What changed in this filing

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Item 2. Properties

2024-02-14 compared with 2023-02-15 · 56 added, 30 removed, 273 unchanged (24% of the section changed)

4 unchanged sentences

7 and Blue Creek were considered material properties.

Our mining operations also consist of other surface met and thermal coal mines, two of which are currently under lease to third parties and four of which are not operating.

Our mining operations also consist of other surface steelmaking and thermal coal mines, two of which are currently under lease to third parties and four of which are not operating.

Information concerning our mining properties in this Annual Report on Form 10-K has been prepared in accordance with the requirements of subpart 1300 of Regulation S-K, which first became applicable to us for the fiscal year ended December 31, 2021.

These requirements differ significantly from the previously applicable disclosure requirements of SEC Industry Guide 7.

Among other differences, subpart 1300 of Regulation S-K requires us to disclose our mineral resources, in addition to our mineral reserves, as of the end of the our most recently completed fiscal year both in the aggregate and for each of our individually material mining properties.

Among other differences, subpart 1300 of Regulation S-K requires us to disclose our mineral resources, in addition to our mineral reserves, as of the end of the most recently completed fiscal year both in the aggregate and for each of our individually material mining properties.

As used in this Annual Report on Form 10-K, the terms "mineral resource," "measured mineral resource," "indicated mineral resource," "inferred mineral resource," "mineral reserve," "proven mineral reserve" and "probable mineral reserve" are defined and used in accordance with subpart 1300 of Regulation S-K.

4 unchanged sentences

The information that follows relating to our individually material properties:

7 and Blue Creek, is derived, for the most part, from, and in some instances is an extract from, the technical report summaries ("TRS") relating to such properties prepared in compliance with Item 601(b)(96) and subpart 1300 of Regulation S-K by Marshall Miller.

Portions of the following information are based on assumptions, qualifications and procedures that are not fully described herein.

Reference should be made to the full text of the TRSs, incorporated herein by reference and made a part of this Annual Report on Form 10-K.

With regard to Mine No.

7 and Mine No.

4, there have been no material changes in the mineral reserves or mineral resources from the TRSs filed for Mine No.

7 and Mine No.

4 as Exhibits 96.1 and 96.2, respectively, to the Amendment No.

1 on Form 19-K/A to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2023 Mine No.

7 and Mine No.

The Company is therefore not filing new TRSs for Mine No.

7 and Mine No.

4 in connection with this Annual Report and is incorporating the 2023 Mine No.

7 and Mine No.

4 TRSs herein by reference.

Overview and Highlights

28 unchanged sentences

A substantial amount of the coal that the Company mines is produced from mineral reserves leased from third-party landowners.

These leases convey mining rights to the Company in exchange for royalties to be paid to the land owner as either a fixed amount per ton or as a percentage of the sales price.

These leases convey mining rights to the Company in exchange for royalties to be paid to the landowner as either a fixed amount per ton or as a percentage of the sales price.

Although coal leases have varying renewal terms and conditions, they generally last for the economic life of the reserves.

4 unchanged sentences

Mineral Reserves (3)(5)

Quality (Air-Dried Basis)

Quality (Dry Basis)

Location/Mine

2 unchanged sentences

7 Production 34.1 12.3 46.4 0.3 46.1 10.2 0.7 22

Blue Creek Development 42.8 25.4 68.2 11.1 49.7 10.2 0.7 32

Blue Creek (6)

Development 43.3 24.3 67.6 11.3 49.2 10.0 0.7 32

Various 8.6 — 8.6 6.9 1.7 3.2 - 23.5 0.7 - 6.01 N/A

8 unchanged sentences

The degree of assurance, although lower than for proven reserves, is high enough to assume continuity between points of observation.

The range of met coal sales prices used to assess our Mine No.

The range of steelmaking coal sales prices used to assess our Mine No.

4 reserves were based on 98 percent of the average of premium low-vol and mid-vol forecast through 2030 and was held constant beyond that date and varies between $152 to $187 per metric ton.

The range of met coal sales prices used to assess our Mine No.

The range of steelmaking coal sales prices used to assess our Mine No.

7 reserves were based on 98 percent of the premium low-vol forecast through 2030 and was held constant beyond that date and varies between $156 to $191 per metric ton.

The range of met coal sales prices used to assess our Blue Creek reserves were based on the IHS High Volatile A price forecast through 2030 and was held constant beyond that date and varies between $143 to $177 per metric ton.

The range of steelmaking coal sales prices used to assess our Blue Creek reserves were based on the IHS High Volatile A price forecast through 2030 and was held constant beyond that date and varies between $172 to $206 per metric ton.

