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, 2024, we estimate that we owned or controlled approximately 298.6 million tons of marketable proven and probable bituminous coal reserves and approximately 517.8 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 geologic, engineering, and economic assumptions. Our engineering and land 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).
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In determining coal reserves as of December 31, 2024, the following estimated market pricing was utilized:
Coal quality Market Pricing Per Ton (1) (2)
High-Vol. A $185
High- Vol. B $169
Mid-Vol. $188
Low-Vol. $189
Thermal $77
(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.
The following is a summary of our estimated marketable proven and probable coal reserves as of December 31, 2024 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 38,055 24,530 13,525 4,603 33,452 20,307 17,748
Kepler WV 38,473 21,478 16,995 209 38,264 12,577 25,896
Kingston WV 35,745 22,020 13,725 554 35,191 22,197 13,548
Marfork WV 91,988 51,204 40,784 2,176 89,812 46,359 45,629
McClure/Toms Creek VA 66,531 47,690 18,841 1,245 65,286 38,111 28,420
Elk Run WV 27,847 17,259 10,588 144 27,703 4,152 23,695
Total 298,639 184,181 114,458 8,931 289,708 143,703 154,936
(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 — 38,055 — — — 34,413 3,642 29 %
Kepler WV — — 5,026 33,447 — 38,473 — 41 %
Kingston WV 17,905 — 2,394 9,903 5,543 10,489 25,256 39 %
Marfork WV 59,427 — 2,601 26,194 3,766 84,249 7,739 30 %
McClure/Toms Creek VA 6,081 — 58,947 — 1,503 66,531 — 31 %
Elk Run WV — 27,847 — — — 27,847 — 21 %
Total 83,413 65,902 68,968 69,544 10,812 262,002 36,637
(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, 2024, the following estimated market pricing was utilized:
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Complex Market Pricing Per Ton (1) (2)
Aracoma $197
Kepler $197
Kingston $211
Marfork $201
McClure/Toms Creek $198
Power Mountain $201
Elk Run $191
(1) Market pricing shown on U.S. East Coast basis.
(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, 2024 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 30,509 23,500 7,009 596 29,913 17,590 12,919
Kingston WV 25,978 10,769 15,209 13,864 12,114 — 25,978
Marfork WV 159,694 47,415 112,279 61,168 98,526 10,378 149,316
McClure/Toms Creek VA 43,649 13,099 30,550 — 43,649 19,080 24,569
Power Mountain WV 57,086 21,759 35,327 15,110 41,976 27,237 29,849
Elk Run WV 69,467 21,997 47,470 — 69,467 8,705 60,762
Total 517,766 188,246 329,520 137,330 380,436 103,658 414,108
(1) Amounts shown exclusive of coal reserves.
(2) Inferred resources were not considered material and have not been presented.
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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 — — 6,949 23,560 — 28,157 2,352 47 %
Kingston WV — — 2,505 23,473 — 25,978 — 27 %
Marfork WV 107,467 — 3,856 43,799 4,572 62,085 97,609 31 %
McClure/Toms Creek VA 8,049 — 35,600 — — 23,744 19,905 25 %
Power Mountain WV — 57,086 — — — 9,084 48,002 32 %
Elk Run WV — 69,467 — — — 14,172 55,295 29 %
Total 115,516 257,936 48,910 90,832 4,572 221,784 295,982
(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.”
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, 2024:
Changes in Coal Reserves (Tons in thousands)
12/31/2023 12/31/2024
Mining Complex Coal Reserves Acquired/Leased Change in Mine Plan Divested Production Coal Reserves
Met
Aracoma 41,276 — (636) — (2,585) 38,055
Kepler 41,190 — (944) — (1,773) 38,473
Kingston 38,657 181 (1,119) — (1,974) 35,745
Marfork 97,653 — (1,170) — (4,495) 91,988
McClure/Toms Creek 68,747 87 1,105 — (3,408) 66,531
Elk Run 28,434 — (407) — (180) 27,847
Total 315,957 268 (3,171) — (14,415) 298,639
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Changes in Coal Resources (Tons in thousands)
12/31/2023 12/31/2024
Mining Complex Coal Resources Initial Assessment (1)
Change in Mine Plan Divested Production Coal Resources
Met
Aracoma 131,383 — — — — 131,383
Kepler 32,866 — — (2,357) — 30,509
Kingston 26,662 — (684) — — 25,978
Marfork 156,436 — 3,258 — — 159,694
McClure/Toms Creek 43,629 — 20 — — 43,649
Power Mountain 54,683 — 5,781 — (3,378) 57,086
Elk Run 67,883 1,617 (33) — — 69,467
Total 513,542 1,617 8,342 (2,357) (3,378) 517,766
(1) Mineral areas subjected to initial assessment in 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 land and accounting 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.
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.
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The following map shows the locations of our material mining properties and corporate headquarters: