Item 2. Properties
Item 2. Properties
Our Properties
Refer to “Item 1. Business” for information on our active mining properties.
Our corporate headquarters consists of approximately 50,000 square feet of leased office space at 340 Martin Luther King Jr. Boulevard in Bristol, Tennessee.
Coal Reserves and Resources
As of December 31, 2023, we estimate that we owned or controlled approximately 316.0 million tons of marketable proven and probable bituminous coal reserves and approximately 513.5 million tons of in situ bituminous coal resources. Our coal reserve and resource estimates were prepared by Marshall Miller & Associates, Inc. (“Marshall Miller”), an independent professional mine engineering and geological consulting firm. Technical Summary Reports prepared by Marshall Miller, as a qualified person, for each of our material mining properties are filed as exhibits to this Annual Report on Form 10-K and incorporated herein by reference.
Coal reserve and resource estimates are based on data obtained from drilling activities and other available geologic data. Estimating reserves and resources requires the use of a geologic, engineering, and economic assumptions. Our engineering, land and operational support personnel work closely with Marshall Miller to ensure the integrity and accuracy of the data used to calculate the estimates as well as to ensure the assumptions used are reasonable based on our historical results as well as current and future anticipated mine plans. We provide Marshall Miller with historical property information including property maps, deed, lease, and permit information, drilling and lab results, mine plans, production quantities, development, capital, and operating costs as well as market information. For our active and certain idled Met mining properties, Marshall Miller performs an initial assessment and based on the level of geological evidence estimates our coal resources and classifies such resources as either inferred, indicated or measured. When considered cost beneficial by the Company, Marshall Miller further conducts a pre-feasibility study to estimate our coal reserves and classify such reserves as either proven or probable. The estimates and reports prepared by Marshall Miller are reviewed by our personnel to ensure such reports have been prepared in accordance with applicable rules and regulations and that estimates are based on reasonable assumptions and reflect known facts and circumstances updated through year-end.
Economic analysis is a required part of the process of estimating coal reserves and resources. For a coal reserve or resource to be considered economic, generally revenue generated from its sale must exceed its total cost of production (including consideration of development, capital, and operating costs).
In determining coal reserves as of December 31, 2023, the following estimated market pricing was utilized:
Coal quality Market Pricing Per Ton (1) (2)
High-Vol. A $162
High- Vol. B $140
Mid-Vol. $163
Low-Vol. $163
Thermal $74
(1) Market pricing shown on U.S. East Coast basis.
(2) Met and thermal pricing based on 10-year and 3-year average, respectively of forecasted pricing from pricing services.
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The following is a summary of our estimated marketable proven and probable coal reserves as of December 31, 2023 as determined by Marshall Miller:
Coal Reserves (Tons in thousands)
Marketable Coal Reserves (1)
Reserve Control Stage / Permit Status Production Stage
Mining Complex Location Total Proven Probable Owned Leased Permitted Not Permitted
Met
Aracoma WV 41,276 26,252 15,024 5,473 35,803 22,664 18,612
Kepler WV 41,190 23,031 18,159 258 40,932 15,065 26,125
Kingston WV 38,657 23,051 15,606 632 38,025 22,024 16,633
Marfork WV 97,653 53,333 44,320 2,214 95,439 50,651 47,002
McClure/Toms Creek VA 68,747 47,753 20,994 — 68,747 38,648 30,099
Elk Run WV 28,434 17,341 11,093 139 28,295 4,724 23,710
Total 315,957 190,761 125,196 8,716 307,241 153,776 162,181
(1) Minimum seam height generally 30 inches for underground mines.
Coal Reserves (Tons in thousands)
Coal Type/Quality
Met Coal by Volatility Thermal Sulfur Recovery Percentage (2)
Mining Complex Location High-Vol A High-Vol B Mid-Vol Low-Vol Thermal (1)
< 1% > 1%
Met
Aracoma WV — 41,276 — — — 36,836 4,440 28 %
Kepler WV — — 5,026 36,164 — 41,190 — 42 %
Kingston WV 20,584 — 1,632 9,722 6,719 10,528 28,129 41 %
Marfork WV 64,318 — 2,555 26,132 4,648 88,588 9,065 30 %
McClure/Toms Creek VA 6,265 — 60,936 — 1,546 68,747 — 31 %
Elk Run WV — 28,434 — — — 28,434 — 21 %
Total 91,167 69,710 70,149 72,018 12,913 274,323 41,634
(1) Kingston thermal reserves primarily proven and >1% sulfur; Marfork and McClure/Toms Creek thermal reserves primarily probable and <1% sulfur.
(2) Recovery percentage defined as estimated coal reserves divided by related estimated in situ measured and indicated coal resources.
In performing an initial assessment for purposes of determining coal resources as of December 31, 2023, the following estimated market pricing was utilized:
Complex Market Pricing Per Ton (1) (2)
Aracoma $154
Kepler $167
Kingston $181
Marfork $171
McClure/Toms Creek $177
Power Mountain $154
Elk Run $150
(1) Market pricing shown on U.S. East Coast basis.
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(2) Pricing shown for primary product judgmentally selected by qualified person based on review of historical average pricing for each complexes coal products over the past 5 years.
The following is a summary of the Company’s estimated in situ inferred, indicated, and measured coal resources (exclusive of coal reserves) as of December 31, 2023 as determined by Marshall Miller:
Coal Resources (1) (Tons in thousands)
In Situ Coal Resources (2)
Resource Control Stage / Permit Status Exploration Stage
Mining Complex Location Total Indicated Measured Owned Leased Permitted Not Permitted
Met
Aracoma WV 131,383 49,707 81,676 46,592 84,791 20,668 110,715
Kepler WV 32,866 25,857 7,009 596 32,270 3,901 28,965
Kingston WV 26,662 10,957 15,705 13,864 12,798 — 26,662
Marfork WV 156,436 47,377 109,059 61,168 95,268 12,408 144,028
McClure/Toms Creek VA 43,629 13,102 30,527 — 43,629 19,060 24,569
Power Mountain WV 54,683 23,739 30,944 16,695 37,988 22,446 32,237
Elk Run WV 67,883 22,360 45,523 — 67,883 8,681 59,202
Total 513,542 193,099 320,443 138,915 374,627 87,164 426,378
(1) Amounts shown exclusive of coal reserves.
(2) Inferred Resources were not considered material and have not been presented.
Coal Resources (1) (Tons in thousands)
Coal Type/Quality
Met Coal by Volatility Thermal Sulfur Expected Recovery Percentage (2)
Mining Complex Location High-Vol A High-Vol B Mid-Vol Low-Vol Thermal < 1% > 1%
Met
Aracoma WV — 131,383 — — — 58,564 72,819 21 %
Kepler WV — — 6,948 25,918 — 30,514 2,352 48 %
Kingston WV — — 3,189 23,473 — 26,662 — 27 %
Marfork WV 104,124 — 3,684 43,799 4,829 60,693 95,743 30 %
McClure/Toms Creek VA 8,049 — 35,580 — — 23,724 19,905 24 %
Power Mountain WV — 54,683 — — — 5,938 48,745 31 %
Elk Run WV — 67,883 — — — — 67,883 28 %
Total 112,173 253,949 49,401 93,190 4,829 206,095 307,447
(1) Amounts shown exclusive of coal reserves.
(2) Expected recovery percentage defined as potential estimated recoverable tons divided by estimated in situ measured and indicated coal resources.
Our coal reserves and resources are owned or are controlled through leases with third parties, which have varied expiration dates and either have options to renew or are expected to be renewed until all mineable and merchantable coal is exhausted. Leases require the payment of production royalties to lessors based on a stated percentage of sales revenue less freight cost and may contain annual minimum payment requirements. We permit coal reserves and resources in advance of mining. Currently, there are no known permitting issues that would impact the reporting of our coal reserves or resources. However, also refer to “Item 1. Business—Environmental and Other Regulatory Matters” and “Item 1A. Risks Factors—Risks relating to regulatory and legal developments.”
