SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the transition period from            to            

Commission File Number 000-33433

KAISER VENTURES LLC

(Exact name of small business issuer as specified in its charter)

3633 East Inland Empire Blvd., Suite 480

Ontario, California 91764

(Address of principal executive offices and zip code)

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

No Change

(Former name, former address and former fiscal year, if change since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

At NovemberMay 1, 2011,2012, the registrant had 6,957,7127,002,806 Class A Units outstanding including: (i) 104,267 Class A Units outstanding but reserved for distribution to the general unsecured creditors in the Kaiser Steel Corporation bankruptcy; (ii) 113,101 Class A Units 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; and (iii) 84,61213,000 units outstanding that are subject to certain vesting requirements.

KAISER VENTURES LLC AND SUBSIDIARIES

TABLE OF CONTENTS TO FORM 10-Q

AVAILABILITY OF PREVIOUS REPORTS

The Company will furnish without charge, to each member, upon written request of any such person, a copy of the Company’s 20102011 Annual Report on Form 10-K and the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 and for the quarter ended June 30, 2011.10-K. Those requesting a copy of such reportsreport that are not currently members of the Company may also obtain a copy of the reports directly from the Company upon payment of a nominal photocopying charge. Requests for a copy of any report filed with the Securities and Exchange Commission should be directed to Executive Vice President-Administration, at 3633 East Inland Empire Boulevard, Suite 480, Ontario, California 91764. All such reports can also be accessed from the Company’s website atwww.kaiserventures.com.

The reader is encouraged to read this Report on Form 10-Q in conjunction with the Company’s 20102011 Annual Report on Form 10-K and the Company’s first and second quarter 2011 Report on Form 10-Q as the information contained herein is often an update of the information in such reports.report.

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KAISER VENTURES LLC AND SUBSIDIARIES

PART I

FORWARD-LOOKING STATEMENTS

Except for the historical statements and discussions contained herein, statements contained in this Report on Form 10-Q 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, Annual Report, 10-Q Report, 10-QSB Report, 8-K Report or press release of the Company and any amendments 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-Q 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 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: the filing by Mine Reclamation, LLC of a voluntary petition in bankruptcy pursuant to Chapter 11 of the U.S. Bankruptcy Code; pre-bankruptcy activities of Kaiser Steel Corporation, the predecessor of Kaiser, and asbestos claims; insurance coverage disputes; the challenge, reduction or loss of any claimed tax benefit including Kaiser’s conclusion that its tender offer completed in December 2008 would not result in the Company being treated as a “publicly traded partnership”;or tax treatment; any obligations that could arise out of any sale of the Company’s ownership interests in Kaiser Eagle Mountain, LLC, Lake Tamarisk Development, LLC and Mine Reclamation, LLC; 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.

ADDITIONAL INFORMATION

A reader of this Report on Form 10-Q is strongly encouraged to read the entire report, together with the Company’s 20102011 Annual Report on Form 10-K and the Company’s Report on Form 10-Q for the period ended March 31, 2011 and for the period ended June 30, 2011 for background information and a complete understanding as to material developments concerning the Company. Such report can be found on Kaiser’s website atwww.kaiserventures.com under the “Member Relations” tab.

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. 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.

The Financial Statements are located at the end of Item 3, beginning on Page 1110 of this Report and are incorporated herein by this reference.

KAISER VENTURES LLC AND SUBSIDIARIES

BUSINESS UPDATE

Overview

Our business is developing and monetizing as appropriate the remaining assets we received from the KSC bankruptcy. Following is a summary of our material assets other than cash and securities:

KAISER VENTURES LLC AND SUBSIDIARIES

Cash Maximization Strategy Status

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 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. TheIn particular the adverse final decision in the federal land exchange litigation in March 2011 negatively impactsimpacted MRC’s ability to pursue the Landfill Project, which in turn altersaltered and adversely impactsimpacted the timing of the continuing implementation of the cash maximization strategy. In addition,However, with the potential sale by Kaiser Recycling of ourits ownership interest in Kaiser Eagle Mountain, Lake Tamarisk Development, and MRC, would have substantially advanced the finalWVMRF, LLC, the Company’s Board of Mangers declared a distribution of $1.50 per Class A Unit to unitholders of record as of May 9, 2012. Further implementation of the cash maximization strategy.strategy is dependent upon, among other things, other asset sales.

Eagle Mountain Landfill Project and MRC

In 1988, the Company entered into a 100-year lease agreement (the “MRC Lease”) with MRC. MRC was seeking to develop the Company’s former iron ore mine near Eagle Mountain, California into a large, regional rail-haul, municipal solid waste landfill. On May 26, 2000, the Company also entered into a Real Estate Option Agreement (the “MRC Option”) with MRC which would permit MRC to acquire the real property for the Landfill Project upon the terms and conditions set forth in the MRC Option. The MRC Option has not yet been exercised and it currently expires on December 31, 2011,June 1, 2012, if it is not extended by mutual agreement. The Company currently owns approximately 84.247% of the Class B units and 100% of the Class A units of MRC. On October 30, 2011, MRC filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy. For additional information, please see the discussion above under the first bullet point paragraph in “Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—OPERATIONS - BUSINESS UPDATE—UPDATE - Overview.”

As part of the proceedings in Bankruptcy Court, MRC will need to develop a plan of reorganization which will include decisions regarding the status of the MRC Lease, the MRC Option and the Landfill Project Sale Agreement, among other things.

KAISER VENTURES LLC AND SUBSIDIARIES

Prior Federal Landfill Project Litigation. On September 20, 2005, the U.S. District Court for the Central District of California, Eastern Division, issued its opinion in Donna Charpied,et al., Plaintiffs v.United States Department of Interior, et al., Defendants (Case No. ED CV 99-0454 RT (Mex))Sale Agreement, among other things. In addition, MRC will consider and inNational Parks and Conservation Association, Plaintiff v.Bureau of Land Management, et al., Defendants (ED CV 00-0041 RT (Mex)). That decision is adversetake action with respect to the Landfill Projectproof of claims filed in the bankruptcy proceeding including whether to accept, reject, compromise or take other action with respect to any particular proof of claim that it sets aside a land exchange completed betweenwas timely and properly submitted. In addition, litigation and threatened litigation have arisen in the Company and BLM in October 1999 and two BLM rights-of-way.

The Company and the U.S. Department of Interior each appealed the decision to the U. S. 9^th Circuit Court of Appeals. On November 10, 2009, a three-judge panelcontext of the U.S. 9^th Circuit Court of Appeals issued its decision inMRC bankruptcy. For additional information, please see the Company’s land exchange litigation and Landfill Project appeal. In a 2 to 1 decision the majority opinion was adverse to the Landfill Project in that it upheld portions of the prior U. S. District Court decision setting aside the completed land exchange. A slightly modified decision was released on May 19, 2010, by the U.S. 9^th Circuit Court of Appeals but the modified decision did not change any of the conclusions of the majority opinion. We elected to seek U.S. Supreme Court review of the adverse U.S. 9^th Circuit Court of Appeals decision, but the U.S. Supreme Court on March 28, 2011, declined to accept our appeal. On May 10, 2011, the U.S. District Court issued its order remanding the actions “to the BLM for proceedings consistent with the Ninth Circuit’s May 19, 2010 amended opinion.discussion under “PART II. Item 1. LEGAL PROCEEDINGS.” With the decision of the U.S. Supreme Court not to hear the appeal of the adverse decision of the 9^th Circuit Court of Appeals, there is no longer any pending litigation and the adverse federal litigation is final and fully concluded as no further appeals are available.

MRC Financing.Since Kaiser became an owner of MRC in 1995, MRC has been financed through a series of private offerings of securities to its existing equity owners. As a result of a private placement completed in September 2011,However, the Company has determined that it will not provide any future equity financing to MRC raised total proceeds of approximately $1.3 million, of whichto pursue the Landfill Project, but MRC may need additional funds to complete its bankruptcy. Under certain circumstances, Kaiser contributed $1,146,344 which increased Kaiser’s ownership interest in MRC from 83.13%LLC as well as others may become “debtor-in-possession” lenders to 84.247%. The amount raised in the September 2011 private placement is far short of the total estimated amount of funds that would be necessary to implement any “fix” of the land exchange.MRC.

West Valley Materials Recovery and Transfer Station

West Valley MRF,Background. WVMRF, LLC was formed in June 1997 by Kaiser Recycling Corporation (now Kaiser Recycling, LLC (formerly Kaiser Recycling, Inc.)), a wholly-owned subsidiary of Kaiser, and West Valley Recycling & Transfer, Inc., a wholly-owned subsidiary of Burrtec Waste Industries, Inc. (“Burrtec”). This entity was formed to construct and operate the materials recovery facility and is referred to as the West Valley MRF.WVMRF, LLC. This facility is permitted to receive up to 7,500 tons per day of municipal solid waste. Currently, the facility is processing approximately 3,000 – 3,500 + tons per day of municipal solid waste and recyclable materials.

