What changed in this filing

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Item 2. Properties

2022-02-25 compared with 2021-02-23 · 365 added, 55 removed, 122 unchanged (77% of the section changed)

Coal Reserves

We must obtain permits from applicable regulatory authorities before beginning to mine particular reserves.

For more information on this permitting process, and matters that could hinder or delay the process, please read "Item 1.

Business—Environmental, Health and Safety Regulations— Mining Permits and Approvals ."

Our reported coal reserves are those we believe can be economically and legally extracted or produced at the time of the filing of this Annual Report on Form 10-K.

In determining whether our reserves meet this economic and legal standard, we take into account, among other things, our potential ability or inability to obtain mining permits, the possible necessity of revising mining plans, changes in future cash flows caused by changes in estimated future costs, changes in mining permits, variations in quantity and quality of coal, and varying levels of demand and their effects on selling prices.

At December 31, 2020, we had approximately 1.653 billion tons of coal reserves.

These reserves are owned or held by the complexes they are most closely associated with or Alliance Resource Properties.

Alliance Resource Properties has lease agreements with some of the complexes for certain reserves it owns or holds.

All of the estimates of reserves which are presented in this Annual Report on Form 10-K are of proven and probable reserves (as defined below) and closely adhere to the standards described in United States Geological Survey ("USGS") Circular 831 and USGS Bulletin 1450-B.

For information on the locations of our mines, please read "Coal Operations"

under "Item 1.

Business."

The following table sets forth reserve information at December 31, 2020 about our coal operations:

Coal Mineral Resources and Reserves

Overview of Coal Properties

Our coal properties are located in the Illinois Basin and the Appalachia Basin.

Our Illinois Basin properties are located in western Kentucky, southern Illinois, and southern Indiana.

Our Appalachian properties are located in eastern Kentucky, Maryland, western Pennsylvania, and northern West Virginia.

Mining operations on our coal properties consist of underground mines that produce bituminous coal that is sold to customers principally for electric power generation (thermal) and the production of steel (metallurgical).

In addition to our coal mining operations, we also hold coal mineral interests that we lease/sublease to our operations or hold for lease/sublease to our operations or others.

For a detailed overview of our coal mining operations and our coal royalty activities, please see "Item 1.

Business—Coal Mining Operations"

and "Item 1.

Business—Mineral Interest Activities", respectively.

Evaluation and Review of Coal Mineral Resources and Reserves

Numerous uncertainties are inherent in estimating coal mineral resources and reserves, and the estimates are subject to change as additional information becomes available or circumstances change.

Significant factors and assumptions related to the uncertainty in estimating coal mineral reserves and resources include:

● geological and mining conditions, which may not be fully identified by available exploration data and/or differ from our experiences in areas where we currently mine;

● the percentage of coal in the ground ultimately recoverable;

● historical production from the area compared with production from other producing areas;

● the assumed effects of regulation and taxes by governmental agencies;

● future improvements in mining technology;

● assumptions concerning future coal prices, operating costs, capital expenditures, severance and excise taxes, and development and reclamation costs.

Each of the factors which impacts reserve and resource estimation may vary considerably from the assumptions used in making the estimation and, as a result, the estimates in this report may not accurately reflect our actual coal reserves and resources.

Actual production, revenues and expenditures with respect to our coal reserves will likely vary from the assumptions used in these estimates, and these variances may be material.

Government regulations and other pressures may result in closure of coal-fired electric generating plants earlier than assumed.

Such changes would reduce the economic viability of our mining operations and could have a material adverse impact on our operations and financial results.

Additionally, the estimates of coal reserves and resources may be adversely affected in future fiscal periods by the SEC's recent rule amendments revising property disclosure requirements for publicly traded coal mining companies, with which we are complying for the first time in this report.

Under SEC rules, a mineral resource is a concentration or occurrence of material of economic interest in or on the Earth's crust in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction.

A mineral resource is a reasonable estimate of mineralization, taking into account relevant factors such as cut-off grade, likely mining dimensions, location or continuity that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable.

A mineral reserve is an estimate of tonnage and grade or quality of indicated and measured mineral resources that, in the opinion of the qualified person, can be the basis of an economically viable project.

