Item 2. Properties
Item 2. Properties
The following map shows the major locations of our mining operations.
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Our administrative headquarters and production facilities as of December 31, 2020 were as follows:
Land Acreage Building Square Footage
Business Unit/Location
(State/County/Town) Principal Operations Leased Owned Leased Owned
Warrior Met Coal Mining, LLC
Alabama/Tuscaloosa/Brookwood Administrative headquarters & mine support facilities — — — 668,764
Alabama/Jefferson & Tuscaloosa/Adger & Brookwood Coal mines, mine support facilities, land holdings & barge loadout 18,504 46,323 — —
Alabama/Mobile/Mobile Administrative headquarters, mine support facilities & real estate — — 1,471 —
Warrior Met Coal BCE, LLC
Alabama/Jefferson/Adger Real estate — 223 — —
Alabama/Tuscaloosa/Whitson Coal mines & land holdings 26,194 2,112 — 2,360
Warrior Met Coal Gas, LLC
Alabama/Tuscaloosa/Tuscaloosa Administrative headquarters & mine support facilities 10 28 — 15,425
Alabama/Tuscaloosa & Fayette /Various Natural gas fields-developed 86,922 — — —
Warrior Met Coal Land, LLC
Alabama/Various/Various Real estate — 21,042 400 12,430
Alabama/Various/Various Real estate-mineral interest only — 170,061 — —
Warrior Met Coal TRI, LLC
Alabama/Tuscaloosa/
Brookwood Real estate — 187 — —
Warrior Met Coal LA, LLC
Louisiana/Terrebonne/Houma Real estate — 1,304 — —
Warrior Met Coal WV, LLC
West Virginia/Various/Various Real estate — 2,510 — —
West Virginia/Various/Various Real estate-mineral interest only — 3,740 — —
Estimated Recoverable Coal Reserves
The estimates of our proven and probable reserves as of December 31, 2020 included in this Annual Report (i) for our Mine No. 4 and Mine No. 7 were prepared by Marshall Miller, (ii) for our Blue Creek mine were prepared by Stantec, and (iii) for our other mining properties described in this Annual Report were prepared by McGehee Engineering Corp. ("McGehee"). Within Marshall Miller, the technical person primarily responsible for preparing the estimates of our proven and probable reserves for our Mine No. 4 and Mine No. 7 is K. Scott Keim. Within Stantec, the technical person primarily responsible for preparing the estimates of our proven and probable reserves for our Blue Creek mine is Pat Akers. Within McGehee, the technical person primarily responsible for preparing the estimates of our proven and probable reserves for our mining properties owned by Warrior Met Coal TRI, LLC and Warrior Met Coal Land, LLC is Sanford M. Hendon.
We maintain an internal staff of engineers and geoscience professionals who worked closely with our independent reserve engineers to ensure the integrity, accuracy and timeliness of the data used to calculate our estimated reserves. Our internal technical team members meet with our independent reserve engineers periodically to discuss the assumptions and methods used in the proved reserve estimation process. We provide historical information to the independent reserve engineers for our properties, such as ownership interest, production, test data, commodity prices and operating and development costs.
These estimates are based on engineering, economic and geologic data, coal ownership information and current and proposed mine plans. Our proven and probable coal reserves are reported as “recoverable coal reserves,” which is the portion of the coal that could be economically and legally extracted or produced at the time of the reserve determination, taking into
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account mining recovery and preparation plant yield. These estimates are periodically updated to reflect past coal production, new drilling information and other geologic or mining data. Acquisitions or dispositions of coal properties will also change these estimates. Changes in mining methods may increase or decrease the recovery basis for a coal seam, as will changes in preparation plant processes.
“Reserves” are defined by the SEC Industry Guide 7 as that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. Industry Guide 7 divides reserves between “proven (measured) reserves” and “probable (indicated) reserves,” which are defined as follows:
• “Proven (Measured) Reserves.” Reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established.