The categories for proven and probable coal reserves are based on distances from valid points of measurement as determined by the qualified person for the area under consideration.

16 unchanged sentences

All mineral reserves reported are either 100% owned or controlled through lease agreements.

(6) Our other mines consist of other surface met and thermal coal mines, two of which are currently under lease to third parties and four of which are not operating.

(6) Total Blue Creek Mine reserve tonnage includes:

11.3 million owned, 49.2 million leased, and an additional 7.1 million with option to mine.

(7) Our other mines consist of other surface steelmaking and thermal coal mines, two of which are currently under lease to third parties and four of which are not operating.

The proven and probable mineral reserves for these properties were prepared by McGehee Engineering Corporation.

2 unchanged sentences

(in millions of metric tons) (2)

Demonstrated Coal Resources

Quality (Air-Dried Basis)

Demonstrated Coal Resources (in-place)

Quality (Dry Basis)

Location/Mine

10 unchanged sentences

The information that follows relating to our individually material properties:

7 and Blue Creek, is derived, for the most part, from, and in some instances is an extract from, the TRS relating to such properties prepared in compliance with Item 601(b)(96) and subpart 1300 of Regulation S-K by Marshall Miller.

Portions of the following information are based on assumptions, qualifications and procedures that are not fully described herein.

Portions of the

following information are based on assumptions, qualifications and procedures that are not fully described herein.

Reference should be made to the full text of the TRSs, incorporated herein by reference and made a part of this Annual Report on Form 10-K.

26 unchanged sentences

7 change in proven and probable mineral reserves and quality is primarily attributable to production and incorporation of additional exploration drilling and associated coal quality data.

The Blue Creek change in proven and probable mineral reserves is primarily due to tons previously classified as mineral resources, exclusive of reserves, now qualifying to be classified as a proven and probable reserve.

The Blue Creek change in proven and probable mineral reserves is primarily due to results from additional exploration and changes in property control.

The following table provides a comparison of our material mineral resources exclusive of reserves as of December 31, 2023 and December 31, 2022:

8 unchanged sentences

(1) 1 metric ton is equivalent to 1.102311 short tons.

The Blue Creek change in coal resources exclusive of reserves and quality is primarily due to the new rules governing mineral reserves under subpart 1300 of Regulation S-K combined with a significant portion of tons formerly categorized as reserves being reclassified as a resource exclusive of reserves due to variations in coal quality.

The Blue Creek change in coal resources exclusive of reserves is primarily due to results from additional exploration and labratory testing.

4 was opened by Jim Walter Resources in 1974 and has been in operation since.

22 unchanged sentences

4 has had multiple improvements to the infrastructure by adding new portal facilities in 2019 and 2021.

4 North portal development is expected to be completed in 2023.

4 North portal development was completed in 2023.

These facilities have helped to decrease travel time to the active sections, as well as improving the safety of the miners by having shafts closer to the main work areas.

21 unchanged sentences

7 in April 2016.

The property has been extensively explored as early 1916 by subsurface drilling efforts carried out by numerous entities, the majority of which were completed prior to our acquisition of the assets including:

Steel, Tennessee Coal, Iron & Railroad Company and Walter Energy.

The property has been extensively explored as early as 1916 by subsurface drilling efforts carried out by numerous entities, the majority of which were completed prior to our acquisition of the assets including:

Steel, Tennessee Coal, Iron & Railroad Company and Walter Energy, Inc.

The majority of the drilling was accomplished by means of conventional core hole exploration and air rotary drilling with geophysical logging for coalbed methane wells.

30 unchanged sentences

As of the filing of this annual report Mine No.

7 is currently active with two longwall sections and five continuous mining sections.

7 is currently active with two longwall sections and six continuous mining sections.

7, inclusive of depleted mine works and future reserve areas, is composed of approximately 43,000 total acres.

7 unchanged sentences

There are no significant title encumbrances to the property.

We believe that Blue Creek represents one of the few remaining untapped reserves of premium High Vol A met coal in the United States and that it has the potential to provide us with meaningful growth.

We believe that the combination of a low production cost and the high quality of the High Vol A met coal mined from Blue Creek, assuming we achieve our expected price realizations, will generate some of the highest met coal margins in the U.S., generate strong investment returns for us and achieve a rapid payback of our investment across a range of met coal price environments.

We believe that Blue Creek represents one of the few remaining untapped reserves of premium High Vol A steelmaking coal in the United States and that it has the potential to provide us with meaningful growth.

