Accounts Receivable and Other (Net). During the first threenine months of 2012, accounts receivable and other current assets decreasedincreased by $139,000$162,000 primarily due to decreasesincreases in trade accounts receivable associated with aggregate sales at Eagle Mountain and prepaid insurance.

KAISER VENTURES LLC AND SUBSIDIARIES

Short-Term Investments. During the first threenine months of 2012, short-term investments decreasedincreased by $479,000.$4,929,000. This is primarily the result of increased investment activity utilizing a portion of the funds from the sale of investments to provide operating funds.the West Valley MRF. On March 31,September 30, 2012, the Company had $2.2$7.6 million of its excess cash reserves invested in such investments. Investments are marked to market and unrealized earnings or loss are reflected in the value of the investment and in income for the period for which they are earned. A vast majority of the invested cash is being reserved for future potential liabilities and commitments.

Investments. The Company’s equity share of income from the investment in the West Valley MRF, which totaled $298,000$391,000 for the first threenine months of the year, was offset by the receipt of cash distributions totaling $750,000 resulting in a $452,000$359,000 decrease to the Company’s investment in the West Valley MRF.

KAISER VENTURES In addition, the Company sold its entire member interest in the West Valley MRF, LLC AND SUBSIDIARIESon April 2, 2012, so the Company’s investment in the West Valley MRF, LLC was $0 at September 30, 2012.

As previously stated, the investment in the MRC Landfill Project was determined to be impaired and, therefore, was written-down by $6,683,000 during the first quarter of 2011 which was charged to earnings. As required by the ASC, all subsequent Eagle Mountain Landfill expenses will be expensed as incurred.

Other Assets. For the first threenine months of the year, there was a decrease in other assets of $80,000$235,000 which is the net result of the amortization of the environmental insurance policy of $75,000,$225,000, and depreciation of $5,000$10,000 related to buildings and equipment.

Environmental Remediation. The Company purchased, in 2001, a 12-year $50 million insurance policy 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 March 31,September 30, 2012, 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 Prologis, in its purchase of the Mill Site Property in August 2000 would be approximately $2.7$2.3 million for which a reserve has been established. See Note“Note 2. “ENVIRONMENTAL- ENVIRONMENTAL MATTERS”. 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 insurance depending upon the nature and timing of the claim. In addition, in connection with the Tar Pits Parcel now owned toby Kaiser Recycling, LLC, insurance will bewas purchased in the second quarter of this year to cover possible contingent environmental related liabilities and a third party escrow of approximately $20,000$363,000 in cash was established benefitting WVMRF, LLC and others. This amount was charged against the Company’s environmental reserve which encompassed this specific environmental exposure. The $113,621 premium for the purchased policy was paid from the cash escrow.

Non-Controlling Interest.Interest in MRC. During the first threenine months of 2012, the Non-Controlling Interest decreased by $31,000$53,000 from $2,057,000 as of December 31, 2011 to $2,026,000$2,004,000 as of March 31,September 30, 2012, which is the net loss attributable to non-controlling interest for the threenine month period. As of March 31,September 30, 2012 the resulting non-controlling interest is $2,026,000,$2,004,000, which relates to the approximate 15.8% ownership interest in MRC that 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 Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. As disclosed in the Notes to the 2011 Annual Financial Statements, the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty and therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the consolidated financial statements.

KAISER VENTURES LLC AND SUBSIDIARIES

The Company believes the following critical accounting policies, which comply with the ASC, are important to the portrayal of the Company’s financial condition and results.

Investments. The Company accounts for investments under Section 320-10 of the ASC. The Company invests its excess cash reserves in highinvestment grade or better commercial paper (Standard & Poor’s rating of “A” or above), and U.S. government bonds which it classifies as “available-for-sale” and which are recorded at the purchase price of the security plus or minus the discount or premium paid. Investments are marked to market and unrealized earnings are reflected in income for the period in which they are earned. However, the Company expects to hold these investments to maturity.

KAISER VENTURES LLC AND SUBSIDIARIES

Investment in West Valley MRF, LLC. The Company accountsaccounted for its investment in WVMRF, LLC, under the equity method of accounting because of the Company’s 50% non-controlling ownership interest. However, as discussed elsewhere in this Report, the Company’s ownership interest in WVMRF, LLC was sold on April 2, 2012.