• “Probable (Indicated) Reserves.” Reserves for which quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between points of observation.
As of December 31, 2020, we had estimated reserves totaling 210.4 million metric tons, of which 103.3 million metric tons, or 49.1%, were “assigned” recoverable reserves that were either being mined, were controlled and accessible from a then active mine, or located at idled facilities where limited capital expenditures would be required to initiate operations when conditions warrant. The remaining 107.1 million metric tons were classified as “unassigned,” representing coal at currently non-producing locations that we anticipate mining in the future, but which would require significant additional development capital before operations could begin.
Our reserve estimates are predicated on engineering, economic, and geological data assembled and analyzed by internal engineers, geologists and finance associates, as well as third-party consultants. We update our reserve estimates annually to reflect past coal production, new drilling information and other geological or mining data, and acquisitions or sales of coal properties.
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The following table provides the location and coal reserves associated with each mine or potential mine as of December 31, 2020:
As of December 31, 2020
(in thousands of metric tons) (1)
Recoverable Reserves (2)
Reserve Control (5)
Location/Mine
Type (7)
Status of
Operation (6)
Coal Bed
Assigned/
Unassigned (4)
Reserves (2)
Proven (3)
Probable (3)
Owned
Leased
Alabama:
Warrior Met Coal Mining, LLC
No. 4 U Production Blue Creek/Mary Lee Assigned 40,676 40,621 54 — 40,675
No. 7 U Production Blue Creek/Mary Lee Assigned 56,818 40,432 16,386 466 56,352
Warrior Met Coal BCE, LLC
Blue Creek U Exploration Mary Lee Unassigned 103,042 64,309 38,733 2,624 100,418
Warrior Met Coal TRI, LLC
Carter/Swann’s Crossing (8)
S Idled Brookwood Assigned 2,609 2,609 — 2,609 —
Warrior Met Coal Land, LLC
Beltona East S Development Black Creek Unassigned 1,013 1,013 — 1,013 —
Bull Gap Mine S Development Unassigned 624 624 — 624 —
Carter West S Development Unassigned 8 8 — 8 —
Howton S Idled Brookwood Unassigned 271 271 — 271 —
Kimberly S Development Black Creek Unassigned 128 128 — 128 —
Morris (8)
S Production Mary Lee Assigned 3,191 3,191 — 3,191 —
Searles 8 & 10 (8)
S Production Brookwood Assigned 6 6 — 6 —
Searles BW-UG U Exploration Unassigned 2,032 2,032 — 2,032 —
Total Alabama 210,418 155,244 55,173 12,972 197,445
Total Warrior Met Coal 210,418 155,244 55,173 12,972 197,445
(1) 1 metric ton is equivalent to 1.102311 short tons.
(2) Reserves are that part of a mineral deposit which can be economically and legally extracted or produced at the time of the reserve determination. Recoverable reserves represent the amount of proven and probable reserves that can actually be recovered taking into account all mining and preparation losses involved in producing a saleable product using existing methods under current law. Recoverable reserve estimates incorporate losses for dilution and mining recovery based upon a 95% longwall recovery, 35% to 40% continuous miner recovery and a 95% preparation plant efficiency. The ranges of met coal sales prices used to assess our reserves were $103 and $93 per metric ton (which represents a 3-year average between 2014 and 2016) at Mine No. 4 and Mine No. 7, respectively, and $117 per metric ton at Blue Creek. We believe that the ranges of met coal sales prices used to assess our reserves exclude favorable changes in met coal prices since such time. For example, our average net selling price per metric ton realized for Mine No. 4 and Mine No. 7 for the year ended December 31, 2020 was $113.12 per metric ton, which was a year in which met coal prices were negatively impacted by the COVID-19 pandemic, and at the time of the Blue Creek reserve study was $195 per metric ton. Our mineral reserves were also assessed using a historical three year average met coal sales price to determine the reserves were economical. Mine No. 4 and Mine No. 7 proven reserves were estimated within a 3/4 mile radius from point of measurement with thickness and representative coal quality and probable reserves were estimated within a 3/4 mile radius from a point of measurement with thickness but no representative coal quality. Mine No. 4 and Mine No. 7 mineral reserves were estimated within an accuracy threshold of plus or minus 15 percent which represents the margin of error of a standard final feasibility study. Blue Creek and our surface mines proven reserves were estimated within a 3/4 mile radius from point of measurement. Blue Creek mineral reserves were estimated within an accuracy threshold of plus or minus 25 percent which represents the margin of error of a standard pre-feasibility study. Blue Creek is an adjacent property to our existing operating Mines No. 7 and No. 4 and could allow for either a continuation of current production levels or allow for additional tons to be brought to market. This property has similar mining conditions, measured geology and the ability to utilize equipment and infrastructure from our current operations.
