What changed in this filing

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Item 1A. Risk Factors

2025-03-17 compared with 2024-03-14 · 156 added, 149 removed, 313 unchanged (49% of the section changed)

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● our future ability to access the capital markets may be restricted as a result of future economic conditions, which could materially impact our ability to grow our business, including development of our coal reserves.

The stability and profitability of our operations could be adversely affected if our customers do not honor existing contracts or do not extend existing or enter into new long-term contracts for coal or electric power.

In 2023, a significant portion of our coal, capacity and energy sales were under contracts having a term greater than one year, which we refer to as long-term contracts.

The stability and profitability of our operations could be adversely affected if our customers do not honor existing contracts or do not extend existing contracts or enter into new long-term contracts for electric power, capacity or coal.

In 2024, a significant portion of our electric power, capacity and coal sales were under contracts having a term greater than one year, which we refer to as long-term contracts.

These contracts have historically provided a relatively secure market for the amount of production committed under the terms of the contracts.

From time to time industry conditions could make it more difficult for us to enter into long-term contracts with our electric utility customers, and if supply exceeds demand in the coal and power industries, our customers may become less willing to lock in price or quantity commitments for an extended period of time.

Accordingly, we may not be able to continue to obtain long-term sales contracts with reliable customers as existing contracts expire, which could subject a portion of our revenue stream to the increased volatility of the spot market.

Some of our long-term sales contracts contain provisions allowing for the renegotiation of prices and, in some instances, the termination of the contract or the suspension of purchases by customers.

Some of our long-term coal sales contracts contain provisions that allow for the purchase price to be renegotiated at periodic intervals.

From time to time, industry conditions could make it more difficult for us to enter into long-term contracts with our customers, and if supply exceeds demand in the electric power, capacity and coal industries, our customers may become less willing to lock in price or quantity commitments for an extended period of time.

Accordingly, we may not be able to continue to obtain long-term sales contracts with reliable customers as existing contracts expire, which could subject an increasing portion of our revenue stream to the increased volatility of the spot market.

Our financial performance may be impacted by price fluctuations in the electric power markets, as well as fluctuations in coal markets and other market factors that are beyond the Company’s control.

Market prices for power, capacity, coal and other ancillary services are unpredictable and tend to fluctuate substantially.

Electric power generally must be produced concurrently with its use.

As a result, power prices are subject to significant volatility due to supply and demand imbalances, especially in the day-ahead and spot markets.

While we currently sell a significant portion of our electric power pursuant to long-term contracts (where we may be less susceptible to day-to-day fluctuations), we also sell a material amount of power in the competitive wholesale market including through MISO.

A significant portion of the electricity we sell is used by residential and commercial customers for heating and air conditioning Long and short-term power prices may fluctuate substantially due to factors outside of the Company’s control, including:

● changes in generation capacity in the Company’s markets, including the addition of new supplies of power as a result of the development of new plants, expansion of existing plants, the continued operation of uneconomic power plants due to state subsidies, retirement of existing plants or addition of new transmission capacity;

● electric supply disruptions, including plant outages and transmission disruptions;

● changes in power transmission infrastructure;

● transportation capacity constraints or inefficiencies;

● weather conditions, including extreme weather conditions and seasonal fluctuations, including the effects of climate change;

● changes in commodity prices and the supply and available inventory of commodities, including but not limited to natural gas, coal and oil;

● changes in the demand for power, or in patterns of power usage, including the potential development of demand-side management tools and practices, distributed generation, and more efficient end-use technologies;

● development of new fuels, new technologies and new forms of competition for the production of power;

● economic and political conditions;

● changes in law, including judicial decisions, environmental regulations and environmental legislation;

● federal, state and provincial power regulations and legislation, and regulations and actions of the ISO and RTOs.

Such factors and the associated fluctuations in power prices have affected the Company’s profitability in the past and are expected to continue to do so in the future.

Some of our long-term sales contracts contain provisions allowing for the termination of the contract or the suspension of purchases by customers or, in certain cases, the renegotiation of prices.

Several of our long-term electric power, capacity and coal contracts contain provisions that allow the customer to suspend or terminate performance under the contract upon the occurrence or continuation of certain events that are beyond the customer’s reasonable control.

Such events could include force majeure, labor disputes, mechanical malfunctions and changes in government regulations, including, in the case of our coal contracts, changes in environmental regulations rendering use of our coal inconsistent with the customer’s environmental compliance strategies.

Additionally, most of our long-term coal contracts contain provisions requiring us to deliver coal within stated ranges for specific coal characteristics.

Failure to meet these specifications can result in economic penalties, rejection or suspension of shipments or termination of the contracts.

In the event of early termination of any of our long-term contracts, if we are unable to enter into new contracts or similar terms, our business, financial condition and results of operations could be adversely affected.

Further, long-term coal sales contracts may contain provisions that allow for the purchase price to be renegotiated at periodic intervals, however, we had no coal contracts with price reopeners at December 31, 2024.

These price reopener provisions may automatically set a new price based on the prevailing market price or, in some instances, require the parties to the contract to agree on a new price.

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In some circumstances, failure of the parties to agree on a price under a reopener provision can also lead to early termination of a contract.

Several of our long-term contracts also contain provisions that allow the customer to suspend or terminate performance under the contract upon the occurrence or continuation of certain events that are beyond the customer’s reasonable control.

Such events could include labor disputes, mechanical malfunctions and changes in government regulations, including changes in environmental regulations rendering use of our coal inconsistent with the customer’s environmental compliance strategies.

Additionally, most of our long-term coal contracts contain provisions requiring us to deliver coal within stated ranges for specific coal characteristics.

Failure to meet these specifications can result in economic penalties, rejection or suspension of shipments or termination of the contracts.

In the event of early termination of any of our long-term contracts, if we are unable to enter into new contracts on similar terms, our business, financial condition and results of operations could be adversely affected.

We depend on a few customers for a significant portion of our revenue, and the loss of one or more significant customers could affect our ability to maintain the sales volume and price of our products.

During 2023, we derived 93% of our coal revenue from four third-party customers, each representing at least 10% of our coal sales.

If in the future we lose any of these customers without finding replacement customers willing to purchase an equivalent amount of coal on similar terms, or if these customers were to decrease the amounts of coal purchased or the terms, including pricing terms, on which they buy coal from us, it could have a material adverse effect on our business, financial condition and results of operations.

Our electric operations revenue for the first half of 2023 was generated largely by one customer as required by the terms of the Asset Purchase Agreement for our acquisition of Hoosier Energy's Merom Generation Station ("Merom").

We depend on a few customers for a significant portion of our revenues, and the loss of one or more significant customers could affect our ability to maintain the sales volume and price of our products.

In our Electric Operations, a material portion of our 2024 revenue was derived from a power purchase agreement with Hoosier (“PPA”), which we entered into as part of our acquisition of Hoosier Energy’s Merom Generation Station (“Merom”) in 2022.