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Our coal reserve and resource estimates are updated periodically to reflect coal production, acquisitions and dispositions of mineral interests, new drilling, mine or geological data, and changes in regulations, market conditions or other economic factors. As coal seams in the United States have been mined for many years and are well established, we do not conduct material exploration activity. However, we periodically conduct drilling of additional core holes to provide additional geological evidence as part of our routine mine permitting and planning processes. The following is a summary of the changes in our coal reserves and resources for the year-ended December 31, 2023:
Changes in Coal Reserves (Tons in thousands)
12/31/2022 12/31/2023
Mining Complex Coal Reserves Acquired/Leased Pre-Feasibility (1)
Change in Mine Plan Divested (2)
Production Coal Reserves
Met
Aracoma 40,114 — 2,957 820 — (2,615) 41,276
Kepler 43,954 — — 116 (917) (1,963) 41,190
Kingston 32,892 — 6,262 1,724 — (2,221) 38,657
Marfork 106,210 354 — (4,455) — (4,456) 97,653
McClure/Toms Creek 72,094 — 612 (274) — (3,685) 68,747
Elk Run 41,442 — — — (12,985) (23) 28,434
Total 336,706 354 9,831 (2,069) (13,902) (14,963) 315,957
(1) Mineral areas subjected to Pre-feasibility study in current period.
(2) Mineral control released through transfer, termination or lapse of lease, or sale of property.
Changes in Coal Resources (Tons in thousands)
12/31/2022 12/31/2023
Mining Complex Coal Resources Initial Assessment (1)
Pre-Feasibility (2)
Change in Mine Plan Divested Production Coal Resources
Met
Aracoma 143,815 — (14,029) 1,597 — — 131,383
Kepler 34,246 — — (994) (386) — 32,866
Kingston 21,453 5,209 — — — — 26,662
Marfork 159,115 — — (2,679) — — 156,436
McClure/Toms Creek 43,044 — (2,692) 3,277 — — 43,629
Power Mountain 57,777 — — (953) — (2,141) 54,683
Elk Run 67,883 — — — — — 67,883
Total 527,333 5,209 (16,721) 248 (386) (2,141) 513,542
(1) Mineral areas subjected to initial assessment in current year.
(2) Mineral areas subjected to Pre-feasibility study in the current year.
Internal Controls Disclosure
The preparation of coal reserve and resource estimates is conducted in accordance with the Company’s prescribed internal control procedures, which are designed to ensure the reliability of such estimates. On an annual basis, Company personnel meet with the independent qualified person to provide updates to the data and assumptions to be used in performing the reserve and resource estimates. Company personnel review the work of the qualified person to ensure such work is prepared in accordance with applicable rules and regulations and that the data and assumptions used are supportable based on historical results and current and future mine plans and reflect known facts and circumstances through the reporting date. For example, the Company’s land personnel verify the property maps and control areas used by the qualified person based on review of underlying deed and lease records. The Company’s engineering personnel ensure estimates are based on current mine plans, incorporate the most recent drilling and lab data, properly reflect changes in permitting status, consider known encumbrances, and are consistent with operating knowledge and expectations in terms of mining methods, recovery rates, minimum seam heights or maximum strip ratios, and saleable qualities. The Company’s operations support personnel endeavor to ensure that estimates are prepared in accordance with applicable rules and regulations, that rationale for changes in estimates from prior years are reasonable and supportable, and that cash flow projections are based on reasonable and supportable assumptions with respect to forecasted production rates, coal pricing, and operating and capital costs.
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The Company’s drilling, sample preparation and laboratory analysis are conducted in accordance with internal policies and procedures. For example, core drilling is conducted by reputable third-party drillers and core samples are tagged. Laboratory testing is performed by American National Standards Institute (“ANSI”) certified laboratories and samples are analyzed in accordance with procedures defined under American Society for Testing and Materials (“ASTM”) standards. Core drilling and laboratory testing results are logged into a database with restricted access. In addition, the Company’s qualified person performs independent data verification procedures to ensure data is of sufficient quantity and reliability to reasonably support the coal reserve and resource estimates.
Coal reserve and resource amounts are estimates and as estimates have inherent risks due to data accuracy, uncertainty from geologic interpretation, mine plan assumptions, uncontrolled property rights and permit availability, uncertainty with respect to future market supply and demand, and changes in laws and regulations. The Company’s current coal reserves and resource estimates are based on the best information available and are subject to re-assessment when conditions change. Also refer to Item 1A. Risk Factors for further discussion of risks associated with the estimates of the Company’s reserves and resources.
The following map shows the locations of our material mining properties and corporate headquarters: