valley MRF generates cash flow in excess of that necessary to fund its cost of
operations. Furthermore, the West Valley MRF should distribute sufficient cash to cover a significant portion of Kaiser LLCs foreseeable general and administrative costs. In 2007, the West Valley MRF distributed a total of $2 million in cash
to Kaiser.

The Operating Agreement for the West Valley MRF provides the opportunity for either Burrtec or Kaiser to buy the other
partys interest in the West Valley MRF at fair market value in the event a party desires to accept an offer to buy its interest in the West Valley MRF, in the event of default by a party under the Agreement that is not cured within a specified
time period or, in some circumstances, in the event there is a proposed transfer or deemed transfer. For example, a change in the control of Kaiser to a company that is in the waste management business could trigger Burrtecs option to purchase
our interest in the West Valley MRF. In the event a party exercises its right to purchase upon the occurrence of an uncured default, a discount to fair market value may be applicable.

Financing

Most of the financing for the West Valley MRF was obtained through California Pollution
Control Financing Authority tax exempt bonds. Approximately $9.5 million in bonds were issued in June 1997 (Phase 1), and approximately $8.5 million in bonds were issued in May 2000 (Phase 2). The interest rate for the Bonds varies weekly. The rates
for 2007 ranged from approximately 3.21% to 4.05%. Bonds issued for Phase 1 have a stated maturity date of June 1, 2012, and bonds issued for Phase 2 have a stated maturity date of June 1, 2013, although West Valley MRF is required,
pursuant to an agreement with Union Bank, to periodically redeem a portion of the Bonds.

The bonds are secured by a pledge and lien on the
loan payments made by West Valley MRF and funds that may be drawn on an irrevocable direct pay letter of credit issued by Union Bank of California, N.A. The bonds are backed by a letter of credit issued by Union Bank. Kaiser and Burrtec have each
severally guaranteed fifty percent (50%) of the principal and interest on the bonds to Union Bank in the event of a default by West Valley MRF.

In 2007 West Valley and Union Bank modified the banks repayment schedule for the bonds. It was agreed that the then required accelerated principal repayments of the indebtedness could be modified in accordance
with the original issuance terms of the respective bond issues.

As of December 31, 2007, the principal amount of bonds outstanding
totaled approximately $8,340,000.

West Valley MRF and Union Bank have executed a Reimbursement Agreement that, among other things, sets
the terms and conditions whereby West Valley MRF:



| |  |  | is required to repay Union Bank in the event of a draw under the letter of credit;
| | - |  | ----------------------------------------------------------------------------------



| |  |  | grants Union Bank certain security interests in the income and property of West Valley MRF;
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | agrees to a schedule for the redemption of the Bonds; and
| | - |  | ---------------------------------------------------------



| |  |  | agrees to comply with certain financial and other covenants.
| | - |  | ------------------------------------------------------------

Kaiser and Kaiser Recycling have also provided environmental guaranty agreements to Union Bank. Under these agreements, Kaiser and Kaiser Recycling are jointly and severally liable for any liability that



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may be imposed on Union Bank for pre-existing environmental conditions on the West Valley MRFs property acquired from Kaiser Recycling that the West
Valley MRF fails to timely address.

Competition

Burrtec operates a transfer and limited materials recovery facility in Agua Mansa, California. This facility is located approximately 15 miles from the West Valley MRF and competes for certain waste that might
otherwise go to the West Valley MRF. West Valley MRF monitors such waste to ensure that it receives its appropriate share of such waste. Burrtec also controls materials recovery facilities in Victorville, California and in the Coachella Valley of
California, which are not considered to be competitors of the West Valley MRF. Other entities have from time to time proposed to develop materials recovery facilities that would serve the same broad geographic area as that served by West Valley.
There is one small materials recover facility operating in Colton and two other transfer and materials recovery facilities are currently being proposed that could, if built, be competitors for certain of the waste now processed by the West Valley
MRF. One such new facility would be in the City of Pomona and the other facility would be in the City of San Bernardino. Such competition would likely adversely impact the volume and profitability of the waste processed at West Valley.

Risk Factors

The West Valley MRF faces risks
related to general economic and market conditions, including the impact of rising interest rates, fuel and labor costs. For example, in 2006, the State of California passed legislation that increased the minimum wage as of January 1, 2007, to
$7.50 per hour and to $8.00 per hour as of January 1, 2008. Another example is the dramatic increase in fuel costs. To the extent that these increases cannot be fully passed through to its customers, the increases in the minimum wage may
impact, at least in the short-term, the margins and profitability of the West Valley MRF. As a part of its operation the West Valley MRF processes for sale certain recyclable materials, including aluminum, glass, paper, newsprint, corrugated
cardboard and other similar items. These commodities are subject to material price fluctuations relating to domestic and international economic and market conditions which can materially affect future operating income and cash flows. During 2007,
commodity prices were generally higher than in 2006. However, there is a good deal of volatility in commodity prices both up and down.

Most of the waste processed at the West Valley MRF is as a result, directly or indirectly, of hauler or municipal contracts or franchise agreements. Many of these arrangements are for a specified term and are subject to competitive bidding
in the future. For example, as a result of competitive bidding, the West Valley MRF is no longer processing certain waste from a small customer, the City of Claremont, California. In addition, under certain conditions, some of the customers of West
Valley MRF may terminate their contracts prior to the scheduled contract term.

The largest sources of waste for the West Valley MRF are
derived through Burrtec affiliated companies, the City of Ontario and Waste Management, Inc. affiliated companies. The loss of waste currently hauled or directed by these companies or the City of Ontario to the West Valley MRF could materially
impact West Valley.

Governmental action may also affect waste flow to the West Valley MRF. Municipalities may annex unincorporated areas
within San Bernardino County and Riverside County where the West Valley MRF currently derives waste; as a result customers in annexed areas may be required to obtain services from competitors. In addition, the franchise agreements of counties may
impose restrictions on the flow of waste to the West Valley MRF. For example, in 2005 San Bernardino County imposed conditions on the hauling of waste generated in the unincorporated areas of the county that prevents or discourages such waste from
being processed at the West Valley MRF. The imposition of these restrictions resulted in the loss of approximately 200 to 250 tons per week of waste being processed at the facility.



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In addition, there is an extensive regulation of the waste industry. The regulatory process requires
firms in the waste hauling, waste recycling and/or landfill business to obtain and retain numerous governmental permits to conduct various aspects of their operations, any of which may be subject to revocation, modification or denial. Changes in
such governmental policies and attitudes relating to the industry could impair the landfill projects or the West Valley MRFs ability to obtain applicable permits from governmental authorities on a timely basis and to retain such permits. The
Company is not in a position at the present time to assess the extent of the impact of such potential changes in governmental policies and attitudes on the permitting processes, but they could be significant.

The West Valley MRF is also facing increasing competition for waste as discussed in more detail under the Competition discussion immediately
above.

Miscellaneous Business

The
Company is occasionally able to generate miscellaneous income from time to time from various activities. Such activities have included leasing its fee owned land at Eagle Mountain for commercials and military and law enforcement training and the
sale of rock.

OTHER KAISER ASSETS

For
a discussion of our other assets such as the Eagle Mountain Townsite, the property adjoining the Eagle Mountain Townsite and the Lake Tamarisk property, please see Item 2. DESCRIPTION OF PROPERTIES.

HISTORICAL OPERATIONS AND COMPLETED TRANSACTIONS

The
following information is provided as historical background and to put into context our current activities including our current cash maximization strategy.

Water Resources

Until the sale of its ownership interest in Fontana Union Water Company, or Fontana Union, to Cucamonga
County Water District, referred to as Cucamonga, in March 2001 for $87.5 million or approximately $10,860 per share of Fontana Union stock, the Companys results of operations depended, in large part, on water rights and
successfully leasing such rights. Concurrently with the sale of its Fontana Union stock, the Company also received approximately $2.5 million in payments under its water lease with Cucamonga. The sale was completed in the context of settling
outstanding litigation between Cucamonga and the Company. Prior to that time Kaiser leased all of its shares in Fontana Union to Cucamonga under the terms of 102-year take-or-pay lease.

Fontana Union owns water rights to produce water from various sources of water near Fontana, California. Kaisers ownership of Fontana Union
entitled it to receive, annually, a proportionate share of Fontana Unions water, which water was historically used in connection with Kaisers steel making activities.

Mill Site Property

Background. From 1942 through 1983, KSC operated a steel mill in Southern
California near the junction of the Interstate 10 and Interstate 15 freeways and approximately three miles to the northeast of Ontario International Airport. The original Mill Site Property owned by Kaiser after it emerged from the KSC bankruptcy
consisted of approximately 1,200 acres and portions of the property required substantial environmental remediation. Except for the approximate five acre Tar Pits Parcel, we no longer own any portion of the Mill Site Property. The disposition of the
Mill Site Property by us over the past several years is described below.



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The California Speedway Property. In November 1995, the Company contributed approximately 480
acres of the Mill Site Property in exchange for common stock in the company that became Penske Motorsports, Inc., a leading promoter of motor sports activities and an owner and operator of automobile racetracks. In December 1996, the Company sold to
PMI approximately 54 additional acres of the Mill Site Property, for cash and additional stock in PMI. The California Speedway, a world class motor sports speedway, was constructed on this approximate 534 acres of the Mill Site Property.

In July 1999 International Speedway Corporation, referred to as ISC, through a wholly owned subsidiary, acquired PMI. Kaiser Inc., as a stockholder in
PMI, voted for the merger and elected to receive a portion of the merger consideration in cash and a portion in ISC stock. In the transaction Kaiser received approximately $24 million in cash and 1,187,407 shares of ISC Class A common stock,
resulting in a gain of $35.7 million. Subsequent to PMIs acquisition, we sold all of the shares we owned in ISC at an average price of approximately $53.52 per share, realizing an additional gain of approximately $6.6 million. The gross cash
proceeds we received in 1999 from the merger and the subsequent sale of ISC stock totaled approximately $88 million.

The NAPA Lots.
In conjunction with the permitting and development of the California Speedway, we permitted and developed three parcels known as the NAPA Lots for sale. In September 1997, the largest NAPA Lot, consisting of approximately 15.5 acres, was
sold for a gross sale price of approximately $2.9 million. In November 1999, another of the NAPA Lots, consisting of approximately 7.8 acres, was sold for a gross cash sale price of approximately $1.7 million. The remaining NAPA Lot of approximately
5.2 acres was sold in December 1999 for a cash sale price of approximately $1.1 million.

CCG Ontario, LLC (CCG).In August 2000, we
sold approximately 588 acres of our remaining Mill Site Property to CCG for $16 million in cash plus the assumption of virtually all known and unknown environmental obligations and risks associated with the property as well as certain other
environmental obligations. Included in the land sold to CCG were ancillary items such as the sewer treatment plant and the water rights associated with the property. As part of the transaction, CCG obtained environmental insurance coverage and other
financial assurance mechanisms related to the known and unknown environmental obligations and risks associated with the transferred property as well as other environmental obligations subject to limited exceptions. In addition, before this sale
transaction, we were party to a consent order with the California Department of Toxic Substances Control, referred to as the DTSC, which was essentially an agreement to investigate and remediate property. As part of the sale transaction, this
consent order and our financial assurances to the DTSC were terminated, and CCG entered into a new consent order with the DTSC and provided the necessary financial assurances. For additional information, see Part I, Item 1. DESCRIPTION OF
BUSINESS - Historical Operations and Completed Transactions - Mill Site Environmental Matters below.

Rancho Cucamonga Parcel.
In October 2000, the Company completed the sale of approximately 37 acres of the Mill Site Property, known as the Rancho Cucamonga parcel, to The California Speedway Corporation. The gross cash sale price was approximately $3.8 million.

West Valley MRF Property. At the time of the formation of West Valley in 1997, Kaiser Inc. contributed 23 acres of the former Mill Site
Property, on which a 62,000 square foot building, sorting equipment and related facilities were constructed during Phase 1 of the West Valley MRF development. Under the terms of our agreements with West Valley, we contributed additional land
approximating 7 acres after that lands environmental remediation in 2000. We are also obligated to contribute the Tar Pits Parcel to West Valley MRF at its option, upon the environmental remediation of the Tar Pits Parcel in a manner suitable
for use by West Valley MRF. The Tar Pits Parcel is the only acreage that we continue to own at the former Mill Site Property.



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Environmental Matters

The operation of a steel mill by the Companys predecessor, KSC, resulted in known contamination of limited portions of the Mill Site Property. As discussed above, the Companys consent order with the DTSC
was terminated in connection with the sale of approximately 588 acres of the remaining Mill Site Property to CCG for $16 million in cash plus the assumption of virtually all known and unknown environmental obligations and risks associated with the
property as well as certain other environmental obligations. Concurrently with that termination, CCG entered into a new consent order with the DTSC, in which CCG assumed responsibility for all future investigation and remediation of the Mill Site
Property it purchased, as well as various other items covered under its CCG consent order. In addition, CCG assumed and agreed to indemnify the Company against various contractual environmental indemnification and operations and maintenance
(O&M) obligations the Company has with purchasers of other portions of the Mill Site Property. In connection with this land sale, CCG entered into a fixed price environmental remediation services agreement with IT Corporation
(IT), an environmental contractor, to remediate the known environmental conditions on the property. IT filed for bankruptcy in January 2002, but certain of the assets of IT were eventually acquired by The Shaw Group, including the fixed
price environmental contract. Accordingly, the fixed price environmental remediation services contract continues to be performed. In addition, CCG is obligated to remediate the Tar Pits Parcel pursuant to a solidification and capping strategy. The
remediation of the Tar Pits parcel is also covered by the fixed price environmental remediation contract. Except for continuing inspection and maintenance obligations, the remediation of the Tar Pits Parcel has been completed although the Company
may review additional remediation possibilities as a means of making such parcel useable property.

Many of the environmental obligations
assumed by CCG are backed, in whole or in part, by various financial assurance mechanisms or products. Examples of the financial assurances or products provided, include, but are not limited to: a performance bond issued to assure performance under
the environmental remediation service agreement; a real estate environmental liability insurance policy with a policy limit of $50 million; a remediation stop loss policy covering $15 million in cost overruns for known remediation, which known
remediation was estimated to be approximately $15 million; and a limited corporate guaranty by CCGs parent company. All financial assurance mechanisms or products are subject to their terms. In addition, there are certain exceptions to
CCGs assumption of the Companys prior environmental obligations such as any certain environmentally related litigation outstanding as of the date of the closing of the land sale to CCG.

With regard to groundwater, we previously settled certain allegations of groundwater contamination concerning a plume (containing total dissolved solids,
sulfate, and organic carbon) to which the historic steel operations allegedly contributed. As a result of the transaction with CCG and the Companys previous remediation activities in 2000, the Companys estimated environmental liabilities
were reduced by approximately $21.9 to $4.5 million. These potential environmental liabilities included, among other things, environmental obligations at the Mill Site Property that were not assumed by CCG, such as any potential third party damages
from the identified groundwater plume discussed above, environmental remediation work at the Eagle Mountain Site, and third-party bodily injury and property damage claims, including asbestos claims not covered by insurance and/or paid by the KSC
bankruptcy estate. In 2004, this reserve was again reduced to approximately $2.4 million to reflect settlement of a third party claim related to the groundwater plume discussed above. This reserve was further reduced in 2005 as a result of
reclassifying $500,000 to the Eagle Mountain Townsite Cleanup Reserve. This environmental reserve was increased by $1.2 million as of December 31, 2005, for Eagle Mountain Townsite environmental related matters, as discussed in more detail in
Item 6. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Section 2: New Accounting Pronouncements. As a result of some remediation actives that took place at Eagle Mountain in 2007 the environmental
reserve was further reduced by $33,000.

In keeping with our goal to minimize our potential liabilities, including the potential
liabilities outlined above, we purchased effective June 30, 2001, a 12-year $50 million insurance policy, which is



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expected to cover substantially any and all environmental claims (up to the $50 million policy limit) relating to the historical operations of the Company.
See MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS in Part II, Item 6., of this Annual Report on Form 10-KSB.

The Company is involved, from time-to-time, in legal proceedings concerning environmental matters. See Part I, Item 3. LEGAL PROCEEDINGS.

Tar Pits Parcel

Currently, the only remaining
property we own at the Mill Site Property is an approximate 5 acre parcel known as the Tar Pits Parcel. Under our agreement with the West Valley MRF, we are obligated to contribute the Tar Pits Parcel to the West Valley MRF, at its option, upon the
environmental remediation of the property. Except for ongoing inspection and monitoring activities, remediation of the Tar Pits Parcel was completed in 2002 at CCG Ontario, LLCs, (referred to as CCG), expense. CCG is responsible for this
propertys environmental remediation pursuant to the terms of the purchase agreement entered into between CCG and Kaiser in August 2000 relating to Kaisers sale of approximately 588 acres of the Mill Site Property. However, the Company is
exploring additional remediation alternatives as a means of making the Tar Pits Parcel useable. See Part I, Item 1. DESCRIPTION OF BUSINESS - Historical Operations and Completed Transactions - Mill Site Environmental Matter.

Employees

As of March 15, 2008, Kaiser LLC
had no employees. However, Kaiser LLC leases employees through Business Staffing, Inc., a subsidiary of Kaiser LLC, and reimburses Business Staffing for the costs associated with 6 full-time (4 at Ontario, California and 2 at Eagle Mountain,
California) and 5 permanent part-time employees (3 in Ontario, California and 2 at Eagle Mountain, California). All except one of the full-time and all of the part-time employees were previously employed by Kaiser Inc.



|Item 2. | DESCRIPTION OF PROPERTY
|------- | -----------------------

Office Facilities

Our principal offices are located at 3633 East Inland Empire Boulevard, Suite 480, Ontario, California, 91764. The Company currently leases approximately
2,950 square feet in Ontario, California at a current cost of approximately $7,200 per month. The office lease expires on August 31, 2009, with the Company having the option to extend the lease until August 31, 2011. Our subsidiary, Kaiser
Eagle Mountain, LLC, also currently maintains an office at the Eagle Mountain Site. We own the building used as an office at the Eagle Mountain Site.

Eagle Mountain, California

The Kaiser Eagle Mountain idle iron ore mine and the adjoining Eagle Mountain Townsite are
located in Riverside County, approximately ten miles northwest of Desert Center, California. Desert Center is located on Interstate 10 between Indio and Blythe. The heavy duty maintenance shops and electrical power distribution system have been kept
substantially intact since the 1982 shutdown. The Company also owns several buildings, a water distribution system, a sewage treatment facility, and related infrastructure. The District, upon its purchase of the landfill project, will own or control
a substantial portion of this infrastructure. Accordingly, the District and the Company are negotiating a number of agreements addressing access and joint use of infrastructure facilities. The Eagle Mountain Townsite includes more than 300 single
family homes, approximately 100 of which have been renovated. Due to the passage of time and the impacts of weather, a number of the buildings and houses at the Eagle Mountain Townsite are deteriorating at a faster rate than anticipated and may not
be salvageable. Accordingly, we may need to demolish or rehabilitate a number of structures over the next several years



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and we have established a $2.5 million reserve for such purposes. In 2006, 27 homes were remediated and demolished. No homes were demolished in 2007. See
also Part II, Item 6. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Section 2: Liquidity and Capital Resources - New Accounting Pronouncements.

Until December 31, 2003, a private prison was operated at the Eagle Mountain Townsite. With the closure of the private prison and implementation of
a mothball plan in 2004, Eagle Mountains ongoing operations and staffing were reduced. We are continuing to seek appropriate tenants for a lease of all or portions of the Eagle Mountain Townsite but have been unsuccessful to date in finding
permanent tenants. The September 2005 adverse U.S. District Court decision involving a completed land exchange between Kaiser and the BLM may hinder these efforts.

Other than possible future environmental remediation associated with asbestos containing products in certain structures for which a reserve has been recorded, we are not aware of any material environmental remediation
required at the Eagle Mountain Townsite that could require us to expend substantial funds or that could lead to material liability. However, under the terms of a reclamation plan for a portion of the mine site there are ongoing reclamation
activities for which the Company has also recorded a reserve for the estimated cost of such activities.

In and around the Eagle Mountain
site the Company currently has various possessory mining claims of approximately 1,472 acres and holds approximately 8,644 acres in fee simple (which includes the approximate 1,300 acre Eagle Mountain Townsite). Approximately 4,654 acres of this
property will be sold as a part of sale of the landfill project, assuming such sale is completed. See Part I, Item 1. DESCRIPTION OF BUSINESS - Eagle Mountain Landfill Project. However, if the adverse U.S. District Court decision is
upheld on appeal it will impact the amount and nature of our land holdings. If the land exchange is finally reversed, and we are placed back to the same position as prior to the land exchange, we would own or control in and around Eagle Mountain
approximately 1,800 acres in fee and 9,550 acres in various possessory mining claims. In addition, the reversal of the land exchange would reinstate a reversionary interest contained in the original grant of approximately 460 acres of the Eagle
Mountain Townsite.

The Company owns four deep water wells, of which two are currently being used, and two booster pump stations that serve
the Eagle Mountain Site.

Rock/Aggregate

As a result of previous mining at Eagle Mountain, millions of tons of rock of various sizes has been stockpiled on portions of the property around the Eagle Mountain Townsite. We have shipped rock products in various quantities in the
recent past and we are exploring opportunities to increase future rock shipments.

Railroad

To transport ore from the Eagle Mountain mine to the mill site (see below), Kaiser Steel Corporation constructed a 52-mile heavy duty rail line connecting
the mine to the main Southern Pacific rail line at Ferrum, California. We own in fee approximately 10% of the 52-mile railroad right-of-way. The major remaining portion of the railroad right-of-way consists of various private easements and an
operating right-of-way from the BLM. The railroad is included in the lease to MRC and, to the extent reasonably possible, will be transferred to the District upon the consummation of the sale of the landfill project if the sale is completed.
Portions of the railroad suffered significant flood damage in 2003. The adverse U.S. District Court decision reversing a completed land exchange would also reverse a BLM right-of-way granted under the Federal Land Policy and Management Act for the
railroad but the original federal right-of-way granted under the Private Law 790 would remain in place. In addition, if the land exchange is fully reversed, Kaiser would reacquire approximately 2,800 acres along or near the railroad that had been



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conveyed to the BLM as a part of the October 1999 land exchange. For additional information, see Part I, Item 1. DESCRIPTION OF BUSINESS - Eagle
Mountain Landfill Project and Pending Sale - Flood Damage to Railroad.

Fontana, California

With exception of the approximate 5 acre Tar Pits Parcel, the Company no longer owns any property at the former Mill Site Property. With the exception of
ongoing maintenance and inspection obligations, the environmental remediation of this parcel has been completed although the Company is exploring additional remediation alternatives as a means to make the parcel usable. See Part 1,
Item 1. DESCRIPTION OF BUSINESS - Historical Operations and Completed Transactions - Mill Site Property.

Lake Tamarisk, California

Lake Tamarisk is an unincorporated community located two miles northwest of Desert Center, California and approximately 8 miles from
the Eagle Mountain mine. This community has 150 improved lots situated around two recreational lakes and a nine-hole golf course. With 70 homes and a 150-space mobile home park, the community has an average year-round population in excess of 150.
Lake Tamarisk Development, LLC, a wholly owned subsidiary of Kaiser, owns: (i) 72 single family improved lots, including, one residential structure; (ii) 3 multi-family lots totaling 12.42 acres; (iii) 1 commercial lot totaling
approximately 3.31 acres; (iv) an approximate 170 acre parcel of unimproved land across the highway from the main entrance to Lake Tamarisk; (v) an approximate 200 acre unimproved parcel adjoining the nine-hole Lake Tamarisk golf course;
and (vi) an approximate 39 acre unimproved parcel adjacent to Lake Tamarisk. We are seeking to sell our Lake Tamarisk properties but are also looking at other development opportunities that may enhance the ultimate value and sale of such
properties.



|Item 3. | LEGAL PROCEEDINGS
|------- | -----------------

In the normal course of our
business we are involved in various claims and legal proceedings. Significant legal proceedings, including those which may have a material adverse effect on our business or financial condition, are summarized below. However, the following discussion
does not, and is not intended to, discuss all of the litigation matters to which we may be or become a party. Should we be unable to resolve any legal proceeding in the manner we anticipate and for a total cost within close proximity to any
potential damage liability we have estimated, our business and results of operations may be materially and adversely affected.

Eagle
Mountain Landfill Project Land Exchange Litigation. In October 1999 Kaisers wholly-owned subsidiary, Kaiser Eagle Mountain, Inc. (now Kaiser Eagle Mountain, LLC), completed a land exchange with the BLM. This completed land exchange has
been challenged in two separate federal lawsuits. On September 20, 2005, the U. S. District Court for the Central District of California, Eastern Division, issued its opinion inDonna Charpied,et al., Plaintiffs v. United States
Department of Interior, et al., Defendants (Case No. ED CV 99-0454 RT (Mex)) and in National Parks and Conservation Association, Plaintiff v. Bureau of Land Management, et al., Defendants (ED CV 00-0041 RT (Mex)). The decision is
adverse to the landfill project in that it sets aside a land exchange completed between the Company and U.S. Bureau of Land Management (BLM) in October 1999 as well as two BLM rights-of-way. It also effectively reinstates a reverter
title issue involving the Eagle Mountain Townsite.