Construction of the West Valley MRF was financed primarily by variable rate interest bonds issued by the California Pollution Control Finance Authority. TheAs of March 31, 2012, the outstanding principal balance of the bonds have a variable interest rate that is adjusted weekly. The rates during the first nine monthsfully due in June 2012, was $620,000 and due in June 2030 was $5,200,000. Union Bank of 2011 have ranged from a low of 0.15% to a high of 0.40%; however, the average rate for the first nine months of 2011 has been 0.29%. These rates do not include the credit enhancement fee of approximately 1.25%, which is paid to the bank providing the credit enhancement. The bank thatCalifornia (“Union Bank”) provides the letters of credit that support the Pollution Control Finance Authority bonds extendedbonds. At the letters of credit for the 1997 Phase 1 bonds through June 30, 2012, which is their stated date of maturity and for the 2000 Phase 2 bonds through June 2016.

The performancetime of the West Valley MRF, which has been negatively impacted byissuance of the recent world-wide economic recession, continuesbonds Kaiser LLC and Burrtec each severally guaranteed fifty percent (50%) of the principal and interest on the bonds to improve primarily as a result of increasing commodity prices. However, such improvement generally plateauedUnion Bank in the third quarter asevent of a result of continuing world-wide financial and economic weakness. default by WVMRF, LLC.

Distribution.A cash distribution of $500,000 was received from the West Valley MRF during the first quarter of 2011 and a cash distribution of $750,000 was received from the WVMRF, LLC during the first quarter of 2012.

Sale of Ownership Interest.On April 2, 2012, Kaiser LLC, Kaiser Recycling, Burrtec Waste Industries (“Burrtec”) and West Valley Recycling & Transfer, Inc. (“Buyer”), a wholly owned subsidiary of Burrtec, entered into that certain Purchase Agreement (the “Purchase Agreement”) For Units of WVMRF, LLC whereby Kaiser Recycling sold its ownership interest in July 2011.West Valley to Buyer. The sale transaction closed on the same day as the Purchase Agreement was entered into by the parties to the agreement. Kaiser Recycling sold its ownership interest in WVMRF, LLC for a gross cash sales price of approximately $25,768,000. The Company will record a gain of approximately $20 million in the second quarter of 2012. Existing environmental obligations and agreements of the Company and Kaiser Recycling benefiting WVMRF, LLC, Buyer and Union Bank remain in place and an escrow of $363,000 was established to provide certain financial assurances. However, the Company’s guaranty of the outstanding California Pollution Control Finance Authority bonds was terminated.

OPERATING RESULTS

Note on WVMRF

The operating results of the Company during the first quarter of 2012 reflect our fifty percent (50%) ownership interest in WVMRF, LLC, for the 3 month period ended February 29, 2912. In addition, even though we sold our ownership interest in WVMRF, LLC on April 2, 2012, our second quarter operating

KAISER VENTURES LLC AND SUBSIDIARIES

Risks. There are a numberresults will reflect the results of risks associated withWVMRF, LLC’s March 2012 operations. This is due to the West Valley MRF which are discussed in more detail intime required to close the Company’s Annual Report on Form 10-K for 2010. Waste volumes remain negatively impacted by the down-turn in the California economy. In addition, any material reduction in commodity prices would negatively impact the revenues, margins and net incomebooks of the West Valley MRF. Governmental regulationWVMRF, LLC and competition for and lossin keeping with past practice, there is a one month delay in reporting the results of expiring waste contracts would also negatively impact the West Valley MRF.

OPERATING RESULTSWVMRF, LLC

Summary of Revenue Sources

Due to the nature of the Company’s projects and the Company’s recognition of revenues from 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.

Results of Operations

Analysis of Results for the Quarters Ended September 30,March 31, 2012 and 2011 and 2010

Revenues. Total revenues for the thirdfirst quarter of 20112012 were $645,000$325,000 as compared to $652,000$555,000 for the comparable period in 2010.2011. The reasons for this increasedecrease are discussed below.

Revenue from the Company’s equity method investment in the West Valley MRF increasedWVMRF, LLC decreased by $76,000$241,000 to $588,000$298,000 for the thirdfirst quarter of 20112012 as compared to $512,000$539,000 for the same period in 2010.2011. This increase,decrease, which is the result of increaseddecreased operating profit from the West Valley MRF,WVMRF, LLC, is due primarily to higherlower recyclable sales resulting from the continuing increasea reduction in recyclable commodity prices (fiber and aluminum). However, West ValleyAdditionally, the WVMRF, LLC continues to receive lower waste volumes due to the lingering impacts of the U.S. economic recession. The impact of higherlower commodity prices was partially offset by higherlower recyclable rebates and buyback expenses in 2011.the first quarter of 2012.