The PPA (as amended in August 2023) expires at the end of 2028.

While we have subsequently added additional electric power customers and purchasers of accredited capacity, the loss of one or more of these material customers could have a material adverse effect on our business, financial condition and results of operations.

During 2024, we derived 89% of our delivered energy and 88% of our capacity sales revenue from three and four customers, respectively, each of which representing at least 10% of sales revenue.

Additionally, we derived 96% of our third-party coal sales from four customers, each representing at least 10% of coal sales.

Our recent efforts to sell our accredited capacity to long-term customers may not be successful.

In light of the fact that the Company believes it holds a considerable portion of the remaining unsold accredited capacity in MISO Zone 6, covering Indiana and parts of western Kentucky, the Company has recently focused its efforts on entering into one or more long-term contracts for the sale of its energy and capacity to large load end user(s) through a utility or cooperative, including through a data center targeted Request for Proposal (RFP) undertaken in 2024.

This RFP resulted in a wholly owned subsidiary, Hallador Power Company, LLC, executing a Conversion Transaction Commitment Agreement with a leading global data center developer on January 2, 2025.

The transaction contemplated thereby remains subject to a number of conditions, including negotiation of definitive documentation and the selection of a utility partner and there can be no assurance that definitive agreements will be entered into or that the proposed transaction will be consummated on the terms or timeframe currently contemplated, or at all.

Failure to consummate the transaction contemplated by the Conversion Transaction Commitment Agreement and/or any other similar agreement(s) contemplated by the Company’s recent RFP efforts may have a material adverse effect on our business, financial condition and results of operations.

Our ability to collect payments from our customers could be impaired if their creditworthiness declines or if they fail to honor their contracts with us.

Our ability to receive payment for coal and electric power sold and delivered depends on the continued creditworthiness of our customers.

Our ability to receive payment for electric power, capacity and coal sold and delivered depends on the continued creditworthiness of our customers.

If the creditworthiness of our customers declines significantly, our business could be adversely affected.

In addition, if a customer refuses to accept shipments of our coal for which they have an existing contractual obligation, our revenues will decrease, and we may have to reduce production at our mines until our customer’s contractual obligations are honored.

Although none of our coal employees are members of unions, our workforce may not remain union-free in the future.

Contractors that we use to provide employees at our power plant may experience work stoppages, slowdowns, lockouts or other labor disputes.

At Merom, our operator, Consolidated Asset Management Services (“CAMS”), employs represented workers.

While these workers are not Hallador Power employees, work stoppages, slowdowns, lockouts or other labor disputes within the CAMS workforce could adversely affect and disrupt our productivity and operations at the plant.

In our Coal Operations, although none of our coal employees are members of unions, our workforce may not remain union-free in the future.

None of our employees are represented under collective bargaining agreements.

However, all of our workforce may not remain union-free in the future, and legislative, regulatory or other governmental action could make it more difficult to remain union-free.

If some or all of our currently union-free operations were to become unionized, it could adversely affect our productivity and increase the risk of work stoppages at our mining complexes.

If some or all of our currently union-free operations were to become unionized, it could adversely

affect our productivity and increase the risk of work stoppages at our mining complexes.

In addition, even if we remain union-free, our operations could still be adversely affected by work stoppages at unionized companies, particularly if union workers were to orchestrate boycotts against our operations.

Contractors that we use to provide employees at our power plant may experience work stoppages, slowdowns, lockouts or other labor disputes.

At our power plant, our operator, Consolidated Asset Management Services (CAMS), employs represented workers.

Our recent acquisition of Merom may not achieve its intended results.

On October 21, 2022, the Company, through its subsidiary Hallador Power, completed its acquisition of the one Gigawatt Merom Generating Station located in Sullivan County, Indiana pursuant to an Asset Purchase Agreement with Hoosier Energy.

The Company entered into the Asset Purchase Agreement with the expectation that the acquisition of Merom would result in various benefits, including, among other things, securing future demand for a material portion of the Company’s coal production and also providing a path for Merom’s possible transition to renewable energy when the coal plant is eventually retired.

Achieving the anticipated benefits of the acquisition (including the eventual transition to renewable energy) is subject to a number of uncertainties.

Failure to achieve these anticipated benefits could result in lower-than-expected revenues or income generated by the combined businesses and diversion of management’s time and energy and could have an adverse effect on the Company’s business, financial results and prospects.

In addition, in connection with the Asset Purchase Agreement, the Company assumed certain decommissioning costs and environmental responsibilities.

In the event these assumed costs and responsibilities exceed the Company’s estimates, the Company may incur additional liabilities that could have an adverse effect on the Company’s business, financial results and prospects.

The operation and maintenance of the Merom facilities or future investment in the Merom facilities are subject to operational risks that could adversely affect our financial position, results of operations and cash flows.

The operation and maintenance of generating facilities involves many risks, including the performance by key contracted suppliers and maintenance providers;

In October 2022, the Company, through its subsidiary Hallador Power, completed its acquisition of Merom, our one Gigawatt Generating Station located in Sullivan County, Indiana pursuant to an Asset Purchase Agreement (“APA”) with Hoosier Energy.

The operation and maintenance of generating facilities like Merom involves many risks, including the performance by key contracted suppliers and maintenance providers;

increases in the costs for or limited availability of key supplies, labor and services;

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or the impact of unusual, adverse weather conditions or other natural events, as well as the risk of performance below expected levels of output or efficiency.

The Merom facilities contain older generating equipment, which even if maintained in accordance with good engineering practices, may require additional capital expenditures to continue operating at peak efficiency, while additional costs may be required as we eventually transition the Merom facilities to renewable energy.

In October 2023, the Merom facilities experienced a transformer failure causing one unit to be offline for the month of October;

the failed transformer has since been replaced.

We may experience similar failures in the future.

We could also be subject to costs associated with any unexpected failure to produce and deliver power, including failure caused by breakdown or forced outage, as well as the repair of damage to facilities due to storms, natural disasters, wars, sabotage, terrorist acts and other catastrophic events.

From time to time, the Merom facilities may experience transformer failures that may cause one or more of its units to be offline for an extended period of time.

We may also be subject to costs associated with any unexpected failure to produce and deliver power, including failure caused by breakdown or forced outage, as well as the repair of damage to facilities due to storms, natural disasters, wars, sabotage, terrorist acts and other catastrophic events.

Additionally, supply chain shortages or delays on key operating components, including but not limited to, transformers, boiler equipment and chemicals or catalysts could materially and adversely impact our operations and reduce revenues or expose the company to significant cover damages related to longer term contracts.

In connection with the APA, the Company assumed certain decommissioning costs and environmental responsibilities.

Completion of growth projects and future expansion could require significant amounts of financing that may not be available to us on acceptable terms, or at all.