Landfill Permitting and Development. Through its 84.247% interest in MRC, 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 Section 970-10 of the ASC, capitalizable landfill site development costs are recorded at cost and will be expensed when management determines that the capitalized costs provide no future benefit. However, as discussed in more detail in this Report on Form 10-Q, effective June 30, 2010 and March 31, 2011, there was a determination of impairment of MRC’s investment in the Eagle Mountain Landfill Project which resulted in write-downs of the carrying amount of such investment in our financial statements. With the determination that an impairment exists no further costs have been or will be capitalized.

Environmental Insurance and Environmental Remediation Liabilities. The Company’s $3.8 million premium for the prospective insurance policy, which was reduced by a refund from the insurance carrier, 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 Section 450-10 of the ASC 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. In addition, a new limited environmental insurance policy for a ten year term was purchased by Kaiser Recycling as more fully discussed in “WEST VALLEY MRF AND TRANSFER STATION - Sale of Ownership Interest” above.

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

Conditional Asset Retirement Obligations. The Company accounts for certain asset retirement obligations at Eagle Mountain pursuant to ASC 410Accounting for Asset Retirement and Environmental Obligations.

Long-Lived Assets. In accordance with Section 360 of the ASC, 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. As discussed in more detail in this Report of Form 10-Q, effective June 30, 2010 and March 31, 2011, there were determinations of impairment of the Eagle Mountain Landfill investment, a long-lived asset, which resulted in write-downs of the carrying amount of such investment in our financial statements.

KAISER VENTURES LLC AND SUBSIDIARIES

BUSINESS OUTLOOK

The statements contained in this Business Outlook, as well as in “Part I - Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Overview”, are based upon current operations and expectations. In addition to the forward-looking statements and information contained elsewhere in this Report on Form 10-Q, 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 major projects and investments as we have disclosed in previous SEC filings, and as previously discussed in this report, on April 2, 2012, we sold our fifty percent (50%) ownership interest in WVMRF, LLC. Accordingly, our principal remaining assets and projects, other than cash and securities, are: (i) our ownership interest in MRC, however, MRC filed a voluntary bankruptcy petition under Chapter 11 of the U.S. Bankruptcy Code on October 30, 2011; (ii) our 100% equity ownership of KEM which owns and controls

KAISER VENTURES LLC AND SUBSIDIARIES

approximately 10,000 acres at the Eagle Mountain Site on or in which millions of tons of iron ore, stockpiled rock and other mineral resources are present; and (iii) our 100% equity ownership interest in Lake Tamarisk Development which owns property near the Eagle Mountain Site. We have no material ongoing operations except in connection with such remaining assets and projects and in connection with addressing any liabilities we may have. Our principal sources of ongoing income over the last several years have been derived from the WVMRF, LLC, investment earnings and from miscellaneous income generated at the Eagle Mountain Site. As a result of the sale of our interest in WVMRF, LLC, no further distributionsequity income will be received from WVMRF, LLC.

MRC. As discussed in more detail in “Part I - Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - BUSINESS UPDATE - Overview,” on October 30, 2011, MRC filed a voluntary petition in bankruptcy pursuant to Chapter 11 of the U.S. Bankruptcy Code. The filing was necessary to protect and preserve MRC’s assets and options. Depending upon the results of the bankruptcy process, it is possible that the value of Kaiser’s investment in MRC could be further impaired.

Mill Site Property. The only remaining Mill Site Property owned is an approximate five acre parcel referred to as the Tar Pits Parcel which is now owned by Kaiser Recycling. CCG Ontario, LLC substantially completed all material environmental remediation of this parcel pursuant to the terms of its agreement during 2002. CCG Ontario does have ongoing operations and maintenance obligation with respect to the Tar Pits Parcel. WVMRF, LLC has the right to purchase the Tar Pits Parcel for $1.00. Effective April 2, 2012, WVMRF, LLC leased material portions forof the Tar Pits Parcel from Kaiser Recycling. The lease is for 50 years with the right to extend the lease for 50 years in exchange for: (i) payment of all the property taxes for the Tar Pits Parcel; (ii) insuring the Tar Pits Parcel and naming Kaiser Recycling as an additional insured for general liability purposes; and (iii) performing various maintenance and security obligations on the property being leased. In addition, a cash escrow was established in the amount of $363,000 benefiting WVMRF, LLC and others in connection with possible contingent environmental and environmental related actions, a reserve for which had been previously recorded. A limited environmental insurance policy with a term of ten years was purchased for $113,621 with the policy premium being paid from the escrowed amount.

Cash Maximization Strategy. In September 2000, Kaiser Inc.’s Board of Directors approved a strategy to maximize the cash ultimately to be distributed to our owners taking into account all circumstances and applicable legal requirements. This strategy was continued with the conversion of

KAISER VENTURES LLC AND SUBSIDIARIES

Kaiser Inc. to a limited liability company at the end of 2001. Consistent with this strategy, Kaiser Inc. historically completed or entered into a number of transactions which resulted in Kaiser Inc. distributing a total of $12 per unit in cash to its shareholders. Lengthy, but adversely completed, litigation involving the Landfill Project delayed the implementation of the goals of the cash maximization strategy. In particular the adverse final decision in the federal land exchange litigation in March 2011 negatively impacted MRC’s ability to pursue the Landfill Project, which in turn altered and adversely impacted the timing of the continuing implementation of the cash maximization strategy. However, with the sale by Kaiser Recycling of its ownership interest in the WVMRF, LLC, the Company’s Board of MangersManagers declared and paid a distribution of $1.50 per Class A Unit to unitholders of record as of May 9, 2012. In addition, funds were reserved for known future liabilities and for possible future contingent liabilities. Further implementation of the cash maximization strategy isand a further winding-down of the Company’s investment in MRC are dependent upon, among other things, other asset sales. The Company is also exploring its options to further reduce its operating expenses.

Corporate Overhead. With the sale of our ownership interest in WVMRF, LLC, it anticipated that there will bewas a reduction during the second quarter in the staffing of the Company’s accounting department to reflect the reduced requirements resulting from the sale of our interest in WVMRF, LLC and of our remaining operations and projects. The costs of such reductions, shall beincluding the payment of severance, were recorded atduring the time the decision to make such reductions is made by the Company.second quarter of 2012.

Capital Resources.Kaiser LLC expects that its current cash balances and short-term investments together with cash generated from current and future asset sales as well as expense reductions will be sufficient to satisfy the Company’s ongoing projected operating cash requirements for at least the next twelve months even after payment of the $1.50 per unit distribution declared by the Board of Managers on May 9, 2012.months.

KAISER VENTURES LLC AND SUBSIDIARIES

MRC Bankruptcy. On October 30, 2011, MRC filed a voluntary petition relief under Chapter 11 of the U.S. Bankruptcy Code. MRC continues to operate as a debtor in possession. MRC’s bankruptcy is not currently expected to have a material direct adverse result on Kaiser except that Kaiser will incur attorneys’ fees and costs as a result of the bankruptcy and Kaiser may elect to become a debtor-in-possession lender to MRC to provide the funds necessary to complete the bankruptcy process.

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-14.

Based on its review of the Company’s disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its subsidiaries) that is required to be included in the Company’s periodic Securities and Exchange Commission filings. Specifically, the Company has: (a) requested annually 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 (b) internally reviewed and tested the implementation of its internal controls against the Company’s written control procedures. The above conclusions are based upon the work performed. There were no significant changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Additionally,However, with the termination of two accounting positions due to the sale of Kaiser Recycling, Inc.’s ownership interest in WVMRF, LLC, including the termination of the Company’s controller position as of June 30, 2012, going forward there will be fewer individuals that will be able to review and correct any

KAISER VENTURES LLC AND SUBSIDIARIES

omission or errors that may occur in the Company’s accounting controls and procedures. The effect of this will be mitigated by the part-time employment of the now retired former controller and expanded oversight of the detailed accounting functions by the Company’s Chief Financial Officer and General Counsel. As previously noted, the effectiveness of the Company’s disclosure controls and procedures are evaluated effective as of the end of each calendar quarter.