In the exchange, the Companys wholly owned subsidiary, Kaiser Eagle Mountain,
Inc. (now Kaiser Eagle Mountain, LLC) transferred approximately 2,800 acres of Kaiser-owned property along its railroad right-of-way to the BLM and a cash equalization payment in exchange for approximately 3,500 acres of land within the Eagle
Mountain landfill project area. The land exchanged by the Company was identified as prime desert tortoise habitat and was a prerequisite to completion of the permitting of the Eagle Mountain landfill project. Following completion of the land
exchange, two lawsuits were filed



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challenging it and requesting its reversal. The plaintiffs argued that the land exchange should have been reversed, because, among other reasons, the BLM
failed to comply with the National Environmental Policy Act and the Federal Land Policy and Management Act. The U.S. District Court concluded that the environmental impact statement was deficient in its explanation and/or environment analysis with
regard to: (i) the issue of eutrophication which deals with the introduction of nutrients, in this case primarily nitrogen, as a result of the existence of the landfill project; (ii) Big Horn Sheep, which is not an endangered species;
(iii) the statement of purpose and need for the landfill project; and (iv) the reasonable range of alternatives to the proposed project. The court did rule in favor of the landfill project with regard to the environmental analysis and
explanation for: (i) noise; (ii) night lighting; (iii) visual impacts; (iv) the desert tortoise; (v) groundwater; and (vi) air. The court also ruled that the environmental impact statement was deficient under the
Federal Land Policy and Management Act with regard to: (i) the appraisal undertaken by the BLM in the land exchange; and (ii) a full discussion of the BLMs conclusions on the public need for the landfill project. A copy of the
decision can be found as Exhibit 99.1 to the Companys Report on Form 8-K dated September 20, 2005.

We and the U.S. Department of Interior appealed the adverse decision to the U. S. 9thCircuit Court of Appeals. The
briefing for the appeal was completed in 2007 and oral argument was heard by a three judge panel on December 6, 2007. While a decision may be announced at any time, the U.S. 9thCircuit Court of Appeals usually announces its decisions six to twelve months following oral argument. However, on occasion, the announcement of a decision may take substantially
longer. There can be no assurance that we will be successful in any appeal. If the decision is fully affirmed on appeal, the decision would jeopardize the viability of the landfill project. In addition, the decision could adversely impact the
agreement to sell the landfill project to the District, including termination of the agreement.

In April 2007 Donna Charpied, et al, filed
a motion with the same U.S. District Court that handled the land exchange litigation seeking, in their opinion, to enforce the courts order in such case. The allegations are that additional actions are necessary to set aside the land exchange
and to prevent the use of property at Eagle Mountain that would change the character and use of the exchanged properties . In the motion, the opponents objected to the military training that has taken place and that may take place
on Kaiser fee owned land at Eagle Mountain (even though military and law enforcement training previously took place at Eagle Mountain), the possible use of a portion of the Eagle Mountain Townsite for a prison facility (even though one operated
successfully at the Eagle Mountain Townsite for over 12 years) and the possible use of rock from Eagle Mountain to help remediate acknowledged environmental problems at the Salton Sea located in Imperial and Riverside counties in Southern
California. We believe we are in full compliance with the U.S. Districts Courts order and that many of the assertions of the Charpieds are in error. We vigorously opposed such motion. The final briefs for this matter were submitted in
the third quarter of 2007 and we are awaiting a decision. As of the date of this Report, military training has not taken place at Eagle Mountain since the Charpieds filed their motion in April 2007.

Asbestos Litigation. There are pending asbestos litigation claims, primarily bodily injury, against Kaiser LLC and Kaiser Steel Corporation (the
bankruptcy estate of Kaiser Steel Corporation is embodied in KSC Recovery, Inc.). There currently are approximately 15 active suits. Many of the plaintiffs allege that they or their family members were aboard Kaiser ships or worked in shipyards in
the Oakland/San Francisco, California area or Vancouver, Washington area in the 1940s and that the Company and/or KSC Recovery were in some manner associated with one or more shipyards or has successor liability. However, there is an
increasing number of claims related to other facilities such as the former Kaiser Steel Mill Site Property.

Most of these lawsuits are
third party premises claims alleging injury resulting from exposure to asbestos or asbestos containing products and involve multiple defendants. The Company anticipates that it, often along with KSC Recovery, will be named as a defendant in
additional asbestos lawsuits. A number of large manufacturers and/or installers of asbestos and asbestos containing products have filed for bankruptcy over the past several years, increasing the likelihood that additional suits will be filed



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against the Company. In addition, the trend has been toward increasing trial damages and settlement demands. Virtually all of the complaints against us and
KSC Recovery are non-specific, but involve allegations relating to pre-bankruptcy activities. It is difficult to determine the amount of damages that we could be liable for in any particular case until near the time of trial; indeed, many of these
cases do not include pleadings with specific damages. The Company vigorously defends all asbestos claims as is appropriate for a particular case.

Of the claims resolved to date, approximately 75% have been resolved without payment to the plaintiffs. The Company believes that it currently has substantial insurance coverage for the asbestos claims and has tendered these suits to
appropriate insurance carriers.

Bankruptcy Claims. The bankruptcy estate of KSC was officially closed by order of U.S. Bankruptcy
Court for the District of Colorado on October 2, 1996. However, the bankruptcy case was reopened in 1999 in connection with certain litigation matters. Since that time, the bankruptcy case was again closed, however, the administration of
KSCs bankrupt estate will continue for several more years.

From time to time various environmental and similar types of claims that
relate to Kaiser Steel pre-bankruptcy activities, are asserted against KSC and Kaiser LLC. Excluding the asbestos claims, there has been an average of two to four such claims a year for the past several years. In connection with the KSC plan of
reorganization, Kaiser, as the reorganized successor to KSC, was discharged from all liabilities that may have arisen prior to confirmation of the plan, except as otherwise provided by the plan and by law. Although Kaiser believes that in general
all pre-petition claims were discharged under the KSC bankruptcy plan, there have been some challenges as to the validity of the discharge of certain specified claims, such as asbestos claims. If any of these or other similar claims are ultimately
determined to survive the KSC bankruptcy, it could have a materially adverse effect on Kaisers business and value.



|Item 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------

None. We will hold our next members meeting sometime following the decision in the land
exchange litigation that is currently before the U.S. 9thCircuit Court Appeals.

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PART II



|Item 5. | MARKET FOR THE COMPANYS EQUITY, RELATED OWNER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES
|------- | ---------------------------------------------------------------------------------------------------------------

Kaiser Inc.s common stock commenced trading on the NASDAQ Stock Marketsmin the fourth quarter of 1990 under the symbol KSRI. In the merger, each Kaiser Inc. stockholder of record as of December 5, 2001, received
$10.00 in cash plus one (1) Class A Unit in Kaiser LLC for each share of stock. The Class A Units are subject to significant trading restrictions and are not listed for trading on any securities exchange. As a result, Kaiser
Inc.s common stock ceased being publicly traded on November 30, 2001. Kaiser Inc. paid a $2.00 per share cash distribution to stockholders of record as of December 13, 2000. In connection with the merger, the Class A Units were
independently appraised and determined to have a value of $1.50 as of November 30, 2001.

The Class A Units are subject to
substantial transfer restrictions and, therefore, the Class A Units are not traded on an established securities market and are not readily tradable on a secondary market or the substantial equivalent thereof. However, we are aware that there
have been a very limited number of private purchase and sale transactions since November 30, 2001. To our knowledge, in 2007 less than 10,000 Class A Units were sold to third parties at a price averaging $.80 per unit. Since the
Class A Units are not publicly traded and there is no secondary market for the units, there is no performance graph.

As of
March 17, 2008, there were approximately 3,404 holders of record of our Class A Units which includes holders of Kaiser Inc. stock that have yet to convert their shares to Class A Units as a result of the merger.

As of March 17, 2008, KSC Recovery held 104,267 Class A Units that are outstanding but reserved for distribution to the former general
unsecured creditors of KSC pursuant to the KSC Plan. In addition there are 113,690 Class A Units deemed outstanding that are reserved for those investors that have yet to convert their Kaiser Inc. stock to Kaiser LLC Class A Units as a
result of the merger.

We currently have no immediate plans to make distributions but anticipate making distributions subsequent to
receiving our share of the proceeds from the sale of the Eagle Mountain landfill project if such sale is completed or if other funds become available for distribution in accordance with our cash maximum strategy.

We did not repurchase any Class A Units in 2007.

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Equity Compensation Plan Information

As required by Item 201(d) of Regulation S-K, the following table provides certain information as of December 31, 2007, with respect to our
equity compensation plans under which equity securities of the Company are authorized for issuance.



|                                                           |  |                                                                                           |  |                                                                         |      |                                                                                                                                         |                 |  
|---------------------------------------------------------- |  | ----------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------- | ---- | --------------------------------------------------------------------------------------------------------------------------------------- | --------------- | -
|Plan Category                                              |  | Number of securities to beissued upon exercise of outstanding options, warrantsand rights |  | Weighted-average exercise price ofoutstandingoptions,warrants andrights |      | Number ofsecurities remainingavailable for futureissuance underequitycompensation plans
(excluding securities reflectedin first column) |                
|Equity compensation plans approved by security holders     |  | 298,100                                                                                   |  | $                                                                       | 3.11 |                                                                                                                                         | 0               |  
|Equity compensation plans not approved by security holders |  | N/A                                                                                       |  |                                                                         | N/A  |                                                                                                                                         | 95,000 annually | 1



|1 | Each non-management member of
the Board of Managers receives an annual grant of 5,000 Class A Units. In addition, beginning in 2004 Mr. Fawcett was included in the annual unit grants. Accordingly, a total of 20,000 Class A Units are currently being issued each
year collectively to the members of the Board of Managers. Also reflected in the foregoing table for 2007 is that each executive officer under the terms of his current employment agreement is to be issued 25,000 Class A Units as of
January 15 of each year beginning as of January 15, 2007, provided he is still employed by the Company as of the preceding December 31. The annual issuance of Class A Units to the executive officers pursuant to the terms of their
respective employment agreement is scheduled for review prior to 2010. Additionally, Class A Units may be issued to executive officers under the terms of the Executive Officer New Revenue Incentive Participation Plan. For additional
information, see Item 10. Executive Compensation  Executive Compensation.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|Item 6. | MANAGEMENTS DISCUSSION AND ANALYSIS OF OPERATION
|------- | -------------------------------------------------

Section 1: Operating Results

Summary Background

Kaiser, including its wholly-owned subsidiaries unless otherwise provided herein, is the reorganized successor to Kaiser Steel Corporation which was an integrated steel manufacturer that filed for bankruptcy
protection in 1987 (KSC). Since the KSC bankruptcy, we have been developing certain assets remaining after the bankruptcy. As of the date of this Report on Form 10-K, our remaining principal assets include: (i) an 83.13% ownership
interest in Mine Reclamation, LLC, which owns a permitted rail-haul municipal solid waste landfill located at the Eagle Mountain Site; (ii) a 50% ownership interest in the West Valley Materials Recovery Facility and Transfer Station; and
(iii) approximately 5,400 additional acres owned or controlled by Kaiser at the Eagle Mountain Site that are not included in the pending sale to the County District No. 2 of Los Angeles County (which we refer to as the District). However,
if the September 2005 U.S. District Court decision providing that a land exchange completed in October 1999 is to be unwound is upheld on appeal, the reversal of the land exchange will impact the amount and nature of the land we own and control. As
of December 31, 2007, we also had cash and cash equivalents, receivables and short-term investments in securities of approximately $9.6 million. As previously discussed, the permitted rail-haul municipal solid waste landfill project at Eagle
Mountain is currently under contract to be sold to the District for approximately $41 million plus interest from 2001.

We have sought to
sell our assets at such times and on such terms as we believe will generate maximum value from those assets. In September 2000, Kaiser Inc.s Board of Directors approved a strategy to maximize cash distributions to Kaiser Inc.s
stockholders. We continue to pursue this strategy and seek to liquidate our remaining assets in order to maximize cash distributions to our members.

Annual Report on Form 10-KSB

Kaiser qualifies as a small business filer under SEC rules and under such rules Kaiser is only
required to include and discuss in this Annual Report on Form 10-KSB its balance sheet as of December 31, 2007 and its consolidated statements of operations, cash flows and changes in members equity for the years ended December 31,
2007, and 2006. The reader of this Annual Report on Form 10-KSB is encouraged to read our prior reports filed with the SEC for our financial statements for other previous years.

Primary Revenue Sources

Ongoing Operations

Kaisers revenues from ongoing operations are generally derived from the development of our long-term projects. Income from equity method investments
reflects Kaisers share of income related to those equity investments (i.e., West Valley MRF) which we account for under the equity method.

Interim Activities

Revenues and expenses from interim activities are generated from various sources. Historically,
significant components of interim revenue activities have included housing rental income, aggregate and rock sales and lease payments for the minimum security prison at the Eagle Mountain facility. During 2007, the Company generated miscellaneous
income at Eagle Mountain from activities such as leasing its fee owned land for media-related activities and military and law enforcement training. In addition, we have remediated and demolished certain buildings at Eagle Mountain, the costs for
which have been accrued.



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Summary of Revenue Sources

Due to the nature of the Companys projects and the Companys recognition of revenues from bankruptcy-related and other non-recurring items, historical period-to-period comparisons of total revenues may not
be meaningful for developing an overall understanding of the Company. Therefore, the Company believes it is important to evaluate the trends in the components of its revenues as well as the recent developments regarding its long-term ongoing and
interim revenue sources. See Part I, Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - BUSINESS UPDATE for a discussion of recent material events affecting the Companys
revenue sources.

Results of Operations

Analysis
of Results for the Years Ended December 31, 2007 and 2006

Resource Revenues. Total resource revenues for 2007 were
$2,794,000, compared to $2,437,000 for 2006. The reasons for this increase are discussed below in Ongoing Operations and Interim Activities.

Ongoing Operations. Income from the Companys equity method investment, the West Valley MRF, increased by $300,000 to $2,449,000 for 2007 as compared to 2006. This increase in equity income in the West
Valley MRF is the result of higher revenues ($2.5million) due to rate increases which went into effect in 2006 and 2007 and higher commodity prices. These increases were partially offset by higher disposal expenses ($597,000) and increased recycling
rebates ($496,000). In addition, operator and partnership expenses increased by $786,000 and $264,000, respectively, primarily due to an increase in the minimum wage rate in California as of January 1, 2007, and an increase in the reserve for
doubtful accounts.

Interim Activities. Revenue from interim activities increased to $345,000 from $288,000 for 2006. This increase
is the result of increased utilization of our fee owned property for military training, which is not anticipated to continue.

Resource
Operating Costs. Operating expenses increased to $1,323,000 from $1,204,000 for 2006 primarily as a result of continued Townsite maintenance expenses, an increase in site personnel, and the amortization of the capitalized Townsite abatement
reserve. For additional information, see Conditional Asset Retirement Obligations under Critical Accounting Policies.

Corporate General and Administrative Expenses.Corporate general and administrative expenses for 2007 increased 19% to $1,832,000 from $1,533,000 for 2006. The increase is mainly in legal costs and is due to the settlement of an
insurance reimbursement claim.

Net Interest and Investment Income. Net interest and investment income (loss) for 2007 was $482,000
compared to ($7,000) for 2006. This change was the result of the sale, during 2006, of all of the Companys investments in two PIMCO bond funds which resulted in the realization of a loss of $367,000 which was previously reflected in
accumulated other comprehensive loss, a component of members equity. The proceeds from the sale of the PIMCO bonds has been reinvested in short-term high grade commercial paper which produced the 2007 income.

Pre-Tax Loss and Income Tax Provision. The Company recorded a pre-tax loss of $179,000 for 2007 versus a pre-tax loss of $607,000 for 2006. The
Company is taxed as a partnership and, thus, the Companys results of operations (on an income tax basis) are allocated to the unit holders for inclusion in their respective income tax returns. There are, however, minor taxes imposed on the
Company, a gross revenue tax imposed by the State of California, and income taxes on Business Staffing Inc., the



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Companys only corporate subsidiary. These taxes amounted to $10,000 for 2007, versus $18,000 for 2006.

Net Income (Loss).For 2007, the Company reported a net loss of $189,000 or $0.03 per unit, versus a net loss of $625,000 or $0.09 per unit,
reported for 2006.

Section 2: Liquidity and Capital Resources

Cash, Cash Equivalents and Investments. We define cash equivalents as highly liquid debt investment instruments with original maturities of 90
days or less. Cash and cash equivalents increased $266,000 to $1,419,000 at December 31, 2007. Included in cash and cash equivalents is $905,000 held solely for the benefit of MRC at December 31, 2007.

Below is a table showing the major changes in cash:



|                                       |  |   |            |  
|-------------------------------------- |  | - | ---------- | -
|Increase of Short Term Investments     |  | $ | 1,096,000  |  
|Distributions from the West Valley MRF |  |   | 2,000,000  |  
|Sale of Lake Tamarisk Lots             |  |   | 48,000     |  
|Minority Interest                      |  |   | 86,000     |  
|Cash used in Operations                |  |   | (2,093,000 | )
|Capitalized Landfill Expenditures      |  |   | (790,000   | )
|Capital Expenditures                   |  |   | (81,000    | )
|                                       |  |   |            |  
|Net Increase in Cash and Equivalents   |  | $ | 266,000    |  
|                                       |  |   |            |  

Working Capital. During 2007, current assets increased $1,329,000 to $11,741,000, while
current liabilities increased $66,000 to $2,262,000. This caused working capital to increase during 2007 by $1,263,000 to $9.5 million at December 31, 2007.

Below is a table showing the major changes in working capital.



|                                              |  |           |  
|--------------------------------------------- |  | --------- | -
|Changes in Current Asset                      |  |           |  
|Increase in Consolidated Cash                 |  | 266,000   |  
|Increase in Short Term Investments            |  | 1,096,000 |  
|Increase in Accounts Receivable and Other Net |  | (33,000   | )
|Changes in Current Liabilities                |  |           |  
|Increase in Payables                          |  | (47,000   | )
|Increase in Income Taxes Payable              |  | (165,000  | )
|Decrease in Accrued Liabilities               |  | 146,000   |  
|                                              |  |           |  
|Net Increase in Working Capital               |  | 1,263,000 |  
|                                              |  |           |  

Accounts Receivable and Other (net). During 2007, accounts receivable and other (net)
decreased by $33,000 primarily as a result of the collection of an insurance Company receivable.

Short-Term Investments. During
2007, short-term investments increased by $1,096,000. This is the net result of $2 million in long-term investments maturing which was reinvested in short-term bonds and commercial paper and the sale of a portion of the Companys investments to
provide cash for operations and for funds required to maintain our investment in Mine Reclamation, LLC. At December 31, 2007, the Company had $8.0 million of its excess cash reserves invested in such investments.

Investments. The Companys recording of $2,449,000 relating to its share of income from its investment in the West Valley MRF was partially
offset by the receipt of cash distributions from the West Valley MRF totaling $2 million. This resulted in a $449,000 increase in the Companys investment in the West Valley MRF. In addition, our investment in the Eagle Mountain Landfill
increased $790,000 during 2007 due to continuing landfill development activities which were capitalized. Additionally, on June 19,



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2007 the Company approved a subscription agreement with MRC to provide, at a minimum, an additional $990,000 in working capital for MRC. The first
installment of 60% ($594,000) of the minimum subscription amount was paid during the second quarter, with the second and final installment due by March 31, 2008 unless delayed by MRC. Since all the owners of MRC did not purchase their
respective pro rata interest in the private placement, we purchased the balance of such units, resulting in an additional investment of approximately $52,000. Accordingly, assuming the maximum amount of funding is required, our additional investment
in MRC will be a total of $1,042,000. As a result of this private placement, our ownership interest in MRC increased from 82.48% to 83.13%.

Other Assets. There was a decrease in other assets of $705,000 which is the net result of the amortization of the environmental insurance policy of $300,000, an increase in accumulated depreciation as of December 31, 2007 of
$254,000 which took into account the write-off of $99,000 in fully depreciated assets, and the reclassification of a deferred tax asset to a receivable of $124,000. These decreases were partially offset by the purchase of two vehicles for use at
Eagle Mountain for $51,000 and a copier for the corporate office for $21,000.

Environmental Remediation. The Company purchased,
effective June 30, 2001, a 12-year $50 million insurance policy, which is expected to cover substantially any and all environmental claims (up to the $50 million policy limit) relating to the historical operations of the Company. As of
December 31, 2007, based upon current information, we estimate that our future environmental liability related to certain matters and risks not assumed by CCG Ontario, LLC, a subsidiary of Catellus Development Corporation, a New York Stock
Exchange company, in its purchase of the Mill Site Property (August 2000) (Catellus Development Corporation merged with and into Palmtree Acquisition Corporation, a subsidiary of ProLogis on September 15, 2005), including a certain groundwater
matter as well as potential matters at Eagle Mountain and at other historical locations and other possible third party claims, would be approximately $2.9 million for which a reserve has been established. In the event a claim for damages is filed
against the Company that relates to this reserve, management believes that the claim may be covered by such insurance depending upon the nature and timing of the claim.

Minority Interest. As of December 31, 2007, the Company has recorded $5,265,000 of minority interest relating to the approximately 16.87% ownership interest in MRC the Company does not own.

Contingent Liabilities. The Company has contingent liabilities more fully described above and in the notes to the financial statements.

Critical Accounting Policies

The
Companys accounting policies are more fully described in the Notes to the Financial Statements.

The Company believes the following
critical accounting policies are important to the portrayal of the Companys financial condition and results of operations.

Investments. The Company accounts for investments under the provisions of Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities. The investments are
classified as available-for-sale and are recorded at the purchase price of the security plus or minus the amortization of the discount or premium paid. Changes in the market value of the investments are recorded as a change to the
investment with a corresponding change to comprehensive income, which is a component of members equity. In addition, realized gains or losses, and interest income or dividends are reflected in the statement of operations.

Investment in West Valley MRF, LLC. The Company accounts for its investment in West Valley MRF, LLC, under the equity method of accounting because
of the Companys 50% ownership interest.



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Landfill Permitting and Development. Through its 83.13% interest in Mine Reclamation, LLC, the
Company has been developing, for sale to a municipal entity or operating company, its property known as the Eagle Mountain Site in the California desert for use as a rail-haul municipal solid waste landfill. Pursuant to SFAS No. 67,
Accounting for Costs and Initial Rental Operations of Real Estate Projects, capitalizable landfill site development costs are recorded at cost and expensed when management determines that the capitalized costs provide no future benefit.

Long-Lived Assets. In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-lived Assets,
long-lived assets are evaluated for potential impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

Environmental Insurance and Environmental Remediation Liabilities. The Companys $3.8 million premium for the prospective insurance policy is capitalized as a long-term asset and is being amortized on a
straight-line basis over the twelve (12) year term of the policy. To the extent a pre-existing liability has not been recorded, claims made for environmental matters are recorded as litigation accruals in the Companys consolidated
financial statements pursuant to FAS No. 5 when it becomes probable that a loss has been incurred and the amount of such loss can be reasonably estimated. Claims accepted by the insurance company pursuant to coverage under the policy are
recorded as insurance receivables when coverage is accepted and the amount to be paid by the insurance company can be reasonably estimated.

During 2005, as discussed in more detail below under New Accounting Pronouncements, the Company increased its environmental reserve by $1.2 million to account for its conditional asset retirement obligations related to future
abatement obligations for asbestos-containing products in certain of the viable structures at the Eagle Mountain Townsite.

Revenue
Recognition. Revenues are recognized when the Company has completed the earnings process and an exchange transaction has taken place.

Uncertain Tax Benefits.The Company adopted Financial Standards Board Interpretation No. 48 Accounting for Uncertainty in Income Taxes (FIN 48) an interpretation of FASB Statement 109 (SFAS 109) effective
January 1, 2007. Because the Company is a limited liability company, it has no unrecognized tax benefits and the adoption of FIN 48 will have no impact on the Companys financial statements.

New Accounting Pronouncements

In September 2006, the
FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157). This new standard provides guidance for using fair value to measure assets and liabilities and information about the extent to which companies measure assets
and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. This framework is intended to provide increased consistency in how fair value determinations are made under various
existing accounting standards which permit, or in some cases require, estimates of fair market value. SFAS 157 also expands financial statement disclosure requirements about a companys use of fair value measurements, including the effect of
such measures on earnings. The provisions of SFAS 157 are effective for financial statements issued for fiscal years beginning after November 15, 2007. The adoption of SFAS 157 should not have a material impact on the Companys
consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159 The Fair Value option for Financial Assets
and Liabilities. This Statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate
volatility in reporting earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to



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expand the use of fair value measurement, which is consistent with the Boards long-term measurement objectives for accounting for financial
instruments. The provisions of SFAS 159 are effective for financial statements issued for fiscal years beginning after November 15, 2007. The adoption of SFAS 159 should not have a material impact on the Companys consolidated financial
statements.