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Further, as cyber incidents continue to evolve, we could be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyber incidents.

We may not recover our investments in our mining, power and other assets, which may require us to recognize impairment charges related to those assets.

We may not recover our investments in our power, mining, and other assets, which may require us to recognize impairment charges related to those assets.

The value of our assets has from time to time been adversely affected by numerous uncertain factors, some of which are beyond our control, including, but not limited to unfavorable changes in the economic environments in which we operate, lower-than-expected coal pricing, technical and geological operating difficulties, an inability to economically extract our coal reserves and unanticipated increases in operating costs.

These factors may trigger the recognition of additional impairment charges in the future, which could have a substantial impact on our results of coal operations.

During the fourth quarter of 2024, we completed our annual impairment analysis, which was based upon the finalized operating plans of the Company, market driven pricing and cost trends.

As part of that analysis, the Company determined the carrying amount of its long-lived assets were not recoverable and recorded a non-cash, long-lived asset impairment charge of $215.1 million in the fourth quarter of 2024.

See “ Note 19 – Impairment of Coal Properties” to the Consolidated Finance Statements in this Form 10-K for further information on the impairment analysis.

The factors noted above may trigger the recognition of additional impairment charges in the future, which could have a substantial impact on our results of coal operations.

In the future, as investments in Merom become more significant, the value of those assets could be adversely affected by numerous uncertain factors, some of which are beyond our control, including, but not limited to unfavorable changes in the economic environments in which we operate, environmental, litigation, weather, and regulatory and/or legal changes.

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If we are unable to comply with the covenants contained in our credit agreement, the lenders could declare all amounts outstanding to be due and payable and foreclose on their collateral, which could materially adversely affect our financial condition and operations.

As disclosed in Note 4 to our financial statements, there are two key ratio covenants stated in our credit agreeme nt:

(i) a Minimum Debt Service Coverage Ratio (consolidated adjusted EBITDA/annual debt service) of 1.25 to 1.00 and (ii) a Maximum Leverage Ratio (consolidated funded debt/trailing twelve months adjusted EBITDA) not to exceed 2.25 to 1.00.

On December 31, 2023 , our debt service coverage ratio was 3.30, and our leverage ratio was 1.32.

Therefore, we were in compliance with these two ratios.

As disclosed in “Note 4 – Bank Debt” to our consolidated financial statements, on September 27, 2024, we executed the First Amendment (“First Amendment”) to the Fourth Amended and Restated Credit Agreement, dated as of August 2, 2023 (as amended, the “Credit Agreement”), in which we adjusted existing covenants and added new ones:

(i) waived the Company’s Leverage Ratio requirement for the third and fourth quarters of 2024, increased the threshold to 5.50 to 1.00 for the first quarter of 2025, and decreased the threshold back to 2.25 to 1.00 for each fiscal quarter thereafter, (ii) the Debt Service Coverage Ratio requirement (1.25 to 1.00) was waived from third quarter of 2024 through the first quarter of 2025, (iii) added a maximum First Lien Leverage Ratio for the first quarter of 2025, calculated as of the end of each fiscal quarter for the trailing twelve months, not to exceed 3.50 to 1.00;

(iv) added a minimum liquidity requirement of $10.0 million, beginning on the First Amendment execution date and ending when the second quarter of 2025 compliance certificate is received, and (v) added a minimum quarterly EBITDA requirement, as defined in the First Amendment, of $5.0 million for the third quarter of 2024 through the first quarter of 2025.

As of December 31, 2024, our liquidity of $37.8 million and quarterly EBITDA of $6.2 million were in compliance with the requirements of the Credit Agreement.

Our ability to comply with the covenants in our credit agreement may be affected by changes in economic or business conditions or other events that are beyond our control.

If we fail to comply with these covenants, we may be in default under our credit agreement, which may entitle the lenders to accelerate the debt obligations.

In order to avoid defaulting on our indebtedness, we may be required to take actions such as reducing or delaying capital expenditures, reducing or eliminating dividends or share repurchases, selling assets, restructuring or refinancing all or part of our existing debt, or seeking additional equity capital, any of which may not be available on terms that are favorable to us, if at all.

In the event of an event of default under our credit agreement, the lenders could declare all amounts outstanding to be due and payable and foreclose on their collateral, which could materially adversely affect our financial condition and operations.

Our indebtedness may limit our ability to borrow additional funds or capitalize on business opportunities.

On December 31, 2023, our funded bank debt was $91.5 million, we had outstanding convertible notes totaling $19 million, and held letters of credit totaling $18.6 million.

As of December 31, 2024, our funded bank debt was $44.0 million and we held letters of credit totaling $19.4 million.

Our leverage may:

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Should our financial condition deteriorate, these provisions may require substantial collateral that may have a materially adverse effect on our financial condition.

We could be deemed ineligible for the Paycheck Protection Program ( “ PPP ” ) loan we received in 2020 upon audit by the United States Small Business Administration ( “ SBA ” ) upon completion of an SBA audit.

The PPP loan application required us to certify that the current economic uncertainty made the PPP loan request necessary to support our ongoing operations.

While we made this certification in good faith after analyzing, among other things, our financial situation and access to alternative forms of capital and believe that we satisfied all eligibility criteria and that our receipt of the PPP loan is consistent with the broad objectives of the Paycheck Protection Program of the CARES Act, the certification described above does not contain any objective criteria and is subject to interpretation.

In addition, the SBA has stated that it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith.

The lack of clarity regarding loan eligibility under the program resulted in significant media coverage and controversy with respect to public companies applying for and receiving loans.

If despite our good faith belief that we satisfied all eligibility requirements for the PPP loan, we are found to have been ineligible to receive the PPP loan or in violation of any of the laws or regulations that apply to us in connection with the PPP loan, including the False Claims Act, we may be subject to penalties, including significant civil, criminal and administrative penalties and could be required to repay the PPP loan.

We received forgiveness of the entire $10 million of the PPP loan in July 2021, and as a part of the forgiveness process were required to make certain certifications that remain subject to audit and review by governmental entities and could subject us to significant penalties and liabilities if found to be inaccurate.

In addition, our receipt of the PPP loan resulted in adverse publicity, and a review or audit by the SBA or other government entity or claims under the False Claims Act could consume significant financial and management resources.

Any of these events could harm our business, results of operations, and financial condition.

Investor and lender focus on ESG matters may negatively impact our business, financial results, and stock price.

Companies across all industries, including companies in the fossil-fuel industry, are facing increased scrutiny from stakeholders related to their ESG practices.

Companies that do not adapt or comply with evolving investor or stakeholder expectations and standards or are perceived to have not responded appropriately to ESG issues, regardless of any legal requirement to do so, may suffer reputational damage and the business, financial condition, and stock price of such companies could be materially and adversely affected.

Companies across all industries, including companies in the fossil-fuel industry, have faced increased scrutiny from stakeholders related to their ESG practices.