(3) Reserves are further categorized as Proven (Measured) and Probable (Indicated) as defined by SEC Industry Guide 7 as follows: Proven (Measured) Reserves are reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites of inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established. Probable (Indicated) Reserves are reserves for which quantity and grade and/or quality are computed from information
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similar to that used for proven (measured) reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than for proven (measured) reserves, is high enough to assume continuity between points of observation.
(4) “Assigned” reserves represent recoverable reserves that are either currently being mined, reserves that are controlled and accessible from a currently active mine or reserves at idled facilities where limited capital expenditures would be required to initiate operations. “Unassigned” reserves represent coal at currently non-producing locations that would require significant additional capital spending before operations begin.
(5) “Reserve Control” of recoverable reserves is either through direct ownership of the property or through third-party leases. Third-party leases have initial terms extending up to 30 years and generally provide for terms or renewals through the anticipated life of the associated mine. These renewals are conditioned upon the payment of minimum royalties. Under current mining plans, assigned reserves reported will be mined out within the period of existing leases or within the time period of probable lease renewal periods. All recoverable reserves reported are either 100% owned or controlled through lease agreements.
(6) The “Status of Operation” for each mine is classified as follows: Exploration-mines where exploration has been conducted sufficient to define recoverable reserves, but the mine is not yet in development or production stage; Development-an established commercially minable deposit (reserves) is being prepared for extraction but that is not yet in production; Production-the mine is actively operating; Idled -previously active mines that have been idled until such time as reinitiating operations are considered feasible. If conditions warrant, the mines could be re-opened with less capital investment than would be required to develop a new mine.
(7) Type of Mine: U = Underground; S = Surface
(8) Reserve is leased to a third party, royalty is collected by us from the third party and we have first right of refusal to purchase mined product if we elect to exercise the right.
The following table provides a summary of the quality of our reserves as of December 31, 2020:
Estimated Recoverable Coal Reserves (Continued)
As of December 31, 2020
(in thousands of metric tons) (1)
Quality
Average
Coal
Seam Thickness
Date Mine:
Location/Mine
Reserves
Type (2)
% Ash
% Sulfur
BTU/lb.
(in Feet)
Acquired/
Opened
Ceased/
Idled
Alabama:
Warrior Met Coal Mining, LLC
No. 4 (3)
40,676 LVM/MVM 10.76 0.76 N/A 6.50 1976 N/A
No. 7 56,818 LVM 9.53 0.62 N/A 5.40 1978 N/A
Warrior Met Coal BCE, LLC
Blue Creek 103,042 HVM 9.10 0.70 N/A 5.20 N/A N/A
Warrior Met Coal TRI, LLC
Carter/Swann’s Crossing 2,609 M/T 11.23 1.23 12,575 10.43 2011 2013
Warrior Met Coal Land, LLC
Beltona East 1,013 M/T 7.79 2.58 14,162 4.88 N/A N/A
Bull Gap Mine 624 M/T 4.07 1.54 14,013 4.98 N/A N/A
Carter West 8 M/T 6.57 1.58 13,937 1.10 N/A N/A
Howton 271 M/T 12.80 1.27 12,619 7.52 2006 2009
Kimberly 128 M/T 6.47 2.32 13,748 5.58 N/A N/A
Morris 3,191 T 20.46 1.19 11,260 5.12 2014 N/A
Searles 8 6 M/T 13.34 1.24 12,307 5.90 2013 N/A
Searles BW-UG 2,032 T 15.89 0.95 11,587 3.57 N/A N/A
Total Alabama 210,418
Total Warrior Met Coal 210,418
(1) 1 metric ton is equivalent to 1.102311 short tons.