Revenue from Eagle Mountain operations decreasedincreased for the thirdfirst quarter of 20112012 by $83,000$11,000 to $57,000$27,000 as compared to $140,000$16,000 for 2010,2011, primarily due to decreasedincreased revenue from salvagetenant rentals and scrap salesother media rentals as compared to the same period in 2010.2011.

Operating Costs. Operating costs increaseddecreased to $548,000$743,000 for the thirdfirst quarter of 20112012 from $441,000$7,068,000 for the same period in 2010.2011. This increasedecrease relates primarily to legal and consulting expenses incurred in pursuitAsset Impairment expense of various business opportunities associated with$6,683,000, related to the Company’s Eagle Mountain assets.Landfill investment, which was recorded in the first quarter of 2011. The reduction in Asset Impairment expense was partially offset by increased expenses related to Eagle Mountain of $281,000 including $77,000 in non-capitalized MRC expenses and $82,000 in electrical repair and mechanical repairs, as well as, $45,000 in outside Consultants and $25,000 in licenses and fees.

Corporate General and Administrative Expenses.Corporate general and administrative expenses decreased to $467,000$525,000 for the thirdfirst quarter of 20112012 from $513,000$526,000 for the same period in 2010.2011. This decrease is primarily related to the purchasenet of new office computersan increase in legal expenses related to the MRC bankruptcy and a decrease in other outside services during this period in 2010.as compared to 2011.

Net Interest and Investment Income. Net interest and investment income, including net realized and unrealized losses of $146,000, for the thirdfirst quarter of 20112012 was a lossgain of $123,000$23,000 compared to a gain of $165,000$88,000 for the same period in 2010.2011. Of the $123,000 loss$23,000 gain for the thirdfirst quarter of 2011, $23,0002012, $14,000 was interest income, $14,000and $9,000 was a net realized and unrealized lossgain on the Company’s short-term investments and $132,000 was the net unrealized loss on the Company’s SERP accounts.investments.

Loss Before Income Tax Benefit and Allocation of Non-Controlling Interest. The Company recorded a pre-tax loss of $493,000$920,000 in the thirdfirst quarter of 20112012 versus a pre-tax loss of $137,000$6,951,000 for the same period in 2010. The Company is taxed as a partnership and thus the Company’s annual results of

KAISER VENTURES LLC AND SUBSIDIARIES

operations (on an income tax basis) are allocated to the unit holders for inclusion in their respective income tax returns.

Net Loss Attributable to Controlling Interest.For the third quarter of 2011, the Company incurred a net loss attributable to controlling interest of $438,000, which is equal to $0.06 per unit, versus a loss of $32,000, or $0.00 per unit for the same period in 2010.

Analysis of Results for the Nine Months Ended September 30, 2011 and 2010

Revenues. Total revenues for the first nine months of 2011 were $1,814,000, compared to $1,594,000 for 2010. The reasons for this increase are discussed below.

Revenue from the Company’s equity method investment in the West Valley MRF increased by $376,000 to $1,690,000 as compared to $1,314,000 for 2010. This increase, which is the result of increased operating profit from the West Valley MRF, is due primarily to higher recyclable sales resulting from the continuing increase in recyclable commodity prices (fiber and aluminum). However, West Valley continues to receive lower waste volumes due to the lingering impacts of the U.S. economic recession. The impact of higher commodity prices was partially offset by higher recyclable rebates and buyback expenses in 2011.

Revenue from Eagle Mountain operations for the first nine months of 2011 decreased by $156,000 to $124,000 as compared to $280,000 for 2010. This decrease is primarily the result of decreased sales of rock and scrap metal which was partially offset by increased media related revenues.

Operating Costs. Operating costs decreased to $8,060,000 for the first nine months of 2011 from $13,559,000 for the same period in 2010. This decrease relates primarily to the $12,504,000 write –down of MRC’s investment in the Eagle Mountain Landfill project during the same period in 2010 versus the additional $6,683,000 write-down in the first quarter of 2011. In addition, the Company recorded $349,000 in non-capitalized MRC expenses in 2011 versus $114,000 in 2010.

Net Interest and Investment Income. Net interest and investment income, including net realized and unrealized losses of $90,000, for the first nine months of 2011, was a gain of $12,000 compared to a gain of $246,000 for the same period in 2010. Of the $12,000 gain for the first nine months of 2011, $102,000 relates to interest income, $5,000 was net realized and unrealized losses on the Company’s short-term investments and $85,000 relates to a net unrealized loss on the Company’s SERP accounts.