We believe that the combination of a low production cost and the high quality of the High Vol A steelmaking coal mined from Blue Creek, assuming we achieve our expected price realizations, will generate some of the highest steelmaking coal margins in the U.S., generate strong investment returns for us and achieve a rapid payback of our investment across a range of steelmaking coal price environments.

Based on the current schedule, we expect the first development tons from continuous miner units to occur in the third quarter of 2024 with the longwall scheduled to start in the second quarter of 2026.

We expect to invest approximately $650.0 to $700.0 million over the next five years to develop Blue Creek.

We initially expected to invest approximately $650.0 to $700.0 million over five years to develop Blue Creek.

These costs include, among others, costs to construct a preparation plant and coal handling facility, longwall and continuous miner equipment, belts and advancement material, outside facilities and related matters.

1 unchanged sentence

This includes rebuilds and replacement of equipment, mine development and multiple bleeder, intake and return shafts.

These amounts could be higher now with the passage of time, inflation and labor shortages in the general economy.

More than a year after the relaunch of the Blue Creek mine development in May 2022, Warrior has initiated important and highly beneficial project scope changes that will require incremental capital expenditures over the life of the project while lowering operating costs, increasing flexibility to manage risks, and making better use of multi-channel transportation methods.

Most of these scope changes are transportation and logistics-related, with additional amounts related to inflation for these changes only.

These scope changes are expected to increase total capital expenditures for the Blue Creek mine by approximately $120 - $130 million over the remainder of the project development period.

While the Company originally planned on a single channel to transport coal from the Blue Creek mine via an overland belt to a third-party owned and operated barge loadout facility, it now plans to build a belt conveyor system to a railroad loadout to transport the majority of the coal.

We expect this change to de-risk the single channel to market, lower operating cost and move volumes faster to the port.

Warrior will also build and operate a barge loadout itself rather than utilizing a third-party provider.

The Company believes that the potential economic benefits associated with these scope changes should provide Warrior with an inherently robust and cost competitive outbound logistics model that will provide additional flexibility to manage alternative transportation methods.

The inclusion of the benefits and incremental capital expenditures relating to these specific scope changes did not have a material impact to the project economic metrics of net present value and internal rate of return.

In addition, the Company has experienced inflationary cost increases ranging from 25 to 35 percent in both operating expenses and capital expenditures for its existing mining operations since late 2021.

The Company is also experiencing inflationary pressures at Blue Creek, especially in relation to labor, construction materials and certain equipment, that is expected to continue during the remainder of the project development period.

As a number of key material contracts are currently being negotiated, and due to uncertainty regarding future inflation rates, the Company is not providing an estimate of the impact of inflation at this time.

However, as the Company negotiates and enters into contracts for the larger project components, the Company expects that more information will become available to allow it to provide revised guidance.

While cost inflation has impacted the cost of the project, these inflationary pressures are expected to be offset by an inflationary increase in the long-term price assumption for steelmaking coal.

The Blue Creek mine will be a similar operation to our currently active operations, Mine No.

2 unchanged sentences

The mine property is located approximately 87°26’35” latitude and 33°35’21”N longitude.

Access to the Blue Creek property is by State Route 69, a well maintained, paved, two-lane road with interstate access in close proximity to both the

north and south.

Access to the Blue Creek property is by State Route 69, a well maintained, paved, two-lane road with interstate access in close proximity to both the north and south.

The current mine plan allows for three continuous mining sections and a longwall unit to mine simultaneously through the initial stages of mine development.

12 unchanged sentences

Walter Energy acquired the majority of its mineral rights for the Blue Creek property in 2010 through its purchase of Chevron Mining, Inc.

In connection with the acquisition of certain assets of Walter Energy, we acquired the mineral rights for Blue Creek in April 2016.

In connection with the acquisition of certain assets of Walter Energy, Inc., we acquired the mineral rights for Blue Creek in April 2016.

Since the acquisition, we have strategically purchased and leased mineral and surface rights to further assemble the project.

6 unchanged sentences

Carlson Mining software was utilized to generate the life of mine plan.

The range of met coal sales prices used to assess our reserves were based on IHS High Volatile A price forecast through 2030 and was held constant beyond that date and varies between $143 to $177 per metric ton.

The range of steelmaking coal sales prices used to assess our reserves were based on IHS High Volatile A price forecast through 2030 and was held constant beyond that date and varies between $143 to $177 per metric ton.

The categories for proven and probable coal reserves are based on distances from valid points of measurement as determined by the qualified person for the area under consideration.

14 unchanged sentences

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.

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.

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