Companies that do not adapt or comply with investor or stakeholder expectations and standards or are perceived to have not responded appropriately to ESG issues, regardless of any legal requirement to do so, may suffer reputational damage and the business, financial condition, and stock price of such companies could be materially and adversely affected.

Several advocacy groups, both domestically and internationally, have campaigned for governmental and private action to promote change at public companies related to ESG matters, including through the investment and voting practices of investment advisers, public pension funds, universities, and other members of the investing community.

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Indeed, many investment funds focus on positive ESG business practices and sustainability scores when making investments, whereas other funds may use certain ESG criteria to “screen” certain sectors, such as coal or fossil fuels more generally, out of their investments.

In addition, investors, particularly institutional investors, use these scores to benchmark companies against their peers and if a company is perceived as lagging, these investors may engage with companies to require improved ESG disclosure or performance or sell their interests in the company, particularly if its ESG performance does not improve.

In addition, investors,

particularly institutional investors, use these scores to benchmark companies against their peers and if a company is perceived as lagging, these investors may engage with companies to require improved ESG disclosure or performance or sell their interests in the company, particularly if its ESG performance does not improve.

Moreover, certain members of the broader investment community may consider a company’s sustainability score as a reputational or other factor in making an investment decision.

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Public statements with respect to ESG matters, such as emission reduction goals, other environmental targets, or other commitments addressing certain social issues, are becoming increasingly subject to heightened scrutiny from public and governmental authorities related to the risk of potential “greenwashing,” i.e., misleading information or false claims overstating potential ESG benefits.

For example, in March 2021, the SEC established the Climate and ESG Task Force in the Division of Enforcement to identify and address potential ESG-related misconduct, including greenwashing.

Certain non-governmental organizations and other private actors have also filed lawsuits under various securities and consumer protection laws alleging that certain ESG-statements, goals, or standards were misleading, false, or otherwise deceptive.

Certain non-governmental organizations and other private actors have filed lawsuits under various securities and consumer protection laws alleging that certain ESG-statements, goals, or standards were misleading, false, or otherwise deceptive.

As a result, we may face increased litigation risks from private parties and governmental authorities related to our ESG efforts.

Similarly, we could be criticized by ESG detractors for the scope and nature of any ESG policies or initiatives we implement.

We could also be subjected to negative responses by governmental actors, such as state legislation, retaliatory legislative treatment or litigation by state or federal agencies, or face negative publicity campaigns that could adversely affect our reputation, business, financial performance and growth.

In addition, any alleged claims of greenwashing against us or others in our industry may lead to further negative sentiment and diversion of investments.

Additionally, we could face increasing costs as we attempt to comply with and navigate further ESG-related focus and scrutiny.

A significant portion of the electricity we sell is used by residential and commercial customers for heating and air conditioning.

Accordingly, fluctuations in weather, gas and electricity commodity costs, inflation and economic conditions impact demand of our customers and our operating results.

Energy sales are sensitive to variations in weather.

Forecasts of energy sales are based on “normal” weather, which represents a long-term historical average.

Significant variations from normal weather resulting from climate change or other factors could have, and have had, a material impact on energy sales.

Additionally, residential usage, and to some degree commercial usage, is sensitive to fluctuations in commodity costs for electricity, whereby usage declines with increased costs, thus affecting our financial results.

Commodity prices have been and may continue to be volatile.

Lastly, residential and commercial customers’ usage is sensitive to economic conditions and factors such as recession, inflation, unemployment, consumption and consumer confidence.

Therefore, prevailing economic conditions affecting the demand of our customers may in turn affect our financial results.

We face various risks related to pandemics and similar outbreaks, which have had and may continue to have material adverse effects on our business, financial position, results of operations, and/or cash flows.

Since first reported in late 2019, the COVID-19 pandemic has dramatically impacted the global health and economic environment, including millions of confirmed cases, business slowdowns or shutdowns, government challenges, and market volatility of an unprecedented nature.

The COVID-19 pandemic and related economic repercussions have created significant volatility, uncertainty, and turmoil in the coal and electric industry driven by widespread government-imposed lockdowns.

While most government-imposed shut-downs in the U.S.

and abroad have been phased out, there is a possibility that such shut-downs may be reinstated if COVID-19 or another pandemic were to again become an acute, severe risk.

This could cause a sustained decrease in demand for our coal and electric power and the failure of our customers to purchase coal or electric power from us that they are obligated to purchase pursuant to existing contracts, which would have a material adverse effect on our operations and financial condition.

The various governmental and private responses to the pandemic also led to widespread, global supply chain disruptions.

These supply chain disruptions have previously caused and may continue to or again cause some of our suppliers to fail to deliver the quantities of supplies we need or fail to deliver such supplies in a timely manner.

The extent to which COVID-19 or another future pandemic may adversely impact our results of operations, cash flows and financial condition depends on future developments, which are highly uncertain and unpredictable.

Enhanced data privacy and data protection laws and regulations or any non-compliance with such laws and regulations, could adversely affect our business and financial results.

The consumer privacy landscape continues to experience momentum for greater privacy protection and reform at the state and federal level in response to precedents set forth by the General Data Protection Regulation (the “GDPR”) and the California Consumer Privacy Act (the “CCPA”).

The development and evolving nature of domestic and international privacy regulation and enforcement could impact and potentially limit how Hallador processes personally identifiable information.

Beginning January 1, 2023, California residents have increased access rights (including the right to limit the use and disclosure of sensitive personal information), which are enforced by a new state privacy regulator, resulting in more scrutiny of business practices and disclosures.

Additional states including Virginia, Utah, Connecticut, Colorado, and Nevada have similarly adopted enhanced data privacy legislation effective in 2023 and patterned after the standards set forth by CCPA, including broader data access rights, with Virginia going a step further requiring businesses to perform data protection assessments for certain processing activities.

As new laws and regulations are created, requiring businesses to implement processes to enable customer access to their data and enhanced data protection and management standards, we cannot forecast the impact that they may have on the Company’s business.

Any non-compliance with laws may result in proceedings or actions against the Company by 35 governmental entities or individuals.

Consistent with the trend established by passage of the General Data Protection Regulation (the “GDPR”), the development and evolving nature of domestic and international privacy regulation and enforcement could impact and potentially limit how Hallador processes personal information.

For example, California residents have certain privacy rights (including the right to limit the use and disclosure of sensitive personal information, and the right to request that a business delete personal information collected about them, among other rights), established by the California Consumer Privacy Act (“CCPA”) and enforced by a state privacy regulator, resulting in more scrutiny of business practices and disclosures.

Additional states including Virginia, Utah, Connecticut, Colorado, and Nevada have similarly adopted enhanced data privacy legislation patterned after the standards set forth by CCPA, including broader data access rights, with some states even requiring businesses to perform data protection assessments for certain processing activities.