FINANCIAL STATEMENTS

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KAISER VENTURES LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

as of

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

KAISER VENTURES LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

as of

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

KAISER VENTURES LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

for the Three and Nine Months Ended March 31September 30

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

KAISER VENTURES LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

for the ThreeNine Months Ended March 31September 30

(Unaudited)

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

KAISER VENTURES LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1. BASIS OF PRESENTATION

The unaudited consolidated financial statements of Kaiser Ventures LLC and Subsidiaries (the “Company”) as of March 31,September 30, 2012 and 2011, as well as the related notes, should be read in conjunction with the Company’s audited consolidated financial statements and related notes as of and for the year ended December 31, 2011, included in the Company’s Annual Report on Form 10-K. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the Company’s financial position at March 31,September 30, 2012, and results of operations and cash flows for the threenine month period ended March 31,September 30, 2012 and 2011.

The Company’s consolidated financial statements include the following significant entities: Lake Tamarisk Development, LLC; Kaiser Eagle Mountain, LLC; Kaiser Recycling LLC; all of which are 100% owned; and Mine Reclamation, LLC, which is 84.247% owned.

In addition, the Company has determined that Business Staffing, Inc. which provides administrative services to the Company, is a variable interest entity due to a lack of sufficient equity at risk even though the Company does not own any interest in Business Staffing, Inc. which is 100% owned by three officers of the Company. The Company has also determined it is the primary beneficiary of Business Staffing, Inc. because the Company has the power to direct activities that most significantly impact the economic performance of Business Staffing, Inc. Accordingly, the Company has consolidated this entity into the consolidated financial statements. The consolidation of this entity does not change any legal ownership, and does not change the assets or the liabilities and equity of Kaiser Ventures LLC and Subsidiaries as a stand-alone entity. Total assets of the variable interest entity were $2,556,000 and $0 as of September 30, 2012 and December 31, 2011, respectively. All intercompany accounts and transactions have been eliminated on consolidation.

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 assets remaining after the bankruptcy and have realized substantial value from certain of those assets. Currently, our principal remaining assets are: (i) our 84.27% ownership interest in MRC, however, MRC filed a voluntary bankruptcy petition under Chapter 11 of the U.S. Bankruptcy Code on October 30, 2011; (ii) our 100% equity ownership of KEM which owns and controls approximately 10,000 acres at the Eagle Mountain Site on or in which millions of tons of iron ore, stockpiled rock and other mineral resources are present; and (iii) our 100% equity ownership interest in Lake Tamarisk Development which owns property near the Eagle Mountain Site

Our 50% ownership interest in the West Valley MRF, LLC was sold on April 2, 2012. For further information on this transaction, see “Note 9. SUBSEQUENT EVENTS.5. INVESTMENT IN WEST VALLEY MRF, LLC.”

Note 2. ENVIRONMENTAL MATTERS

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

KAISER VENTURES LLC AND SUBSIDIARIES

indemnity coverage for scheduled indemnity obligations of the Company arising from, e.g., prior corporate transactions and real estate sales. 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.

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.

KAISER VENTURES LLC AND SUBSIDIARIES

The Company’s original $3.8 million premium for the prospective insurance policy was capitalized as a long-term asset and is being amortized on a straight-line basis over the 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 Section 450-10 of the ASC 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. Generally, unless previously accrued, the liability and the receivable relating to claims covered by this policy should occur in the same accounting period, thereby having no adverse or beneficial impact on the Company’s operating results for that accounting period.

Note 3. INVESTMENTSIn addition to the foregoing policy, an additional insurance policy with a term of ten years covering certain possible contingent environmental and other related events that could arise and impact the West Valley MRF, LLC and others was purchased by Kaiser Recycling during the second quarter. The policy premium of $113,621 was paid from the escrow account originally totaling $363,000 that was established as a result of the sale of Kaiser Recycling, LLC’s ownership interest in WVMRF, LLC. The amount of this escrow was charged against the Company’s existing environmental liability reserve.

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 March 31,September 30, 2012 the Company had all of its investments in bonds, bond funds or high grade commercial paper (Standard & Poor’s rating of “A” or above) which isare classified as “available-for-sale.”

Pursuant to Section 825-10 of the ASC, the Company at the end of a period, compares the actual market value to the actual cost and uses that calculation to determine any gain or loss on the maturity or sale of each available-for-sale investment.

