Losing fat occurs when the body has fewer calories than it consumes, but ENOUGH calories to avoid the famine response (as I've covered numerous times in the three years that Chaser has been here). Too few calories, and the famine response PRESERVES fat and SLOWS metabolism. You MUST exercise in the presence of adequate calories if you wish to lose fat, and not lean body mass (LBM). You MUST lift weights / do resistance training if you wish to preserve LBM while doing a fat loss program. It's just that simple.
I've often seen folks gain muscle, and LOSE FAT, at the same time, when their calories are right. It's a myth that it can't be done, and holds especially true with folks who were untrained previously. Think about it for a minute and it becomes obvious. If you weren't' training, then, you start eating, lifting, and getting busy, what happens? YOU GET IN SHAPE. You gain muscle. You lose fat. Happens all the time.