Loss Before Income Tax Benefit and Allocation of Non-Controlling Interest. The Company recorded a pre-tax loss of $7,705,000 in the first nine months of 2011 versus a pre-tax loss of $13,109,000 for the same period in 2010. The Company is taxed as a partnership and thus the Company’s annual 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: (a) federal income taxes imposed on the Company’s former subsidiary Business Staffing Inc. (in 2010 only); and (b) a gross revenue tax imposed by the State of California.

KAISER VENTURES LLC AND SUBSIDIARIES

Net Loss Attributable to Controlling Interest.For the first nine monthsquarter of 2011,2012, the Company incurred a net loss attributable to controlling interest of $6,465,000, or $0.95$890,000, which is equal to $0.13 per unit, versus a loss of $10,910,000,$5,796,000, or $1.63$0.86 per unit for the same period in 2010.2011.

FINANCIAL POSITION

Cash, and Cash Equivalents and Short-Term Investments. The Company defines cash equivalents as highly liquid debt instruments with original maturities of 90 days or less. Cash and cash equivalents increased $408,000decreased $48,000 to $1,176,000$756,000 at September 30, 2011March 31, 2012 from $768,000$804,000 at December 31, 2010.2011. Included

KAISER VENTURES LLC AND SUBSIDIARIES

in cash and cash equivalents is $580,000$295,000 and $124,000$534,000 held solely for the benefit of MRC at September 30, 2011March 31, 2012 and December 31, 2010,2011, respectively.

Below is a table showing the major changes in cash during 2011:2012:

Working Capital. During the first ninethree months of 2011,2012, current assets decreased $1,099,000$666,000 to $5.7$3.7 million, while current liabilities increased $21,000decreased $231,000 to $2.0 million. The decrease in current assets was the net result of decreases in (a) short term investments of $1,437,000,$479,000; (b) accounts receivable and a decrease in restricted cashother of $105,000. These decreases were partially offset by an increase in Accounts Receivable of $35,000$139,000; and $408,000(c) $48,000 in cash and equivalents as discussed above. The increasedecrease in current liabilities is the result of increasesdecreases of $14,000$154,000 and $7,000$77,000 in accounts payable and accrued liabilities, respectively. As a result, net working capital decreased during the first ninethree months of 20112012 by $1,120,000$435,000 to $3.7$1.7 million at September 30, 2011.March 31, 2012.

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

Accounts Receivable and Other (Net). During the first ninethree months of 2011,2012, accounts receivable and other current assets increaseddecreased by $35,000 primarily$139,000 due to an increasedecreases in trade accounts receivable and prepaid insurance.

Short-Term Investments. During the first ninethree months of 2011,2012, short-term investments decreased by $1,437,000.$479,000. This is primarily the result of the sale of investments to provide operating funds. On September 30, 2011,March 31, 2012, the Company had $2.7$2.2 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.

Investments. The Company’s equity share of income from the investment in the West Valley MRF, which totaled $1,690,000$298,000 for the first ninethree months of the year, was offset by the receipt of cash distributions totaling $1,250,000$750,000 resulting in a $440,000 increase$452,000 decrease to the Company’s investment in the West Valley MRF.

KAISER VENTURES LLC AND SUBSIDIARIES

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 ninethree months of the year, there was a decrease in other assets of $214,000$80,000 which is the net result of the amortization of the environmental insurance policy of $225,000,$75,000, and an

KAISER VENTURES LLC AND SUBSIDIARIES

increase in accumulated depreciation as of September 30, 2011 of $14,000, which were partially offset by the establishment of a $25,000 refundable legal retainer.$5,000 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 September 30, 2011,March 31, 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 million for which a reserve has been established. See Note 2. “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 to Kaiser Recycling, LLC, insurance will be purchased in the second quarter of this year to cover possible contingent environmental related liabilities and a third party escrow of approximately $20,000 in cash was established benefitting WVMRF, LLC and others.

Non-Controlling Interest. During the first ninethree months of 2011,2012, the Non-Controlling Interest decreased by $1,032,000$31,000 from $3,136,000$2,057,000 as of December 31, 20102011 to $2,104,000$2,026,000 as of September 30, 2011 due toMarch 31, 2012, which is the following factors: (i) Netnet loss attributable to Non-Controlling Interestnon-controlling interest for the ninethree month period amounted to $1,186,000 which was largely related to the write-down of the Eagle Mountain Landfill investment recorded in first quarter of 2011; and (ii) In September 2011, MRC completed a private placement whereby they raised total proceeds of $1.3 million, of which approximately $154,000 was contributed by Non-Controlling Interests. Current MRC expenditures are no longer being capitalized but are charged to operations.period. As of September 30, 2011March 31, 2012 the resulting Non-Controlling Interestnon-controlling interest is $2,104,000,$2,026,000, 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, 2010.2011. As disclosed in the Notes to the 20102011 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.

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 high grade 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, thereby mitigating any fluctuations in fair value.maturity.

KAISER VENTURES LLC AND SUBSIDIARIES

Investment in West Valley MRF, LLC. The Company accounts for its investment in West Valley MRF,WVMRF, LLC, the owner of West Valley MRF, under the equity method of accounting because of the Company’s 50% non-controlling ownership interest.

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

KAISER VENTURES LLC AND SUBSIDIARIES

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.

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.

BUSINESS OUTLOOK

The statements contained in this Business Outlook, as well as in “Part I—I - Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—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 projects and investments. Ourinvestments and as previously discussed 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 50%100% equity ownership of the West Valley MRF; (iii) miscellaneous property at or near the Eagle Mountain Townsite;KEM which owns and (iv) the other resourcescontrols

KAISER VENTURES LLC AND SUBSIDIARIES

approximately 10,000 acres at the Eagle Mountain Site on our fee owned property such as theor in which millions of tons of iron ore, stockpiled rock and other mineral resources.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.projects and in connection with addressing any liabilities we may have. Our principal sources of ongoing income areover the last several years have been derived from the West Valley MRF,WVMRF, LLC, investment earnings and from miscellaneous income generated at the Eagle Mountain Site.

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 retain customers and waste volumes

KAISER VENTURES LLC AND SUBSIDIARIES

at attractive processing rates; (ii) recyclable commodity prices; (iii) the ability to increase prices to reflect increases in such items as transportation, labor and disposal costs; and (iv) future competition from competing facilities. The performance of the West Valley MRF, which was negatively impacted by the recent world-wide economic recession, has significantly improved in the first nine months of 2011 versus 2010 primarily as As a result of increasing commodity prices. However, such improvements generally plateaued in the third quartersale of 2011. Additionally, the West Valley MRF is continuing the process of evaluating possible waste-to-energy and composting projects that might be capable of utilizing a portion of the municipal solid waste received at the facility. Finally, as part of our cash maximization 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.WVMRF, LLC, no further distributions will be received from WVMRF, LLC.

MRC.MRC. As discussed in more detail in “Part I—I - Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—OPERATIONS - BUSINESS UPDATE—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 by the Company is an approximate five acre parcel referred to as the Tar Pits Parcel.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. West ValleyWVMRF, LLC has the right to purchase the Tar Pits Parcel for $1.00. Effective April 2, 2012, WVMRF, LLC leased material portions for 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.

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 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. The nowLengthy, but adversely completed, litigation involving the Landfill Project delayed the implementation of the goals of the cash maximization strategy. In particular the adverse final adversely-decideddecision in the federal land exchange litigation in connection withMarch 2011 negatively impacted MRC’s ability to pursue the Landfill Project, alterswhich in turn altered and adversely impactsimpacted 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, the Company’s Board of Mangers declared and paid a distribution of $1.50 per Class A Unit to unitholders of record as of May 9, 2012. Further implementation of the cash maximization strategy is dependent upon, among other things, other asset sales.

Corporate Overhead. GivenWith the sale of our current assets and projects,ownership interest in WVMRF, LLC, it is unlikelyanticipated that wethere will be able to further reduce personnel and corporate overheada reduction in the near future. However, as we divest our remaining assets, we intend to further reduce corporate staffing and overheadof 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 be recorded at the time the decision to make such reductions is made by the Company.

Capital Resources.Kaiser LLC expects that its current cash balances and short-term investments together with cash generated from the West Valley MRF,current and any 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.months even after payment of the $1.50 per unit distribution declared by the Board of Managers on May 9, 2012.

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.

WithinAs of the 90 days prior toend of the date ofperiod 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.

KAISER VENTURES LLC AND SUBSIDIARIES

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, since 2007, 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, 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 September 30

(Unaudited)March 31

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

KAISER VENTURES LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

for the NineThree Months Ended September 30March 31

(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 September 30,March 31, 2012 and 2011, and 2010, 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, 2010,2011, 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 September 30, 2011,March 31, 2012, and results of operations and cash flows for the ninethree month periodsperiod ended September 30, 2011March 31, 2012 and 2010.2011.

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 was 83.13% owned until September 1, 2011 after which it is 84.247% owned. However, as disclosed in “Note 9. SUBSEQUENT EVENTS.” Mine Reclamation, LLC filed for Chapter 11 bankruptcy on October 30, 2011.

As discussed in our 2010 Annual Report on Form 10-K as a subsequent event, effective January 1, 2011, the Company sold its Business Staffing, Inc. (“BSI”) subsidiary to Richard Stoddard, James Verhey and to Tri-C, LLC, a limited liability company controlled by Terry Cook. Messrs. Stoddard, Verhey and Cook are the executive officers of the Company. BSI was established in 2001 in connection with the conversion of Kaiser Ventures Inc. to a limited liability company. BSI is an administrative services company that provides administrative services and employees to the Company. BSI is reimbursed by the Company, without mark-up, only for the expenses it incurs in providing services for the benefit of the Company and its subsidiaries. BSI will continue to provide services for the Company and its subsidiaries on such basis in accordance with an Amended and Restated Administrative Services Agreement. The purchase price for all of the stock of BSI was $3.00 plus the assumption of certain liabilities such as the deferred compensation obligations to those employees or prior employees that are currently participants in the Company’s supplemental executive retirement plans. BSI will be responsible for such plans going forward and will become the sponsor for each plan. At January 1, 2011, BSI had minimal assets and liabilities. There was no gain or loss on the transaction.

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) An 84.247% (as of September 1, 2011)our 84.27% ownership interest in Mine Reclamation, LLC, (referred to as MRC),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 a permitted rail-haul municipal solid waste landfilland controls approximately 10,000 acres at a property called the Eagle Mountain Site locatedon 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 California desert (the “Landfill Project”). See “Note 9. SUBSEQUENT EVENTS”;Eagle Mountain Site

(ii) AOur 50% ownership interest in the West Valley Materials Recovery Facility and Transfer Station, a transfer station and materials recovery facility locatedMRF, LLC was sold on land acquired from Kaiser, which we refer to as the West Valley MRF;

(iii) Approximately 5,400 additional acres owned or controlled by Kaiser at the Eagle Mountain Site that are not a part of the Landfill Project; and

KAISER VENTURES LLC AND SUBSIDIARIES

(iv) The resources at the Eagle Mountain SiteApril 2, 2012. For further information on our fee owned property that are not a part of the Landfill Project such as the millions of tons of stockpiled rock and other mineral resources such as iron ore.this transaction, see “Note 9. SUBSEQUENT EVENTS.”

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 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. 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 September 30, 2011March 31, 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 is 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 September 30, 2011March 31, 2012 and December 31, 2010.2011. 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-term investments in commercial paper and bonds represent available-for-sale securities that are valued primarily using quoted market prices utilizing market observable inputs.

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KAISER VENTURES LLC AND SUBSIDIARIES

inputs in active markets for identical assets.

The following table presents information about our assets measured at fair value on a recurring basis at September 30, 2011March 31, 2012 and December 31, 2010,2011, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

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.

Note 5. INVESTMENT IN WEST VALLEY MRF, LLC

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

Most of the financing for the construction of the West Valley MRF 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”).

KAISER VENTURES LLC AND SUBSIDIARIES

The payment schedule as of August 31, 2011,February 29, 2012, for the California Pollution Control Authority bonds is summarized below.

KAISER VENTURES LLC AND SUBSIDIARIES

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 accounting 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 is a one month delay in reporting the results of West Valley MRF, LLC. The condensed summarized financial information of West Valley MRF, LLC is as follows:

The increase in current assets between November 30, 20102011 and August 31, 2011February 29, 2012 is due primarily to an increase in cash. The increasedecrease in Members’ Equity for the West Valley MRF between November 30, 20102011 and August 31, 2011,February 29, 2012, is primarily due to the fact that cash distributions exceeded net income exceeded cash distributions during this period.

The Company recognized equity income from the West Valley MRF of $1,690,000$298,000 and $1,314,000$539,000 for the first ninethree months of 2012 and 2011, and 2010, respectively.

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.”

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 September 30, 2011,March 31, 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 income 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. Previously, in 2010, the Company recorded a $12,504,000 write-down of MRC’s Eagle Mountain Landfill Project investment as a result of its quarterly evaluation of long-lived assets and its determination that impairment had occurred as of June 30, 2010. As of September 30, 2011,March 31, 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.

KAISER VENTURES LLC AND SUBSIDIARIES

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.

As of September 30, 2011,March 31, 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 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.

Previous Landfill Project Litigation. There currently is no pending litigation involving the Landfill Project. Two lawsuits were filed in U.S. District Court located in Riverside County challenging the completed federal land exchange. On September 20, 2005, the U.S. District Court for the Central District of California, Eastern Division, issued an opinion and order which concluded that the land exchange be reversed and the case be sent back to the BLM for further action consistent with the opinion. MRC and the U.S. Department of Interior appealed the decision to the U. S. 9^th Circuit Court of Appeals. In November 2009, a three judge panel of the U.S. 9^th Circuit Court of Appeals released its decision on the matter. The majority of the panel affirmed and reversed in part the U.S. District Court decision. The dissenting judge would have found in the Company’s and BLM’s favor on all matters. MRC sought further review of this decision by a broader panel of U.S. 9^th Circuit of appeals judges but on July 30, 2010, such review was denied by the 9^th Circuit. On March 28, 2011, the U.S. Supreme Court denied MRC’s request to further review the prior adverse decision of the U.S. 9^th Circuit Court of Appeals. Thus, the previously existing federal land exchange litigation is final as there is no further right of appeal.

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 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.

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.

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 willdid 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

KAISER VENTURES LLC AND SUBSIDIARIES

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 willdid not have a material impact on our consolidated financial statements.

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 willdid not have a material impact on our consolidated financial statements.

Note 9. SUBSEQUENT EVENTS

On October 30, 2011, MRC filedApril 2, 2012, Kaiser Recycling, LLC sold its 50% ownership interest in the West Valley MRF, LLC which owns and operates the WVMRF, a voluntary petitiontransfer station and materials recovery facility near Fontana, California. The gross cash sales price for relief under Chapter 11the 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 United States Bankruptcy CodeCompany and Kaiser Recycling benefiting West Valley MRF, LLC and West Valley Recycling & Transfer, LLC (the owner of the other 50% interest in the United States Bankruptcy CourtWest 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 Central Districtthe Company’s and Kaiser Recycling, Inc. environmental obligations. In addition, the Company’s guaranty of California, Riverside Division, bankruptcy case number 6:11-bk-43596 (the “Bankruptcy Court”). MRC will continue to operate its businesscertain outstanding debt of West Valley (approximately $5,820,000 as a “debtorof March 31, 2012) was terminated.

With the completed sale of the ownership interest in possession”West Valley MRF, LLC, compensation related actions were implemented under the jurisdictionpreviously disclosed terms of applicable compensation arrangements for officers and under the terms of the Bankruptcy CourtCompany’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 applicable provisionsterms 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 Bankruptcy Code, RulesAmended and ordersRestated Services Agreement, as amended, between the Company and Business Staffing, Inc. and under the terms of the Bankruptcy Court. The petitionemployment agreement of each executive officer. A “Change in bankruptcy was filed by MRC due to threatened litigation byControl” requires the District to compel MRC at its sole expense and risk to further proceed withfunding, but not the permittingpayment, of the landfill which would involve substantial additional financial resources and time, neither of which MRC has. Management does not currently believe that MRC’s bankruptcy filing will have a material impact on Kaiser’s operations.

On October 12, 2011, Kaiser Ventures executed an option and purchase agreement whereby the option holder could purchase Kaiser’s ownership interest in MRC, in Kaiser Eagle Mountain, LLC, the owner of the property at Eagle Mountain, and in Lake Tamarisk Development, LLC, the owner of property at Lake Tamarisk. Such purchase was subject, in all instances, to the rights of the District to acquire the Landfill Project on or before October 31, 2011. The option holder was also willing to purchase the ownership interests in MRC that Kaiser did not own. However, as a result of the actions of the District and the bankruptcy filing by MRC described above, the option holder did not exercise its option. The performance of the option and purchase agreement was tolled for a limited period and that tolling period will lapse without further extension.

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KAISER VENTURES LLC AND SUBSIDIARIES

PART II

As discussed in our Annual Report on Form 10-K for 2010,2011, 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, 2010, and as updated by our first and second quarter 2011, reports on Form 10-Q except as noted below.

MRC/Landfill Project.As discussed under “Part I—I - Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—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 will continuecontinues 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 seeks declaratory relief only and not damages. In summary, the suit seeks 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 seeking dismissal of such suit.

On March 30, 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.

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. However, MRC completed a private placement to its existing members in September 2011.

Item 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

Item 4. RESERVED

Not applicable.

In addition to the other matters discussed in the report on Form 10-Q, on October 10, 2011,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 actions, among others:additional actions:

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

KAISER VENTURES LLC AND SUBSIDIARIESExhibit 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. ***

Exhibit 101 - The following materials from Kaiser Ventures LLC’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011,March 31, 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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