More specifically, it is the economically mineable part of a measured or indicated mineral resource, which includes diluting materials and allowances for losses that may occur when the material is mined or extracted.

Our coal mineral resource and reserve estimates included in this Annual Report on Form 10-K were prepared by an independent, qualified engineering firm, RESPEC Company, LLC ("RESPEC").

We provided RESPEC with property control, mine plans, production, revenue, costs, capital, and other information considered by RESPEC in making their estimates.

As part of our internal controls, our geologists and engineers review the integrity, accuracy, and timeliness of the data provided to RESPEC that they considered in calculating their coal mineral resource and reserve estimates.

We also review the geologic data, mining assumptions, and methodology used by RESPEC to estimate our coal mineral

resources and reserves.

Our geologists and engineers also met with RESPEC periodically during the year to discuss the assumptions and methods used in the coal mineral resource and reserve estimation process.

RESPEC, an independent third-party engineering firm, does not own an interest in any of our properties and is not employed on a contingent basis.

RESPEC's Technical Report Summaries for each of our material mining operations are included as exhibits to this Annual Report on Form 10-K.

Summary of Coal Mineral Resources and Reserves

Coal Mineral Resources

Most of our coal properties designated as mineral resources are of thickness, quality, and mineability similar to that of our mineral reserves, and all are proximal to existing infrastructure such as power, water, transportation, facilities, etc.

However, we have not completed pre-feasibility or feasibility studies with respect to our coal properties designated as mineral resources, as is required to convert the mineral resources into mineral reserves.

There is no certainty that all or any part of our mineral resources will be converted into mineral reserves.

The following table sets forth our coal mineral resources, exclusive of coal mineral reserves, at December 31, 2021:

Resources (tons in

Content (Btus

Pounds S02 per MMBtu

Pounds SO2 per MMBtu

Resource Classification

Illinois Basin

Henderson/Union (KY)

Sebree South (KY)

Hamilton County (IL)

Appalachian Basin

Mountain View (WV)

Penn Ridge (PA)

(1) Combined resources are defined as measured plus indicated resources.

At December 31, 2021, we had approximately 1.165 billion tons of coal mineral resources.

Tonnages are reported on a clean recoverable basis with pricing based on available third party forecasts and historical pricing adjusted for quality at the end of 2021 ranging from $36.00 to $67.00 per short ton, which are the prices used by RESPEC to estimate the amount of coal mineral resources.

All resources are classified as underground mineable in the exploration stage.

Coal Mineral Reserves

Our reserves are assigned to our active operations and are (1) currently in production, (2) economically viable, and (3) meet the other requirements to be considered reserves as defined by the SEC.

The following table sets forth coal mineral reserve information, exclusive of the coal mineral resources above, at December 31, 2021, about our coal operations:

Content (Btus

Pounds SO2 per MMBtu

Classification

Reserve Assignment

Reserve Control

Operations (1)

(tons in millions)

Reserves (tons in millions)

Illinois Basin Operations

Gibson South (IN)

Hamilton County (IL)

Henderson/Union (KY)

River View (KY)

Sebree - Onton (KY)

Appalachia Operations

Hamilton County (IL)

Gibson (South) (IN)

Appalachian Basin Operations

MC Mining (KY)

Penn Ridge (PA)

Mountain View (WV)

Tunnel Ridge (WV)

(1) Our mining operations, both active and inactive, contain underground mines

(2) A = Active, C = Closed, I = Idled, R = Reserves only

Our reserve estimates are prepared from geological data assembled and analyzed by our staff of geologists and engineers.

This data is obtained through our extensive, ongoing exploration drilling and in-mine channel sampling programs.

Our drill spacing criteria adheres to standards as defined by the USGS.

The maximum acceptable distance from seam data points varies with the geologic nature of the coal seam being studied, but generally the standard for (a) proven reserves is that points of observation are no greater than ½ mile apart and are projected to extend as a ¼ mile wide belt around each point of measurement and (b) probable reserves is that points of observation are between ½ and 1 ½ miles apart and are projected to extend as a ½ mile wide belt that lies ¼ mile from the points of measurement.