Section 3: Business Outlook

The statements contained in this Business Outlook, as well as in Part I, Item 1. DESCRIPTION OF BUSINESS, are based upon current operations and expectations. In addition to the forward-looking
statements and information contained elsewhere in this Annual Report on Form 10-KSB, these statements are forward-looking and, therefore, actual results may differ materially. See the Companys disclosure regarding forward-looking statements in
the section entitled Forward-Looking Statements above.

Ongoing Operations. As noted above, our revenues from ongoing
operations have, in the past, generally been derived from the performance of our major long-term development projects and investments. We have previously sold most of our projects and investments. Our principal remaining assets and projects, other
than cash and securities, are: (i) the landfill project; (ii) our 50% equity ownership of the West Valley MRF; and (iii) miscellaneous property at or near the Eagle Mountain Townsite. We have no material ongoing operations except in
connection with such assets and projects. Our principal sources of ongoing income are derived from the West Valley MRF and our investments although we are occasionally generating miscellaneous income from the lease of our Eagle Mountain property for
various activities. We will continue to evaluate our remaining assets and investments in light of how to best provide maximum value to our members.

In regard to the West Valley MRF, the most significant factors affecting our future equity income will continue to depend upon: (i) the ability of the West Valley MRF to attract new customers and waste volumes at attractive processing
rates; (ii) recyclable commodity prices; (iii) the ability to increase prices to reflect increases in such items as fuel and personnel costs; and (iv) future competition from competing facilities. During 2006 and early 2007, the West
Valley MRF was able to increase it rates to many of its customers as a result of increases in operating and disposal expenses as well as the increase in the minimum wage laws in California that went into effect in January 2007. However, these rate
increases may not be sufficient to cover all past and future anticipated increases in the costs of operation. In addition, commodity prices have fluctuated dramatically and this volatility impacts the West Valley MRFs revenue both positively
and negatively. Due to the volatility of commodity prices, West Valley MRF may need to restructure its prices in certain markets which could have a negative impact on revenues and profitability. In order to address anticipated future demand, the
West Valley MRF in 2007 received an increase in its permitted waste processing capacity to 7,500 tons per day. Additionally, West Valley is in the process of evaluating possible waste-to-energy and composting projects that might be capable of
profitably utilizing a portion of the municipal solid waste received at the facility. We also anticipate that capital improvements costing approximately $1 million will be made during 2008 by West Valley.

As part of our strategy, we intend to evaluate any potential offers to purchase our interest in West Valley or other alternatives in light of our primary
objective of maximizing value. West Valley currently generates more than sufficient cash flow to fund its cost of operations and does not require additional investment by us. Furthermore, West Valley should continue to generate sufficient cash
distributions to cover a significant portion of Kaiser LLCs foreseeable general and administrative costs.

Pending Sale of Eagle
Mountain Landfill Project. As discussed in more detailed in Part I, Item 1. DESCRIPTION OF BUSINESS - Eagle Mountain Landfill Project and Pending Sale, in August 2000, MRC entered into that certain Agreement For Purchase and
Sale of Real Property and Related Personal Property In Regard To The Eagle Mountain Sanitary Landfill Project and Joint Escrow Instructions (Landfill Project Sale Agreement) with the District. In summary, the landfill project (which
includes our royalty payments under the MRC Lease) is under contract to be sold to the District for $41 million



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plus an estimated approximate $8 million in accrued interest from May 2001 to the date of this Report on Form 10-KSB. Kaisers equity interest in MRC is
currently 83.13%.

Assuming there is a sale of the landfill project, $41 million of
the total purchase price will be deposited into an escrow account and will be released when any litigation contingencies are fully resolved. As of the date of this Report, the only litigation contingency is the federal litigation challenging the
completed federal land exchange. In September 2005 the Company received an adverse U.S. District Court decision in the land exchange litigation that may materially impact the validity of the landfill project. The decision was adverse to the landfill
project in that it set aside the land exchange completed between the Company and BLM as well as two BLM rights-of-way. The Company along with the U.S. Department of Interior appealed the decision to the U.S. 9thCircuit Court of Appeals. The briefing for the appeal was completed in 2007 and oral argument was heard before a three judge panel on December 6, 2007. While a decision may be
announced at any time, the U.S. 9thCircuit Court of Appeals usually announces its decisions six to twelve months following oral argument. However,
on occasion, the announcement of a decision may take substantially longer. If the U.S. District Courts decision is fully affirmed on appeal, the decision would jeopardize the viability of the landfill project. In addition, the decision could
adversely impact the agreement to sell the landfill project to the District, including termination of the agreement. For a more detailed discussion of this litigation and the risks associated with this litigation, see Item 3. LEGAL PROCEEDINGS
- Eagle Mountain Landfill Project Land Exchange Litigation. Although closing has not occurred, interest began to accrue on this portion of the purchase price in May 2001.

Mill Site Property. The only remaining Mill Site Property owned by the Company is an approximate five acre parcel referred to as the Tar Pits
Parcel. CCG substantially completed the environmental remediation of this parcel pursuant to the terms of its agreement during 2002. The West Valley MRF has the right to purchase the Tar Pits Parcel for $1.00.

Sale of Miscellaneous Properties, Eagle Mountain Townsite, and other Possible Opportunities. We are continuing to seek buyers for our
miscellaneous properties, most of which are located at or near our Eagle Mountain facilities and we are continuing to seek tenants for the private prison facility in the Eagle Mountain Townsite. We were successful in selling two Lake Tamarisk lots
in July 2007. However, the September 2005 adverse U.S. District Court decision involving a completed land exchange between Kaiser and the BLM may hinder our efforts at Eagle Mountain. Additionally, due to the passage of time and the impacts of
weather, a number of the buildings and houses at the Eagle Mountain Townsite are deteriorating at a faster rate than anticipated and may not be salvageable. Accordingly, we will need to demolish or rehabilitate a number of structures over the next
several years and we have established a reserve for such purposes.

In addition, we are exploring possible opportunities for the sale of
rock from the Eagle Mountain Site. As a result of past mining activities, millions of tons of rock of various sizes was stockpiled near the Eagle Mountain Townsite. Any sale of rock would be from property that is not a part of the landfill project.

We will continue to explore the development and use of our property at Lake Tamarisk and at Eagle Mountain for other purposes. For
example, in the past, military and law enforcement training exercises have taken place on portions of the Eagle Mountain property. The most recent example of this is that in January 2007 the U.S. Marines conducted troop training exercises on
portions of our fee owned land at Eagle Mountain property. However, litigation has slowed the use of such property for alternative uses.

Corporate Overhead. Given our current assets and projects, it is unlikely that we will be able to further reduce personnel and corporate overhead in the near future. However, as we divest our remaining assets, we intend to further
reduce corporate staffing and overhead to reflect the reduced requirements of our remaining operations and projects. The costs of such reductions shall be recorded at the time the decision to make such reductions is made by the Company.



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Capital Resources. Kaiser expects that its current cash balances and short-term investments
together with cash generated from the West Valley MRF, note receivables and any future asset sales will be sufficient to satisfy the Companys ongoing projected operating cash requirements.

Cash Maximization Strategy

We have been developing
our remaining assets and then selling them at such times and on such terms as we believe optimizes the realizable value for a particular project or asset. During 2000 and 2001, we: (i) sold the balance of our real estate at the former KSC mill
site near Fontana, California, except for an approximate five acre parcel, the Tar Pits Parcel; (ii) entered into an agreement to sell the landfill project to the District for an aggregate of $41 million, with MRC and the District working
toward a closing on such transaction; (iii) sold our interest in Fontana Union to Cucamonga; and (iv) paid a total of $12.00 per share in cash distributions to Kaiser Inc.s stockholders. In continuing this strategy, our current plans
include:



| |  |  | To resolve favorably the outstanding federal land exchange litigation and to complete the sale of the landfill project. Although the closing with the District was
originally scheduled to occur during 2002, this sale is subject to the satisfaction of numerous conditions and, as a result, this date has been extended numerous times, and we cannot be sure when or if this sale will ultimately close. We do not
expect to receive any cash from the sale, if it closes, until the federal land exchange litigation matter is successfully resolved. See Part I, Item 1. DESCRIPTION OF BUSINESSEagle Mountain Landfill Project and Pending Sale;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To continue to hold our interest in West Valley MRF, which pays significant cash distributions to us, until we believe we can negotiate a sale of our interest or
otherwise create enhanced value for our members from the West Valley MRF;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To explore other opportunities for use of the Eagle Mountain Site, including the development of the millions of tons of rock stockpiled at the site; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To maximize our revenue as we attempt to sell our remaining miscellaneous assets, such as our surplus property in Riverside County, California.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------

The Company currently expects to distribute substantially all available cash to its members once the cash maximization
strategy is completed. The September 2005 adverse U.S. District Court decision concerning the Landfill Project will affect the completion date for, and may ultimately alter, this strategy. The Company currently does not expect completion of this
strategy until 2009 at the earliest.

Conversion. In November 2001, the stockholders of Kaiser Inc. overwhelmingly approved the
conversion of Kaiser Inc. into a newly-formed limited liability company pursuant to a merger between the Kaiser Inc. and Kaiser LLC. In this conversion, Kaiser Inc.s stockholders received $10.00 in cash plus one Class A Unit for each
share of common stock in Kaiser Inc. The conversion to a limited liability company and the resulting cash payment to stockholders was an important step in the implementation of the cash maximization strategy.

Insurance. In furtherance of the cash maximization strategy, we purchased an insurance policy in 2001 that is designed to provide broad commercial
general liability, pollution legal liability, and contractual indemnity coverage for our ongoing and historical operations. The aggregate cost for this policy was approximately $5.8 million, of which KSC Recovery paid $2.0 million and the Company
paid $3.8 million.



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|Item 7. | FINANCIAL STATEMENTS
|------- | --------------------



|                                                                                                     |  |     
|---------------------------------------------------------------------------------------------------- |  | ----
|INDEX TO CONSOLIDATED FINANCIAL STATEMENTS                                                           |  | PAGE
|Report of Independent Registered Public Accounting Firm                                              |  | 31  
|Consolidated Balance Sheet as of December 31, 2007                                                   |  | 32  
|Consolidated Statements of Operations for the years ended December 31, 2007 and 2006                 |  | 34  
|Consolidated Statements of Cash Flows for the years ended December 31, 2007 and 2006                 |  | 35  
|Consolidated Statements of Changes in Members Equity for the years ended December 31, 2007 and 2006 |  | 36  
|Notes to Consolidated Financial Statements                                                           |  | 37  



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Members and Board of Managers of Kaiser Ventures LLC

We have audited the accompanying consolidated balance sheet of Kaiser Ventures, LLC and subsidiaries as of December 31, 2007 and the
related consolidated statements of operations, members equity and cash flows for each of the years in the two-year period ended December 31, 2007. These consolidated financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in
accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material
misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our
opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Kaiser Ventures, LLC and subsidiaries as of December 31, 2007, and the consolidated results of its
operations and its cash flows for each of the years in the two-year period ended December 31, 2007, in conformity with accounting principles generally accepted in the United States of America.

/s/ Moss Adams LLP

Irvine, California

March 14, 2008



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CONSOLIDATED BALANCE SHEET

as of December 31



|                                                                                  |  |      |           
|--------------------------------------------------------------------------------- |  | ---- | ----------
|                                                                                  |  | 2007
|ASSETS                                                                            |  |      |           
|Current Assets                                                                    |  |      |           
|Cash and cash equivalents                                                         |  | $    | 1,419,000 
|Accounts receivable and other, net of allowance for doubtful accounts of $34,000. |  |      | 169,000   
|Short-term investments                                                            |  |      | 8,042,000 
|Restricted cash held for                                                          |  |      |           
|Conversion distribution                                                           |  |      | 1,190,000 
|Contribution to Company SERP                                                      |  |      | 921,000   
|                                                                                  |  |      |           
|                                                                                  |  |      | 11,741,000
|Eagle Mountain Landfill Investment                                                |  |      | 31,904,000
|Investment in West Valley MRF                                                     |  |      | 5,271,000 
|Land                                                                              |  |      | 2,465,000 
|Other Assets                                                                      |  |      |           
|Deferred income tax asset                                                         |  |      | 328,000   
|Unamortized environmental insurance premium                                       |  |      | 1,650,000 
|Buildings and equipment (net)                                                     |  |      | 1,052,000 
|                                                                                  |  |      |           
|                                                                                  |  |      | 3,030,000 
|                                                                                  |  |      |           
|Total Assets                                                                      |  | $    | 54,411,000
|                                                                                  |  |      |           

The accompanying notes are an integral part of the consolidated financial statements.



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CONSOLIDATED BALANCE SHEET

as of December 31



|                                                |  |      |           
|----------------------------------------------- |  | ---- | ----------
|                                                |  | 2007
|LIABILITIES AND MEMBERS EQUITY                 |  |      |           
|Current Liabilities                             |  |      |           
|Accounts payable                                |  | $    | 169,000   
|Conversion distribution payable                 |  |      | 1,190,000 
|Accrued liabilities                             |  |      | 903,000   
|                                                |  |      |           
|                                                |  |      | 2,262,000 
|                                                |  |      |           
|Long-term Liabilities                           |  |      |           
|Accrual for MRC railroad casualty loss          |  |      | 4,338,000 
|Accrual for Eagle Mountain Townsite cleanup     |  |      | 2,340,000 
|Accrual for environmental remediation           |  |      | 2,882,000 
|Other accrued liabilities                       |  |      | 250,000   
|                                                |  |      |           
|                                                |  |      | 9,810,000 
|                                                |  |      |           
|Total Liabilities                               |  |      | 12,072,000
|                                                |  |      |           
|Minority Interest                               |  |      | 5,265,000 
|                                                |  |      |           
|Members Equity                                 |  |      |           
|Class A units; issued and outstanding 7,064,299 |  |      | 37,047,000
|Class B units; issued and outstanding 751,956   |  |      |          
|Class C units; issued and outstanding 872       |  |      |          
|Class D units; issued and outstanding 128       |  |      |          
|Accumulated other comprehensive income          |  |      | 27,000    
|                                                |  |      |           
|Total Members Equity                           |  |      | 37,074,000
|                                                |  |      |           
|Total Liabilities and Members Equity           |  | $    | 54,411,000
|                                                |  |      |           

The accompanying notes are an integral part of the consolidated financial statements.



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CONSOLIDATED STATEMENTS OF OPERATIONS

for the Years Ended December 31



|                                                                               |  |      |           |   |      |   |           |  
|------------------------------------------------------------------------------ |  | ---- | --------- | - | ---- | - | --------- | -
|                                                                               |  | 2007 |           |   | 2006 |  
|Resource Revenues                                                              |  |      |           |   |      |   |           |  
|Ongoing Operations Income from equity method investment in the West Valley MRF |  | $    | 2,449,000 |   |      | $ | 2,149,000 |  
|Revenue from interim activities                                                |  |      | 345,000   |   |      |   | 288,000   |  
|                                                                               |  |      |           |   |      |   |           |  
|Total resource revenues                                                        |  |      | 2,794,000 |   |      |   | 2,437,000 |  
|Resource Operating Costs                                                       |  |      |           |   |      |   |           |  
|Environmental insurance premium amortization                                   |  |      | 300,000   |   |      |   | 300,000   |  
|Expenses related to interim activities                                         |  |      | 1,323,000 |   |      |   | 1,204,000 |  
|                                                                               |  |      |           |   |      |   |           |  
|Total resource operating costs                                                 |  |      | 1,623,000 |   |      |   | 1,504,000 |  
|                                                                               |  |      |           |   |      |   |           |  
|Income from Resources                                                          |  |      | 1,171,000 |   |      |   | 933,000   |  
|Corporate General and Administrative Expenses                                  |  |      |           |   |      |   |           |  
|Total Corporate and Administrative Expense                                     |  |      | 1,832,000 |   |      |   | 1,533,000 |  
|                                                                               |  |      |           |   |      |   |           |  
|Loss from Operations                                                           |  |      | (661,000  | ) |      |   | (600,000  | )
|Net interest and investment (loss) income                                      |  |      | 482,000   |   |      |   | (7,000    | )
|                                                                               |  |      |           |   |      |   |           |  
|Loss before Income Tax Provision                                               |  |      | (179,000  | ) |      |   | (607,000  | )
|Income tax provision                                                           |  |      | 10,000    |   |      |   | 18,000    |  
|                                                                               |  |      |           |   |      |   |           |  
|Net Loss                                                                       |  | $    | (189,000  | ) |      | $ | (625,000  | )
|                                                                               |  |      |           |   |      |   |           |  
|Basic Loss Per Unit                                                            |  | $    | (0.03     | ) |      | $ | (0.09     | )
|                                                                               |  |      |           |   |      |   |           |  
|Diluted Loss Per Unit                                                          |  | $    | (0.03     | ) |      | $ | (0.09     | )
|                                                                               |  |      |           |   |      |   |           |  
|Basic Weighted Average Number of Units Outstanding                             |  |      | 7,051,000 |   |      |   | 6,960,000 |  
|Diluted Weighted Average Number of Units Outstanding                           |  |      | 7,051,000 |   |      |   | 6,960,000 |  

The accompanying notes are an integral part of the consolidated financial statements.



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CONSOLIDATED STATEMENTS OF CASH FLOWS

for the Years Ended December 31



|                                                                                   |  |      |             |   |      |   |            |  
|---------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ---------- | -
|                                                                                   |  | 2007 |             |   | 2006 |  
|Cash Flows from Operating Activities                                               |  |      |             |   |      |   |            |  
|Net loss                                                                           |  | $    | (189,000    | ) |      | $ | (625,000   | )
|Adjustments to reconcile net loss to net cash used by operating activities:        |  |      |             |   |      |   |            |  
|Income from equity method investment in West Valley MRF, LLC, net of distributions |  |      | (449,000    | ) |      |   | (149,000   | )
|Depreciation and amortization                                                      |  |      | 653,000     |   |      |   | 653,000    |  
|Land option not exercised                                                          |  |      | 20,000      |   |      |   |           |  
|                                                                                   |  |      |             |   |      |   |            |  
|Realized loss on sale of investments                                               |  |      |            |   |      |   | 367,000    |  
|Class A Units / stock-based compensation expense                                   |  |      | 47,000      |   |      |   | 10,000     |  
|Changes in assets:                                                                 |  |      |             |   |      |   |            |  
|Accounts Receivable- and other                                                     |  |      | 33,000      |   |      |   | 76,000     |  
|Changes in liabilities:                                                            |  |      |             |   |      |   |            |  
|Eagle Mountain Townsite cleanup reserve                                            |  |      |            |   |      |   | (160,000   | )
|Accounts payable and accrued liabilities                                           |  |      | 31,000      |   |      |   | (43,000    | )
|Net cash flows provided by (used in) operating activities                          |  |      | 146,000     |   |      |   | 129,000    |  
|                                                                                   |  |      |             |   |      |   |            |  
|Cash Flows from Investing Activities                                               |  |      |             |   |      |   |            |  
|Minority interest                                                                  |  |      | 86,000      |   |      |   |           |  
|Purchase of investments                                                            |  |      | (26,801,000 | ) |      |   | (9,640,000 | )
|Sale of investments                                                                |  |      | 27,691,000  |   |      |   | 8,441,000  |  
|Collection of notes receivable                                                     |  |      |            |   |      |   | 57,000     |  
|Capital acquisitions                                                               |  |      | (81,000     | ) |      |   |           |  
|Sale of Lake Tamarisk lots                                                         |  |      | 48,000      |   |      |   |           |  
|Capitalized landfill expenditures                                                  |  |      | (790,000    | ) |      |   | (817,000   | )
|Environmental remediation expenditures                                             |  |      | (33,000     | ) |      |   | (197,000   | )
|                                                                                   |  |      |             |   |      |   |            |  
|Net cash flows provided by (used in) investing activities                          |  |      | 120,000     |   |      |   | (2,156,000 | )
|                                                                                   |  |      |             |   |      |   |            |  
|Cash Flows from Financing Activities                                               |  |      |             |   |      |   |            |  
|Increase in restricted cash for contributions to SERP                              |  |      |            |   |      |   | (921,000   | )
|                                                                                   |  |      |             |   |      |   |            |  
|Net cash flows from financing activities                                           |  |      |            |   |      |   | (921,000   | )
|                                                                                   |  |      |             |   |      |   |            |  
|Net Increase (Decrease) in Cash and Cash Equivalents                               |  |      | 266,000     |   |      |   | (2,948,000 | )
|Cash and Cash Equivalents at Beginning of Year                                     |  |      | 1,153,000   |   |      |   | 4,101,000  |  
|                                                                                   |  |      |             |   |      |   |            |  
|Cash and Cash Equivalents at End of Year                                           |  | $    | 1,419,000   |   |      | $ | 1,153,000  |  
|                                                                                   |  |      |             |   |      |   |            |  
|Supplemental Disclosure of Cash Flow Information                                   |  |      |             |   |      |   |            |  
|Cash paid during the year for income taxes                                         |  | $    | 96,500      |   |      | $ | 10,800     |  

The accompanying notes are an integral part of the consolidated financial statements.



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CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS EQUITY

for the Years Ended December 31, 2007 and
2006



|                              |  |                     |  |                |            |   |                                            |   |          |       |  |   |            |  
|----------------------------- |  | ------------------- |  | -------------- | ---------- | - | ------------------------------------------ | - | -------- | ----- |  | - | ---------- | -
|                              |  | Member Class AUnits |  | MembersEquity |            |   | AccumulatedOtherComprehensiveIncome (Loss) |   |          | Total | 
|Balance at December 31, 2005  |  | 6,949,299           |  |                | 37,804,000 |   |                                            |   | (307,000 | )     |  |   | 37,497,000 |  
|Net loss                      |  |                    |  |                | (625,000   | ) |                                            |   |         |       |  |   | (625,000   | )
|Comprehensive loss            |  |                     |  |                |            |   |                                            |   |          |       |  |   |            |  
|Change in gain on investments |  |                     |  |                |            |   |                                            |   |          |       |  |   |            |  
|Realized                      |  |                    |  |                |           |   |                                            |   | 307,000  |       |  |   | 307,000    |  
|Unrealized                    |  |                    |  |                |           |   |                                            |   | 41,000   |       |  |   | 41,000     |  
|                              |  |                     |  |                |            |   |                                            |   |          |       |  |   |            |  
|Total Comprehensive loss      |  |                    |  |                |           |   |                                            |   |         |       |  |   | (277,000   | )
|Issuance of Class A Units     |  | 20,000              |  |                | 10,000     |   |                                            |   |         |       |  |   | 10,000     |  
|                              |  |                     |  |                |            |   |                                            |   |          |       |  |   |            |  
|Balance at December 31, 2006  |  | 6,969,299           |  |                | 37,189,000 |   |                                            |   | 41,000   |       |  |   | 37,230,000 |  
|Net loss                      |  |                    |  |                | (189,000   | ) |                                            |   |         |       |  |   | (189,000   | )
|Comprehensive loss            |  |                     |  |                |            |   |                                            |   |          |       |  |   |            |  
|Change in gain on investments |  |                     |  |                |            |   |                                            |   |          |       |  |   |            |  
|Realized                      |  |                    |  |                |           |   |                                            |   | (41,000  | )     |  |   | (41,000    | )
|Unrealized                    |  |                    |  |                |           |   |                                            |   | 27,000   |       |  |   | 27,000     |  
|                              |  |                     |  |                |            |   |                                            |   |          |       |  |   |            |  
|Total Comprehensive loss      |  |                    |  |                |           |   |                                            |   |         |       |  |   | (203,000   | )
|Issuance of Class A Units     |  | 95,000              |  |                | 47,000     |   |                                            |   |         |       |  |   | 47,000     |  
|                              |  |                     |  |                |            |   |                                            |   |          |       |  |   |            |  
|Balance at December 31, 2007  |  | 7,064,299           |  | $              | 37,047,000 |   |                                            | $ | 27,000   |       |  | $ | 37,074,000 |  
|                              |  |                     |  |                |            |   |                                            |   |          |       |  |   |            |  

At December 31, 2007 and 2006, Kaiser Ventures LLC had 751,956 Class B Units outstanding. At
December 31, 2007 and 2006, Kaiser Ventures LLC had outstanding 872 and 128 units outstanding, Class C and D, respectively.

The accompanying notes are an integral part of the consolidated financial statements.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. NATURE OF BUSINESS

Unless otherwise noted: (1) the term Kaiser Inc. refers to the former Kaiser Ventures Inc., (2) the term Kaiser LLC
refers to Kaiser Ventures LLC, and (3) the terms Kaiser, the Company, we, us, and our, refer to past and ongoing business operations conducted in the form of Kaiser Inc. or Kaiser LLC,
and their respective subsidiaries.