The following is a summary of the fair value of investment securities classified as “available-for-sale” as of March 31,September 30, 2012 and December 31, 2011. For each item included in the table below the gains or losses from Fair Value reporting are included in income for the quarter.

KAISER VENTURES LLC AND SUBSIDIARIES

Note 4. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES

ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

KAISER VENTURES LLC AND SUBSIDIARIES

Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed is determined based on the lowest level input that is significant to the fair value measurement.

Our short-termshort and long-term investments in commercial paper and bonds represent available-for-sale securities that are valued primarily using quoted market prices utilizing market observable inputs in active markets for identical assets.

The following table presents information about our assets measured at fair value on a recurring basis at March 31,September 30, 2012 and December 31, 2011, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

KAISER VENTURES LLC AND SUBSIDIARIES

In addition to the assets listed in the table, other short-term financial assets and liabilities of the Company consist of accounts receivable, accounts payable and certain accrued liabilities. These financial assets and liabilities generally approximate fair market value based on their short-term nature.

On April 2, 2012, Kaiser Recycling, LLC sold its 50% ownership interest in the West Valley MRF, LLC

Effective June 19, 1997, which owns and operates the WVMRF, a transfer station and materials recovery facility near Fontana, California. The gross cash sales price for the 50% ownership interest was approximately $25,769,000. The Company recorded a gain on the sale of $20,588,000 in the second quarter of 2012. Existing environmental obligations of the Company and Kaiser Recycling Corporation (“KRC”) (now Kaiser Recycling, LLC)benefiting West Valley MRF, LLC and West Valley Recycling & Transfer, LLC (the owner of the other 50% interest in the West Valley MRF and the buyer of Kaiser Recycling’s ownership interest in the West Valley MRC, LLC) remain in place. An escrow originally totaling $363,000 was established to provide certain additional financial assurances for the Company’s and Kaiser Recycling, Inc. (“WVRT”),’s existing contingent environmental obligations. The amount of this escrow was charged against the Company’s existing environmental reserve. Kaiser Recycling, LLC purchased an environmental insurance policy for $113,621 which was paid from the escrow account, leaving a subsidiarybalance of Burrtec Waste Industries, Inc. (“Burrtec”), which are equal members$249,379 in the escrow account. In addition, the Company’s guaranty of certain outstanding debt of West Valley (approximately $5,820,000 as of March 31, 2012) was terminated. Finally, as a result of the sale of the Company’s member interest in West Valley MRF, LLC (“WVMRF”), (a California limited liability company) entered intoon April 2, 2012, the Company will no longer be providing and billing West Valley MRF, LLC for accounting services from that date, which totaled approximately $28,000 per month or approximately $84,000 per quarter. The Company also reduced its accounting staff by one employee as of June 30, 2012 and recorded severance expenses associated with that termination of $131,000 during the second quarter of 2012.

With the completed sale of the ownership interest in West Valley MRF, LLC, compensation related actions were implemented under the previously disclosed terms of applicable compensation arrangements for officers and under the terms of the Company’s Class C and D Units. In accordance with the terms and conditions of the Company’s Class C and D Units $771,000 was due and paid on such units. In addition, a Members Operating Agreement (“MOA”) which is substantiallybonus of approximately $173,000 was paid to an officer in accordance with the equivalentterms of his employment agreement. The Company also awarded $95,000 in discretionary bonuses as a joint venture agreement for a limited liability company. The construction and start-upresult of the sale of the ownership interest in the West Valley MRF was completed during December 1997.

MostMRF. In addition, a “Change in Control” occurred under the terms of the financing forAmended and Restated Services Agreement, as amended, between the constructionCompany and Business Staffing, Inc. and under the terms of the West Valley MRFemployment agreement of approximately $22 million, was obtained through the issuance and sale of two California Pollution Control Financing Authority (the “Authority”) Variable Rate Demand Solid Waste Disposal Revenue bonds. The bonds are secured by an irrevocable letter of credit issued by Union Bank of California, N.A. (“Union Bank”).each executive officer.

KAISER VENTURES LLC AND SUBSIDIARIES

The payment schedule as of February 29, 2012, for the California Pollution Control Authority bonds is summarized below.

The Company also remains responsible for any pre-existing environmental conditions on the land on which the WVMRF is located, which is covered by insurance.