Reserve estimates will change from time to time to reflect mining activities, additional analysis, new engineering and geological data, acquisition or divestment of reserve holdings, modification of mining plans or mining methods, and other

We have historically obtained an outside audit of our reserve estimates and calculation methods every five years with the most recent audit being performed by Weir International Mining Consultants ("Weir") in July 2015.

Weir is expected to perform this audit again during 2021 in advance of the SEC's new property disclosure requirements for mining companies.

Reserves represent that part of a mineral deposit that can be economically and legally extracted or produced, and reflect estimated losses involved in producing a saleable product.

All of our reserves are thermal coal, except for reserves at Mettiki that can be delivered to the thermal or metallurgical markets.

The 12.7 million tons of reserves listed at MC Mining as <1.2 pounds of SO 2 per MMBtus are marketable as compliance coal under Phase II of CAA.

Btu values are reported on an as shipped, fully washed basis.

Shipments that are either fully or partially raw will have a lower Btu value.

We own or control certain leases for coal deposits that do not currently meet the criteria to be reflected as reserves but may be reclassified as reserves in the future.

These tons are classified as non-reserve coal deposits and are not included in our reported reserves.

We have total non-reserve coal deposits of 289.2 million tons of which the Henderson/Union Reserves account for 157.4 million tons.

Our remaining non-reserve coal deposits include the following:

Dotiki—16.2 million tons, Elk Creek—7.8 million tons, Gibson South—1.7 million tons, Gibson North—21.4 million tons, Hamilton—33.7 million tons, Mettiki—1.0 million tons, Penn Ridge––15.9 million tons, Riverview—2.1 million tons, Sebree - Onton—4.6 million tons, Sebree—7.0 million tons, Tunnel Ridge—16.2 million tons and Warrior—4.2 million tons.

We lease most of our reserves and generally have the right to maintain leases in force until the exhaustion of mineable and merchantable coal located within the leased premises or a larger coal reserve area.

These leases provide for royalties to be paid to the lessor at a fixed amount per ton or as a percentage of the sales price.

Many leases require payment of minimum royalties, payable either at the time of the execution of the lease or in periodic installments, even if no mining activities have begun.

These minimum royalties are normally credited against the production royalties owed to a lessor once coal production has commenced.

On December 31, 2021, we had approximately 547.1 million tons of coal mineral reserves.

All reserves are classified as underground mineable in the production stage.

Mining Operations

5 unchanged sentences

CSX, PAL, truck, barge

CSX, NS, PAL, truck, barge

Hamilton County

CSX, EVW, NS, barge

Gibson (North) (1)

CSX, NS, truck, barge

Gibson (South)

CSX, NS, truck, barge

CSX, EVW, barge

CSX, PAL, truck, barge

Appalachia Operations

Appalachian Basin Operations

MC Mining/Excel

CSX, truck, barge

Mountain View

West Virginia

CSX, NS, barge

3 unchanged sentences

Continuous Miner

Individual Property Disclosures

We consider the following properties to be material based on multiple factors including, but not limited to, the property’s contribution to our overall business and financial condition.

Please see Coal Mineral Resources and Coal Mineral Reserves sections above for information about the coal mineral resources and reserves held by these material properties.

In addition to the following information, Technical Report Summaries for these material properties with additional information are included as exhibits to this Annual Report on Form 10-K.

Henderson/Union

The Henderson/Union Resources are located in Henderson and Union counties, Kentucky at 37°44'30"N, -87°46'07"W and currently have control in over 1,600 tracts encompassing over 127,000 acres.

The property is controlled through both fee ownership and leases of the coal.

Existing and proposed facilities are on controlled land.

The coal mineral resources are controlled by Alliance Resource Properties.

The base leases are with private owners and WKY CoalPlay or its subsidiaries, which are related parties.

See "Item 8.

Financial Statements and Supplementary Data — Note 21 – Related Party Transactions"

for more information about our WKY CoalPlay transactions.

These base leases generally provide for a term that can be extended until exhaustion of the leased coal.