On November 16, 1988, the Company began operations as Kaiser Steel Resources, Inc. upon the
successful completion of the reorganization of Kaiser Steel Corporation (KSC) under Chapter 11 of the Bankruptcy Code. The Company has changed its name twice since reorganization in June 1993 and 1995, to Kaiser Resources Inc. and to
Kaiser Ventures Inc. (Kaiser Inc.), respectively. In November 2001, the stockholders of Kaiser Inc. approved the conversion of Kaiser Inc. into a newly-formed limited liability company pursuant to a merger of Kaiser Inc. with and into
Kaiser Ventures LLC. Under the terms of the agreement and plan of merger, Kaiser Inc.s stockholders received $10.00 in cash plus one Class A Unit for each share of common stock in Kaiser Inc. Kaiser Inc. assets and liabilities were
carried over at their historical cost basis.

At December 31, 2007, the Companys principal assets include: (i) an 83.13%
ownership interest in Mine Reclamation, LLC, which owns a permitted rail-haul municipal solid waste landfill located at the Eagle Mountain Site, this landfill is currently under contract to be sold to County District No. 2 of Los Angeles County
for approximately $41 million plus accrued interest, which sale is subject to a number of conditions, several of which remain to be fully satisfied; (ii) a 50% ownership interest in the West Valley Materials Recovery Facility and Transfer
Station (West Valley MRF); (iii) approximately 5,400 additional acres currently owned or controlled by Kaiser at the Eagle Mountain Site that are not included in the pending sale to the District; and (iv) cash and cash
equivalents, receivables and short-term investments of approximately $9.6 million.

The Companys consolidated financial statements
include the following significant entities: Lake Tamarisk Development, LLC; Kaiser Eagle Mountain, LLC; Kaiser Recycling LLC; Business Staffing, Inc.; and Mine Reclamation, LLC. See Note 2 below for additional information concerning the
Companys subsidiaries.

Ongoing Operations

The Companys revenues from ongoing operations are generally derived from the development of the Companys long-term projects. Income from equity method investments reflects Kaisers share of income
related to its equity investment in the West Valley MRF which the Company accounts for under the equity method.

Interim Activities

Revenues and expenses from interim activities are generated from various sources. Significant components of interim activities have
included housing rental income, aggregate and rock sales and lease payments for the minimum security prison at the Eagle Mountain Site. Due to the interim nature of these activities, they were previously presented as net revenues (net of expenses).
For clarification purposes we are now presenting the revenues and expenses separately for both 2006 and 2007.



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Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated
financial statements include the accounts of the Company and all wholly-owned subsidiaries and majority-owned investments, except as specified below. Intercompany accounts and transactions have been eliminated.

KSC Recovery, Inc. (KSC Recovery).The Companys wholly-owned subsidiary, KSC Recovery, Inc., which is governed and controlled by
a Bankruptcy Court approved Plan of Reorganization, acts solely as an agent for KSCs former creditors in pursuing bankruptcy related adversary litigation and administration of the KSC bankruptcy estate. Kaiser exercises no significant control
or influence over nor does Kaiser have any interest in the operations, assets or liabilities of KSC Recovery except as provided by the terms of the approved Plan of Reorganization. In addition, KSC Recoverys cash on hand and potential future
recoveries fund all costs and expenses of KSC Recovery. Consequently, activity of KSC Recovery is not included in Kaisers financial statements; however, KSC Recovery is a member of the Kaiser consolidated group for tax purposes and is
therefore included in the consolidated tax return.

Reclassifications

In 2007, in an effort to provide investors more detail of our revenues, we began presenting our interim revenues and expenses separately rather than net.
All relative prior period balances have been reclassified to conform to the current period presentation. These reclassifications had no material impact on revenue, gross margin, net loss, assets or liabilities in the periods presented.

Cash and Cash Equivalents

The Company
maintains its cash balances with two financial institutions that have Standard & Poors ratings of AA- or higher, have at least $30 billion in assets and are insured by the Federal Deposit Insurance Corporation up to $100,000 at each
institution. At December 31, 2007, and at various times throughout the year, the Company had cash in excess of federally insured limits.

Investments

The Company accounts for investments under the provisions of Statement of Financial Accounting Standards
(SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities. The Company has an Investment Policy which provides for the investment of excess cash balances primarily in mutual funds, commercial paper, certificates of
deposit, debt instruments, and government debt securities. The Company considers instruments with maturities of 365 days or more from the balance sheet date to be long-term investments. The classification of investment securities is reviewed by the
Company at each reporting period.

The Company classifies all of its investments as available-for-sale. As an
available-for-sale security, realized gains or losses, and interest income or dividends are reflected in the statement of operations while unrealized gains and losses are included in comprehensive income (loss) which is a component of
members equity.

Real Estate

In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company records impairment losses on long-lived assets used in operations when events and circumstances indicate that the
assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets.



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Interest and property taxes related to real estate under development are capitalized during periods
of development.

Investment in West Valley MRF, LLC

The Company accounts for its investment in West Valley MRF, LLC, the owner of West Valley MRF, under the equity method of accounting because of the Companys 50% ownership interest.

Landfill Permitting and Development

Through
its 83.13% interest in Mine Reclamation, LLC, the Company has been developing, for sale to a municipal entity or operating company, its property known as the Eagle Mountain Site in the California desert for use as a rail-haul municipal solid waste
landfill. Pursuant to SFAS No. 67, Accounting for Costs and Initial Rental Operations of Real Estate Projects, capitalizable landfill site development costs are recorded at cost and consist of engineering and environmental studies, legal
and consulting expenses, and other costs directly related to the permitting and development process. These costs are expensed when management determines that the capitalized costs provide no future benefit. Additionally, in accordance with SFAS
No. 144, Accounting for the Impairment or Disposal of Long-lived Assets, long-lived assets are evaluated for potential impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be
recoverable. The Company is still litigating challenges to a land exchange completed with the Bureau of Land Management of the U. S. Department of the Interior in October 1999 (See Note 17), and no sale of the Eagle Mountain is expected until this
matter is ultimately resolved. Further, the perception of the public and private financial markets of the value of solid waste sites and the waste management industry can fluctuate significantly over time. Accordingly, there can be no assurance that
the Company will successfully sell the Eagle Mountain assets on favorable terms or at all.

Buildings and Equipment

Buildings and equipment are stated on the cost basis. Depreciation is provided on the straight-line method over the estimated useful lives of the
respective assets which range from 3 to 10 years. Due to the passage of time and the impacts of weather, a number of the buildings and houses at the Eagle Mountain Townsite were deteriorating faster than anticipated and determined not to be
salvageable. Accordingly, the Company needed to demolish or rehabilitate a number of structures and accordingly established a reserve of $2.5 million in 2005 for such purposes. $2 million of the reserve was expensed in 2005 and $500,000 was
reclassified from the unused existing environmental remediation reserve in 2005. The Company utilized $160,000 of this reserve during 2006, which was the last expense charged against this reserve.

In addition, in March 2005, the Financial Accounting Standards Board issued, Interpretation No. 47. Accounting for Conditional Asset
Retirement Obligations, an interpretation of FASB Statement No. 143 (FIN 47) clarifying and interpreting the legal obligation to perform an asset retirement activity in which the timing and/or settlement are conditional on a
future event that may or may not be within the control of the Company. The Company has adopted FIN 47 effective as of the year ended December 31, 2005. Based upon currently available information, the Company has estimated that the conditional
asset retirement obligations related to possible future abatement for asbestos-containing products in certain of the viable structures at Eagle Mountain would approximate $1.2 million. These estimates were produced by third party consultants.
Pursuant to the requirements of FIN 47, the Company increased its environmental reserve by $1.2 million to account for these obligations and increased the carrying amount of the associated structures at Eagle Mountain by a comparable amount. This
increased carrying amount is being depreciated over the remaining estimated time that such assets will be owned by the Company, which was estimated to be approximately 4 years.



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In addition, the Company has reviewed and analyzed the increased carrying amount associated with
structures discussed above pursuant to SFAS No. 144, Accounting for the Impairment or Disposal of Long-lived Assets and has concluded that the $1.2 million increase in carrying amount for these structures will be recoverable and that no
impairment of these structures exists as of December 31, 2007.

Environmental Insurance

The Companys $3.8 million premium for the prospective insurance policy is capitalized as a long-term asset and is being amortized on a straight-line
basis over the twelve (12) year term of the policy. To the extent a pre-existing liability has not been recorded, claims made for environmental matters are recorded as litigation accruals in the Companys consolidated financial statements
pursuant to FAS No. 5 when it becomes probable that a loss has been incurred and the amount of such loss can be reasonably estimated. Claims accepted by the insurance company pursuant to coverage under the policy are recorded as insurance
receivables when coverage is accepted and the amount to be paid by the insurance company can be reasonably estimated.

Revenue Recognition

Revenues are recognized when the Company has completed the earnings process and an exchange transaction has taken place.

Income Taxes

The Company is taxed as a
partnership and thus, the Companys results of operations (on an income tax basis) are allocated to the members for inclusion in their respective income tax returns. The only income taxes imposed on the Company are a minor gross revenue tax
imposed by the State of California and income taxes imposed on Business Staffing Inc., the Companys only corporate subsidiary.

Earnings Per
Share

The Company follows SFAS No. 128, Earnings per Sharein calculating basic and diluted earnings per unit. Basic
earnings per unit excludes the dilutive effects of options, warrants and convertible securities, while diluted earnings per unit includes the dilutive effects of claims on the earnings of the Company.

LLC Unit/Stock Options

At December 31,
2007, the Company has three stock-based employee compensation plans, which are described more fully in Note 13. Effective January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards No. 123R
(SFAS 123R), Share-Based Payment, which requires the measurement and recognition of compensation expense for all share-based payment (or in our case units) awards to employees and managers based on estimated fair values. SFAS
123R supersedes the Companys previous accounting methodology which used the intrinsic value method under Accounting Principles Board Opinion No. 25 (APB 25), Accounting for Stock Issued to Employees. Under the
intrinsic value method no share-based compensation expense related to any option awards granted to employees or managers had been recognized in the Companys Consolidated Statements of Operations, as all unit option awards granted under the
plans had an exercise price equal to the Companys closing stock price on the date of grant.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported



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amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is
practicable to estimate that value:

Cash and Cash Equivalents. The carrying amount approximates fair value because of the
short-term maturity of these instruments.

Receivables. The carrying amount approximates fair value because of the short-term
maturity of these instruments.

Investments. The carrying amount approximates fair value of these investments.

Class B, C and D Units

The Company has
outstanding Class B, C and D Units which are reflected on the Companys Balance Sheet as equity securities that were designed and implemented to replicate the cash distributions the holders of such units would have received under certain former
long-term transaction incentive plans. These former plans provided for bonus payments as a result of the sale of certain assets at prices above certain minimum threshold requirements. Even though the Class B, C and D Units are classified as equity
securities, the Company will account for any future distributions on the Class B, C and D Units by recording compensation expense for the full amount of the distribution at the time a distribution become probable and estimateable. For additional
information regarding the Class B, C and D Units. Please see Note 13. EQUITY and Note 16. COMMITMENTS AND CONTINGENCIES - Contingent Distributions on Class B, C and D Units.

Note 3. ACCOUNTS RECEIVABLE AND OTHER

Accounts
receivable and other as of December 31, 2007 consisted of the following:



|                                    |  |   |         |  
|----------------------------------- |  | - | ------- | -
|Prepaid Insurance                   |  |   | 54,000  |  
|Income Tax Receivable               |  |   | 124,000 |  
|Accounts Receivable Trade and Other |  |   | 149,000 |  
|                                    |  |   |         |  
|Sub Total                           |  |   | 327,000 |  
|Allowance for doubtful accounts     |  |   | (34,000 | )
|                                    |  |   |         |  
|Total                               |  | $ | 293,000 |  
|                                    |  |   |         |  

Note 4. INVESTMENT IN WEST VALLEY MRF, LLC

Effective June 19, 1997, Kaiser Recycling Corporation (KRC) and West Valley Recycling & Transfer, Inc. (WVRT), a
subsidiary of Burrtec Waste Industries, Inc. (Burrtec), which are equal members of West Valley MRF, LLC, (a California limited liability company) entered into a Members Operating Agreement (MOA) which is substantially the
equivalent of a joint venture agreement but for a limited liability company. The construction and start up of the West Valley MRF was completed during December 1997.

Pursuant to the terms of the MOA, KRC contributed approximately 23 acres of Mill Site property on which the West Valley MRF was constructed while WVRT contributed all of Burrtecs recycling business that was
operated within Riverside County, thereby entitling West Valley MRF to receive all revenues



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generated from this business after the closing date. The Company also remains responsible for any pre-existing environmental conditions on the land, which is
generally covered by insurance.

Most of the financing for the construction of the West Valley MRF of approximately $22 million, including
reimbursement of previously incurred development costs of Burrtec and the Company, was obtained through the issuance and sale of two California Pollution Control Financing Authority (the Authority) Variable Rate Demand Solid Waste
Disposal Revenue Bonds (West Valley MRF, LLC Project) Series 1997A and Series 2000A (the Bonds). The Bonds are secured by an irrevocable letter of credit issued by Union Bank of California, N.A. (Union Bank). The Bonds have
stated maturity dates of June 1, 2012 for Series 1997A ($9.5 million) and June 1, 2030 Series 2000A ($8.5 million), although West Valley MRF, LLC is required, pursuant to its agreement with Union Bank, to periodically redeem a portion of
the Bonds on a stated schedule. Pursuant to a Guaranty Agreement with Union Bank, the Company and Burrtec each are liable for fifty percent (50%) of the principal and interest on the Bonds in the event of a default by the West Valley MRF, LLC.

During the second quarter of 2007 West Valley MRF, LLC and Union Bank agreed to modify the banks repayment schedule for West Valley
MRF, LLCs outstanding indebtedness issued by the California Pollution Control Finance Authority. West Valley MRF, LLC and the bank agreed that the current principal repayments of the indebtedness could be rescheduled in accordance with the
original issuance terms of the respective bond issues. The former and new payment schedules are summarized below.

CPCFA Debt
Rescheduling



|          |  |                         |           |                      |   |           |  |           |           |           |   |           |  |   |           |  |   |           |    
|--------- |  | ----------------------- | --------- | -------------------- | - | --------- |  | --------- | --------- | --------- | - | --------- |  | - | --------- |  | - | --------- | ---
|          |  | Former Payment Schedule |           | New Payment Schedule |  
|Year      |  | 1997Bond                |           | 2000Bonds            |   | Total     |  | 1997Bonds |           | 2000Bonds |   | Total     | 
|2007      |  | $                       | 1,200,000 |                      | $ | 900,000   |  | $         | 2,100,000 |           | $ | 630,000   |  | $ |          |  | $ | 630,000   |    
|2008      |  | $                       | 1,250,000 |                      | $ | 1,000,000 |  | $         | 2,250,000 |           | $ | 630,000   |  | $ |          |  | $ | 630,000   |    
|2009      |  | $                       | 1,320,000 |                      | $ | 1,100,000 |  | $         | 2,420,000 |           | $ | 630,000   |  | $ |          |  | $ | 630,000   |    
|2010      |  |                         |           |                      | $ | 1,100,000 |  | $         | 1,100,000 |           | $ | 630,000   |  | $ |          |  | $ | 630,000   |    
|2011      |  |                         |           |                      | $ | 1,100,000 |  | $         | 1,100,000 |           | $ | 630,000   |  | $ |          |  | $ | 630,000   |    
|2012      |  |                         |           |                      |   |           |  | $         |          |           | $ | 620,000   |  | $ |          |  | $ | 620,000   |    
|2013 thru |  |                         |           |                      |   |           |  |           |           |           |   |           |  |   |           |  |   |           |    
|2029      |  |                         |           |                      |   |           |  | $         |          |           |   |           |  | $ | 290,000   |  | $ | 4,930,000 | (1)
|          |  |                         |           |                      |   |           |  |           |           |           |   |           |  |   |           |  |   | ($290,000 |    
|          |  |                         |           |                      |   |           |  |           |           |           |   |           |  |   |           |  |   | per year  | )  
|2030      |  |                         |           |                      |   |           |  | $         |          |           |   |           |  | $ | 270,000   |  | $ | 270,000   |    
|          |  |                         |           |                      |   |           |  |           |           |           |   |           |  |   |           |  |   |           |    
|Total     |  | $                       | 3,770,000 |                      | $ | 5,200,000 |  | $         | 8,970,000 |           | $ | 3,770,000 |  | $ | 5,200,000 |  | $ | 8,970,000 |    
|          |  |                         |           |                      |   |           |  |           |           |           |   |           |  |   |           |  |   |           |    



|1 | Total payments for this period (2013 thru 2029) at $290,000 per year.
|- | ---------------------------------------------------------------------

The condensed summarized balance sheet information of West Valley MRF, LLC as of November 30, 2007, is as follows:



|                                        |  |   |           
|--------------------------------------- |  | - | ----------
|Balance Sheet Information               |  |   |           
|Current Assets                          |  | $ | 11,143,000
|Property and Equipment (net)            |  |   | 12,306,000
|Other Assets                            |  |   | 1,094,000 
|                                        |  |   |           
|Total Assets                            |  | $ | 24,543,000
|                                        |  |   |           
|Current Liabilities                     |  | $ | 5,055,000 
|Other Liabilities                       |  |   |          
|CPCFA Bonds Payable (long-term portion) |  |   | 7,710,000 
|Members Equity                         |  |   | 11,778,000
|                                        |  |   |           
|Total Liabilities and Members Equity   |  | $ | 24,543,000
|                                        |  |   |           



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The condensed summarized income statement information for the West Valley MRF, LLC as of
November 30, 2007 and 2006, is as follows:



|                             |  |                  |            |                  |   |           
|---------------------------- |  | ---------------- | ---------- | ---------------- | - | ----------
|Income Statement Information |  | November 30,2007 |            | November 30,2006
|Net Revenues                 |  | $                | 16,341,000 |                  | $ | 14,752,000
|Gross Profit                 |  | $                | 6,702,000  |                  | $ | 5,844,000 
|Net Income                   |  | $                | 4,898,000  |                  | $ | 4,298,000 

The Company has recognized equity income from the West Valley MRF of $2,449,000, and $2,149,000,
in 2007 and 2006, respectively. The Company received cash distributions of $2 million each during 2007 and 2006, respectively, from its investment in the West Valley MRF.

Note 5. MINE RECLAMATION, LLC

The Company, in January 1995, acquired a 70% interest in Mine
Reclamation, the developer of the landfill project. As a result of subsequent equity fundings and purchases, the Companys ownership interest in Mine Reclamation as of December 31, 2007, is 83.13%. On August 9, 2000, MRC, entered into
that certain Agreement For Purchase and Sale of Real Property and Related Personal Property In Regard To The Eagle Mountain Sanitary Landfill Project and Joint Escrow Instructions (Landfill Project Sale Agreement) with the District. In
summary, the landfill project (which includes the Companys royalty payments under the MRC Lease) is being sold for $41 million plus accrued interest, with an initial closing currently scheduled to occur on June 30, 2008, but the initial
closing date has been extended numerous times. However, payment of the purchase price will be delayed as described in more detail below. The sale of the landfill project is subject to the results of the Districts due diligence and satisfaction
of numerous contingencies. The contingencies include, but are not limited to, obtaining the transfer of the landfill projects permits to the District and obtaining all necessary consents to the transaction and resolving the outstanding federal
land exchange litigation.

In September 2005, the Company received an adverse U.S.
District Court decision in the federal land exchange litigation that may materially impact the validity of the landfill project. The decision was adverse to the landfill project in that it set aside the land exchange completed between the Company
and BLM as well as two BLM rights-of-way. The Company along with the U.S. Department of Interior appealed the decision to the 9thCircuit Court of
Appeals. The briefing for the appeal was completed in 2007 and oral argument was held on December 6, 2007, before a three judge panel of the 9thCircuit Court of Appeals. A decision can be made at any time after oral argument but the U.S. 9thCircuit Court of Appeals usually takes
six to nine months to issue a decision after oral argument. Occasionally, the announcement of a decision may take substantially longer. If the decision is fully affirmed on appeal, the decision would jeopardize the viability of the landfill project.
In addition, the decision could adversely impact the agreement to sell the landfill project to the District, including termination of the agreement. For a more detailed discussion of this litigation and the risks associated with this litigation, see
Note 17. LEGAL PROCEEDINGS - Eagle Mountain Landfill Project Land Exchange Litigation. The Company has evaluated the adverse decision on the landfill project in the context of whether such asset should be considered impaired. The Company
finds itself in much the same position as it was in 2000 when the San Diego County Superior Court judge ruled that the environmental documentation was insufficient under California law. Believing that the Superior Court was in error, much like the
Company believes the U.S. District Court is in error, the Company appealed the San Diego County Superior Court decision. The Company won that appeal with the California Court of Appeals unanimously reversing the San Diego Superior Court.
Accordingly, the Company has concluded that, although it is possible, it is not currently probable or measurable that there has been impairment of the investment in MRC at this time due to the pending appeal of the decision before the U.S.
9thCircuit Court of Appeals.

Assuming there is a closing, $41 million of the total purchase price plus accrued interest is to be deposited into an escrow account and will be released when litigation contingencies are fully resolved. The litigation contingencies are the
federal litigation challenging the completed federal land exchange.



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Even though the closing has not taken place and these funds have not been deposited into an escrow account, interest began accruing on this portion of the
purchase price on May 3, 2001.

The District has been undertaking extensive due
diligence on the landfill project and has the right to terminate the Landfill Project Sale Agreement if it is not satisfied with the results of its due diligence and other matters. Due diligence, joint use negotiations and other items are expected
to continue during 2008 although a number of items have been delayed and will not be resolved until there is a successful conclusion of the land exchange litigation that is on appeal to the U.S. 9thCircuit Court of Appeals. In addition, the parties will individually determine whether each chooses to continue to extend the closing date for the transaction.

There are numerous risks associated with MRC and the landfill project, including the competition represented by the Mesquite rail-haul landfill project,
which the District purchased. There are also numerous risks and contingencies associated with the pending sale of the landfill project to the District. There can be no assurance that all outstanding matters currently preventing an initial closing
with the District will be resolved to the satisfaction of the parties. Accordingly, there can be no assurance that the sale to the District will occur or that the current terms of the pending transaction may not be significantly modified as a result
of future discussions with the District or as to the timing of the receipt of the purchase price. There can be no assurance that the completed purchase of the Mesquite landfill by the District will not adversely impact the negotiations and the
closing on the sale of the landfill to the District. In addition, there are material litigation risks associated with the current federal land exchange litigation, and the appeal of the adverse U.S. District Court decision in such litigation
including reversal of the completed land exchange and the threatened litigation over the Endangered Species Act, all as discussed in Note 16. LEGAL PROCEEDINGS. No assurance can be made that the Company will successfully and timely
resolve these matters so as to avoid a material adverse effect on the Companys current plan to sell the landfill to the District. In addition, there are risks that the landfill project will be impacted by natural disasters like the floods that
caused significant damage to the rail line in 2003. Certain risks may be uninsurable or are not insurable on terms which the Company believes are economical.

As discussed below, MRC will need additional funding to complete the landfill project, including funds to repair the flood damage sustained by the Eagle Mountain rail line, to fund the litigation involving the project
and to fund the activities necessary for its possible sale. There is no assurance that MRC can obtain additional funds through debt or equity financing on acceptable terms.

If the Company is unable to manage any of these risks or uncertainties, the Company may not be able to sell the landfill at a favorable price, if at all,
and the value of the Companys Class A Units could be materially reduced.

Flood Damage to Railroad. The Company owns an
approximate 52-mile private railroad that runs from Ferrum Junction near the Salton Sea to the Eagle Mountain mine. In late August and early September of 2003, portions of the railroad and related protective structures sustained considerable damage
due to heavy rains and flash floods. This damage included having some rail sections being buried under silt while other areas had their rail bed undermined. Subsequent to the filing of the Companys report on Form 10-Q/A for the quarter ended
September 30, 2003, the Company conducted a more complete investigation of the damage and of the costs to return the railroad to the condition that it was in prior to the flood damage. As a result of such investigation, the Company has
estimated the cost to repair the damage to be a minimum of $4.5 million, an accrual for which was recorded in 2003. The Companys current plans has undertaken, the work necessary to help preserve and protect the existing railroad. However, the
major repairs to return the railroad to its condition prior to the flood damage will be deferred until a later date.



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Note 6. INVESTMENTS

The Company has an Investment Policy which provides for the investment of excess cash balances primarily in bond funds, commercial paper, and debt instruments. At December 31, 2007 the Company had investments in
high grade commercial paper (Standard & Poors rating of A or above) and U.S. governmental bonds which were classified as available-for-sale. The classification of investment securities is reviewed by the
Company at each reporting period.

The following is a summary of the fair value of investment securities classified as
available-for-sale as of December 31, 2007:



|                              |  |                  |          
|----------------------------- |  | ---------------- | ---------
|AVAILABLE-FOR-SALE SECURITIES |  | December 31,2007
|Commercial Paper              |  | $                | 8,043,000

All of the $8,043,000 available for sale at December 31, 2007, has a maturity of less than
one year and is therefore classified as short-term investments on the consolidated balance sheet.

As of December 31, 2007, the
Companys available for sale securities had an unrealized net gain of $27,000 that is included in other comprehensive income, a component of Members Equity.