The Company is accountingaccounted for its investment in West Valley MRF, LLC under the equity method.

Due to the time required to close the books of the West Valley MRF, LLC and in keeping with past practice, there iswas a one month delay in reporting the results of West Valley MRF, LLC. Thus, even though the closing on the sale of Kaiser Recycling, LLC’s ownership interest occurred on April 2, 2012, due to this one month delay, there was one month’s of the Company’s share of the income for West Valley MRF, LLC during the second quarter of 2012. The condensed summarized financial information of West Valley MRF, LLC is as follows:

The increase in current assets between November 30, 2011 and February 29, 2012 is due primarily to an increase in cash. The decrease in Members’ Equity for the West Valley MRF between November 30, 2011 and February 29, 2012, is primarily due to the fact that cash distributions exceeded net income during this period.

The Company recognized equity income from the West Valley MRF, LLC of $298,000 and $539,000$1,690,000 for the first threenine months of 20122011, and $391,000 for the period from December 1, 2011 respectively.

Our 50% ownership interest in the West Valley MRF, LLC was sold onto April 2, 2012. For further information on this transaction, see “Note 9. SUBSEQUENT EVENTS.”2012 (date of transaction).

Note 6. EVALUATION OF LONG-LIVED ASSETS

In accordance with Section 360 of the ASC, 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. Our reviews as of March 31,September 30, 2012, concluded that no impairment of the following long-lived assets had occurred:

KAISER VENTURES LLC AND SUBSIDIARIES

(a) our 50% ownership interest in the West Valley MRF because the West Valley MRF continues to generate significant net incomeoccurred and positive cash flow; and (b) our other real estate and building and equipment are recorded at the lower of cost or fair market values.

With the denial of our appeal to the U.S. Supreme Court, our quarterly analysis pursuant to the ASC of whether the MRC investment in Eagle Mountain Landfill Project was impaired, resulted in a determination of impairment and a write-down of the carrying amount of the MRC investment in Eagle Mountain Landfill Project as of March 31, 2011. As required by GAAP, the impairment determination and resulting calculation of fair value of the carrying amount of the MRC investment in Eagle Mountain Landfill Project were made utilizing a probability analysis of the remaining options with regard to the Landfill Project after the U.S. Supreme Court declined to accept the petition requesting further review of the adverse U.S. 9^th Circuit Court of Appeals decision as of March 28, 2011. The total amount of the write-down was $6,683,000 which was charged to earnings in the first quarter of 2011. As of March 31,September 30, 2012, there were no events or changes in circumstances that indicated that the carrying amount of MRC’s investment in Eagle Mountain Landfill Project may not be recoverable. Possible further impairment in the MRC investment in Eagle Mountain Landfill Project resulting from MRC’s bankruptcy filing on October 30, 2011, may be required in the future as the impact of the bankruptcy filing is determined.

Note 7. COMMITMENTS AND CONTINGENCIES

Environmental Contingencies. As discussed in Note 2, 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 ASC 450-10 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.

KAISER VENTURES LLC AND SUBSIDIARIES

As of March 31,September 30, 2012, the Company estimates, 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 a substantial portion of Kaiser’s former Fontana mill site property (“Mill Site Property”), including a certain groundwater matter as well as potential matters at Eagle Mountain and at other historical locations, will be approximately $2.7$2.3 million. In the event that a future environmental claim for damages is filed against the Company such claim may be covered by insurance depending upon the nature and timing of the claim.

In addition, an insurance policy covering certain possible contingent environmental and other related events that could arise and impact the WVMRF and others subsequent to the sale of the Company’s interest in the WVMRF was purchased by Kaiser Recycling during the second quarter. The policy premium of $113,621 was paid from the existing escrow account established by the Company at the time of the sale. These potential contingent environmental related events for which insurance coverage was purchased existed regardless of the sale of Kaiser Recycling’s ownership interest in WVMRF, LLC but such sale did accelerate the timing on fully addressing such potential contingent liabilities.

MRC Financing. Since Kaiser became an owner of MRC in 1995, MRC has been financed through a series of private placements to its existing equity owners. As a result of a private placement completed in September 2011, MRC raised total proceeds of approximately $1,300,000, of which amount Kaiser contributed $1,146,344, which increased Kaiser’s ownership interest in MRC from 83.13% to 84.247%.