Local infrastructure is as follows:

Interstates 69 and US-60,

Evansville Regional Airport (EVV),

River View, Hamilton 1, UC Processing, on the Ohio River,

Local municipalities and mine sources,

Kentucky Utilities (KU),

The potential underground mine(s) would utilize room-and-pillar methods operating a heavy media, float/sink style preparation plant.

Exploration continues as needed to fulfill possible permitting and development requirements.

Multiple access points are available for development.

Access is available from the active River View mine, which began production in 2009.

All equipment, facilities, infrastructure, and underground development are in good working order and maintained to industry standards.

Access at the Hamilton and UC Coal, LLC sites are considered "brownfield"

developments.

Though some facilities and permitting are in place, significant upgrades to existing infrastructure and new construction would be needed to bring them into good working order that meets industry standards.

The property associated with Henderson/Union has no book value as of December 31, 2021 but does have outstanding advanced royalties with WKY CoalPlay or its subsidiaries.

See "Item 8.

Financial Statements and Supplementary Data — Note 21 – Related Party Transactions"

for more information about advanced royalties that Henderson/Union has with WKY CoalPlay.

The Henderson/Union property contains resources in four seams, the West Kentucky No.

11 (WKY11), the West Kentucky No.

9 (WKY9), the West Kentucky No.

7 (WKY7), and the West Kentucky No.

Island Creek Coal Company ("Island Creek") operated mines in the area and controlled a portion of the property.

Under a joint venture, Texas Gas Service also controlled a large interest in the mineral rights.

Lastly, Peabody Coal Corporation ("Peabody") and Patriot Coal Corporation ("Patriot") operated mines in the area and controlled a portion of the reserves.

We consolidated control of the property through multiple transactions from 2005 through 2015.

Island Creek operated the Ohio #11 and Uniontown #9 mines.

Island Creek also operated the Hamilton #1 and #2 mines in Kentucky.

Peabody and later Patriot operated the Camp complex and Highland mines to the southeast and east.

Both the WKY9 and WKY11 seams were mined at these locations.

No mining has occurred on the property in the WKY7 or WKY6 seams.

Approximately 1,050 exploration holes have been drilled within and adjacent to the Henderson/Union area to assess thickness and mineability of the WKY11, WKY9, WKY7, and WKY6 seams.

From these holes, over 410 samples were collected and analyzed to determine coal quality characteristics.

Also, over 150 oil/gas well geophysical logs drilled by various companies have been interpreted to supplement the exploration drilling.

In general, all drilling has shown highly consistent coal seams of mineable thickness and quality for the high sulfur, thermal utility market.

Our revolving credit facility is secured by, among other things, liens against certain Henderson/Union surface properties and coal leases.

Documentation of such liens is of record in the Offices of the Henderson and Union County Clerks.

Please read "Item 8.

Financial Statements and Supplementary Data — Note 8 – Long-term Debt"

for more information on our revolving credit facility.

The Kentucky Department of Natural Resources ("KYDNR"), Division of Mine Permits ("DMP") is responsible for review and issuance of all permits relative to coal mining and reclamation activities, and financial assurance of comprehensive environmental protection performance standards related to surface and underground coal mining operations.

In addition to state mining and reclamation laws, operators must comply with various federal laws relevant to mining.

Geology and Reserves

Henderson/Union contains coal resources in four seams ranging in depths from about 100 to 750 feet.

The table below summarizes mineral resources as of December 31, 2021 using a cut off thickness of 4.00 feet:

Quality, Washed, Dry Basis

Tons (millions)

Thickness (ft)

Henderson/Union

Measured Mineral Resources

Indicated Mineral Resources

Combined Mineral Resources

Inferred Mineral Resources

River View is located in Union County, Kentucky at 37°45'37"N, -87°56'42"W and currently has approximately 54,250 underground acres permitted.

The mine is controlled through both fee ownership and leases of the coal.

The coal mineral reserves are leased or held for lease to River View by Alliance Resource Properties.

River View either owns or controls the surface properties upon which its facilities are located including the preparation plant, refuse areas, mine offices, conveyor systems, shafts and slopes.

The coal mineral reserves currently assigned to and controlled by River View are pursuant to a 2009 Coal Lease and Sublease Agreement from Alliance Resource Properties.

The base leases are with private owners and generally provide for a term that can be extended until exhaustion of the leased coal.