In 2025, state privacy laws go into effect in a number of states, including Delaware, Maryland, Minnesota, Nebraska, and New Jersey, among others.

As new laws and regulations are enacted by legislators or adopted by regulators, requiring businesses to implement processes to enable customer access to their data and enhanced data protection and management standards, we cannot forecast the impact that they may have on the Company’s business.

Any non-compliance with laws may result in proceedings or actions against the Company by as many as 35 governmental entities or individuals.

Moreover, any inquiries or investigations, government penalties or sanctions, or civil actions by individuals may be costly to comply with, resulting in negative publicity, increased operating costs, significant management time and attention, and may lead to remedies that harm the business, including fines, demands or orders that existing business practices be modified or terminated.

The Company ’ s trading and hedging activities do not cover certain risks and may expose it to earnings volatility and other risks.

The Company’s trading and hedging activities do not cover certain risks and may expose it to earnings volatility and other risks.

In addition to overall price volatility, the Company is currently subject to price volatility on diesel fuel and other commodities utilized in its operations.

The Company has entered into certain hedging arrangements to address these risks and may continue in the future to enter into hedging arrangements, including economic hedging arrangements, to manage these risks or other exposures.

Since the Company’s existing hedging arrangements do not receive cash flow hedge accounting treatment, all changes in fair value are reflected in current earnings.

Some of these hedging arrangements may require the Company to post margin based on the value of the related instruments and other credit factors.

If the fair value of its hedge portfolio moves significantly, or if laws, regulations, or exchange rules are passed requiring all hedge arrangements to be exchange-traded or exchange-cleared, the Company could be required to post additional margin, which could negatively impact its liquidity.

Risks Related to our Industry

Substantial or extended volatility in coal prices could negatively impact our results of operations.

Our results of operations are primarily dependent upon the prices we receive for our coal in our coal operations, or the price we pay for our coal in the case of our electric operations, as well as our ability to improve productivity and control costs.

Substantial or extended volatility in coal prices could negatively impact our results of operations in both our Electric Operations and Coal Operations segments.

Our results of operations are primarily dependent upon the price we pay for our coal in the case of our Electric Operations, or the prices we receive for our coal in our Coal Operations, as well as our ability to improve productivity and control costs.

These prices depend upon factors beyond our control, including:

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● overall domestic and global economic conditions;

the adverse impact of the COVID-19 pandemic due to the reduction in demand;

● international developments impacting supply of coal;

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, volume optionality and multiple supply sources) and reliability of supply.

In addition, deregulation within the coal industry, including as a result of actions taken by the new Presidential Administration, may encourage new market entrants and could increase the number of competitors we face.

Some competitors could have, among other things, larger financial and operating resources, lower per ton cost of production, or relationships with specific transportation providers.

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We cannot predict further developments, and such increases could have a material adverse effect on our results of operations, financial position, and cash flows.

New tariffs and other trade measures could adversely affect our results of operations, financial position and cash flows.

Further, there is uncertainty surrounding tariffs and international trade relations, and it is difficult for us to predict future trade measures and the impact they will have on our business and operations.

In early 2025, the new U.S.

Administration threatened and imposed tariffs on imports from various countries.

In response, some of these countries threatened or imposed tariffs on imports from the U.S.

How long current tariffs will remain in place, and whether the new Administration will enact the threatened tariffs or impose entirely new ones is uncertain.

These newly enacted tariffs, additional new tariffs and other trade measures could adversely affect our results of operations, financial position and cash flows.

In response to the tariffs imposed by the U.S., the European Union, Canada, Mexico and China have imposed tariffs on U.S.

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Extensive environmental laws and regulations affect coal consumers and have corresponding effects on the demand for coal as a fuel source.

Federal, state and local laws and regulations extensively regulate the amount of sulfur dioxide, particulate matter, nitrogen oxides, mercury and other compounds emitted into the air from coal-fired electric power plants, which are the ultimate consumers of much of our coal.

Federal, state and local laws and regulations extensively regulate the amount of sulfur dioxide, particulate matter, nitrogen oxides, mercury and other compounds emitted into the air and pollutants in wastewater from coal-fired electric power plants, which are the ultimate consumers of much of our coal.

These laws and regulations can require significant emission control expenditures for many coal-fired power plants, and various new and proposed laws and regulations could require further emission reductions and associated emission control expenditures.

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There is also continuing pressure on federal and state regulators to impose limits on carbon dioxide emissions from electric power plants, particularly coal-fired power plants.

Further, far-reaching federal regulations promulgated by the EPA in the last several years, such as CSAPR and MATS, have led to the premature retirement of coal-fired generating units and a significant reduction in the amount of coal-fired generating capacity in the U.S.

Further, far-reaching federal regulations promulgated by the EPA in the last several years, such as CSAPR, MATS, 316(a) and (b) rules, CCR rules, and ELGs have led to the premature retirement of coal-fired generating units and a significant reduction in the amount of coal-fired generating capacity in the U.S.

These rules could also lead to material capital expenditures for our electric generating operations.

Our operations are subject to a series of risks resulting from climate change.

Combustion of fossil fuels, such as the coal we produce, results in the emission of carbon dioxide into the atmosphere.

Combustion of fossil fuels, such as the coal we produce in our mining operations and the energy we produce in our electric operations, results in the emission of carbon dioxide into the atmosphere.

Concerns about the environmental impacts of such emissions have resulted in a series of regulatory, political, litigation, and financial risks for our business.

Global climate issues continue to attract public and scientific attention.

Most scientists have concluded that increasing concentrations of GHGs in the Earth’s atmosphere could produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts and floods, and other climatic events.

Many scientists have concluded that increasing concentrations of GHGs in the Earth’s atmosphere could produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts and floods, and other climatic events.

Increasing government attention is being paid to global climate issues and to emissions of GHGs, including emissions due to fossil fuels.

In the U.S., no comprehensive climate change legislation has been implemented at the federal level.

However, following the U.S.

Following the U.S.

Supreme Court finding that GHG emissions constitute a pollutant under the CAA, the EPA has adopted regulations that, among other things, establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the monitoring and annual reporting of GHG emissions from certain sources in the U.S., or constrain the emissions of power plants (though such emissions restraints have been subject to challenge).

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Although the U.S.

had withdrawn from the Paris Agreement, following President Biden’s executive order in January 2021, the U.S.

rejoined the Agreement and, in April 2021, established a goal of reducing economy-wide net GHG emissions 50-52% below levels by 2030.

Additionally, at COP26 in Glasgow in November 2021, the U.S.

and the European Union jointly announced the launch of a Global Methane Pledge committing to a collective goal of reducing global methane emissions by at least 30% from 2020 levels by 2030, including “all feasible reductions” in the energy sector.