Contingent DistributionsCompensation Expense 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, distributionsadditional compensation payments will be made on the Class B, C and D Units in accordance with their respective terms. With the sale of Kaiser Recycling, LLC’s ownership interest in West Valley MRF, LLC, compensation payments totaling $771,000 were due and paid during the second quarter of 2012 in accordance with the terms and conditions of the Company’s Class C and D Units.

Restricted Cash.Restricted Cash consists primarily of certificates of deposit used to secure certain letters of credit that provide indemnification to governmental entities regarding landfill project approvals and mining rights and other mine related matters. During the second and third quarters of 2012 additional certificates of deposit in the amount of $32,000 were acquired to amend the indemnification to the County of Riverside.

Note 8. RECENT ACCOUNTING PRONOUNCEMENTS

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that are adopted by the company as of the specified effective date. Unless otherwise discussed,

KAISER VENTURES LLC AND SUBSIDIARIES

management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the company’s consolidated financial statements upon adoption.

In September 2011, the FASB issued an accounting standards update that gives an entity the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. This guidance will be effective for annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. The adoption of the guidance did not have a material impact on the consolidated financial statements.

In June 2011, the FASB issued guidance regarding the presentation of comprehensive income. The new standard requires the presentation of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The new standard also requires presentation of adjustments for items that are reclassified from other comprehensive income to net income in the statement where the components of net income and the components of other comprehensive income are presented. The updated guidance is effective on a retrospective basis for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. The adoption of this guidance did not have a material impact on our consolidated financial statements.

KAISER VENTURES LLC AND SUBSIDIARIES

In May 2011, the FASB issued additional guidance on fair value measurements that clarifies the application of existing guidance and disclosure requirements, changes certain fair value measurement principles and requires additional disclosures about fair value measurements. The updated guidance is effective on a prospective basis for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. The adoption of this guidance did not have a material impact on our consolidated financial statements.

Note 9. SUBSEQUENT EVENTS[REMAINDEROFTHIS PAGE INTENTIONALLY LEFT BLANK]

On April 2, 2012, Kaiser Recycling, LLC sold its 50% ownership interest in the West Valley MRF, LLC which owns and operates the WVMRF, a transfer station and materials recovery facility near Fontana, California. The gross cash sales price for the 50% ownership interest was approximately $25,768,000. The Company will record a gain on the sale of approximately $20 million in the second quarter of 2012. Existing environmental obligations of the Company and Kaiser Recycling benefiting West Valley MRF, LLC and West Valley Recycling & Transfer, LLC (the owner of the other 50% interest in the West Valley MRF and the buyer of Kaiser Recycling’s ownership interest in the West Valley MRC, LLC) remain in place. An escrow of $363,000 was established to provide certain additional financial assurances for the Company’s and Kaiser Recycling, Inc. environmental obligations. In addition, the Company’s guaranty of certain outstanding debt of West Valley (approximately $5,820,000 as of March 31, 2012) was terminated.

With the completed sale of the ownership interest in West Valley MRF, LLC, compensation related actions were implemented under the previously disclosed terms of applicable compensation arrangements for officers and under the terms of the Company’s Class C and D Units. In accordance with the terms and conditions of the Company’s Class C and D Units $770,735 was due and paid as distributions on such units. In addition, a bonus of approximately $173,000 was paid to an officer in accordance with the terms of his employment agreement.

On May 9, 2012, the Company’s Board of Managers declared a distribution of $1.50 per Kaiser Class A Unit to unitholders of record as of such date.

The Board of Managers also confirmed that a “Change in Control” occurred under the terms of the Amended and Restated Services Agreement, as amended, between the Company and Business Staffing, Inc. and under the terms of the employment agreement of each executive officer. A “Change in Control” requires the funding, but not the payment, of severance benefits.

