Item 2. Properties
ITEM 2. PROPERTIES.
Electric Operations
Hallador Power, the Company’s wholly-owned electric subsidiary, owns and operates the Merom Power Plant (“Merom”), a 1,080 MW coal-fired power generating station, consisting of two steam turbine generators. Unit 1 entered commercial operations in 1982 and Unit 2 in 1983. The units are dispatched through its MISO interconnection. In order to purchase energy through the MISO Interconnection, an end user must supply or purchase accredited capacity for an equivalent load. As accredited capacity is primarily available in large quantities from dispatchable sources of energy, such as natural gas and coal-fired power plants, Hallador Power sells accredited capacity and energy to utilities, generation and transmission cooperatives, and other energy market participants within the MISO system through power purchase agreements (“PPA”) and other bilateral transactions. Merom is located in Sullivan County, Indiana, on approximately 691 acres, which also holds a 112-acre landfill. Hallador Power has two tracts under option for approximately 72 acres for expansion and future development at Merom. Merom is about twenty miles from Sunrise’s Oaktown Mining Complex and has rail and truck access. The Company acquired Merom from Hoosier Energy Rural Electric Cooperative, Inc. in 2022.
Year Ended December 31,
2025
2024
Power Capacity and Utilization
Nameplate capacity (MW) (i)
1,080
1,080
Accredited capacity for the period (MW) (ii)
775
823
Net capacity factor (iii)
56
%
44
%
i. Nameplate capacity for Merom refers to the maximum electric output generated by the plant in the period presented and may not reflect actual production. Actual production each period varies based on weather conditions, operational conditions, market conditions and other factors.
ii. Accredited capacity is based on MISO’s average seasonal accreditations for the year. Average seasonal accreditations were 775 MW and 808 MW per day for 2025 and 2024, respectively. Accreditations are weighted and adjusted annually based on 3-year rolling performance metrics.
iii. Net capacity factor is the net amount o f electricity that a generating unit produces over a period of time divided by the net amount of electricity it could have produced if it had run at full power over that time period. The net amount of electricity produced is the total amount of electricity generated minus the amount of electricity used during generation by the station.
Permits are required by federal and state law for Merom’s facilities and landfill. Merom holds several construction and environmental permits for air, wastewater and solids waste disposal. All necessary permits to support current operations are in place. New permits or permit revisions may be necessary from time to time to facilitate future operations or to keep pace with the changing regulatory landscape. Given sufficient time and planning, we should be able to secure new permits, as required, to maintain our planned operations within the context of the current regulations. Merom continually excels in environmental excellence and compliance.
Permits generally require that the Company post a performance bond in an amount established by the regulator program to: (1) provide assurance that any disturbance or liability created is properly mitigated, and (2) assure that all regulation requirements of the permit are fully satisfied. We hold surety bonds of $9.7 million to cover obligations relating to reclamation at Merom.
Coal Operations
The preparation of coal reserve and resource estimates is conducted by independent entities who are by virtue of their education, experience and professional association considered qualified persons (as defined in SEC rules). Company personnel meet on an annual basis with the independent qualified person to provide updates to the reserve and resource estimates. Company personnel review the work of the qualified person to ensure such work is prepared in accordance
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with applicable rules and regulations and that the data and assumptions provided were properly applied to the final reserve and resource model. 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.
An American National Standards Institute-certified third-party laboratory is utilized to support reserve and resource estimates. The laboratory follows standard sample preparation, security, and environmental procedures. 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.
Estimates of any mineral reserve and resources are always subject to a degree of uncertainty. The level of confidence that can be applied to a particular estimate is a function of, among other things, the amount, quality, and completeness of exploration data; geological complexity of the deposit; and economic, legal, social, and environmental factors associated with mining the reserve/resource. The Company’s current coal reserves and resource estimates are based on the best information available and are subject to updates as conditions change. Also refer to " Item 1A. Risk Factors " for discussion of risks associated with the estimates of the Company’s reserves and resources.
Summary of All Mining Properties
The Company has seven total mining properties. These properties are the Oaktown Mining Complex (“Oaktown”), which is comprised of Oaktown Fuels No. 1 Mine and Oaktown Fuels No. 2 Mine, the Ace in the Hole Mine, the Ace in the Hole Mine #2 Reserves, Prosperity, Freelandville and Carlisle. Oaktown Fuels No. 2, Prosperity and Freelandville were temporarily idled in February of 2024 as part of the Organizational Restructuring in “ Note 17 – Organizational Restructuring ” to the Consolidated Financial Statements below. Ace in the Hole Mine and Carlisle are fully depleted.
The Oaktown Fuels No. 1 Mine is an underground mine in the ILB located near Oaktown in Knox County, Indiana. Oaktown Fuels No. 1 Mine utilizes continuous mining units operating in room and pillar mining techniques to produce high-sulfur coal. The Oaktown Fuels No. 2 Mine is an underground mine in the ILB located near Oaktown in Knox County, Indiana. The Oaktown Fuels No. 2 Mine utilizes continuous mining units operating in room and pillar mining techniques to produce high-sulfur coal. The preparation plant at Oaktown has a throughput capacity of 1,800 tons of raw coal per hour. Freelandville is a surface mine in the ILB located near Freelandville in Knox County, Indiana. Freelandville utilizes surface mining techniques to produce high-sulfur coal from as many as three seams. Prosperity is a surface mine at the site of a former underground mine in the ILB located near Petersburg in Pike County, Indiana. Prosperity utilizes surface mining techniques to produce low-sulfur coal. The low-sulfur coal is trucked to the Oaktown and other Sunrise logistic facilities where it is blended with coal from the Oaktown Mines.
These properties and further summaries concerning property description, purpose, property overview, geology, background, processing operations, mine infrastructure, and market analysis can be found and are hereby incorporated by reference to the March 2025 Technical Report Summary (“TRS”) prepared by the John T. Boyd Company in compliance with the Item 60(b)(96) and subpart 1300 of Regulation S-K (“S-K 1300”) incorporated by reference as exhibit 96.1 to the 2024 Form 10-K filed on March 17, 2025.
Attached as Exhibit 96.2 to this Form 10-K is the letter from John T. Boyd Company providing an update of the Company’s mineral reserves at Oaktown as of December 31, 2025, including a year-over-year comparison of those reserves.
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The following figure shows the general location of Merom and our mining properties discussed above:
Individual Mining Properties
The following information concerning our mining properties has been prepared in accordance with the requirements of S-K 1300 which requires us to disclose our mineral (coal) resources, which we have none, in addition to our mineral (coal) reserves, as of the end of our 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 resources,” “mineral reserve,” “proven mineral reserve” and “probable mineral reserve” are defined and used in accordance S-K 1300. Under S-K 1300, mineral resources may not be classified as “mineral reserves” unless the determination has been made by a qualified person (“QP”) that the mineral resources can be the basis of an economically viable project. You are specifically cautioned not to assume that any part or all of the mineral deposits (including any mineral resources) in these categories will ever be converted into mineral reserves, as defined by the SEC.
Internal QP’s estimated our mineral reserves and mineral resources based on geologic data, coal ownership/control information, as well as current and proposed operating plans. Periodic updates occur to mineral reserve and mineral resource estimates attributable to revised mine plans, new exploration data, depletion from coal production, property acquisitions or dispositions, and other geologic or mining data. Sunrise’s estimates of mineral reserves are proven and probable reserves that could be extracted or produced at the time of the reserve determination, economically, legally, and after considering all material modifying factors. Modifications or updates of the estimates of the Company’s mineral reserves is limited to qualified geologists and mining engineers. All modifications or updates of the estimates of recoverable coal reserves are documented. The John T. Boyd Company, a qualified person firm, has assessed the Company’s estimates of mineral reserves and mineral resources and supporting information. Based upon the review, John T. Boyd Company provided modification to the Company’s estimates of mineral reserves where warranted.
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The Oaktown Mining Complex is the Company’s only individually material mining property. Sections of the following information provided herein do not fully describe assumptions, qualifications, and procedures. Reference should be made to the full text of the TRS which includes the mineral price, cut-off grade, and metallurgical recovery factors utilized in John T. Boyd Company’s preparation of the mineral reserve estimates.
Oaktown Mining Complex
The Oaktown Mining Complex is a coal mining and processing operation located in Knox and Sullivan counties, Indiana, and Crawford and Lawrence counties, Illinois.
Oaktown is an underground room and pillar coal mining complex. It is comprised of 83 square miles within the ILB coal-producing region of the mid-western U.S. Oaktown operations currently consists of one active underground mine - Oaktown Fuels No. 1 Mine - and related infrastructure. Geographically, the Oaktown Complex Coal Preparation Plant is located at approximately 28°51’24.7” N latitude and 87°25’30.9” W longitude. Within the Oaktown area and its immediate vicinity, our Company controls approximately 64,000 acres of mineral rights. We have a complex collection of leases that apply to more than 1,000 tracts. Leased tracts range from less than an acre to several hundred acres in size. Ownership of the surface rights and the mineral rights is often severed for the properties and the estates are often fractions, in which mineral rights are split between several owners. The Company and its predecessors have acquired the necessary rights to support development and operations through purchase or lease agreements with predominately private owners or entities. The Company controls surface rights through fee simple ownership for over 1,700 permitted acres, holding mine accesses, processing, storing, shipping, and refuse disposal facilities (i.e., refuse impoundment site and fine refuse injection sites). We acquired Oaktown Fuels No. 1 and No. 2 Mines from Vectren Fuels in 2014.
Oaktown utilizes room and pillar mining employing Continuous Miners (“CM”) for primary production. This mining method is highly productive and commercially demonstrated; it has been one of the primary approaches to underground mining the Indiana V Seam for decades. Oaktown has utilized this mining method since the inception of each operation. To date, Oaktown has produced a combined 75.1 million tons of clean coal. Oaktown is configured to operate up to 6 CM sections (currently operating 4 CM sections), with an annual production target of approximately 3.7 million tons. The Oaktown Preparation Plant serves as the coal washing and shipment facility for Oaktown’s two room and pillar mines. The plant was commissioned in 2009 to wash coal by the Oaktown Fuels No. 1 Mine. The Oaktown Preparation Plant’s processing capacity is 1,800 raw tons-per-hour (“TPH”). Coal from Oaktown is transported to customers via rail and truck. The Oaktown Preparation Plant is served by both the CSX Railroad and Indiana Railroad (“INRD”) via a rail spur and rail loop that connects the complex with the mainline rail just north of Oaktown, Indiana.
Additionally, the Oaktown Preparation Plant can facilitate the loading of trucks for direct transport to select customers, or to our transload facility in Princeton, Indiana serviced by the Norfolk Southern (“NS”) Railroad.
Sources of electrical power, water, supplies, and materials are readily available. Electrical power is provided to the mines and facilities by regional utility companies. Water is supplied by public water services, surface impoundments, or water wells.
Multiple permits are required by federal and state law for underground mining, coal preparation and related facilities, and other incidental activities. All necessary permits to support current operations are in place or pending approval. New permits or permit revisions may be necessary from time to time to facilitate future operations. Given sufficient time and planning, we should be able to secure new permits, as required, to maintain our planned operations within the context of the current regulations.
Permits generally require that the Company post a performance bond in an amount established by the regulator program to: (i) provide assurance that any disturbance or liability created during mining operation is properly mitigated, and (ii) assure that all regulation requirements of the permit are fully satisfied. We hold surety bonds of $10.0 million to cover obligations relating to mining and reclamation, road repair, etc. at the Oaktown Mining Complex.
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Additional information is provided in the following table regarding Oaktown’s mineral reserves:
OAKTOWN
Recoverable Coal Reserves as of December 31, 2025 and 2024
As Received
As Received
Heat
SO2
Value
Content
(Btu/lb)
(lbs/MMBtu)
Owned
Leased
Recoverable Coal Reserves (As-Received)
Mine/Reserve
Approximate
Approximate
(%)
(%)
Proven
Probable
12/31/2025
12/31/2024
Change
Oaktown Mining Complex
Oaktown Fuels No. 1 Mine
11,493
6.0
—
100.0
22.3
2.3
24.6
28.4
(13.4)%
Oaktown Fuels No. 2 Mine
11,576
5.0
—
100.0
5.9
0.2
6.1
6.1
0.0%
Total
28.2
2.5
30.7
34.5
(11.0)%
Proven and probable coal reserves decreased 11.0% during the year ended December 31, 2025. This decrease is primarily attributable to depletion through ordinary mining operations and coal sales.
Oaktown Fuels No. 1 Mine
As of December 31, 2025, the assigned and accessible reserve base for the Oaktown Fuels No. 1 Mine contains 24.6 million tons of recoverable Indiana V seam coal, of which 24.6 million tons are currently permitted compared to 28.4 million tons as of December 31, 2024. This represents a 13.4% decrease year-over-year. This decrease is the result of depletion through ordinary mining operations and coal sales. Access to the Oaktown Fuels No. 1 Mine is via a 90-foot-deep box cut and a 2,200-foot long slope, which facilitates the egress of coals being mined in excess of 375 feet below the surface. Since beginning first commercial coal production in 2009, the mine workings have substantially grown, and an additional mine access elevator was constructed for employee and supply ingress/egress closer to the active production faces.
Oaktown Fuels No. 2 Mine
As of December 31, 2025, the assigned and accessible reserve base for the Oaktown Fuels No. 2 Mine contains 6.1 million tons of recoverable Indiana V seam coal, of which 5.4 million tons are currently permitted consistent with December 31, 2024. Access to the Oaktown Fuels No. 2 Mine is via an 80-foot-deep box cut and 2,600-foot long slope, which facilitates the egress of coals being mined in excess of 400 feet below the surface. An additional mine access elevator was constructed for employee and supply ingress/egress closer to the active production faces. Oaktown Fuels No. 2 was temporarily idled in February of 2024.
Oaktown Fuel No. 1 and 2 Mines
Coal tons are reported on a clean recoverable basis with average long-term pricing based on available third-party forecasts and historical pricing adjusted for quality, with the coal sales price estimated over the life of the reserves, averaging approximately $49 (ranging from $47.25 to $51.47 per ton), as presented in the TRS. Coal sale prices vary based on coal quality, access to transportation, and other factors at each location. All reserves are classified as underground mineable in the production stage.
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Historical production for Oaktown during the years ended December 31, 2025, 2024, and 2023 are provided in the following table:
Annual Saleable Production Tons
(Million Tons)
Mine/Reserve
2025
2024
2023
Oaktown Mining Complex
Oaktown Fuels No. 1 Mine
4.0
3.5
3.9
Oaktown Fuels No. 2 Mine
-
0.4
2.5
Total Oaktown Mining Complex Production
4.0
3.9
6.4
Other Properties
The Company holds other recoverable coal reserves in the ILB, which are not deemed individually material.
Ace in the Hole Mine (Ace) (surface) – Assigned
The Ace mine is now depleted. Remaining inventory of coal and base was moved to our Oaktown wash plant in early 2023. Reclamation resumed in the Spring of 2023. There are five phases of reclamation that extend through 2029, of which, Phase 1 was complete as of December 31, 2025.
Prosperity (surface) – Assigned
The Prosperity mine contains approximately 0.2 million tons of low sulfur coal. The mine opened in the summer of 2022. The mine produced coal and reclaimed the slurry pond and refuse pile left by the Prosperity underground mine. Additional reserves are in the area that may extend the life of this mine. In February 2024, this mine was temporarily idled.
Freelandville (surface) – Assigned
Sunrise is a contract miner at the Freelandville East Mine Center Pit, Permit No. S 358. Sunrise has an option through May 31, 2026 to assume the permit that contains approximately 1.7 million tons of salable coal with an additional 0.6 million available. Mining started in the fall of 2022 and was idled in February 2024. Remaining reserves under the permit are 0.4 million tons. There are additional reserves of 1.2 million tons available with the completion and approval of an Army Corps of Engineers permit.
Carlisle
The Carlisle mine is located near the town of Carlisle, Indiana in Sullivan County. It became operational in January 2007 for both surface and underground mining. The mine was permanently closed for mining operations in 2020. A wash plant was relocated to the Carlisle mine in 2022 and was sold in 2024.
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