At COP27 in Sharm El-Sheik in November 2022, countries reiterated the agreements from COP26 and were called upon to accelerate efforts toward the phase out of inefficient fossil fuel subsidies.

also announced, in conjunction with the European Union and other partner countries, that it would develop standards for monitoring and reporting methane emissions to help create a market for low methane-intensity natural gas.

Although no firm commitment or timeline to phase out or phase down all fossil fuels was made at COP27, there can be no guarantees that countries will not seek to implement such a phase out in the future.

had withdrawn from the Paris Agreement, the U.S.

rejoined the Agreement in 2021 and, in April 2021, established a goal of reducing economy-wide net GHG emissions 50- 52% below levels by 2030.

However, the new Trump Administration has recently announced its intention to withdraw from the Paris Agreement, so these targets from the Biden Administration may change.

Since the 2021 Biden Administration targets were announced, the Parties of the UN Framework Convention on Climate Change have met on several occasions, including at the 28th Conference to the Parties on the UN Framework Convention on Climate Change (“COP28”).

At the COP28, the Parties agreed to non-binding language calling on countries to transition away from fossil fuels in energy systems to achieve net zero emissions by 2050.

Although no legally binding commitment or timeline to phase out or phase down all fossil fuels was made, there can be no guarantees that countries will not seek to implement such a binding phase out in the future.

The full impact of these actions is uncertain at this time and it is unclear what additional initiatives may be adopted or implemented that may have adverse effects upon us and our operators’ operations.

Governmental, scientific, and public concern over climate change has also resulted in increased political risks, including certain climate-related pledges made by certain candidates now in political office.

In January 2021, President Biden issued an executive order that commits to substantial action on climate change, calling for, among other things, the increased use of zero-emissions vehicles by the federal government, the elimination of subsidies provided to the fossil-fuel industry, a doubling of electricity generated by offshore wind by 2030, and increased emphasis on climate-related risks across governmental agencies and economic sectors.

Governmental, scientific, and public concern over climate change has also resulted in increased political risks.

For example, in January 2021, President Biden issued an executive order that commits to substantial action on climate change, calling for, among other things, the increased use of zero-emissions vehicles by the federal government, the elimination of subsidies provided to the fossil-fuel industry, a doubling of electricity generated by offshore wind by 2030, and increased emphasis on climate-related risks across governmental agencies and economic sectors.

While the Biden executive order has now been rescinded by the new Trump Administration, the political dynamic could change yet again in the future.

Other actions that may be pursued include restrictive requirements on new pipeline infrastructure or fossil-fuel export facilities or the promulgation of a carbon tax or cap and trade program.

Further, although Congress has not passed such legislation, almost half of the states have begun to address GHG emissions, primarily through the planned development of emissions inventories, regional GHG cap and trade programs, or the establishment of renewable energy requirements for utilities.

Further, almost half of the states have begun to address GHG emissions, primarily through the planned development of emissions inventories, regional GHG cap and trade programs, or the establishment of renewable energy requirements for utilities.

Depending on the particular program, we or our customers could be required to control GHG emissions or to purchase and surrender allowances for GHG emissions resulting from our operations.

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As a result of these final rules, we or our customers could incur increased costs related to the assessment and disclosure of climate-related risks and certain emissions metrics.

In addition, enhanced climate disclosure requirements could accelerate the trend of certain stakeholders and lenders restricting or seeking more stringent conditions with respect to their investments in certain carbon intensive sectors.

In addition, enhanced climate disclosure requirements could accelerate the trend of certain

stakeholders and lenders restricting or seeking more stringent conditions with respect to their investments in certain carbon intensive sectors.

Apart from governmental regulation, there are also increasing financial risks for fossil-fuel producers as stakeholders of fossil-fuel energy companies may elect in the future to shift some or all of their support into non-energy related sectors.

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There is also a risk that financial institutions will be required to adopt policies that have the effect of reducing the funding provided to the fossil-fuel sector.

In late 2020, the Federal Reserve announced it had joined the Network for Greening the Financial System (“NGFS”), a consortium of financial regulators focused on addressing climate-related risks in the financial sector, and, in September 2022, announced that six of the U.S.’ largest banks will participate in a pilot climate scenario analysis to enhance the ability of firms and supervisors to measure and manage climate-related financial risk.

The Federal Reserve released its pilot exercise in January 2023 which is designed to analyze the impact of both physical and transition risks related to climate change on specific assets of the banks’ portfolio.

However, in January 2025 the Board of Governors of the US Federal Reserve System and Federal Deposit Insurance Corporation announced plans to withdrawing as members of the NGFS.

Although we cannot predict the effects of these actions, such limitation of investments in and financing, bonding, and insurance coverages for fossil-fuel energy companies could adversely affect our coal mining operations.

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We may not have insurance to cover these risks and the consequences for our operations could have a negative impact on the costs and revenues from operations.

We or our customers could be subject to related to the alleged effects of climate change.

We or our customers could be subject to risks related to the alleged effects of climate change.

Increasing attention to climate change risk has also resulted in a recent trend of governmental investigations and private litigation by state and local governmental agencies as well as private plaintiffs in an effort to hold energy companies accountable for the alleged effects of climate change.

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Our operations currently use hazardous materials and generate limited quantities of hazardous wastes from time to time.

Drainage flowing from or caused by mining activities can be acidic with elevated levels of dissolved metals, a condition referred to as “acid mine drainage.” We could become subject to claims for toxic torts, natural resource damages and other damages, as well as for the investigation and clean-up of soil, surface water, groundwater and other media.

Drainage flowing from or caused by mining activities can be acidic with elevated levels of dissolved metals, a condition referred to as “acid mine drainage.” Additionally, our electric power generating operations result in air emissions, wastewater effluent, and the generation of coal combustion residuals.

We could become subject to claims for toxic torts, natural resource damages and other damages, as well as for the investigation and clean-up of soil, surface water, groundwater and other media.

Such claims may arise, for example, out of conditions at sites that we currently own or operate, as well as at sites that we previously owned or operated, or may acquire.

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Disputes could occur in the future, and we may not be able to resolve those disputes in a satisfactory manner, which could have a material adverse effect on our business, financial condition and results of operations.

Our profitability could decline due to unanticipated mine operating conditions and other events that are not within our control and that may not be fully covered under our insurance policies.

Our profitability in our Coal Operations could decline due to unanticipated mine operating conditions and other events that are not within our control and that may not be fully covered under our insurance policies.

Our mining operations are influenced by changing conditions or events that can affect production levels and costs at particular mines for varying lengths of time and, as a result, can diminish our profitability.

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In addition, environmental activists could try to hamper fossil-fuel companies by other means including pressuring insurance and surety companies into restricting access to certain needed coverages.

Our mining operations are subject to extensive and costly laws and regulations, and such current and future laws and regulations could increase current operating costs or limit our ability to produce coal.