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(2) Coal Type: M=Metallurgical Coal; T=Thermal; LVM = LV Metallurgical Coal; MVM = MV Metallurgical Coal; HVM = High Volatility Metallurgical Coal
(3) Current pricing for Mine No. 4 reflects a combination of both LV and MV markets. It is anticipated that the pricing of coal produced at Mine No. 4 for at least the next six years will be priced relative to the LV and MV markets. Beyond this period, the volatile contents in the area are anticipated to increase and the coal may be priced relative to the MV and HV markets.
The following table provides a summary of information regarding our mining operations as of December 31, 2020:
Transportation
Preparation Plant
Location/Mine Reserves
(thousands of
metric tons) (1)
Type (2)
Mining
Equipment (3)
Rail Other (4)
Capacity
(metric tons
per hr)
Utilization
%
Source of
Power (5)
Alabama:
Warrior Met Coal Mining, LLC
No. 4 40,676 U LW,CM CSX T,B 1,180 80% ALPCO
No. 5* N/A N/A N/A N/A N/A 907 86% ALPCO
No. 7 56,818 U LW,CM CSX T,B 1,270 90% ALPCO
Warrior Met Coal BCE, LLC
Blue Creek 103,042 U In exploration or development
Warrior Met Coal TRI, LLC
Carter/Swann’s Crossing 2,609 S S,T N/A T,B N/A N/A ALPCO
Warrior Met Coal Land, LLC
Beltona East 1,013 S In exploration or development
Bull Gap Mine 624 S In exploration or development
Carter West 8 S In exploration or development
Howton 271 S S,T N/A T N/A N/A ALPCO
Kimberly 128 S In exploration or development
Morris 3,191 S S,T N/A T N/A N/A ALPCO
Searles 8 6 S S,T N/A T N/A N/A ALPCO
Searles BW-UG 2,032 U In exploration or development
Total Alabama 210,418
Total Warrior Met Coal 210,418
(1) 1 metric ton is equivalent to 1.102311 short tons.
(2) Type of Mine: S = Surface; U = Underground
(3) Mining Equipment: D = Dragline; S = Shovel/Excavator/Loader; T = Trucks; LW = Longwall; CM = Continuous Miner; H=Highwall Miner
(4) Transportation: Other T = Trucks; B = Barge Loadout availability
(5) Source of Power: ALPCO = Alabama Power Company
* Represents a preparation plant
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The following table provides the production (in thousands) and average coal selling price per metric ton for our operating mines for each of the three years ended December 31, 2020, 2019 and 2018:
Production (1) / Average Coal Selling Price Per Metric Ton
Location/Mine
2020 2019 2018
Alabama:
Warrior Met Coal Mining, LLC
No. 4 1,956 $ 115.87 2,015 $ 161.78 1,939 $ 182.20
No. 7 5,176 $ 112.19 5,669 $ 173.91 5,078 $ 198.06
Total Alabama 7,132 7,684 7,017
(1) There were no purchases of coal from third parties during the periods presented. All metric tons produced were on leased property.
Information provided within the previous tables concerning our properties has been prepared in accordance with applicable U.S. federal securities laws. All mineral reserve estimates have been prepared in accordance with SEC Industry Guide 7.