Local infrastructure is as follows:

Interstates 69 and US-60,

Evansville Regional Airport (EVV),

River View on the Ohio River,

Uniontown Water Department and mine sources,

Kentucky Utilities (KU),

The underground mine is currently in production using room-and-pillar methods utilizing a heavy media, float/sink style preparation plant.

Exploration continues as needed to fulfill mining and permitting requirements.

The mine began production in 2009.

All equipment, facilities, infrastructure, and underground development are in good working order and maintained to industry standards.

Total book value of the property and any associated plant and equipment for River View as of December 31, 2021 was $199.3 million.

Island Creek operated mines in the area and controlled a portion of the property.

Under a joint venture, Texas Gas Service also controlled a large interest in the mineral rights.

Lastly, Peabody and Patriot operated mines in the area and controlled a smaller portion of the reserves.

We consolidated control of the property through multiple transactions from 2005 through 2015.

Island Creek operated the Ohio #11 and Uniontown #9 mines to the west of River View.

Island Creek also operated the Hamilton #1 and #2 mines to the southwest.

Peabody and later Patriot operated the Camp complex and Highland mines to the southeast and east.

Both the WKY9 and WKY11 seams were mined at these locations.

Approximately 630 exploration holes penetrate the WKY11 seam and about 450 holes penetrate the WKY9 seam within and adjacent to the River View resource/reserve area to assess thickness, quality, and mineability of the seams.

River View has drilled over 80 holes on the property to supplement the historic data.

Also, over 300 oil/gas well geophysical logs drilled by various companies have been interpreted to supplement the exploration drilling.

Our revolving credit facility is secured by, among other things, liens against certain River View surface properties and coal leases.

Documentation of such liens is of record in the Office of the Union County Clerk.

Please read "Item 8.

Financial Statements and Supplementary Data — Note 8 – Long-term Debt"

for more information on our revolving credit facility.

Please read "Item 8.

Financial Statements and Supplementary Data — Note 8 – Long-term Debt"

for more information on our accounts receivable securitization facility.

The KYDNR, DMP is responsible for review and issuance of all permits relative to coal mining and reclamation activities, and financial assurance of comprehensive environmental protection performance standards related to surface and underground coal mining operations.

In addition to state mining and reclamation laws, operators must comply with various federal laws relevant to mining.

All applicable permits for underground mining, coal preparation and related facilities, and other incidental activities have been obtained and remain in good standing.

Geology and Reserves

River View extracts coal underground from the West Kentucky No.

9 seams at depths ranging from 200 to 500 feet.

The table below summarizes mineral reserves as of December 31, 2021 using a cut off thickness of 4.00 feet:

Quality, Washed, Dry Basis

Tons (millions)

Thickness (ft)

Proven Mineral Reserves

Probable Mineral Reserves

Total Mineral Reserves

The River View mine had 223.3 million tons of coal mineral reserves at the end of 2020.

The year over year reconciliation is as follows:

River View Yearly Reserve Reconciliation

Tons as of December 31, 2020

Mineral Acquisition / Deletion

Normal Course Adjustments

Tons as of December 31, 2021

Normal course adjustments are associated with numerous slight changes in the geologic model.

Hamilton, a longwall mine located in Hamilton County, Illinois at 38°10'12”N, -88°36'47"W, currently has approximately 10,500 underground acres and 1,300 surface acres permitted.

The mine property is controlled through both fee ownership and leases of the coal.

The coal mineral reserves and resources are leased or held for lease to Hamilton by Alliance WOR Properties, LLC ("Alliance WOR Properties"), a subsidiary of Alliance Resource Properties.

Hamilton either owns or controls the surface properties upon which its facilities are located including the preparation plant, refuse areas, mine offices, conveyor systems, shafts and slopes.

Hamilton (or Alliance WOR Properties) currently controls approximately 53,348 acres of coal mineral reserves and resources and subsidence rights, and 1,400 acres of surface properties.

The underlying base coal leases are with private owners and are comprised of a large number of leases originally taken by AMAX Coal Company and Old Ben Coal Company ("Old Ben") in the mid to late 1970’s and early 1980’s (the "Old Ben Leases"), leases acquired by Consolidation Coal Company in the late 1980’s (the "Consol Leases"), and subsequent leases taken directly by White Oak Resources, LLC or affiliated companies and/or Alliance WOR Properties.

Local infrastructure is as follows:

Interstates 64,

Evansville Regional Airport (EVV),

McLeansboro and Mt.

Mount Vernon on the Ohio River,

Hamilton County Water District and mine sources,

Wayne-White Electric Co-op (WWEC),

The underground mine is currently in production using longwall and room-and-pillar methods utilizing a heavy media, float/sink style preparation plant.

Exploration continues as needed to fulfill mining and permitting requirements.

The mine began production in 2014.

All equipment, facilities, infrastructure, and underground development are in good working order and maintained to industry standards.

Total book value of the property and any associated plant and equipment for Hamilton as of December 31, 2021 was $347.1 million.

There were no previous operations on the Hamilton reserves property prior to our predecessor, White Oak Resources LLC, who began construction of the mine in 2011.

Over 180 exploration holes have been drilled in the Hamilton reserve area by other companies to assess thickness, quality, and mineability of the Herrin and Harrisburg seams.

White Oak Resources LLC drilled over 90 holes in the reserve area starting in 2008.

Also, over 70 oil/gas well geophysical logs drilled by various companies have been interpreted to supplement the exploration drilling.

Our revolving credit facility is secured by, among other things, liens against certain Hamilton surface properties, coal leases and owned coal.

Documentation of such liens is of record in the Office of the Hamilton County Clerk.

Please read "Item 8.

Financial Statements and Supplementary Data — Note 8 – Long-term Debt"

for more information on our revolving credit facility.

The Consol Leases are encumbered by an overriding royalty payable to Sustainable Conservation, Inc.

("Sustainable") in the amount of the greater of $0.25 per ton or 0.75% of the average sales realization price received per ton, which sums can be credited against approximately $481,000.00 previously paid to Sustainable for the assignment of the Consol Leases.

The Illinois Department of Natural Resources, Land Reclamation Division is responsible for review and issuance of all permits relative to coal mining and reclamation activities, and financial assurance of comprehensive environmental protection performance standards related to surface and underground coal mining operations.

In addition to state mining and reclamation laws, operators must comply with various federal laws relevant to mining.

All applicable permits for underground mining, coal preparation and related facilities and other incidental activities have been obtained and remain in good standing.

Geology and Reserves

Hamilton extracts coal underground from the Herrin (Illinois No.6) seam at depths ranging from 900 to 1100 feet.

The table below summarizes mineral reserves as of December 31, 2021 using a cut off thickness of 4.00 feet:

Quality, Washed, Dry Basis

Tons (millions)

Thickness (ft)

Hamilton County

Proven Mineral Reserves

Probable Mineral Reserves

Total Mineral Reserves

The Hamilton mine had 125.0 million tons of coal mineral reserves at the end of 2020.

The year over year reconciliation is as follows:

Hamilton County Yearly Reserve Reconciliation

Tons as of December 31, 2020

Mineral Acquisition / Deletion

Mine Plan Adjustment

Normal Course Adjustments

Tons as of December 31, 2021

Normal course adjustments are associated with numerous slight changes in the geologic model.

Gibson South is located in Gibson County, Indiana at 38°18'22"N, 87°42'30"W and currently has approximately 23,350 underground acres permitted.

The mine property is controlled through both fee ownership and leases of the coal.

Gibson South holds rights to approximately 21,600 gross acres of coal.

Leases generally have an initial term with automatic extensions for as long as mining operations are conducted within a described area.

Local infrastructure is as follows:

Interstates 69 and 64,

Evansville Regional Airport (EVV),

Mount Vernon on the Ohio River,

Gibson Water, Inc.

and well water,

Western Indiana Energy REMC,

The underground mine is currently in production using room-and-pillar methods utilizing a heavy media, float/sink style preparation plant.

Exploration continues as needed to fulfill mining and permitting requirements.

The mine began production in 2014.

All equipment, facilities, infrastructure, and underground development are in good working order and maintained to industry standards.

Total book value of the property and any associated plant and equipment for Gibson South as of December 31, 2021 was $118.8 million.

In November 1997, pursuant to (a) Assignment of Underground Coal Leases, (b) Partial Assignment of Underground Coal Leases and (c) Special Corporate Warranty Deed, Old Ben conveyed to MAPCO Land & Development Corporation various coal leases and fee coal interests within a large property boundary located in Gibson County, Indiana.

MAPCO Land & Development Corporation changed its name to MAPCO Coal Land & Development Corporation, and MAPCO Coal Land & Development Corporation merged into Alliance Properties, LLC (“Alliance Properties”) effective August 4, 1999.

Old Ben ran large exploration programs across multiple years to examine thickness, mineability, and quality, drilling a total of 137 holes.

Another 73 holes were drilled in the western area of the property by owners of an adjacent mine.

After the original Old Ben acquisition, Alliance Properties and Gibson County Coal continued to acquire additional coal leases and fee coal interests in the area.

In addition, beginning in or around 2006, the leases originally acquired from Old Ben began to expire by their terms, and Alliance Properties/Gibson County Coal began a program of either amending the expiring leases or entering into new, direct leases with the coal owners.

Alliance Properties merged into Gibson County Coal on February 19, 2018.

Our revolving credit facility is secured by, among other things, liens against certain Gibson County Coal surface properties, coal leases and owned coal.

Documentation of such liens is of record in the Office of the Recorder of Gibson County, Indiana.

Please read "Item 8.

Financial Statements and Supplementary Data – Note 8 – Long-term Debt"

for more information on our revolving credit facility.

Accounts receivable generated from the sale of coal mined from this property are collateral for our accounts receivable securitization facility, evidenced by financing statements of record in the Office of the Recorder of Gibson County, Indiana.

Please read "Item 8.

Financial Statements and Supplementary Data — Note 8 – Long-term Debt"

for more information on our accounts receivable securitization facility.

The Indiana Department of Natural Resources, Division of Reclamation is responsible for oversight of active coal mining and reclamation activities, and financial assurance of comprehensive environmental protection performance standards related to surface and underground coal mining operations.

In addition to state mining and reclamation laws, operators must comply with various federal laws relevant to mining.

All applicable permits for underground mining, coal preparation, and related facilities and other incidental activities have been obtained and remain in good standing.

Geology and Reserves

Gibson South extracts coal underground from the Springfield (Indiana No.5) seam at depths ranging from 450 to 650 feet.

The table below summarizes mineral reserves as of 12/31/21 using a cut off thickness of 4.00 feet:

Quality, Washed, Dry Basis

Tons (millions)

Thickness (ft)

Proven Mineral Reserves

Probable Mineral Reserves

Total Mineral Reserves

The Gibson South mine had 54.7 million tons of coal mineral reserves at the end of 2020.

The year over year reconciliation is as follows:

Gibson South Yearly Reserve Reconciliation

Tons as of December 31, 2020

Mineral Acquisition / Deletion

Normal Course Adjustments

Tons as of December 31, 2021

Normal course adjustments are associated with numerous slight changes in the geologic model.

Tunnel Ridge, located at 40°09’17"

N, -80°39’26"W, is an underground longwall mine in the Pittsburgh No.

8 seam of coal, and currently has approximately 20,890 underground acres permitted.

The mine property is controlled through both fee ownership and leases of the coal.

The vast majority of the coal mined and to be mined by Tunnel Ridge is leased from the Joseph W.

Craft III Foundation and the Kathleen S.

Craft Foundation.

Please read "Item 8.

Financial Statements and Supplemental Data - Note 21 – Related Party Transactions"

for additional information on this lease.

Tunnel Ridge either owns or controls the surface properties upon which its facilities are located, including the preparation plant, refuse areas, mine offices, conveyor systems, shafts and slopes.

Local infrastructure is as follows:

Interstate 70,

Pittsburgh International Airport (PIT),

Tunnel Ridge on the Ohio River,

Ohio County Water District and mine sources,

American Electric Power (AEP), West Penn Power (WPP)

The underground mine is currently in production using longwall and room-and-pillar methods utilizing a heavy media, float/sink style preparation plant.

Exploration continues as needed to fulfill mining and permitting requirements.

The mine began production in 2010.

All equipment, facilities, infrastructure, and underground development are in good working order and maintained to industry standards.

Total book value of the property and any associated plant and equipment for Tunnel Ridge as of December 31, 2021 was $238.8 million.

Valley Camp Coal Company ("Valley Camp") operated mines on the property prior to Tunnel Ridge's operations.

Valley Camp drilled 24 exploration holes in and adjacent to the reserve area to check thickness, quality, and mineability of the Pittsburgh No.

Tunnel Ridge accounts for over 80 of the remaining holes.

Also, Tunnel Ridge has collected over 600 channel samples to supplement the exploration drilling.

Our revolving credit facility is secured by, among other things, liens against certain Tunnel Ridge surface properties, coal leases and owned coal.

Documentation of such liens is of record in the Office of the County Commission of Ohio County, West Virginia and the Office of the Recorder of Deeds of Washington County, Pennsylvania.

Please read "Item 8.

Financial Statements and Supplementary Data — Note 8 – Long-term Debt"

for more information on our revolving credit facility.

Please read "Item 8.

Financial Statements and Supplementary Data — Note 8 – Long-term Debt"

for more information on our accounts receivable securitization facility.

Tunnel Ridge is located on the West Virginia / Pennsylvania State boundary, operating in each state.

As such, regulatory requirements must be met pertaining to mining facilities located in each state.

For operations in West Virginia, the West Virginia Department of Environmental Protection ("WVDEP") is the regulatory authority over mining activities.

Within the WVDEP, the Division of Mining and Reclamation is responsible for review and issuance of all permits relative to coal mining and reclamation activities, and financial assurance of comprehensive environmental protection performance standards related to surface and underground coal mining operations.

For operations in Pennsylvania, the Pennsylvania Department of Environmental Protection (PADEP) is the regulatory authority over mining activities.

Within the PADEP, the Bureau of District Mining Operations is responsible for review and issuance of all permits relative to coal mining and reclamation activities, and financial assurance of comprehensive environmental protection performance standards related to surface and underground coal mining operations.

Geology and Reserves

Tunnel Ridge extracts coal underground from the Pittsburgh No.8 seam at depths ranging from 300 to 800 feet.

The table below summarizes mineral reserves as of December 31, 2021 using a cut off thickness of 4.00 feet:

Quality, Washed, Dry Basis

Tons (millions)

Thickness (ft)

Proven Mineral Reserves

Probable Mineral Reserves

Total Mineral Reserves

The Tunnel Ridge mine had 64.0 million tons of coal mineral reserves at the end of 2020.

The year over year reconciliation is as follows:

Tunnel Ridge Yearly Reserve Reconciliation

Tons as of December 31, 2020

Mine Plan Adjustment

Tons as of December 31, 2021

Oil & Gas Reserves

20 unchanged sentences

Beginning balance, January 1, 2021

Sales of PUDs

Transfers of PUDs to estimated proved developed

2 unchanged sentences

Ending balance, December 31, 2021

During the year ended December 31, 2020, we converted 115 MBOE of PUD reserves to proved developed reserves as applicable wells began production.

Extensions and discoveries contributed 2,238 MBOE resulting in a net increase of 1,221 MBOE despite a reduction of 1,017 MBOE due to expired permits.

Revisions of previous estimates of 317 MBOE is a result of type curve changes.

As a mineral interest owner we have no transparency into or control over our operators' investments and operational progress to convert PUDs to proved developed producing reserves.

We do not incur any capital expenditures or lease operating expenses in connection with the development of our PUDs, which costs are borne entirely by our operators.

As a result, during the year ended December 31, 2020, we did not have any expenditures to convert PUDs to proved developed reserves.

As a result, during the year ended December 31, 2021, we did not have any expenditures to convert PUDs to proved developed producing reserves.

PUDs that have not been developed within two years of permitting are reviewed and removed from proved reserves as necessary.

52 unchanged sentences

The following table sets forth information regarding production of oil & gas and certain price and cost information for each of the periods indicated:

Year Ended December 31,

Natural gas (MMcf)

16 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 2. Properties