We are subject to numerous federal, state and local laws and regulations affecting the coal mining industry, including laws and regulations pertaining to employee health and safety, permitting and licensing requirements, air and water quality standards, plant and wildlife protection, reclamation and restoration of mining properties after mining is completed, the discharge or release of materials into the environment, surface subsidence from underground mining and the effects that mining has on groundwater quality and availability.

Our Electric and Coal Operations are subject to extensive and costly laws and regulations, and such current and future laws and regulations could increase current operating costs or limit our ability to produce coal.

We are subject to numerous federal, state and local laws and regulations affecting the coal mining industry and the electric generation industry, including laws and regulations pertaining to employee health and safety, permitting and licensing requirements, air and water quality standards, plant and wildlife protection, reclamation and restoration of mining properties after mining is completed, the discharge or release of materials into the environment, surface subsidence from underground mining and the effects that mining has on groundwater quality and availability.

Many of these same risks apply to our electric operations and the operation of a coal-fired generating facility, including impacts on air, surface water, groundwater and the environment.

Certain of these laws and regulations may impose strict liability without regard to fault or legality of the original conduct.

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Complying with these laws and regulations could be costly and time-consuming and could delay commencement or continuation of exploration or production operations.

The possibility exists that new laws or regulations may be adopted, or that judicial interpretations or more stringent enforcement of existing laws and regulations could occur, which could materially affect our mining operations, cash flow, and profitability, either through direct impacts on our mining operations, or indirect impacts that discourage or limit our customers’ use of coal.

Federal and state laws addressing mine safety practices impose stringent reporting requirements and civil and criminal penalties for violations.

The possibility exists that new laws or regulations may be adopted, or that judicial interpretations or more stringent enforcement of existing laws and regulations could occur, which could materially affect our mining operations, cash flow, and profitability, either through direct impacts on our mining and electric operations, or indirect impacts that discourage or limit our customers’ use of coal or purchase of coal-fired electricity.

Federal and state laws addressing safety practices impose stringent reporting requirements and civil and criminal penalties for violations.

Federal and state regulatory agencies continue to interpret and implement these laws and propose new regulations and standards.

Implementing and complying with these laws and regulations has increased and will continue to increase our operational expense and have an adverse effect on our results of operation and financial position.

Anticipated changes in the U.S.

political environment, including those resulting from the change in Presidential Administration and control of Congress, and to regulatory agencies, may result in significant changes to regulatory framework and enforcements.

As a result of the 2024 presidential election, changes in the Presidency and both houses of Congress may result in significant changes in, and have resulted in uncertainty with respect to, legislation, regulation, implementation or repeal of laws and rules related to our industry, our coal products, and our electric power operations.

The new Presidential Administration has rescinded various prior Executive Orders and has issued new Executive Orders and taken other related executive actions.

Many of these policy changes will require further rulemaking actions or other formal steps

before they would become law.

In addition, the new Administration has taken actions to reduce the number of federal employees and to eliminate certain federal agencies or reduce their authority.

As a result, there is significant uncertainty regarding whether or how regulations and the agencies that administer and enforce these regulations may change as a result of the actions taken to date and possible future actions by the new Administration.

Additionally, there may be litigation over such regulatory changes, and if public enforcement decreases as a result of such changes, private litigation over environmental matters may increase.

Changes to existing policies and rules regarding our industry, including those recently instituted, in addition to anticipated new rule proposals, may result in significant regulatory changes, increased penalties for non-compliance, increased competition, or increased private litigation.

We also anticipate that there may be changes in legislative control and legislative priorities.

As a result, future legislation may be proposed or passed that may adversely affect our business, operating results and financial condition.

We continually monitor these developments in order to respond to the changing regulatory environment impacting our business.

While it is not possible to predict whether and when any such changes will occur, specific proposals discussed during and after the election, including the U.S.

withdrawal from the Paris Agreement, could harm our business, operating results and financial condition.

If we are slow or unable to adapt to any such changes, our business, operating results and financial condition could be adversely affected.

We may be unable to obtain and renew permits necessary for our operations, which could reduce our production, cash flow and profitability.

Mining companies must obtain numerous governmental permits or approvals that impose strict conditions and obligations relating to various environmental and safety matters in connection with coal mining.

Mining and electricity generation companies must obtain numerous governmental permits or approvals that impose strict conditions and obligations relating to various environmental and safety matters in connection with our operations.

The permitting rules are complex and can change over time.

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The U.S., European Union and other large economies have recently experienced inflation at a rate significantly higher than recent years.

Current and future inflationary effects may be driven by, among other things, governmental stimulus and monetary policies, supply chain disruptions and geopolitical instability, including the ongoing military conflict between Ukraine and Russia.

This recent inflation has resulted in rising prices, including increases in freight rates, prices for energy and other costs, and has adversely impacted us and may further impact us negatively in the future.

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Our efforts to recover inflation-based cost increases from our customers may be hampered as a result of the structure of our contracts and competitive pressures.

Accordingly, substantial inflation may have an adverse impact on our business, financial position, results of operations and cash flows.

Accordingly, substantial inflation may have an adverse

impact on our business, financial position, results of operations and cash flows.

Inflation has also resulted in higher interest rates in the U.S., which could increase our cost of debt borrowing in the future.

Increases in interest rates could adversely affect our business.

The Federal Reserve raised the federal funds interest rate throughout December 31, 2023, in its effort to take action against domestic inflation, and rates are expected to remain higher throughout 2024.

We have exposure to these past increases in interest rates and may be affected further in the future.

Based on our current variable debt level of $91.5 million as of December 31, 2023, comprised of funds drawn on our outstanding bank debt, an increase of one percentage point in the interest rate will result in an increase in annual interest expense of slightly less than $1 million.

Although the Federal Reserve decreased the federal interest rate multiple times in 2024, the rate continues to be elevated and there can be no assurance that the rates will continue to decrease or that it will not be increased in 2025 or beyond.

We have exposure to past increases in interest rates and may be affected further in the future.

Based on our current variable debt level of $44.0 million as of December 31, 2024, comprised of funds drawn on our outstanding bank debt, an increase of one percentage point in the interest rate will result in an increase in annual interest expense of slightly more than $0.4 million.

Any indebtedness we incur in the future may also expose us to increased interest rates, whether as a result of higher fixed rates at the time such a new facility is entered into or because such new indebtedness accrues interest at a variable rate.

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We may not be able to successfully grow through future acquisitions.

We have expanded our operations by adding and developing mines and coal reserves in existing, adjacent, and neighboring properties, including through our recent acquisition of Merom.

We continually seek to expand our operations and coal reserves.

Our future growth could be limited if we are unable to continue to make acquisitions, or if we are unable to successfully integrate the companies, businesses, or properties we acquire.

We may not be successful in consummating any acquisitions and the consequences of undertaking these acquisitions are unknown.

We may not be successful in consummating any

acquisitions and the consequences of undertaking these acquisitions are unknown.