Note 7. CONVERSION DISTRIBUTION

At December 31,
2007, the Company holds $1,190,000 in cash it had previously sent to its transfer agent in December 2001 for the payment of the $10.00 per share merger consideration to shareholders. This cash, classified as restricted cash, will ultimately be
distributed to shareholders once the correct paperwork is submitted by such shareholders, thereby reducing the related conversion distribution payable.

Note 8. ENVIRONMENTAL INSURANCE

One of the goals in the cash maximization strategy approved by Kaiser Ventures LLCs
Board of Directors in September 2000 was to reduce the liabilities associated with existing and potential future environmental and other similar types of claims. In furtherance of such goal, the Company purchased an insurance policy effective
June 30, 2001, that is designed to provide broad prospective commercial general liability, pollution legal liability, and contractual indemnity coverage for the Companys ongoing and historical operations. The policy has a twelve
(12) year term and limits of $50 million in the aggregate for defense and indemnity, with no deductible or self-insured retention. The policy is designed to provide coverage for future claims in excess of the Companys existing and
historic insurance policies; however, to the extent that these other insurance policies are not responsive to a claim, the policy will provide first dollar coverage for a claim resulting from property damage, personal injury, bodily injury, cleanup
costs or violations of environmental laws. The policy also provides for a broad defense of claims that may be brought against the Company. The policy is specifically intended to provide additional coverage for potential liabilities arising from
pollution conditions or known and/or potential asbestos-related claims. The policy also provides contractual indemnity coverage for scheduled indemnity obligations of the Company arising from, e.g., prior corporate transactions and real estate
sales. The aggregate cost for this policy was approximately $5.8 million, of which, based upon discussions among the respective members of the Boards of Directors, KSC Recovery paid $2 million and the Company paid the balance of approximately $3.8
million. The portion of the policy paid by KSC Recovery was expected to cover known and/or potential asbestos claims; while the portion of the policy paid by the Company was expected to cover future potential claims arising from the Companys
historical operations. The Company expects this policy will cover substantially any and all environmental claims (up to the $50 million policy limit) relating to the historical operations of the Company.



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In June 2005, the Company was notified that it was to receive a refund of a portion of the cost of
the policy relating to other commissions. The refund, totaling $106,000, was recorded as a reduction in the cost of the policy and the future amortization of the policy cost will be adjusted accordingly as described below.

The Companys $3.8 million premium for the prospective insurance policy was capitalized as a long-term asset and was being amortized on a
straight-line basis over the twelve (12) year term of the policy; approximately $80,000 per quarter or $320,000 per year. As a result of the refund discussed above, the Company adjusted the current years expense and the remaining balance,
thereby reducing the amortization to $75,000 per quarter or $300,000 per year as of June 2005. To the extent a pre-existing liability has not been recorded, claims made for environmental matters are recorded as litigation accruals in the
Companys consolidated financial statements pursuant to FAS No. 5 when it becomes probable that a loss has been incurred and the amount of such loss can be reasonably estimated. Claims accepted by the insurance company pursuant to coverage
under the policy are recorded as insurance receivables when coverage is accepted and the amount to be paid by the insurance company can be reasonably estimated.

Note 9. BUILDINGS AND EQUIPMENT

Buildings and equipment as of December 31, 2007 consisted of the following:



|                         |  |   |            |  
|------------------------ |  | - | ---------- | -
|Buildings and structures |  | $ | 3,285,000  |  
|Machinery and equipment  |  |   | 1,803,000  |  
|                         |  |   |            |  
|                         |  |   | 5,088,000  |  
|Accumulated depreciation |  |   | (4,036,000 | )
|                         |  |   |            |  
|Total                    |  | $ | 1,052,000  |  
|                         |  |   |            |  

Depreciation expenses for the years ended December 31, 2007 and 2006 was $351,000 and
$350,000, respectively.

Note 10. ACCRUED LIABILITIES - CURRENT

The current portion of accrued liabilities as of December 31, 2007 consisted of the following:



|                                                   |  |   |        
|-------------------------------------------------- |  | - | -------
|Compensation, severance and related employee costs |  | $ | 215,000
|Accrued professional                               |  |   | 416,000
|Other                                              |  |   | 26,000 
|                                                   |  |   |        
|Total                                              |  | $ | 657,000
|                                                   |  |   |        

Note 11. ENVIRONMENTAL REMEDIATION RESERVE

With the sale of approximately 588 acres of the Companys Mill Site Property to CCG Ontario, LLC (CCG) in August 2000, and as a result of
the Companys previous remediation activities in 2000, the Companys estimated environmental liabilities were reduced by approximately $21.9 to $4.5 million. These potential environmental liabilities included, among other things,
environmental obligations at the Mill Site Property that were not assumed by CCG, such as any potential third party damages from the identified groundwater plume discussed below, environmental remediation work at the Eagle Mountain Site, and
third-party bodily injury and property damage claims, including asbestos claims not covered by insurance and/or paid by the KSC bankruptcy estate.

The Company purchased an insurance policy effective June 30, 2001 that is designed to provide broad commercial general liability, pollution legal liability, and contractual indemnity coverage for the Companys ongoing and
historical operations. The policy has a twelve (12) year term and limits of $50



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million in the aggregate for defense and indemnity, with no deductible or self-insured retention. The policy is designed to provide coverage for future
claims in excess of the Companys existing and historic insurance policies; however, to the extent that these other insurance policies are not responsive to a claim, the policy will provide first dollar coverage for a loss resulting from
property damage, personal injury, bodily injury, cleanup costs or violations of environmental laws. The policy also provides for a broad defense of claims that may be brought against the Company. The policy is specifically intended to provide
additional coverage for known and/or potential liabilities arising from pollution conditions or asbestos-related claims. The policy also provides contractual indemnity coverage for scheduled indemnity obligations of the Company arising from, e.g.,
prior corporate transactions and real estate sales.

In August 2001, the California Regional Water Quality Control Board, on behalf of the
City of Ontario, asserted an environmental claim against the Company relating to the historical operations conducted at the Mill Site. The Company tendered the claim to its insurance carrier and the insurance carrier accepted the claim. As a result,
at September 30, 2001, the Company recorded an insurance receivable in an amount equal to its pre-existing estimated environmental liability of $1.5 million and reclassified the obligation as a litigation accrual separate from its environmental
remediation liabilities. The City of Ontarios claims were fully settled in March 2004 with the settlement paid by the insurance carrier. The final settlement between our insurance carrier and the City of Ontario resulted in a payment to the
City that was $250,000 less than the Company had accrued. Therefore the Company reduced both its litigation accrual and insurance receivable by $250,000 as of the date of the settlement.

In 2004, this reserve was reduced to approximately $2.4 million to reflect settlement of a third party claim related to the groundwater plume discussed
above. This reserve was further reduced in 2005 as a result of reclassifying $500,000 to the Eagle Mountain Townsite Cleanup Reserve. Finally, this environmental reserve was increased by $1.2 million as of December 31, 2005, for Eagle Mountain
Townsite environmental related matters, as discussed in more detail in Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Buildings and Equipment.

As discussed above in Note 2, the Company, as a result of the adoption of FIN 47, increased its environmental reserve by $1.2 million to account for the estimated cost of possible future abatement obligations relating
to asbestos-containing products in certain of the viable structures at Eagle Mountain and increased the cost basis of the associated structures at Eagle Mountain by a comparable amount. During 2007 and 2006, $33,000 and $197,000, respectively of the
reserve was utilized primarily for the abatement of these products. Thus, as of December 31, 2007, the Company estimates, based upon current information, that its future environmental liability related to certain matters not assumed by CCG in
its purchase of the Mill Site Property, such as the groundwater plume discussed above and other environmental related items, including, but not limited to remediation at the Eagle Mountain Site, potential third party property damage and bodily
injury claims, would be approximately $2,882,000. In the event a future claim for damages is filed against the Company that exceeds the remaining $2,882,000 environmental reserve, management believes that the claim may be covered by insurance
depending upon the nature and timing of the claim.

See also Note 2. Summary of Significant Accounting Policies - Buildings and
Equipment, Note 8. Environmental Insurance, and Note 15. Commitments and Contingencies - Environmental Contingencies.

Note 12. EQUITY

Conversion into LLC

In November 2001, the stockholders of Kaiser Inc. approved the conversion of Kaiser Inc. into a newly-formed limited liability company pursuant to a merger between Kaiser Inc. and Kaiser LLC, the surviving company.
Under the terms of the merger converting Kaiser Inc., to a limited liability company, Kaiser Inc.s stockholders received $10.00 in cash plus one Class A Unit for each share of common stock



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in Kaiser Inc. The new Class A Units are not listed on any stock exchange, additionally the transferability of the units is subject to the approval of
an executive of the Company. Subsequent to the conversion, Kaiser LLC is taxed as a partnership and thus, Kaiser LLC results of operations (on an income tax basis) are distributed to the unit holders for inclusion in their respective income tax
returns.

Class A Units Outstanding

At December 31, 2007 Kaiser LLC had 7,064,299 Class A Units outstanding.

At December 31, 2007, there are 298,100
Class A Units available for issuance relating to outstanding options.

At December 31, 2007, 104,267 Class A Units of the
Company were being held for the benefit of the former general unsecured creditors of the predecessor company pending the resolution of disputed bankruptcy claims. The final resolution of these claims will result in the final allocation of the held
shares among the unsecured creditor group, which presents no liability to the Company. For financial reporting purposes these shares have been considered issued and outstanding. Just prior to the Companys conversion into an LLC in November
2001, the then 136,919 shares were issued to the bankruptcy estate, and subsequently converted into Class A units. Distribution of these units have been made periodically for the settlement of unsecured creditor claims.

At December 31, 2007, 113,690 Class A Units were deemed outstanding and reserved for issuance to holders of Kaiser Inc. stock that have yet to
convert such stock to Kaiser LLC Class A Units.

Class B Units

Prior to the merger, Kaiser LLC issued 751,956 Class B Units to current and former MRC executives. These MRC executives had previously been granted the
right to receive certain contingent incentive payments in order to incentivize each of them to assist Kaiser and MRC in closing the sale of the landfill project as well as meeting all conditions necessary for the release of funds from escrow. These
Class B Units, issued to the MRC executives, replaced those incentive payments rights.

These Class B Units are entitled to receive
approximately 2% of any cash actually received by MRC, up to approximately $752,000 or $1.00 per unit, if MRC receives the currently agreed upon price of $41 million. The Class B Units are not entitled to any distributions or profits, have no voting
rights except as required by law and are not transferable. Please see Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Class B, C and D Units for the accounting treatment of the Class B Units.

At December 31, 2007, Kaiser LLC had 751,956 Class B Units outstanding.

Class and D Units

During 2002, the Company issued Class C and D Units to certain officers and
terminated the Long- Term Incentive Plan (TIP) as to future unearned payments that could have been payable to the Companys executive officers. Payments to holders of the Class C and D Units will only be paid upon the monetization
of the Companys major assets. Payments, if any, will be made under a formula that replicates the amount that would have been paid under the TIP if it had been continued. Class C and D Units are not entitled to any other distributions or
profits, have no voting rights except as required by law and are not transferable. Please see Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Class B, C and D Units for the accounting treatment of the Class C and D Units.

At December 31, 2007, Kaiser LLC had 800 and 200 Class C and D Units outstanding, respectively.



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Unit/Stock Option and Unit/Stock Grant Programs

In October 1990, the Companys stockholders approved the Amended, Restated and Substituted Kaiser Steel Resources, Inc. 1989 Stock Plan (the
1989 Stock Plan). The 1989 Stock Plan provided for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock or deferred stock awards. Certain options granted under the 1989 Stock Plan
are still outstanding. The Company incurred no compensation expense during 2007 related to these options.

In July 1992, the Companys
stockholders approved the 1992 Stock Plan. The 1992 Stock Plan provides for the grant of incentive stock options and non-qualified stock options. The 1992 Stock Option Plan is administered by the Board of Directors. The 1992 Plan is a three-year
Plan with years running from July 1 to June 30. Each July 1, an amount equal to 2% of the Companys shares outstanding became available to support grants of stock options to employees during that year. At the end of each plan
year, reserved plan shares not made subject to stock options revert to normal unissued share status. Grants are generally established at fair market value of the Companys common stock on the date of the grant and the exercise thereof may
extend for up to 10 years with various vesting schedules.

In addition, under the 1992 Stock Plan each director when first elected to the
Board was automatically granted options for 5,000 common stock shares. Each non-employee director who is re-elected or serving an unexpired term as a member of the Board at an annual meeting of holders of stock of the Company will be automatically
granted an additional 1,500 stock options. These options have an exercise price equal to the fair market value of the Companys Common Stock on the date of the grant.

In June 1995, the Companys stockholders approved the 1995 Stock Plan. The 1995 Stock Plan provides for the grant of incentive stock options,
non-qualified stock options, restricted stock and other stock related incentives. However, there are no outstanding options under this plan as of December 31, 2007.

In addition, under the 1995 Stock Plan, each director when first elected to the Board was automatically granted options for 5,000 common stock shares. Each non-employee director who is re-elected or serving an
unexpired term as a member of the Board at an annual meeting of holders of stock of the Company was automatically granted an additional 1,500 stock options. These options have an exercise price equal to the fair market value of the Companys
common stock on the date of the grant.

Additionally, each member of the Board of Managers, other than Mr. Stoddard, receives an
annual grant of 5,000 Class A Units.

Effective with the date of the merger, all options with an exercise price of $10.00 and below,
326,750 options, were deemed exercised which entitled the optionees to participate in the $10.00 cash distribution and conversion into Class A Units. As a result of this cash distribution, the Company reduced the exercise price on all remaining
outstanding options, 301,100 Class A Unit options, by the $10.00 in order to mirror the $10.00 dividend per share. Additionally, the term on the remaining unit options was extended, due to their reduced liquidity, to December 31, 2008.



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A summary of the status of grants under the Companys unit/stock plans as of December 31,
2007 and 2006, and activities during the years ended on those dates is presented below:



|                                                               |  |         |         |                                |   |         |  |                                |         |  |   |     
|-------------------------------------------------------------- |  | ------- | ------- | ------------------------------ | - | ------- |  | ------------------------------ | ------- |  | - | ----
|                                                               |  | 2007    |         | 2006                          
|                                                               |  | Options |         | Weighted-AverageExercise Price |   | Options |  | Weighted-AverageExercise Price
|Outstanding at beginning of Year                               |  |         | 298,100 |                                | $ | 3.11    |  |                                | 298,100 |  | $ | 3.11
|Granted                                                        |  |         |        |                                |   |        |  |                                |        |  |   |    
|Exercised                                                      |  |         |        |                                |   |        |  |                                |        |  |   |    
|Forfeited                                                      |  |         |        |                                |   |        |  |                                |        |  |   |    
|                                                               |  |         |         |                                |   |         |  |                                |         |  |   |     
|Outstanding at end of year                                     |  |         | 298,100 |                                | $ | 3.11    |  |                                | 298,100 |  | $ | 3.11
|                                                               |  |         |         |                                |   |         |  |                                |         |  |   |     
|Options exercisable at year End                                |  |         | 298,100 |                                | $ | 3.11    |  |                                | 298,100 |  | $ | 3.11
|                                                               |  |         |         |                                |   |         |  |                                |         |  |   |     
|Weighted-average fair value of options granted during the year |  | $       | N/A     |                                |   |         |  | $                              | N/A     |  |   |     

The following table summarizes information about unit options outstanding as of December 31,
2007:



|                        |  |                                       |  |         |  |                               |     
|----------------------- |  | ------------------------------------- |  | ------- |  | ----------------------------- | ----
|                        |  | Options Exercisable andOutstanding   
|Range ofExercise Prices |  | Weighted-AverageRemainingLife (years) |  | Options |  | Weighted-AverageExercisePrice
|$0.55 to $1.625         |  | 1.0                                   |  | 161,600 |  | $                             | 1.36
|$4.85 to $5.58          |  | 1.0                                   |  | 136,500 |  | $                             | 5.18

Note 13. LOSS PER UNIT/SHARE

The following table sets forth the computation of basic and diluted loss per unit/share:



|                                                                                                    |  |      |           |   |      |   |           |  
|--------------------------------------------------------------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|                                                                                                    |  | 2007 |           |   | 2006 |  
|Numerator:                                                                                          |  |      |           |   |      |   |           |  
|Net loss                                                                                            |  | $    | (189,000  | ) |      | $ | (625,000  | )
|Numerator for basic loss per unit                                                                   |  |      |           |   |      |   |           |  
|Loss available to Class A members                                                                   |  | $    | (189,000  | ) |      | $ | (625,000  | )
|Numerator for diluted loss per unit                                                                 |  |      |           |   |      |   |           |  
|Loss available to Class A members                                                                   |  | $    | (189,000  | ) |      | $ | (625,000  | )
|Denominator:                                                                                        |  |      |           |   |      |   |           |  
|Denominator for basic earnings per unit-weighted-average shares                                     |  |      | 7,051,000 |   |      |   | 6,960,000 |  
|Effect of dilutive options                                                                          |  |      |          |   |      |   |          |  
|                                                                                                    |  |      |           |   |      |   |           |  
|Denominator for diluted earnings per unit -adjusted weighted-average shares and assumed conversions |  |      | 7,051,000 |   |      |   | 6,960,000 |  
|                                                                                                    |  |      |           |   |      |   |           |  
|Basic loss per unit                                                                                 |  | $    | (0.03     | ) |      | $ | (0.09     | )
|                                                                                                    |  |      |           |   |      |   |           |  
|Diluted loss per unit                                                                               |  | $    | (0.03     | ) |      | $ | (0.09     | )
|                                                                                                    |  |      |           |   |      |   |           |  

For additional disclosures regarding the outstanding employee unit/stock options see Note 12.

The Company incurred a net loss during 2007 and 2006 and therefore all options are considered antidilutive for those years.

Note 14. INCOME TAXES

Subsequent to the Companys conversion
into an LLC, the Company is taxed as a partnership and thus, the Companys results of operations (on an income tax basis) are allocated to the unit holders for inclusion



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in their respective income tax returns. Therefore, the only income taxes are those imposed on Business Staffing Inc. These taxes amounted to $10,000 for 2007
and $18,000 for 2006, net of any increased change in deferred tax benefits.

Note 15. COMMITMENTS AND CONTINGENCIES

Environmental Contingencies

As discussed in
Note 11., effective June 30, 2001, the Company purchased, a 12-year $50 million insurance policy, which is expected to cover substantially any and all environmental claims (up to the $50 million policy limit) relating to the historical
operations of the Company. To the extent a pre-existing liability has not been recorded, claims made for environmental matters are recorded as litigation accruals in the Companys consolidated financial statements pursuant to FAS No. 5
when it becomes probable that a loss has been incurred and the amount of such loss can be reasonably estimated. Claims accepted by the insurance company pursuant to coverage under the policy are recorded as insurance receivables when coverage is
accepted and the amount to be paid by the insurance company can be reasonably estimated.

At the inception of the insurance contract, the
Company estimated, based upon current information and discussions with environmental consultants, that its future environmental liabilities related to certain matters not assumed by CCG Ontario, LLC in its purchase of the Mill Site Property,
including a certain groundwater matter as well as potential matters at Eagle Mountain and at other historical locations, would be approximately $4.0 million. These liabilities reflected managements estimate of potential future environmental
claims, remediation and related costs but did not represent known claims at the inception of the policy. In August 2001, the California Regional Water Quality Control Board, on behalf of the City of Ontario, asserted an environmental claim against
the Company relating to the historical operations conducted at the Mill Site. The Company tendered the claim to its insurance carrier and the insurance carrier accepted the claim. As a result, at September 30, 2001, the Company recorded an
insurance receivable in an amount equal to its pre-existing estimated environmental liability of $1.5million and reclassified the obligation as a litigation accrual.

As discussed above in Note 2., the Company, as a result of the adoption of FIN 47, increased its environmental reserve by $1.2 million to account for its conditional asset retirement obligations related to possible
future abatement obligations for asbestos-containing products in certain of the viable structures at Eagle Mountain and increased the cost basis of the associated structures at Eagle Mountain by a comparable amount. Thus, as of December 31,
2007, the Company estimates, based upon current information, that its future environmental liability related to certain matters not assumed by CCG in its purchase of the Mill Site Property, such as the groundwater plume discussed above and other
environmental related items, including, but not limited to remediation at the Eagle Mountain Site, potential third party property damage and bodily injury claims, would be approximately $2,882,000. In the event a future claim for damages is filed
against the Company that relates to the remaining $2,882,000 environmental reserve, management believes that the claim may be covered by insurance depending upon the nature and timing of the claim.

Pension Plans

The Company currently sponsors
a voluntary qualified 401(k) savings plan and one nonqualified pension plan, available to all full-time employees. Participants may make contributions of up to 25% of their base salary and 100% of any cash bonus with the Company matching one-half of
each participants contribution up to 6% of compensation. The non-qualified plan that is potentially available to all full time employees mirrors the qualified 401(k) plan.

In January 2007, an additional nonqualified pension plan was established that benefits two of the executive officers. The Company placed into this Plan
previously accrued amounts due Richard E. Stoddard and Terry L. Cook upon termination of their employment in the amount of $660,872 and



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$260,121, respectively. Like the terms of their previous employment agreements, the amounts in the Plan remain subject to forfeiture if the executive officer
is terminated for cause as defined in such Plan (which is the same definition as contained the employment agreements of the executive officers) or if the officer should voluntarily terminate his employment. In addition, the amounts in
such Plan fully vest if the executive officer is terminated without cause, is constructively terminated without cause, dies, is permanently disabled or upon completion of the initial term of their employment. Once vested, payments may commence, upon
the officers death, permanent disability, or the termination of the officer for any reason except for cause as defined in the Plan.

Total expense relative to all of these plans for the years ended December 31, 2007 and 2006 was $118,000 and $91,100, respectively.

MRC Financing

Since 1995 MRC has been funded through a series of private placements to its
existing equity holders. The last private placement was completed bringing its ownership interest in MRC to 83.13%. Future funding of MRC will be required to cover such items as the federal land exchange litigation appeal and the railroad repairs
but there is no assurance that such funding will be obtained.

Contingent Distributions on Class B, C and D Units

Upon the sale of certain of the Companys assets at a price equal to or greater than certain minimum sales prices, distributions will be made on the
Class B, C and D Units in accordance with their respective terms. For additional information, see Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Class B, C and D Units and Note 12. EQUITY above.

Note 16. LEGAL PROCEEDINGS

In the normal course of
our business we are involved in various claims and legal proceedings. Significant legal proceedings, including those which may have a material adverse effect on our business or financial condition, are summarized below. However, the following
discussion does not, and is not intended to, discuss all of the litigation matters to which we may be or become a party. Should we be unable to resolve any legal proceeding in the manner we anticipate and for a total cost within close proximity to
any potential damage liability we have estimated, our business and results of operations may be materially and adversely affected.

Eagle Mountain Landfill Project Land Exchange Litigation. In October 1999, Kaisers wholly-owned subsidiary, Kaiser Eagle Mountain, Inc. (now Kaiser Eagle Mountain, LLC), completed a land exchange with the BLM. This completed
land exchange has been challenged in two separate federal lawsuits. On September 20, 2005, the U. S. District Court for the Central District of California, Eastern Division, issued its opinion inDonna Charpied,et al., Plaintiffs v.
United States Department of Interior, et al., Defendants (Case No. ED CV 99-0454 RT (Mex)) and in National Parks and Conservation Association, Plaintiff v. Bureau of Land Management, et al., Defendants (ED CV 00-0041 RT (Mex)).
The decision is adverse to the landfill project in that it sets aside a land exchange completed between the Company and U.S. Bureau of Land Management (BLM) in October 1999 as well as two BLM rights-of-way. It also effectively reinstates
a reverter title issue involving the Eagle Mountain Townsite.

In the exchange, the Companys wholly owned subsidiary, Kaiser Eagle
Mountain, Inc. (now Kaiser Eagle Mountain, LLC) transferred approximately 2,800 acres of Kaiser-owned property along its railroad right-of-way to the BLM and a cash equalization payment in exchange for approximately 3,500 acres of land within the
Eagle Mountain landfill project area. The land exchanged by the Company was identified as prime desert tortoise habitat and was a prerequisite to completion of the permitting of the Eagle Mountain landfill project. Following completion of the land
exchange, two lawsuits were filed challenging it and requesting its reversal. The plaintiffs argued that the land exchange should have been reversed, because, among other reasons, the BLM failed to comply with the National Environmental



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Policy Act and the Federal Land Policy and Management Act. The U.S. District Court concluded that the environmental impact statement was deficient in its
explanation and/or environment analysis with regard to: (i) the issue of eutrophication which deals with the introduction of nutrients, in this case primarily nitrogen, as a result of the existence of the landfill project; (ii) Big Horn
Sheep, which is not an endangered species; (iii) the statement of purpose and need for the landfill project; and (iv) the reasonable range of alternatives to the proposed project. The court did rule in favor of the landfill project with
regard to the environmental analysis and explanation for: (i) noise; (ii) night lighting; (iii) visual impacts; (iv) the desert tortoise; (v) groundwater; and (vi) air. The court also ruled that the environmental impact
statement was deficient under the Federal Land Policy and Management Act with regard to: (i) the appraisal undertaken by the BLM in the land exchange; and (ii) a full discussion of the BLMs conclusions on the public need for the
landfill project. A copy of the decision can be found as Exhibit 99.1 to the Companys Report on Form 8-K dated September 20, 2005.

We and the U.S. Department of Interior appealed the decision to the U. S. 9thCircuit Court of Appeals. The briefing for the appeal was completed in 2007 and oral argument was heard by a three judge panel on December 6, 2007. While
a decision may be announced at any time, the U.S. 9thCircuit Court of Appeals usually announces its decisions six to twelve months following oral
arguments. However, on occasion, the announcement of a decision may take substantially longer. There can be no assurance that we will be successful in any appeal. If the decision is fully affirmed on appeal, the decision would jeopardize the
viability of the landfill project. In addition, the decision could adversely impact the agreement to sell the landfill project to the District, including termination of the agreement.

In April 2007, Donna Charpied, et al, filed a motion with the same U.S. District Court that handled the land exchange litigation seeking to enforce the
courts order in such case. The allegations are that additional actions are necessary to set aside the land exchange and to prevent the use of property at Eagle Mountain that would change the character and use of the exchanged properties
. In the motion, the opponents objected to the military training that has taken place and that may take place on Kaiser fee owned land at Eagle Mountain (even though military and law enforcement training previously took place at Eagle
Mountain), the possible use of a portion of the Eagle Mountain Townsite for a prison facility (even though one operated successfully at the Eagle Mountain Townsite for over 12 years) and the possible use of rock from Eagle Mountain to help remediate
acknowledged environmental problems at the Salton Sea located in Imperial and Riverside counties in Southern California. We believe we are in full compliance with the U.S. Districts Courts order and that many of the assertions of the
Charpieds are in error. We vigorously opposed such motion. The final briefs for this matter were submitted in the third quarter of 2007 and we are awaiting a decision. As of the date of this Report, military training has not taken place at Eagle
Mountain since the Charpieds filed their motion.

Asbestos Litigation. There are pending asbestos litigation claims, primarily
bodily injury, against Kaiser LLC and Kaiser Steel Corporation (the bankruptcy estate of Kaiser Steel Corporation is embodied in KSC Recovery, Inc.). There currently are approximately 15 active suits. Many of the plaintiffs allege that they or their
family members were aboard Kaiser ships or worked in shipyards in the Oakland/San Francisco, California area or Vancouver, Washington area in the 1940s and that the Company and/or KSC Recovery were in some manner associated with one or more
shipyards or has successor liability. However, there is an increasing number of claims related to other facilities such as the former Kaiser Steel Mill Site Property.

Most of these lawsuits are third party premises claims alleging injury resulting from exposure to asbestos or asbestos containing products and involve multiple defendants. The Company anticipates that it, often along
with KSC Recovery, will be named as a defendant in additional asbestos lawsuits. A number of large manufacturers and/or installers of asbestos and asbestos containing products have filed for bankruptcy over the past several years, increasing the
likelihood that additional suits will be filed against the Company. In addition, the trend has been toward increasing trial damages and settlement demands. Virtually all of the complaints against us and KSC Recovery are non-specific, but involve
allegations relating to pre-bankruptcy activities. It is difficult to determine the amount of damages that



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we could be liable for in any particular case until near the time of trial; indeed, many of these cases do not include pleadings with specific damages. The
Company vigorously defends all asbestos claims as is appropriate for a particular case.

Of the claims resolved to date, approximately 75%
have been resolved without payment to the plaintiffs. The Company believes that it currently has substantial insurance coverage for the asbestos claims and has tendered these suits to appropriate insurance carriers.

Bankruptcy Claims. The bankruptcy estate of KSC was officially closed by order of U.S. Bankruptcy Court for the District of Colorado on
October 2, 1996. However, the bankruptcy case was reopened in 1999 in connection with certain litigation matters. Since that time, the bankruptcy case was again closed, however, the administration of KSCs bankrupt estate will continue for
several more years.

From time to time various environmental and similar types of claims that relate to Kaiser Steel pre-bankruptcy
activities, are asserted against KSC and Kaiser LLC. Excluding the asbestos claims, there has been an average of two to four such claims a year for the past several years. In connection with the KSC plan of reorganization, Kaiser, as the reorganized
successor to KSC, was discharged from all liabilities that may have arisen prior to confirmation of the plan, except as otherwise provided by the plan and by law. Although Kaiser believes that in general all pre-petition claims were discharged under
the KSC bankruptcy plan, there have been some challenges as to the validity of the discharge of certain specified claims, such as asbestos claims. If any of these or other similar claims are ultimately determined to survive the KSC bankruptcy, it
could have a materially adverse effect on Kaisers business and value.



|Item 8. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|------- | ------------------------------------------------------------------------------------

None.



|Item 8A. | CONTROLS AND PROCEDURES
|-------- | -----------------------

Disclosure Controls and Procedure

The Company maintains controls and procedures designed to ensure that it is able to collect the information it is required to disclose in
the reports it files with the SEC, and to process, summarize and disclose this information within the time periods specified in the rules of the SEC. Based on an evaluation of the Companys disclosure controls and procedures as of the end of
the period covered by this report conducted by the Companys management, under the supervision and with the participation of the Chief Executive and Chief Financial Officer, the Chief Executive and Chief Financial Officer believe that these
controls and procedures are effective at the reasonable assurance level to ensure that the Company is able to collect, process and disclose the information it is required to disclose in the reports it files with the SEC within the
required time periods. Specifically, in 2007, the Company: (a) requested that all of the critical employees, officers and Members of the Board of Managers of the Company complete an extensive internal control and risk management questionnaire;
and internally reviewed and tested its internal controls against its written procedures. The above conclusions are based upon the work performed.

Managements Report on Internal Control over Financial Reporting

Management is responsible for establishing and
maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act, as amended). Company management assessed the effectiveness of our internal control over financial reporting as of
December 31, 2007. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated



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Framework. Our management has concluded that, as of December 31, 2007, our internal control over financial reporting is effective based on these
criteria.

Changes Internal Control over Financial Reporting

During the period covered by this report, there have been no changes in the Companys internal control over financial reporting that have materially affected or are reasonably likely to materially affect the
Companys internal control over financial reporting.

Limitations on the Effectiveness of Controls

We do not expect that the disclosure controls or our internal controls will prevent all errors and they cannot possibly prevent all fraud. A control
system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of
fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be
circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the
policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.



|Item 8B. | OTHER INFORMATION
|-------- | -----------------

Not applicable.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT
BLANK]



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PART III



|Item 9. | MANAGERS AND EXECUTIVE OFFICERS OF THE COMPANY; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
|------- | -------------------------------------------------------------------------------------------------

BOARD OF MANAGERS

The current members of the Board of Managers are as follows:



|                    |  |     |  |                                                             
|------------------- |  | --- |  | ------------------------------------------------------------
|NAME                |  | AGE |  | POSITION WITH THE
COMPANY                                   
|Richard E. Stoddard |  | 57  |  | Chief Executive Officer, President and Chairman of the Board
|Ronald E. Bitonti   |  | 75  |  | Manager                                                     
|Todd G. Cole        |  | 87  |  | Manager                                                     
|Gerald A. Fawcett   |  | 75  |  | Vice Chairman                                               
|Marshall F. Wallach |  | 65  |  | Manager                                                     

Richard E. Stoddardwas appointed Chief Executive Officer of Kaiser in June 1988, and has
held such position and/or the position of Chairman of the Board since such date. Prior to joining Kaiser in 1988, he was an attorney in private practice in Denver, Colorado. Mr. Stoddard is Chairman of the Board of Managers of Mine Reclamation,
LLC and until July 1999 he served on the Board of Directors of Penske Motorsports, Inc. (PMI) when International Speedway Corporation acquired PMI. As of January 1, 2003, Mr. Stoddard began working less than full time for
Kaiser. In addition to working on behalf of Kaiser, Mr. Stoddard works as a general business consultant with an emphasis on distressed businesses and water development opportunities. In this capacity, Mr. Stoddard is working primarily on
behalf of Cadiz, Inc.

Ronald E. Bitonti is Chairman of the Benefits Committee for the VEBA and was Chairman of the Reorganized
Creditors Committee formed during the KSC bankruptcy until dissolution of this committee in 1991. From 1985 to 1991, Mr. Bitonti served as International Representative for the United Steelworkers of America. Mr. Bitonti retired from
KSC in 1981 and has been a director or manager of Kaiser since November 1991.

Todd G. Cole has been a director or manager of Kaiser
since November 1989. Mr. Cole was Chief Executive Officer of CIT Financial Corporation before starting his present career as a consultant and corporate director. He currently is President of Cole & Wilds Associates, Inc., a consulting
company. He was a founding director of Coral Gable Trust Company, a Florida State chartered institution, which began operations in April 2004. Mr. Cole is a member of the Georgia Bar Association and is an accredited certified public accountant
(inactive status).

Gerald A. Fawcett was President and Chief Operating Officer of Kaiser Inc. from January 1996 until his
retirement from full time duties on January 15, 1998. He was appointed to Kaisers Board on January 15, 1998, and currently serves as Vice Chairman of the Board and undertakes special projects on behalf of the Company from
time-to-time. Mr. Fawcett began his employment with KSC in 1951, holding various positions in the steel company and ultimately becoming Division Superintendent of the Cold Rolled and Coated Products Division. After working five years consulting
with domestic and overseas steel industry clients, Mr. Fawcett joined Kaiser in 1988 as Senior Vice President and became Executive Vice President in October 1989. He is also Vice Chairman of the Board of MRC.

Marshall F. Wallach has been a director or manager of Kaiser since November 1991. From 1984 to 2003, Mr. Wallach served as President of The
Wallach Company, a Denver, Colorado based investment banking firm. The Wallach Company was sold to Keycorp on January 1, 2001. Mr. Wallach retired from



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The Wallach Company on Dec. 31, 2003. Prior to forming The Wallach Company, Mr. Wallach managed the Corporate Finance Department and established the
Mergers and Acquisitions Department of Boettcher & Company, a regional investment bank in Denver, Colorado. Mr. Wallach serves on the boards of several non-profit organizations and privately-owned corporations. He is currently
President of Wallach Capital Advisors, Inc. which was incorporated in early 2004 and is President of Gates Capital Partners, LLC formed in 2005.

MANAGER EMERITUS

Reynold C. MacDonald serves as a Manager Emeritus on our Board of Managers. This is an honorary, nonvoting
and unpaid position. In this position, Mr. MacDonald is available to the Board and to the Chief Executive Officer to provide guidance on Company matters. Mr. MacDonald served on the Board of Directors of Kaiser Inc. from November 1988
until completion of the merger in 2001, and he also was an employee of Kaiser Steel from 1946 to 1963, with his last position being assistant general superintendent of all the mills. Mr. MacDonald served as Chairman of the Board for Acme Metals
Company from 1986 until 1992 and continues as a director with that company. He has also served as a director with Interlake, Inc., a metals fabrication and materials handling company and of ARAMARK Group, Inc.

INDEPENDENT MANAGERS

Messrs. Bitonti, Cole and
Wallach are considered independent managers (directors) under applicable rules.

COMMITTEES OF THE BOARD

Our Board has a standing Audit Committee and Human Relations Committee.

AUDIT COMMITTEE MATTERS

The duties and responsibilities of the Audit Committee are set forth in our
Audit Committee Charter. The Audit Committees primary function is to review the financial information to be provided to our members, the financial reporting process, the system of internal controls, the audit process and the Companys
process for monitoring compliance with laws and regulations.

Under our Audit Committee Charter, the Audit Committee is solely responsible
for:



| |  |  | Hiring and firing the independent registered public accounting firm auditors for Kaiser LLC;
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | Resolving any disagreement between the independent registered public accounting firm and management; and
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | Approving all non-audit services performed by Kaiser LLCs independent registered public accounting firm, subject to a de minimis exception.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------

Mr. Wallach (Chairman) and Mr. Cole serve as members of our Audit Committee. Our Board has determined that
both Mr. Wallach and Mr. Cole are independent of Kaisers management and that they have accounting or financial management experience sufficient to qualify each of them as a financial expert under the rules issued by
NASDAQ. In addition, our Board has determined that Mr. Wallach and Mr. Cole each qualify as an audit committee financial expert under current SEC rules and regulations. However, even if none of the current members of our Audit
Committee would qualify as an audit committee financial expert under SEC rules and regulations, we would retain Mr. Wallach and Mr. Cole on the Audit Committee because of their expertise and experience in financial matters,
including



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reviewing and analyzing financial statements, and their familiarity with the Company and its operations. In addition:



| |  |  | Neither Mr. Wallach nor Mr. Cole sits on audit committees for more than two other public companies.
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | Each member of the Audit Committee has one vote.
| | - |  | ------------------------------------------------



| |  |  | Neither Mr. Wallach nor Mr. Cole receives any compensation from us, other than as a manager and/or as a member of any committee appointed by the Board of
Managers.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

In performing its duties, the Audit Committee seeks to maintain free and open communication between the
managers, the independent registered public accounting firm and our internal financial management. The Audit Committee is intended to provide an independent and, as appropriate, confidential forum in which interested parties can freely discuss
information and concerns.

The Audit Committee retained Moss Adams LLP as our independent registered public accounting firm for fiscal 2007
and also retained the firm as our independent registered public accounting firm for 2008.

In connection with our annual audit:



| |  |  | The Audit Committee reviewed and discussed with Moss Adams LLP, our independent registered public accounting firm, their overall plans for the audit and the
audits scope.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Audit Committee reviewed the fees for our financial statements and the fees charged for other services rendered to Moss Adams LLP.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Audit Committee reviewed and discussed the audited financial statements with our management.
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | The Audit Committee discussed with our independent registered public accounting firm the matters required to be discussed by Statement of Auditing Standards 61.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Audit Committee received the written disclosures and the letter from the independent registered public accounting firm required by Independence Standards Board
Standard No. 1, and has discussed with the independent registered public accounting firm its independence.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Audit Committee met in executive session with management and separately with representatives of Moss Adams LLP.
| | - |  | -------------------------------------------------------------------------------------------------------------------

Based upon the foregoing, the Audit Committee recommended to the Board of Managers that the audited financial statements be included in our Annual Report
on Form 10-KSB for the year ended December 31, 2007.

HUMAN RELATIONS COMMITTEE

The duties and responsibilities of the Human Relations Committee are set forth in our Human Relations Committee Charter. Although Kaiser LLC leases its
employees from Business Staffing, Inc., the Human Relations Committee, along with Business Staffing, Inc. reviews compensation and benefit programs for the employees leased to Kaiser by Business Staffing, Inc.

The Human Relations Committee is composed of Messrs. Cole (Chairman) Bitonti and Fawcett.



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EXECUTIVE OFFICERS

The current executive officers of the Company are:



|                    |  |     |  |                                                                                   
|------------------- |  | --- |  | ----------------------------------------------------------------------------------
|NAME                |  | AGE |  | POSITION WITH THE
COMPANY                                                         
|Richard E. Stoddard |  | 57  |  | Chief Executive Officer, President and Chairman of the Board                      
|James F. Verhey     |  | 60  |  | Executive Vice President - Finance and Chief Financial Officer                    
|Terry L. Cook       |  | 52  |  | Executive Vice President - Administration, General Counsel and Corporate Secretary

Richard E. Stoddards biographical information is set forth above under Board of
Managers.

James F. Verhey joined Kaiser and was appointed Vice President - Finance and Chief Financial Officer in August
1993, appointed Senior Vice President - Finance in January 1996, and appointed Executive Vice President of Kaiser in January 1998. In addition to his duties with Kaiser, Mr. Verhey was appointed Vice President of Finance and Chief Financial
Officer of Mine Reclamation Corporation in February 1995. Mr. Verhey is a certified public accountant and spent several years with PricewaterhouseCoopers LLP in Los Angeles, California. As of October 1, 1999, Mr. Verhey began working
less than full time for Kaiser. In addition to working for Kaiser, Mr. Verhey is a director of Silverado WineGrowers, LLC, which is headquartered in Napa, California, and which owns and manages wine grape vineyards.

Terry L. Cook joined Kaiser and was appointed General Counsel and Corporate Secretary in August 1993, became a Senior Vice President in January
1996, and was appointed Executive Vice President - Administration in January 2000. Mr. Cook was appointed General Counsel and Corporation Secretary of Mine Reclamation Corporation in February 1995. Prior to joining Kaiser, Mr. Cook was a
partner in the Denver office of the national law firm McKenna & Cuneo (now called McKenna Long & Aldridge) specializing in business, corporate, and securities matters. Prior to his joining McKenna & Cuneo in July 1988,
Mr. Cook was an attorney in private practice as a partner in a Denver, Colorado, law firm.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES
EXCHANGE ACT OF 1934

Section 16(a) of the Securities Act of 1934, as amended, requires certain beneficial owners of our units to
file with the SEC initial reports of ownership and reports of changes in ownership of Kaiser LLC.

To our knowledge, based solely on a
review of the Form 3, 4 and 5 filings with the SEC of certain beneficial owners of our Class A Units, all Section 16(a) filing requirements applicable to Section 16 reporting persons were timely filed.

CODE OF BUSINESS CONDUCT AND ETHICS

We have adopted
an employee policy called the Code of Business Conduct and Ethics. This policy states our policies on, among other things, complying with laws, fair dealing, confidentiality and insider trading. The Code of Business Conduct and Ethics
applies to all employees including our executive officers. This policy also creates an enforcement procedure in which employees are able to submit reports or inquiries to the Audit Committee, on a strictly confidential basis, for the
committees independent investigation. The Companys Code of Business Conduct and Ethics is available on the Companys website www.kaiserventures.com. A copy may also be obtained free of charge by writing to us.



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|Item 10. | EXECUTIVE COMPENSATION
|-------- | ----------------------

The following table sets
forth the compensation information for our Chief Executive Officer, and our other two most highly compensated executive officers. (Currently, we only have three executive officers.) Over the past several years we have reduced our staffing needs due
primarily to the sale of substantial assets and consummation of the merger that created the present structure.

SUMMARY COMPENSATION TABLE(1)



|                                                    |  |      |  |            |  |           |  |                 |  |                           |  |          
|--------------------------------------------------- |  | ---- |  | ---------- |  | --------- |  | --------------- |  | ------------------------- |  | ---------
|Name andPrincipal Position                          |  | Year |  | Salary(2)$ |  | Bonus(3)$ |  | Unit Awards(4)$ |  | All OtherCompensation(5)$ |  | Total$   
|Richard E. Stoddard                                 |  | 2007 |  | 332,925    |  | 3,455     |  | 15,955          |  | 722,826                   |  | 1,075,161
|Chairman of the Board, President and CEO            |  | 2006 |  | 317,071    |  | 0         |  | 0               |  | 54,403                    |  | 371,474  
|James F. Verhey                                     |  | 2007 |  | 152,640    |  | 3,455     |  | 15,955          |  | 24,957                    |  | 197,007  
|Exec. Vice President - Finance & CFO                |  | 2006 |  | 145,371    |  | 0         |  | 0               |  | 24,539                    |  | 169,910  
|Terry L. Cook                                       |  | 2007 |  | 275,450    |  | 3,455     |  | 15,955          |  | 293,472                   |  | 588,332  
|Exec. Vice President, General Counsel and Secretary |  | 2006 |  | 238,524    |  | 0         |  | 0               |  | 31,305                    |  | 269,829  



|(1) | All employees are leased to Kaiser LLC by Business Staffing, Inc., a subsidiary of the Company. The Bonus; Option Awards; Non-Equity Incentive Plan
Compensation; and Change in Pension Value and Non-qualified Deferred Compensation Earnings columns have been eliminated from the Summary Compensation Table because there were no reportable events/compensation earned for the
applicable years for such items.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | The salary amount was not reduced for any employee contributions to our 401(k) Savings Plan and Supplemental Executive Retirement Plans.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------



|(3) | The bonus was paid pursuant to the Executive Officer New Revenue Incentive Participation Plan whereby the executive officers are paid a bonus based upon a percentage of net new
revenue, if any. Half of the bonus is paid in cash, which is reflected in the Bonus column, and the other half is payable in Class A Units. For additional information, see Item 10. EXECUTIVE COMPENSATION - EXECUTIVE OFFICER
NEW REVENUE INCENTIVE PARTICIPATION PLAN.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | Represents value of 25,000 Class A Units issued to each executive officer under his respective employment agreement and units issued pursuant to the Executive Officer New
Revenue Incentive Participation Plan.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | Our executive officers are provided with certain health insurance, disability insurance and other non-cash benefits generally available to all salaried employees and therefore are
not included in this table under applicable SEC rules. However, Mr. Stoddard and Mr. Cook received a comprehensive medical physical in 2007, at the Companys expense. The cost of such physical was $2,800 for Mr. Stoddard and
$2,992 for Mr. Cook. These amounts are included in the All Other Compensation column as appropriate. Our contributions to the 401(k) Savings Plan, and to the Supplemental Executive Retirement Plan in 2007 and 2006 are listed below.
Additionally, our one time contribution to what is identified below as the Restricted SERP is specified below.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                    |  |                       |  |                   |  |            |  |                            |  |                  
|------------------- |  | --------------------- |  | ----------------- |  | ---------- |  | -------------------------- |  | -----------------
|                    |  | COMPANY CONTRIBUTIONS
|NAME                |  | YEAR                  |  | 401(K) PLAN(a)($) |  | SERP(a)($) |  | RESTRICTED SERP(a), (b)($) |  | TOTAL TO PLANS($)
|Richard E. Stoddard |  | 2007                  |  | 18,604            |  | 14,118     |  | 660,872                    |  | 693,594          
|                    |  | 2006                  |  | 18,604            |  | 12,624     |  |                           |  | 31, 228          
|James F. Verhey     |  | 2007                  |  | 12,890            |  |           |  |                           |  | 12,890           
|                    |  | 2006                  |  | 12,223            |  |           |  |                           |  | 12,223           
|Terry L. Cook       |  | 2007                  |  | 18,604            |  | 8,587      |  | 260,121                    |  | 287,713          
|                    |  | 2006                  |  | 18,604            |  | 4,658      |  |                           |  | 23,262           



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|(a) | Reported in the All Other Compensation column.
|--- | ------------------------------------------------



|(b) | A SERP was adopted in 2007 with a one time contribution by the Company of $660,877 and of $260,121 for the benefit of Mr. Stoddard and Mr. Cook, respectively. These one
time contributions represent the accrued amount of severance under their respective employment agreements in effect as of December 31, 2006. The amounts in this Restricted SERP are subject to vesting and certain other restrictions. For
additional information see ITEM 10. Executive Compensation - Non-Qualified Deferred Compensation Plans.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Like all
other employees employed more than five (5) years, our executive officers can participate in a program under which we will pay two-thirds (2/3) of the premium on a life insurance policy or policies with a total benefit equal to
approximately three (3) times an employees annual base salary. The term life insurance policies of the executive officers expired in 2007 or were soon due to expire. Thus, new term life insurance polices were obtained in 2007. The
premiums paid by us under this life insurance program for each of our executive officers are as follows:



|                    |  |      |  |                               
|------------------- |  | ---- |  | ------------------------------
|NAME                |  | YEAR |  | COMPANYSPREMIUMPAYMENTS(a)($)
|Richard E. Stoddard |  | 2007 |  | 3,268                         
|                    |  | 2006 |  | 1,715                         
|James F. Verhey     |  | 2007 |  | 2,619                         
|                    |  | 2006 |  | 959                           
|Terry L. Cook       |  | 2007 |  | 2,340                         
|                    |  | 2006 |  | 843                           



|(a) | Does not include the cost of a $50,000 term life insurance policy that we pay for all employees of the Company, other than certain part-time employees.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------

Both Mr. Stoddard and Mr. Verhey reside outside Southern California. As a part of the terms of their employment, we pay or reimburse them for
their commuting, rental car and hotel expenses as well as other miscellaneous commuting expenses such as parking fees and mileage reimbursement for use of a private vehicle.



|                    |  |         |  |                    |  |            |  |               |  |              |  |          |  |         
|------------------- |  | ------- |  | ------------------ |  | ---------- |  | ------------- |  | ------------ |  | -------- |  | --------
|                    |  |         |  | COMMUTING EXPENSES |  |           
|NAME                |  | YEAR($) |  | AIRFARE($)         |  | LODGING($) |  | CARSERVICE($) |  | RENTALCAR($) |  | MISC.($) |  | TOTAL($)
|Richard E. Stoddard |  | 2007    |  | 9,999              |  | 6,451      |  | 2,658         |  | 4,619        |  | 463      |  | 24,890  
|                    |  | 2006    |  | 10,835             |  | 5,340      |  | 760           |  | 3,747        |  | 728      |  | 21,410  
|James F. Verhey     |  | 2007    |  | 2,053              |  | 3,841      |  |              |  | 3,224        |  | 1,853    |  | 10,971  
|                    |  | 2006    |  | 4,246              |  | 3,366      |  |              |  | 2,824        |  | 2,381    |  | 12,817  

Mr. Cook receives an annual automobile allowance of $7,200.



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OUTSTANDING EQUITY AWARDS AT 2007 FISCAL YEAR-END



|                                         |  |                                                              |  |                                                                |  |                                                                    |  |                        |  |             |  |                      |  |                                                       |  |                                                        |  |            
|---------------------------------------- |  | ------------------------------------------------------------ |  | -------------------------------------------------------------- |  | ------------------------------------------------------------------ |  | ---------------------- |  | ----------- |  | -------------------- |  | ----------------------------------------------------- |  | ------------------------------------------------------ |  | -----------
|                                         |  | Option Awards                                                |  | Stock Awards                                                  
|Name and Principal Position              |  | Number ofSecuritiesUnderlyingUnexercisedOptions(Exercisable) |  | Number ofSecuritiesUnderlyingUnexercisedOptions(Unexercisable) |  | EquityIncentivePlanAwards:Number ofSecuritiesUnderlyingUnexercised |  | OptionExercisePrice($) |  | VestingDate |  | OptionExpirationDate |  | Numberof Sharesor Unitsof Stockthat havenotVested (3) |  | MarketValue ofShares orUnits ofStockthatHave notVested |  | VestingDate
|Richard E. Stoddard                      |  | 33,750                                                       |  |                                                               |  |                                                                   |  | 1.250                  |  | 01/29/94    |  | 12/31/08             |  |                                                      |  |                                                       |  |           
|Chairman of the Board,                   |  | 14,800                                                       |  |                                                               |  |                                                                   |  | 4.850                  |  | 01/10/95    |  | 12/31/08             |  |                                                      |  |                                                       |  |           
|President & CEO                          |  | 13,800                                                       |  |                                                               |  |                                                                   |  | 5.580                  |  | 06/01/93    |  | 12/31/08             |  |                                                      |  |                                                       |  |           
|James F. Verhey                          |  | 30,000                                                       |  |                                                               |  |                                                                   |  | 1.625                  |  | 07/28/94    |  | 12/31/08             |  |                                                      |  |                                                       |  |           
|Exec. Vice President - Finance & CEO     |  | 15,000                                                       |  |                                                               |  |                                                                   |  | 4.850                  |  | 01/10/95    |  | 12/31/08             |  |                                                      |  |                                                       |  |           
|Terry L. Cook                            |  | 20,000                                                       |  |                                                               |  |                                                                   |  | 1.250                  |  | 01/29/94    |  | 12/31/08             |  |                                                      |  |                                                       |  |           
|Exec. Vice                               |  | 10,000                                                       |  |                                                               |  |                                                                   |  | 4.850                  |  | 01/10/05    |  | 12/31/08             |  |                                                      |  |                                                       |  |           
|President, General Counsel and Secretary |  | 32,000                                                       |  |                                                               |  |                                                                   |  | 5.580                  |  | 06/01/93    |  | 12/31/08             |  |                                                      |  |                                                       |  |           

There were no option grants to the named executive officers in 2007. However, under the terms of
their respective January 1, 2007 employment agreement, each executive officer was issued 25,000 Class A Units in 2007. Additionally, each of executive officer received 5,169 Class A Units under the terms of the Executive Office New
Revenue Participation Plan.

LONG-TERM INCENTIVE COMPENSATION PLAN

Kaiser Inc. provided an incentive to its executive officers through a long-term transaction incentive plan, referred to as the TIP. The TIP was designed to compensate Kaiser Inc.s executive officers for
maximizing proceeds from asset sales and resulting distributions to Kaiser Inc.s stockholders. The TIP was terminated shortly after the merger payments were made to the participants under the plan due to the sale of the Mill Site Property, the
sale of Kaisers Fontana Union stock to Cucamonga, and the tax benefits generated by the conversion to a limited liability company. In place of the TIP, Kaiser LLC issued Class C and Class D Units in Kaiser LLC (collectively referred to as the
Incentive Units) to the five previous participants in the TIP (the Participating Officers). The terms of the Incentive Units mirror the previous cash flow incentives provided to the Participating Officers under the TIP.

Under the terms of the Incentive Units, the Participating Officers receive cash distributions based on the cash available for distribution
to our members from the proceeds realized in the sale of our remaining major assets (net of expenses and taxes) and on our operating expenses.

The terms of the Incentive Units set threshold and target sale prices for our remaining assets. The Participating Officers, as a group, receive 5% of the aggregate net proceeds from an asset sale in excess of the
threshold. If the net proceeds exceeds the higher target sale value, the Participating Officers, as a group, receive 10% of the aggregate net proceeds from such sale in excess of the target. The Incentive Units do not contain a maximum cap as to the
amount distributable to such units.

The Class C Units are held by Participating Officers still employed by Kaiser LLC, and, upon a
Participating Officers departure, all Class C Units are automatically converted into Class D Units. Two former officers of Kaiser LLC hold a total of 200 Class D Units. In the event a Participating Officer is terminated for cause,
Kaiser LLC may repurchase, for a nominal value, all of that officers Incentive Units. Any payment to the Participating Officers will be split with a full share to each Class C Unit and a smaller share for each Class D Unit which will depend on
the length of the period since its issuance. The following table sets forth the number of Incentive Units held by the Participating Officers that are also named executive officers.



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|                      |  |              
|--------------------- |  | -------------
|PARTICIPATING OFFICER |  | CLASS C UNITS
|Richard E. Stoddard   |  | 400          
|Terry L. Cook         |  | 240          
|James F. Verhey       |  | 160          

The Incentive Units do not have the right to vote on any matter, except as required by law.
Neither the Incentive Units nor any rights to distributions with respect to such units may be transferred by any Participating Officer. The Incentive Units do not have a termination date.

Each Incentive Unit will be allocated an amount of the profits of the Company equal to the amount of any distribution with respect to such Incentive
Unit, with the character (capital gain, ordinary income, etc.) of the profits to reflect the portion of each type of income recognized by the Company with respect to that asset(s) after January 1, 2002, as determined by the Board in good faith.
Therefore, the total amount that Participating Officers will receive pursuant to the terms of the Incentive Units can only be determined upon sale of all of our assets and satisfaction of our general obligations and liabilities. The following table
sets forth the total amount that would be earned by the Participating Officers, assuming that (i) each Participating Officer continues to work for Kaiser throughout the period; and (ii) the proceeds generated from the sale of each major
asset and the related cash available for distribution to members equals the specified target for such asset:



|                       |  |                   |              |  |                                                                    |           |  |            |         |  |     |    
|---------------------- |  | ----------------- | ------------ |  | ------------------------------------------------------------------ | --------- |  | ---------- | ------- |  | --- | ---
|                       |  | PERIODUNTILPAYOUT |              |  | ESTIMATED AGGREGATE FUTUREPAYOUTS UNDER NON-STOCK PRICE-BASED PLAN |          
|NAME                   |  |                   | THRESHOLD($) |  |                                                                    | TARGET($) |  | MAXIMUM($) |        
|Richard E. Stoddard(1) |  | N/A               | (2)          |  | 0                                                                  | (3)       |  | $          | 442,000 |  | N/A | (4)
|James F. Verhey(1)     |  | N/A               | (2)          |  | 0                                                                  | (3)       |  | $          | 176,800 |  | N/A | (4)
|Terry L. Cook(1)       |  | N/A               | (2)          |  | 0                                                                  | (3)       |  | $          | 265,200 |  | N/A | (4)



|(1) | The actual participation percentage of each Participating Officer in any distributions to the Incentive Units will
depend on whether the Participating Officer holds Class C or Class D Units. Adjustment of the individual percentages will not change the size of the total distributions.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | The right to distributions primarily depends upon the sale of Kaiser LLCs major assets for aggregate net proceeds
in excess of the previously established threshold levels.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Participating Officers are only entitled to receive distributions on their Incentive Units if and when Kaiser LLC sells
a remaining major asset for aggregate net proceeds in excess of the previously established sale price threshold for such asset, or, in the event of the sale of the Company, in excess of the previously set sale price (net of expenses and taxes) for
the overall Company. If net proceeds generated from the sale exceeds the applicable thresholds, then the Participating Officers, as a group, would receive as a distribution on their Incentive Units cash equal to 5% of any amount over the applicable
threshold up to the applicable target.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | There is no maximum cap as to distribution to the holders of Incentive Units. In the event proceeds in excess of the
target are generated, the Participating Officers, as a group, would receive distributions equal to 10% of the aggregate net proceeds realized in excess of the target.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

401(K) RETIREMENT PLAN

The Company, currently sponsors a combined voluntary 401(k) savings and money
purchase plan. This plan is available to all full time employees. Participants may make contributions of up to 25% of their base salary and 100% of any cash bonus with the Company matching one-half of each participants contribution up to 6% of
compensation.



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NON-QUALIFIED DEFERRED COMPENSATION PLANS

Supplemental Executive Retirement Plan. The Company also sponsors a non-qualified deferred compensation plan which mirrors the qualified 401(k)
plan discussed immediately above. Contributions to such plan commence once a participant reaches the maximum annual Social Security wage base. The assets of this plan are held in a rabbi trust.

Limited Participation Deferred Compensation Plan. Business Staffing adopted the Business Staffing Supplemental Deferred Compensation
Plan (the Supplemental Plan) and a related Non-Qualified Deferred Compensation Plan Trust Agreement (the Trust) on January 10, 2007.

Business Staffing placed into the Supplemental Plan previously accrued amounts due Richard E. Stoddard and Terry L. Cook upon termination of their
employment in the amount of $660,872 and $260,121, respectively. Like the terms of their previous employment agreements, the amounts in the Plan remain subject to forfeiture if the executive officer is terminated for cause as defined in
the Supplemental Plan (which is the same definition as contained the employment agreements of the executive officers) or if the officer should voluntarily terminate his employment. In addition, the amounts in the Supplemental Plan fully vest if the
executive officer is terminated without cause, is constructively terminated without cause, dies, is permanently disabled or upon completion of the initial term of their employment. Once vested, payments may commence, upon the officers death,
permanent disability, or the termination of the officer for any reason except for cause as defined in the Supplemental Plan. The Supplement Plans assets will be held through the Trust which is a rabbi trust and all
investment earnings or losses shall accrue to account of each officer under the Supplemental Plan.

EXECUTIVE OFFICER COMPENSATION

As part of our cash maximization strategy and in connection with the merger, effective, January 1, 2002, Business Staffing, Inc., our subsidiary,
became the employer of all of Kaisers employees and the contracting employer with respect to the several employment agreements discussed below. Business Staffing leases employees to Kaiser LLC and Kaiser LLC reimburses Business Staffing for
all employee and related expenses.

During much of 2006, Kaisers Human Relations Committee along with Business Staffing engaged in an
extensive review of the existing compensation agreements and plans for our executive officers. The review recognized that elements of the compensation of the executive officers of Kaiser have been adopted and implemented at various times over the
years in relation to our cash maximization plan but the original estimates of the timing of such plans complete implementation and realization have proven to be too optimistic. Accordingly, Kaiser along with Business Staffing developed
modified or new compensation agreements and plans that, among other things, further align the interests of the executive officers with those of the members of Kaiser and will encourage the retention of the executive officers. Business Staffing
leases employees, including the executive officers of Kaiser, to Kaiser.

EXECUTIVE OFFICER EMPLOYMENT AGREEMENTS

On January 10, 2007, Business Staffing entered into new employment agreements with each of the executive officers of Kaiser with such agreements
being effective as of January 1, 2007. The new employments agreements superseded the existing employment agreements for the executive officers.

General Terms and Compensation. Except for the name, title, duties, amount of salary, and a special bonus that may be earned by James Verhey upon the sale of Kaisers interest in the West Valley MRF, the
terms of the new employment agreements are the same in all material respects. The agreements commence as of January 1, 2007, and continue for a term of five (5) years (the Initial Term) and continue thereafter on a
month-to-month basis until Kaiser has disposed of all of its material assets. Under the terms of the employment agreements, Messrs. Stoddard, Verhey and Cook have base salaries of



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$332,945; $152,640 and $275,450, respectively. Base salaries will be adjusted annually by no less than utilizing the Consumer Price Index for Urban Wage
Earners and Clerical Workers, U.S. City Average, All Items, published by the Bureau of Labor Statistics of the United Stated Department of Labor.

During the term of their employment, each executive officer is to be awarded 25,000 Kaiser Class A Units as of January 15 of each year beginning January 15, 2007; provided, however, the amount of the annual award of units
will be reviewed prior to the January 15, 2010 grant.

The discretionary annual bonus for executive officers was eliminated in the new
employment agreements. A new performance based incentive bonus program was adopted to commence effective January 1, 2007, as discussed in more detail below.

Unique to Mr. Verheys employment agreement is that if during his employment Kaisers interest in the West Valley MRF is sold, he will be paid a bonus based upon the collected net sales price. At this
time, the projected bonus would be approximately $100,000 but the actual amount of the bonus would increase or decrease if the value of Kaisers West Valley MRF interest increases or decreases after January 1, 2007.

Like all other employees, the executive officers receive medical, dental, vision, and long-term disability insurance benefits. In addition, like other
employees employed more than five (5) years, the executive officers have the opportunity to participate in life insurance whereby Business Staffing will pay two-thirds (2/3) of the premium on a life insurance policy or policies with a
total benefit equal to three times an employees salary. As in previous employment agreements, Mr. Cook receives a car allowance of $600 per month and Messrs. Stoddard and Verhey are reimbursed for their commuting costs to Ontario,
California and any rental car and lodging costs. In addition, the new employment agreements provide that the executive officers are entitled to reimbursement of certain wellness benefits which are directed toward an annual medical physical and a
comprehensive medical physical and appropriate tests every two (2) years. If an executive fails to timely have a comprehensive physical performed, the annual award of Class A Units for such executive will be delayed until such time as the
comprehensive medical physical and any related medical tests are completed.

Severance. If any officer is terminated without cause
during the Initial Term, including, among other reasons, constructive termination, such officer is entitled to receive cash severance pay equal to two (2) years base salary. Severance is payable in one lump sum or, if mutually agreed by
the executive and Business Staffing, over a period of time. In addition, Business Staffing will continue to pay benefits, such as health and dental insurance, for two years. In the event an executive officer voluntarily terminates his employment,
Business Staffing will not be obligated to pay him any severance or other additional compensation, other than the compensation due and owing up to the date of termination.

Change of Control. None of the employment agreements contain change of control provisions. No compensation is due an officer upon a
change of control absent an officers employment being terminated.

Termination for Cause. Each executive officer
can be terminated for cause. Cause is generally defined as:

a. Willful breach by an officer of any
provision of his employment agreement, provided, however, if the breach is not a material breach, Business Staffing is required to give written notice of such breach and the officer shall have thirty (30) days in which to cure such breach. No
written notice or cure period shall be required in the event of a willful and material breach of his agreement;

b. Gross
negligence or dishonesty in the performance of the officers duties or possibilities under his employment agreement;



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c. Engaging in conduct or activities or holding any position that materially
conflicts with the interest of, or materially interferes with the officers duties and responsibilities to Business Staffing, Kaiser LLC or their respective affiliates; or

d. Engaging in conduct which is materially detrimental to the business of Business Staffing, Kaiser LLC or their respective affiliates.

No severance is payable if an executive is terminated for cause.

Current Salary of Executive Officers. Set forth below is the annual base salary of Kaisers Chief Executive Officer and each of its other
named executive officers as of March 15, 2008:



|                    |  |                    |        
|------------------- |  | ------------------ | -------
|NAME                |  | ANNUAL BASE SALARY
|Richard E. Stoddard |  | $                  | 341,248
|Terry L. Cook       |  | $                  | 282,336
|James F. Verhey     |  | $                  | 156,456

EXECUTIVE OFFICER NEW REVENUE INCENTIVE PARTICIPATION PLAN

On January 10, 2007, Business Staffing approved the Executive Officer New Revenue Incentive Bonus Plan to be effective commencing
January 1, 2007 (the Performance Bonus Plan). The previous discretionary bonus plan was terminated and replaced with the Performance Bonus Plan.

Pursuant to this incentive plan, eighteen percent (18%) of the annual New Net Revenue of the Company, as defined in the Performance Bonus Plan shall be awarded as a bonus pool to the current executive officers
and to any new executive officer as may be provided in the Performance Bonus Plan. Any performance bonus payable under the Performance Bonus Plan shall be paid equally among the executive officers and shall be paid 50% in Class A Units and 50%
either in cash or by a contribution to the account of the respective officer under the SERP or any other tax deferred plan that may be established in the discretion of Business Staffing.

New Revenue means all revenue generated from new lines of business or new sources of revenue for Kaiser that are not historically
recurring revenues as of January 1, 2006. New Revenue does not include revenues generated from the sale of Kaisers existing assets and projects, except as provided in the Performance Bonus Plan, distributions from Kaisers interest
in West Valley MRF, LLC, revenues generated as a result of landfill operations at Eagle Mountain, interest and investment income. New Revenue Expenses means all incremental and new direct and indirect expenses incurred in the generation
of New Revenue but New Revenue Expenses shall not include the amortization or depreciation cost of any existing asset or an allocation of any fixed expense or charge, including the allocation of the base salary and benefits of existing employee
positions of the Company. Net New Revenue is the positive difference, if any, of New Revenue less New Revenue Expenses for any give calendar year. The Performance Bonus Plan is administered by a committee composed of the individuals
serving on Kaisers Human Relations Committee. The bonus, if any, is to be paid by March 14 of each year.

HUMAN RELATIONS COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATIONS

During the year ending December 31, 2007, the Human Relations Committee consisted of Messrs.
Cole (Chairman), Bitonti, and Fawcett. Mr. Fawcett was President and Chief Operating Officer of Kaiser from January 1996, until his retirement from full time duties on January 15, 1998. Mr. Fawcett continues to perform work for us
from time-to-time. Mr. Fawcetts compensation is summarized in the Manager Compensation table located on the next page.



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MANAGER COMPENSATION

During 2007 non-employee managers were paid on the following basis:



|                                                      |  |                                                              
|----------------------------------------------------- |  | -------------------------------------------------------------
|DESCRIPTION OF COMPENSATION FOR
NON-EMPLOYEE MANAGERS |  | AMOUNT                                                       
|Annual Cash Retainer                                  |  | $20,000                                                      
|Chairman of Committee-Additional Annual Cash Retainer |  | $7,500Audit Committee$5,000Any Other Active StandingCommittee
|Meeting Fee-(In Person)                               |  | $1,500                                                       
|Meeting Fee-(Telephonic)                              |  | $1,000                                                       
|Annual equity grant                                   |  | 5,000 Class A Units                                          

Each grant vests on
January 31stof the year following the grant, subject to acceleration upon the occurrence of certain events. Accordingly, the restricted 5,000
Class A Units granted to Messrs. Bitonti, Cole, Fawcett and Wallach in 2007, fully vested on January 31, 2008.

We do not provide
retirement benefits for non-employee managers.

MANAGER
COMPENSATION TABLE(1)



|                       |  |                             |     |  |                  |  |         
|---------------------- |  | --------------------------- | --- |  | ---------------- |  | --------
|Name                   |  | FeesEarned orPaidin Cash($) |     |  | UnitAwards($)(2) |  | Total($)
|Ronald E. Bitonti      |  | 25,500                      | (3) |  | 2,500            |  | 28,000  
|Todd G. Cole           |  | 34,500                      |     |  | 2,500            |  | 37,000  
|Gerald A. Fawcett(4)   |  |                            |     |  |                 |  |        
|Richard E. Stoddard(5) |  |                            |     |  |                 |  |        
|Marshall F. Wallach    |  | 35,500                      |     |  | 2,500            |  | 38,000  



|(1) | The Option Awards; Non-Equity Incentive Plan Compensation; Change in Pension Value and Non-qualified Deferred Compensation; and All Other
Compensation columns have been eliminated from the Manager Compensation Table because there were no reportable events/compensation earned for such items in 2007.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | The Companys Class A Units are not publicly traded. However, the Company is aware of a very limited number of private third-party sales of Class A Units in 2007. The
$.50 per Class A Unit value is based upon the average sales price of those sales that did occur during the six-month period prior to the date of the units issuance in June 2007.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Included in this amount is the annual retainer of $2,000 per year Mr. Bitonti receives for serving on the Board of Directors of KSC Recovery, Inc., the bankruptcy estate of
Kaiser Steel Corporation.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(4) | Mr. Fawcett works on our behalf through Business Staffing, Inc. on various matters and projects in addition to his work on the Board of Managers. Accordingly, he is considered
an employee for compensation purposes and is paid an annual salary of $60,000. He is not paid additional compensation for serving on the Board of Managers except for the annual award of 5,000 Class A Units. Mr. Fawcett also receives
medical, dental, and vision insurance and other similar benefits made available to all employees of Business Staffing, Inc.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | As an employee - manager, Mr. Stoddard receives no additional compensation for serving on the Companys Board of Managers. His compensation as an executive officer is
summarized under Item 10. EXECUTIVE COMPENSATION - Summary Compensation Table.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|Item 11. | SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|-------- | ----------------------------------------------------------------

PRINCIPAL UNIT MEMBERS

The following table sets forth, based upon the latest available filings with the Securities and
Exchange Commission and from the Companys Class A Unit member ownership list (generally reporting ownership as of December 31, 2007), the number of Class A Units owned by each person known by us to own of record or beneficially
five percent (5%) or more of such units.



|                                                                                                                        |  |                                         |  |                                             |  
|----------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------- |  | ------------------------------------------- | -
|Name and Address of Beneficial Owner                                                                                    |  | Number ofClass A UnitsBeneficiallyOwned |  | % of Issuedand OutstandingClass A Units (1) |  
|Ascend Capital Holdings Corporation One Montgomery St., Suite 3300 San Francisco, CA 94104                              |  | 656,000                                 |  | 9.2                                         | %
|First Eagle SOOFN Global Fund. 1345 Avenue of the Americas, 44thFloor New York, New York 10105                          |  | 365,000                                 |  | 5.1                                         | %
|Kaisers Voluntary Employees Beneficiary Association Trust (VEBA)(2) 9786 Sierra
Avenue Fontana, CA 92335              |  | 656,987                                 |  | 9.2                                         | %
|Pension Benefit Guaranty Corporation(3) Pacholder Associates, Inc. 8044 Montgomery Road, Suite 382 Cincinnati, OH 45236 |  | 407,415                                 |  | 5.7                                         | %
|Willow Creek Capital Partners(4) 300 Drakes Landing Road, Suite 230 Greenbrae, California                               |  | 756,200                                 |  | 10.6                                        | %



|(1) | The percentage for each member is based on the total number if issued and outstanding Class A Units including the 104,267 Class A Units reserved but not yet distributed to
the Class 4A unsecured creditors of KSC and 113,439 Class A Units deemed outstanding and reserved for issuance to holders of Kaiser Ventures Inc. stock that have to convert such stock into Kaiser Ventures LLC Class A Units.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | VEBA received its shares in Kaiser as a creditor of the KSC bankruptcy. VEBAs shares in Kaiser are held in trust by AST Trust Company.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------



|(3) | PBGC received its shares in Kaiser as a creditor of the KSC bankruptcy. The Company understands that Pacholder Associates, Inc. has a contract with PBGC pursuant to which it has
full and complete investment discretion with respect to substantially all of the units owned by PBGC, including the power to vote such securities. Substantially all of the PBGCs units are held through a nominee Beat & Co.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | The owner of these units was previously identified as being held by Pequot Capital Management Inc. Fund. The Company understands that the relationship between Pequot Capital
Management, Inc. and Willow Creek Capital Partners was terminated in such a manner that Willow Creek Capital Partners is currently the holder of these units.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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SECURITY OWNERSHIP OF MANAGEMENT

This table below reflects the number of Class A Units beneficially owned by the Companys: (1) managers and manager nominees;
(2) named executive officers; and (3) all of its managers and named executive officers as a group, as of March 15, 2008, as well as the number of options exercisable within 60 days of that date.



|                                                                                                |  |                                                 |  |                                                                          |  |                                 |  |                                           |  
|----------------------------------------------------------------------------------------------- |  | ----------------------------------------------- |  | ------------------------------------------------------------------------ |  | ------------------------------- |  | ----------------------------------------- | -
|Name                                                                                            |  | Class A UnitsBeneficiallyOwned,ExcludingOptions |  | Class A UnitsUnderlyingOptionsExercisableWithin 60-Days ofMarch 15,
2008 |  | Total # ofClass A UnitsOwned(1) |  | % of IssuedandOutstandingClass A Units(1) |  
|Richard E. Stoddard, CEO, President & Chairman                                                  |  | 176,363                                         |  | 62,350                                                                   |  | 238,713                         |  | 3.2                                       | %
|Gerald A. Fawcett, Vice Chairman(2)                                                             |  | 110,578                                         |  | 62,000                                                                   |  | 172,578                         |  | 2.4                                       | %
|James F. Verhey, Executive Vice President - Finance & CFO                                       |  | 98,204                                          |  | 45,000                                                                   |  | 143,204                         |  | 1.9                                       | %
|Terry L. Cook, Executive Vice President - Administration, General Counsel & Corporate Secretary |  | 104,135                                         |  | 45,000                                                                   |  | 149,135                         |  | 2.0                                       | %
|Ronald E. Bitonti, Manager(3)                                                                   |  | 33,396                                          |  | 1,500                                                                    |  | 34,896                          |  | *                                         |  
|Todd G. Cole, Manager                                                                           |  | 40,188                                          |  | 0                                                                        |  | 40,188                          |  | *                                         |  
|Marshall F. Wallach, Manager                                                                    |  | 43,250                                          |  | 1,500                                                                    |  | 44,750                          |  | *                                         |  
|All officers and managers as a group (7 persons)(1)                                             |  |                                                 |  |                                                                          |  |                                 |  | 10.9                                      | %



|* | Less than one percent.
|- | ----------------------



|(1) | The percentage for each individual is based on the total number of issued and outstanding Class A Units (including the 104,267 Class A Units which have been issued but are
reserved and not yet distributed to the Class 4A unsecured creditors of KSC and 113,439 Class A Units reserved for those who have yet to convert their Kaiser Inc. stock to Kaiser LLC Class A Units as a result of the merger) and was
determined as if all the options listed in Column 2 had been exercised by that particular individual. All options are vested.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Mr. Fawcett retired as President and Chief Operating Officer of Kaiser effective January 15, 1998.
|--- | --------------------------------------------------------------------------------------------------



|(3) | Mr. Bitonti is Chairman of the VEBA Board of Trustees. He disclaims any beneficial ownership interest in the units beneficially owned by VEBA.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------



|Item 12. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
|-------- | ----------------------------------------------

None reportable.

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PART IV



|Item 13. | EXHIBITS
|-------- | --------

(a) Exhibits.

The following exhibits are filed as part of this Form 10-KSB.

EXHIBIT INDEX

(* Indicates compensation plan, contract or arrangement)



|              |  |                                                                                                                                                                                                                                                                                        
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBITNUMBER |  | DOCUMENT DESCRIPTION                                                                                                                                                                                                                                                                   
|              | 
|2.1           |  | Second Amended Joint Plan of Organization as Modified, as filed with the United States Bankruptcy Court for the District of Colorado on September 19, 1988, incorporated by reference from
Exhibit 2.1 of Kaiser Ventures Inc.s Form 10-K Report for the year ended December 31, 1988.
|              | 
|2.2           |  | Second Amended Joint Plan of Reorganization Modification, as filed with the United States Bankruptcy Court on September 26, 1988, incorporated by reference from Exhibit 2.2 of Kaiser
Ventures Inc.s Form 10-K Report for the year ended December 31, 1988.                          
|              | 
|2.3           |  | United States Bankruptcy Court Order dated October 4, 1988, confirming the Second Amended Joint Plan of Reorganization as Modified, incorporated by reference from Exhibit 2.3 of Kaiser
Ventures Inc.s Form 10-K Report for the year ended December 31, 1988.                        
|              | 
|2.4           |  | Agreement and Plan of Merger between Kaiser Ventures Inc. and Kaiser Ventures LLC, incorporated by reference from Exhibit 2.6 to Kaiser Ventures LLC Registration Statement on Form S-4, filed on
October 19, 2001.                                                                    
|              | 
|2.5           |  | Certificate of Merger to be filed with the Secretary of State of Delaware, incorporated by reference from Exhibit 2.7 to Kaiser Ventures LLC Registration Statement on Form S-4, filed on
October 19, 2001.                                                                            
|              | 
|3.1           |  | Certificate of Formation of Kaiser Ventures LLC, filed with the Delaware Secretary of State on July 10, 2001, incorporated by reference from Exhibit 3.3 to Kaiser Ventures LLC Registration
Statement on Form S-4, filed on July 16, 2001.                                            
|              | 
|3.2           |  | Kaiser Ventures LLC Operating Agreement, effective as of July 10, 2001, incorporated by reference from Exhibit 3.4 to Kaiser Ventures LLC Registration Statement Form S-4 filed on
July 16, 2001.                                                                                      
|              | 
|3.3           |  | Amended and Restated Kaiser Ventures LLC Operating Agreement, effective as of October 1, 2001, incorporated by reference from Exhibit 3.5 to Kaiser Ventures LLCs Registration
Statement Form S-4 filed on October 16, 2001.                                                          
|              | 
|3.4           |  | First Amendment to Amended and Restated Kaiser Ventures LLC Operating Agreement, effective as of January 15, 2002, incorporated by reference from Exhibit 3.4 to Kaiser Ventures LLC Form
10-K Report for the year ended December 31, 2001.                                            
|              | 
|10.1          |  | Lease Entered into between Kaiser Eagle Mountain, Inc., and Mine Reclamation Corporation, dated November 30, 1988, incorporated by reference from Exhibit 10.1 of the Kaiser Ventures
Inc.s Form 10-K Report for the year ended December 31, 1988.                                    
|              | 
|10.1.1        |  | First Amendment dated December 18, 1990, to Lease dated November 30, 1990 between Kaiser Eagle Mountain, Inc. and Mine Reclamation Corporation, incorporated by reference from the
Kaiser Ventures Inc.s Form 8-K Report dated December 18, 1990.                                     



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|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NUMBER |  | DOCUMENT DESCRIPTION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|               | 
|10.1.2         |  | Second Amendment dated July 29, 1994, to Lease dated November 30, 1990, between Kaiser Eagle Mountain, Inc. and Mine Reclamation Corporation, incorporated by reference from Exhibit 4
of Kaiser Ventures Inc.s Form 10-Q Report for the period ending June 30, 1994.                                                                                                                                                                                                                                         
|               | 
|10.1.3         |  | Third Amendment dated January 29, 1995, but effective as of January 1, 1995, to Lease dated November 30, 1990, between Kaiser Eagle Mountain, Inc. and Mine Reclamation
Corporation, incorporated by reference from Exhibit 10.1.3 of Kaiser Ventures Inc.s Form 10-K Report for the year ended December 31, 1994.                                                                                                                                                                                            
|               | 
|10.1.4         |  | Fourth Amendment dated effective January 1, 1996, between Kaiser Eagle Mountain, Inc. and Mine Reclamation Corporation, incorporated by reference from Exhibit 10.1.4 of Kaiser Ventures
Inc.s Form 10-K Report for the year ended December 31, 1995.                                                                                                                                                                                                                                                         
|               | 
|10.1.5         |  | Indemnification Agreement dated September 9, 1997 among Riverside County, Mine Reclamation Corporation, Kaiser Eagle Mountain, Inc. Eagle Mountain Reclamation, Inc. and Kaiser Ventures Inc,
incorporated by reference from Exhibit 10.1 of Kaiser Ventures Inc.s Form 10-Q Report for the period ended September 30, 1997.                                                                                                                                                                                  
|               | 
|10.1.6         |  | Development Agreement to be executed upon consummation of federal land exchange among Riverside County, Mine Reclamation Corporation, Kaiser Eagle Mountain, Inc. Eagle Mountain Reclamation, Inc.
and Kaiser Ventures Inc., incorporated by reference from Exhibit 10.2 of Kaiser Ventures Inc.s Form 10-Q Report for the period ended September 30, 1997.                                                                                                                                                   
|               | 
|10.1.7         |  | Operating Agreement for Mine Reclamation, LLC dated June 1, 2000, incorporated by reference from Exhibit 10.1.7 of Kaiser Ventures Inc.s Form 10-K Report for the year ended
December 31, 2000.                                                                                                                                                                                                                                                                                                               
|               | 
|10.2           |  | Agreement for Purchase and Sale of Real Property and Related Personal Property in Regard to the Eagle Mountain Sanitary Landfill Project and Joint Escrow Instructions between County Sanitation
District No. 2 of Los Angeles County and Mine Reclamation, LLC incorporated by reference from Exhibit 10.3 of the Companys Form 10-Q Report for the quarter ended June 30, 2000, incorporated by reference from Exhibit 10.2 of Kaiser
Ventures Inc.s Form 10-K Report for the year ended December 31, 2000.
|               | 
|10.3*          |  | Employment Agreement between Business Staffing, Inc. and Richard E. Stoddard dated as of January 1, 2007, incorporated by reference from Exhibit 10.1 of Kaiser Ventures LLCs Form 8-K
dated January 10, 2007.                                                                                                                                                                                                                                                                                                
|               | 
|10.4*          |  | Employment Agreement between Kaiser Ventures Inc. and Gerald A. Fawcett dated as of January 18, 1999, incorporated by reference from Exhibit 10.5 of Kaiser Ventures Inc.s Form 10-K
Report for the year ended December 31, 1998.                                                                                                                                                                                                                                                                             
|               | 
|10.5*          |  | Employment Agreement between Business Staffing, Inc. and Terry L. Cook dated as of January 1, 2007, incorporated by reference from Exhibit 10.3 of Kaiser Ventures LLCs Form 8-K Report
dated January 10, 2007.                                                                                                                                                                                                                                                                                               
|               | 
|10.6*          |  | Employment Agreement between Business Staffing, Inc. and James F. Verhey dated as of January 1, 2007, incorporated by reference from Exhibit 10.2 of Kaiser Ventures LLCs 8-K Report
dated January 10, 2007.                                                                                                                                                                                                                                                                                                  
|               | 
|10.7           |  | Lease Agreement between American Trading Estate Properties (now known as Lord Baltimore Properties), Landlord and Kaiser Resources Inc., Tenant, dated June 6, 1994, incorporated by
reference from Exhibit 10.8 of Kaiser Ventures Inc.s Form 10-K Report for the year ended December 31, 1994.                                                                                                                                                                                                              
|               | 
|10.7.1         |  | Second Amendment to Lease Agreement between Lord Baltimore Properties and Kaiser Ventures Inc. dated September 27, 1999, incorporated by reference from Exhibit 10.10.1 of Kaiser Ventures
Inc.s 10-K for the year ended December 31, 1999.                                                                                                                                                                                                                                                                   



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|               |  |                                                                                                                                                                                                                                                                                                                                   
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NUMBER |  | DOCUMENT DESCRIPTION                                                                                                                                                                                                                                                                                                              
|               | 
|10.7.2         |  | Third Amendment to Lease Agreement between Lord Baltimore Properties and Kaiser Ventures LLC dated February 19, 2002, incorporated by reference from Exhibit 10.16.2 of Kaiser Ventures LLC
Report for the year ended December 31, 2001.                                                                                          
|               | 
|10.7.3         |  | Fourth Amendment to Lease Agreement between CIP Empire Tower LLP and Kaiser Ventures LLC dated November 13, 2006 incorporated by reference from Exhibit 10.1 of Kaiser Ventures LLCs
Form 10-QSB Report for the period ended September 30, 2006.                                                                                 
|               | 
|10.8*          |  | Amended, Restated and Substituted Kaiser Steel Resources, Inc. 1989 Stock Plan, incorporated by reference from Kaiser Ventures Inc.s Proxy Statement for the Special Meeting of Stockholders
held on October 2, 1990.                                                                                                            
|               | 
|10.9*          |  | Kaiser Steel Resources, Inc. 1992 Stock Option Plan, as amended, incorporated by reference from Exhibit 10.16 of Kaiser Ventures Inc.s Form S-2 (Registration No.
33-56234).                                                                                                                                                     
|               | 
|10.10*         |  | Kaiser Ventures Inc. 1995 Stock Plan incorporated by reference from Exhibit 10.15 of Kaiser Ventures Inc.s 10-K Report for the year ended December 31, 1995.                                                                                                                                                                     
|               | 
|10.10.1*       |  | First Amendment to Kaiser Ventures Inc. 1995 Stock Option Plan, incorporated by reference from Exhibit 4.1.1 of Kaiser Ventures Inc.s Form S-8 Registration Statement (Registration No.
333-17843).                                                                                                                              
|               | 
|10.11*         |  | Executive Officer New Revenue Participation Incentive Plan adopted to be effective January 1, 2007, incorporated by reference from Exhibit 10.4 of Kaiser Ventures LLCs Form 8-K Report
dated January 10, 2007.                                                                                                                  
|               | 
|10.12*         |  | Business Staffing, Inc. Supplemental Deferred Compensation Plan dated January 10, 2007, incorporated by reference from Exhibit 10.5 of Kaiser Ventures LLCs Form 8-K Report dated
January 10, 2007.                                                                                                                              
|               | 
|10.12.1*       |  | Non-Qualified Deferred Compensation Agreement dated January 10, 2007, incorporated by reference from Exhibit 10.6 of Kaiser Ventures LLCs Form 8-K Report dated January 10, 2007.                                                                                                                                                
|               | 
|10.13*         |  | Board of Directors Stock Plan adopted May 10, 2000, incorporated by reference from Exhibit 10.19 of Kaiser Ventures Inc.s Form 10-K Report for the year ended December 31, 2000.                                                                                                                                                 
|               | 
|10.14          |  | Form of Indemnification Agreement for individuals serving on the Board of Managers of Kaiser Ventures LLC, incorporated by reference from Exhibit 10.25 of Kaiser Ventures LLCs 10-K Report
for the year ended December 31, 2001.                                                                                                
|               | 
|10.15          |  | Form of Indemnification Agreement for officers of Kaiser Ventures LLC, incorporated by reference from Exhibit 10.26 of Kaiser Ventures LLCs 10-K Report for the year ended December 31,
2001.                                                                                                                                    
|               | 
|10.16          |  | Members Operating Agreement dated June 19, 1997 between Kaiser Recycling Corporation and West Valley Recycling & Transfer, Inc., incorporated by reference from Exhibit 10.1 of Kaiser
Ventures Inc.s 10-Q Report for the period ended June 30, 1997.                                                                            
|               | 
|10.16.1        |  | Second Amendment to Members Operating Agreement dated December 1, 2001, incorporated by reference from Exhibit 10.18.1 of Kaiser Ventures LLCs 10-KSB Report for the year ended
December 31, 2004.                                                                                                                               
|               | 
|10.16.2        |  | Performance Guaranty and Indemnification Agreement (KRC Obligations) dated June 19, 1997 given by Kaiser Ventures Inc. for the benefit of West Valley MRF, LLC and West Valley Recycling
& Transfer, Inc., incorporated by reference from Exhibit 10.1.1 of Kaiser Ventures Inc.s 10-Q Report for the period ended June 30, 1997.



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|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NUMBER |  | DOCUMENT DESCRIPTION                                                                                                                                                                                                                                                                                                                                                                                                                           
|               | 
|10.17          |  | Loan Agreement dated as of June 1, 1997 between West Valley MRF, LLC and California Pollution Control Financing Authority, incorporated by reference from Exhibit 10.2 of the Companys
10-Q Report for the period ended June 30, 1997.                                                                                                                                                                                                        
|               | 
|10.17.1        |  | Indenture Agreement dated as of June 1, 1997 between California Pollution Control Financing Authority and BNY Western Trust Company for the benefit of $9,500,000 California Pollution
Control Financing Authority Variable Rate Demand Solid Waste Disposal Revenue Bonds (West Valley MRF, LLC Project) Series 1997A, incorporated by reference from Exhibit 10.2.1 of Kaiser Ventures Inc.s 10-Q Report for the period ended
June 30, 1997.
|               | 
|10.17.2        |  | Remarketing Agreement dated as of June 1, 1997, and among West Valley MRF, LLC and Westhoff, Cone & Holmstedt and Smith Barney, Inc. with regard to $9,500,000 California Pollution
Control Financing Authority Variable Rate Demand Stock Waste Disposal Revenue Bonds (West Valley MRF, LLC Project) Series 1997A, incorporated by reference from Exhibit 10.3 of Kaiser Ventures Inc.s 10-Q Report for the period ended
June 30, 1997.     
|               | 
|10.18          |  | Reimbursement Agreement dated as of June 1, 1997 between West Valley MRF, LLC and Union Bank of California, N.A., incorporated by reference from Exhibit 10.4 of Kaiser Ventures Inc.s
10-Q Report for the period ended June 30, 1997.                                                                                                                                                                                                        
|               | 
|10.19          |  | Guaranty and Mandatory DSR Agreement dated as of June 1, 1997 given by Kaiser Ventures Inc. and Kaiser Recycling Corporation for the benefit of Union Bank of California, N.A., incorporated
by reference from Exhibit 10.4.1 of Kaiser Ventures Inc.s 10-Q Report for the period ended June 30, 1997.                                                                                                                                        
|               | 
|10.20          |  | Environmental Compliance Agreement dated as of June 19, 1997 between West Valley MRF, LLC and Union Bank of California, N.A., incorporated by reference from Exhibit 10.5 of Kaiser Ventures
Inc.s 10-Q Report for the period ended June 30, 1997.                                                                                                                                                                                            
|               | 
|10.21          |  | Environmental Guaranty Agreement dated as of June 19, 1997 given by Kaiser Ventures Inc. and Kaiser Recycling Corporation for the benefit of Union Bank of California, N.A., incorporated by
reference from Exhibit 10.5.1 of Kaiser Ventures Inc.s 10-Q Report for the period ended June 30, 1997.                                                                                                                                           
|               | 
|10.21.1        |  | First Amendment and Restated Environmental Guaranty Agreement between West Valley MRF, LLC and Union Bank of California dated May 1, 2000, incorporated by reference from Exhibit 10.4 of
Kaiser Ventures Inc.s Form 10-Q Report for the period ended June 30, 2000.                                                                                                                                                                          
|               | 
|10.22          |  | Guaranty and Mandatory Deposit Agreement between West Valley MRF, LLC and Union Bank of California, N.A. dated May 1, 2000, incorporated by reference from Exhibit 10.4.1 of Kaiser Ventures
Inc.s Form 10-Q Report for the period ended June 30, 2000.                                                                                                                                                                                       
|               | 
|10.23          |  | First Amendment and Restated Environmental Compliance Agreement between West Valley MRF, LLC and Union Bank of California, N.A. dated May 1, 2000, incorporated by reference from Exhibit
10.4.2 of Kaiser Ventures Inc.s Form 10-Q Report for the period ended June 30, 2000.                                                                                                                                                                
|               | 
|10.24          |  | Reimbursement Agreement between West Valley MRF, LLC and Union Bank of California, N.A. dated May 1, 2000, incorporated by reference from Exhibit 10.4.3 of Kaiser Ventures Inc.s Form
10-Q Report for the period ended June 30, 2000.                                                                                                                                                                                                        
|               | 
|10.25          |  | Loan Agreement between West Valley MRF, LLC and Union Bank of California, N.A. dated May 1, 2000, incorporated by reference from Exhibit 10.4.4 of Kaiser Ventures Inc.s Form 10-Q
Report for the period ended June 30, 2000.                                                                                                                                                                                                                 
|               | 
|10.26          |  | Loan Guaranty between West Valley MRF, LLC and Union Bank of California, N.A. dated May 1, 2000, incorporated by reference from Exhibit 10.4.5 of Kaiser Ventures Inc.s Form 10-Q
Report for the period ended June 30, 2000.                                                                                                                                                                                                                  



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|               |  |                                                                                                                                                                                                                                                                                                             
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NUMBER |  | DOCUMENT DESCRIPTION                                                                                                                                                                                                                                                                                        
|               | 
|14             |  | Code of Business Conduct and Ethics of Kaiser Ventures LLC incorporated by reference from Exhibit 14.1 of Kaiser Ventures LLCs Form 10-K Report for the year ended December 31, 2002.                                                                                                                      
|               | 
|21             |  | Active subsidiaries of Kaiser Ventures LLC are: Lake Tamarisk Development, LLC; Kaiser Eagle Mountain, LLC; Kaiser Recycling, LLC; Business Staffing, Inc.; and Mine Reclamation,
LLC.                                                                                                                      
|               | 
|23             |  | Consent of Moss Adams LLP Independent Registered Public Accounting Firm.                                                                                                                                                                                                                                    
|               | 
|24             |  | Power of Attorney (included in the signature page).                                                                                                                                                                                                                                                         
|               | 
|31.1           |  | Certificate of Richard E. Stoddard, Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a) filed with this Report.                                                                                                                                                                                   
|               | 
|31.2           |  | Certificate of James F. Verhey, Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a) filed with this Report.                                                                                                                                                                                       
|               | 
|32             |  | Certificates of Richard E. Stoddard, Chief Executive Officer, and James F. Verhey, Chief Financial Officer, pursuant to Section 1350, filed with this Report.                                                                                                                                               
|               | 
|99             |  | Preliminary Opinion and related analysis of Duff & Phelps, LLC, relating to its independent valuation of the Class A Units as of November 30, 2001, incorporated by reference from
Exhibit 99.3 of Amendment No. 2 to Kaiser Ventures LLCs Registration Statement on Form S-4, filed on September 30, 2001.
|               | 
|99.1           |  | Amended and Restated Audit Committee Charter of Kaiser Ventures LLC adopted November 11, 2005 incorporated by reference from Exhibit 99. of Kaiser Ventures LLCs Report on Form 10-QSB
for the period ended September 30, 2005.                                                                            

(b) Reports on Form 8-K.

No reports on Form 8-K were filed during the fourth quarter of 2007.



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|Item 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|-------- | --------------------------------------

Independent Auditor and
Fees

The Audit Committee appointed Moss Adams as the Companys independent registered public accounting firm for 2006, 2007 and
for the current fiscal year.

Fees (including reimbursements for out-of-pocket expenses) paid to Moss Adams LLP for services in fiscal 2006
and 2007 were as follows:



|                     |  |                  |         |                  |   |        
|-------------------- |  | ---------------- | ------- | ---------------- | - | -------
|                     |  | Moss Adams LLP  
|Fee Category         |  | Fiscal 2006 Fees |         | Fiscal 2007 Fees
|Audit  Fees         |  | $                | 110,500 |                  | $ | 142,940
|Audit  Related Fees |  | $                |        |                  | $ |        
|Tax Fees             |  | $                | 65,000  |                  | $ | 54,475 
|All Other Fees       |  | $                | 26,250  |                  | $ | 24,255 
|                     |  |                  |         |                  |   |        
|Total Fees           |  | $                | 201,750 |                  | $ | 221,670
|                     |  |                  |         |                  |   |        

The above Audit Fees are for the respective years audit, quarterly reviews and SEC filings,
regardless of when the fees were billed. Tax Fees include tax compliance (tax return preparation) and tax advice services. The above Audit-Related Fees, Tax Fees and All Other Fees shown are based upon billings dates, and may relate to the preceding
fiscal year.

The Audit Committee generally approves all engagements of the independent registered accounting firm in advance including
approval of the related fees. The Audit Committee approves an annual budget (and may from time to time approve amendments), which specifies projects and the approved levels of fees for each. To the extent that items are not covered in the annual
budget or fees exceed the budget, management must have them approved by the Audit Committee or, if necessary between Committee meetings, by the Audit Committee chairman on behalf of the Committee.



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                     |  |  |  |                     |  |        |  |                                                                        
|-------------------- |  |  |  | ------------------- |  | ------ |  | -----------------------------------------------------------------------
|Date: March 18, 2008 |  |  |  | KAISER VENTURES LLC
|                     |  |  |  |                    
|                     |  |  |  |                     |  | By:    |  | /s/ Richard E. Stoddard                                                
|                     |  |  |  |                     |  | Name:  |  | Richard E. Stoddard                                                    
|                     |  |  |  |                     |  | Title: |  | President, Chief Executive Officerand Chairman of the Board of Managers

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



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(Power of Attorney)

Each person whose signature appears below constitutes and appoints RICHARD E. STODDARD and JAMES F. VERHEY as his true and lawful attorneys-in-fact and agents, each acting alone, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments to this Form 10-KSB and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and confirming all said attorneys-in-fact and agents, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof.



|                                              |  |                                                                                                        |  |               
|--------------------------------------------- |  | ------------------------------------------------------------------------------------------------------ |  | --------------
|Signature                                     |  | Title                                                                                                  |  | Date          
|                                              |  |                                                                                                       
|1. Principal Executive Officer                |  |                                                                                                        |  |               
|                                              |  |                                                                                                       
|/s/ Richard E. Stoddard Richard E. Stoddard   |  | President, Chief Executive Officer and Chairman of the Board of Managers (Principal Executive Officer) |  | March 18, 2008
|                                              |  |                                                                                                       
|2. Principal Financial and Accounting Officer |  |                                                                                                        |  |               
|                                              |  |                                                                                                       
|/s/ James F. Verhey James F. Verhey           |  | Executive Vice President, and Chief Financial Officer (Principal Financial and Accounting Officer)     |  | March 18, 2008



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|                                            |  |               |  |                |  | 
|------------------------------------------- |  | ------------- |  | -------------- |  | 
|Signature                                   |  | Title         |  | Date          
|                                            |  |              
|4. Managers                                 |  |               |  |               
|                                            |  |              
|/s/ Ronald E. Bitonti Ronald E. Bitonti     |  | Manager       |  | March 18, 2008
|                                            |  |              
|/s/ Todd G. Cole Todd G. Cole               |  | Manager       |  | March 18, 2008
|                                            |  |              
|/s/ Gerald A. Fawcett Gerald A. Fawcett     |  | Vice Chairman |  | March 18, 2008
|                                            |  |              
|/s/ Marshall F. Wallach Marshall F. Wallach |  | Manager       |  | March 18, 2008



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