KAISER VENTURES LLC AND SUBSIDIARIES

PART II

As discussed in our Annual Report on Form 10-K for 2011 and in our reports on Form 10-Q for the first and second quarter of this year, we are engaged in certain claims and litigation. As of the date of the filing of this Report on Form 10-Q, there have not been any material developments in the legal proceedings involving the Company from the date of the filing of our Report on Form 10-K for the period ended December 31, 2011, and as updated by our first quarter 2012 Report on Form 10-Q and as further updated in our second quarter 2012 Report on Form 10-Q except as noted below.below:

MRC/Landfill Project.ECEC Litigation DismissedAs discussed under “Part I - Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – BUSINESS UPDATE”, MRC filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for Central District of California, Riverside Division, bankruptcy case number 6:11-bk-43596 (the “Bankruptcy Court”). MRC continues to operate its business as a “debtor in possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code, Rules and orders of the Bankruptcy Court.

On March 14, 2012, Eagle Crest Energy Company (“ECEC”) filed a declaratory relief action in the Bankruptcy Court against MRC, KEM and Kaiser LLC. ECEC is seeking to permit a proposed hydro-electric pumped storage project at the Eagle Mountain Site. The lawsuit seekssought declaratory relief only and notno damages. In summary, the suit seekssought a declaration from the Bankruptcy Court stating that ECEC’s right of eminent domain (with ECEC assuming it would have such a right) and the process of seeking a license from FERC is not impacted by MRC’s bankruptcy. MRC, Kaiser LLC and KEM are seekingsought dismissal of such suit.

On March 30, The Bankruptcy Court agreed with MRC’s, Kaiser LLC’s and KEM’s positions in the matter and on August 29, 2012, the District filed a proof of claim in MRC’s bankruptcy case. While the amount of the District’s claim is not certain from its proof of claim, it asserts that the claim could amount to or exceed “hundreds of millions of dollars.” The District further claims that it will seek recovery of its damages from Kaiser LLC independently of the bankruptcy proceeding. However, no legal proceeding against Kaiser LLC has been commenced as of the date of the filing of this Report on Form 10-Q. Kaiser LLC and MRC will vigorously defend the allegations asserted by the District, including asserting claims against the District and others as may be appropriate.Bankruptcy Court dismissed ECEC’s lawsuit without prejudice.

Iron Partners Litigation. The anticipated trial for theIron Partners litigation was postponed from April 2012 to late 2012.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable.

Item 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

Item 4. RESERVED

Not applicable.

Item 5. OTHER INFORMATION

On April 2, 2012, the Board of Managers held a meeting at which it approved the sale by Kaiser Recycling of its ownership interest in WVMRF, LLC. With the completed sale of the ownership interest in WVMRF, LLC, compensation related actions were implemented under the previously disclosed terms of applicable compensation

KAISER VENTURES LLC AND SUBSIDIARIES

arrangements for officers and under the terms of the Company’s Class C and D Units. In accordance with the terms and conditions of the Company’s Class C and D Units $770,735 was due and paid as distributions on such units. In addition, a bonus of approximately $173,000 was paid to Mr. Verhey in accordance with the terms of his employment agreement. These items will be charged to compensation expense on the Company’s financial statements for the second quarter of 2012.

On May 9, 2012, the Board of Managers declared a distribution of $1.50 per Kaiser Class A Unit to the Company’s unitholders of record on such date. Such distribution has been sent to the Company’s unitholders.

In addition, the Board of Managers at such meeting took the following additional actions:

Exhibit 10.1^* - Second Amendment to the Employment Letter Agreement of Gerald A. Fawcett dated May 9, 2012.^**

Exhibit 10.2 - Second Amendment to the Amendment Restated Administrative Services Agreement dated May 9, 2012.^**

Exhibit 31.1 - Certificate of Richard E. Stoddard, Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a).**

Exhibit 31.2 - Certificate of James F. Verhey, Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a). **

Exhibit 32 - Certificate of Richard E. Stoddard, Chief Executive Officer, and James F. Verhey, Chief Financial Officer, pursuant to Section 1350. **

KAISER VENTURES LLC AND SUBSIDIARIES

Exhibit 101 - The following materials from Kaiser Ventures LLC’s Quarterly Report on Form 10-Q for the quarter ended March 31,September 30, 2012, formatted in XBRL (eXtensible Business Reporting Language); (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Income; (iii) Condensed Consolidated Statements of Cash Flows; (iv) Condensed Consolidated Statements of Shareholders’ Equity; and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.^**

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KAISER VENTURES LLC AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements 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.

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