Moreover, any acquisition could be dilutive to earnings.

Our ability to make acquisitions in the future could require significant amounts of financing that may not be available to us under acceptable terms and may be limited by restrictions under our existing or future debt agreements, competition from other coal companies for attractive properties or the lack of suitable acquisition candidates.

Our ability to make acquisitions in the future could require significant amounts of financing that may not be available to us under acceptable terms and may be limited by restrictions under our existing or future debt agreements, competition from other companies for attractive opportunities or the lack of suitable acquisition candidates.

Expansions and acquisitions involve a number of risks, any of which could cause us not to realize the anticipated benefits.

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Expansion and acquisition transactions involve various inherent risks, including:

uncertainties in assessing the value, strengths, and potential profitability of, and identifying the extent of all weaknesses, risks, contingent and other liabilities (including environmental or mine safety liabilities) of, expansion and acquisition opportunities;

● uncertainties in assessing the value, strengths, and potential profitability of, and identifying the extent of all weaknesses, risks, contingent and other liabilities (including environmental or safety liabilities) of, expansion and acquisition opportunities;

● the ability to achieve identified operating and financial synergies anticipated to result from an expansion or an acquisition;

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In addition, future expansions or acquisitions could result in us assuming more long-term liabilities relative to the value of the acquired assets than we have assumed in our previous expansions and/or acquisitions.

The unavailability of an adequate supply of coal reserves that can be mined at competitive costs could cause our profitability to decline.

Our profitability depends substantially on our ability to mine coal reserves that have the geological characteristics that enable them to be mined at competitive costs and to meet the quality needed by our customers.

Because we deplete our reserves as we mine coal, our future success and growth depend, in part, upon our ability to acquire additional coal reserves that are economically recoverable.

Replacement reserves may not be available when required or, if available, may not be mineable at costs comparable to those of the depleting mines.

We may not be able to accurately assess the geological characteristics of any reserves that we acquire, which could adversely affect our profitability and financial condition.

Exhaustion of reserves at particular mines also could have an adverse effect on our operating results that is disproportionate to the percentage of overall production represented by such mines.

Our ability to obtain other reserves in the future could be limited by restrictions under our existing or future debt agreements, competition from other coal companies for attractive properties, the lack of suitable acquisition candidates or the inability to acquire coal properties on commercially reasonable terms.

The estimates of our coal reserves could prove inaccurate and could result in decreased profitability.

The estimates of our coal reserves could prove inaccurate and could result in decreased profitability in our Coal Operations.

The estimates of our coal reserves could vary substantially from actual amounts of coal we are able to recover economically.

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Actual production, revenue, and expenditures with respect to our reserves will likely vary from estimates, and these variations may be material.

Any inaccuracy in the estimates of our reserves could result in higher-than-expected costs and decreased profitability.

Any inaccuracy in the estimates of our reserves could result in higher-than-expected costs and decreased profitability in our Coal Operations.

Mining in certain areas in which we operate is more difficult and involves more regulatory constraints than mining in other areas of the U.S., which could affect the mining operations and cost structures of these areas.

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Unexpected increases in raw material costs could significantly impair our operating profitability.

Our coal mining operations are affected by commodity prices.

We use significant amounts of steel, petroleum products, and other raw materials in various pieces of mining equipment, supplies and materials, including the roof bolts required by the room-and-pillar method of mining.

Our operations are affected by commodity prices.

In our Coal Operations, we use significant amounts of steel, petroleum products, and other raw materials in various pieces of mining equipment, supplies and materials, including the roof bolts required by the room-and-pillar method of mining.

Steel prices and the prices of scrap steel, natural gas and coking coal consumed in the production of iron and steel fluctuate significantly and could change unexpectedly.

Our electric operations are also affected by many of these same commodity prices, including chemicals and catalysts necessary to operate the plant in accordance with environmental and other regulations, fuel oil, and raw materials used in the manufacture and maintenance of equipment throughout the plant.

Our Electric Operations are also affected by many of these same commodity prices, including chemicals and catalysts necessary to operate the plant in accordance with environmental and other regulations, fuel oil, limestone, and raw materials used in the manufacture and maintenance of equipment throughout the plant.

Inflationary pressures have and could continue to lead to price increases affecting many of the components of our operating expenses such as fuel, steel, other materials and maintenance expense.

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Elimination of those provisions would negatively impact our financial statements and results of operations.

A shortage of skilled labor may make it difficult for us to maintain labor productivity and competitive costs and could adversely affect our profitability.

Efficient coal mining using modern techniques and equipment requires skilled laborers, preferably with at least one year of experience and proficiency in multiple mining tasks.

In recent years, a shortage of experienced coal miners has caused us to include some inexperienced staff in the operation of certain mining units, which decreases our productivity and increases our costs.

This shortage of experienced coal miners is the result of a significant percentage of experienced coal miners reaching retirement age, combined with the difficulty of retaining existing workers in and attracting new workers to the coal industry.

Thus, this shortage of skilled labor could continue over an extended period.

If the shortage of experienced labor continues or worsens, it could have an adverse impact on our labor productivity and costs and our ability to expand production in the event there is an increase in the demand for our coal, which could adversely affect our profitability.

Disruptions in supply chains could significantly impair our operating profitability.

We are dependent upon vendors to supply mining equipment, equipment within our power plant, safety equipment, supplies, and materials.

We are dependent upon vendors to supply equipment within our power plant, mining equipment, safety equipment, supplies, and materials.

If a vendor fails to deliver on its commitments, or if common carriers have difficulty providing capacity to meet demands for their services, we could experience reductions in our production or increased production costs, which could lead to reduced profitability and adversely affect our results of operations.

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Any future inflationary or deflationary pressures could adversely affect the results of our operations.

For example, at times our results have been significantly impacted by price increases affecting many of the components of our operating expenses such as fuel, steel, maintenance expense and labor.

In addition to potential cost increases, inflation could cause a decline in global or regional economic conditions that reduce demand for our coal or electric power and could adversely affect our results of operations.

For example, at times our results have been significantly impacted by price increases affecting many of the components of our operating expenses such as fuel, steel, maintenance expense, healthcare and labor.

In addition to potential cost increases, inflation could cause a decline in global or regional economic conditions that reduce demand for our electric power, capacity or coal and could adversely affect our results of operations.

The Russian-Ukrainian conflict, and sanctions brought against Russia, as well as other disruptions throughout Europe and the Middle East have caused significant market disruptions that may lead to increased volatility in the price of commodities.

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Our business operations are subject to interruption by natural disasters, fire, power shortages, pandemics and other events beyond our control.

This may result in delivery delays, malfunctioning of facilities or shutdown of logistic points.

This may result in delivery delays, malfunctioning of

facilities or shutdown of logistic points.

Such events could make it difficult or impossible for us to deliver our products and services to our customers and could decrease demand for our services.

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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 1A. Risk Factors