Ramaco Resources, Inc. 10-K/A

Item 8. Financial Statements and Supplementary Data INDEX TO CONSOLIDATED FINANCIAL STATEMENTS ​ ​ Report of Independent Registered Public Accounting Firm ( PCAOB ID 173 ) 31 Report of Independent Registered Public Accounting Firm 33 Consolidated Balance Sheet 34 Consolidated Statements of Operations 35 Consolidated Statements of Equity 36 Consolidated Statements of Cash Flows 37 Notes to Consolidated Financial Statements 38 ​ ​ ​ 30 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ​ Stockholders and the Board of Directors of Ramaco Resources, Inc. Lexington, Kentucky ​ Opinion on the Financial Statements ​ We have audited the accompanying consolidated balance sheet of Ramaco Resources, Inc. (the “Company”) as of December 31, 2021, the related consolidated statements of operations, stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for each of the year then ended, in conformity with accounting principles generally accepted in the United States of America. ​ Basis for Opinion ​ These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. ​ Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. ​ Critical Audit Matters ​ The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. ​ Information Technology General Controls and Control Environment ​ Description of Critical Audit Matter ​ As discussed in Management’s Report on Internal Control Over Financial Reporting, the Company identified a material weakness in their internal control over financial reporting related to ineffective information technology general controls (ITGC’s) in the areas of user access and certain automated and manual business process controls that are dependent on the affected ITGCs (control environment). Based on the ineffective ITGC’s, we identified the performance of the necessary incremental audit procedures over the financial information reliant on the impacted ITGC’s as a critical audit matter. 31 Table of Contents Significant auditor judgment was required to design and execute the incremental audit procedures and to assess the sufficiency of the procedures performed and evidence obtained. ​ The primary procedures we performed to address the critical audit matter included the following. ​ ● Involving forensic professionals with specialized skills and knowledge in data analysis to perform an evaluation of the journal entry data, vendor master file, and disbursement files. Forensic professionals also assisted with the identification of certain entries that required additional testing and for all such entries, we agreed the journal entry data to source documents. ​ ● Tested the underlying records of selected transactions and other data discussed above to support the use of the information in the conduct of the audit; and ​ ● We evaluated the collective results of the incremental audit procedures performed to assess the sufficiency of audit evidence obtained related to the information produced by the impacted IT systems. ​ Asset Retirement Obligations ​ Description of Critical Audit Matter ​ At December 31, 2021, the Company’s asset retirement obligations (“ARO”) totaled $22.6 million. The Company’s ARO primarily consist of spending estimates, based upon detailed engineering calculations, related to reclaiming metallurgical coal land and support facilities in accordance with federal and state reclamation laws as defined by each mining permit. Legal obligations associated with the retirement of long-lived assets are reflected at their estimated fair value, with a corresponding charge to development costs, at the time they are incurred. The liability is accreted to its present value each period and the capitalized cost is amortized using the units-of-production method over estimated recoverable reserves upon commencement of mining. ​ The calculation of reclamation metallurgical coal land and support facilities obligations involve a high degree of subjectivity and auditing the significant assumptions utilized by management in estimating the amount of the liability requires judgment. In particular, the obligation is determined using a discounted cash flow technique and is based upon mining permit requirements and various assumptions including credit-adjusted risk-free rates, inflation rates, estimates of disturbed acreage, timing of reclamation activities, and reclamation costs. ​ We obtained an understanding of management’s internal controls and evaluated the design of these controls over the Company’s accounting for ARO, including controls over management’s review of the significant assumptions described above. In addition, we evaluated the methodology used by the Company’s specialist and testing the significant assumptions and the underlying data, compared assumptions including the credit-adjusted risk-free rate, and inflation rate to current market data, evaluated significant changes from the prior estimate, verified consistency between timing of reclamation activities and projected mine life, considered the appropriateness of the estimated costs based on mine type, compared anticipated costs to recent operating data, and recalculated management’s estimate. Additionally, we involved our specialists to assist in our assessment of the Company’s ARO liability. As part of this effort, our specialists interviewed members of the Company’s specialist, assessed the completeness of the mine reclamation estimates with respect to meeting mine closure and post closure plan regulatory requirements, and evaluated the reasonableness of the engineering estimates and assumptions. ​ /s/ Crowe LLP ​ We have served as the Company’s auditor since 2022. ​ Houston, Texas March 31, 2022 32 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ​ To the Board of Directors and Stockholders of Ramaco Resources, Inc. Lexington, Kentucky ​ Opinion on the Financial Statements ​ We have audited the accompanying consolidated balance sheets of Ramaco Resources, Inc. (the Company) as of December 31, 2020 and the related consolidated statements of operations, equity, and cash flows for each of the years in the two-year period ended December 31, 2020, and the related notes (collectively referred to as the financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America. ​ Basis for Opinion ​ These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. ​ Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. ​ /s/ Briggs & Veselka Co. ​ We served as the Company’s auditor from 2015 to 2021. ​ Houston, Texas February 18, 2021 ​ 33 Table of Contents Ramaco Resources, Inc. Consolidated Balance Sheets ​ ​ ​ ​ ​ ​ ​ In thousands, except share 2021 2020 Assets ​ ​ ​ Current assets ​ ​ ​ Cash and cash equivalents ​ $ 21,891 ​ $ 5,300 Accounts receivable ​ 44,453 ​ 20,299 Inventories ​ 15,791 ​ 11,947 Prepaid expenses and other ​ 4,626 ​ 4,953 Total current assets ​ 86,761 ​ 42,499 Property, plant and equipment, net ​ 227,077 ​ 180,531 Financing lease right-of-use assets, net ​ ​ 9,128 ​ ​ — Advanced coal royalties ​ 5,576 ​ 4,784 Other ​ 491 ​ 809 Total Assets ​ $ 329,033 ​ $ 228,623 ​ ​ ​ ​ ​ ​ ​ Liabilities and Stockholders' Equity ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ Current liabilities ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 15,346 ​ $ 11,742 Accrued expenses ​ 19,410 ​ 11,591 Asset retirement obligations ​ 489 ​ 46 Current portion of long-term debt ​ 7,674 ​ 4,872 Current portion of financing lease obligations ​ ​ 3,461 ​ ​ — Other current liabilities ​ ​ 280 ​ ​ 862 Total current liabilities ​ 46,660 ​ 29,113 Asset retirement obligations ​ 22,060 ​ 15,110 Long-term debt, net ​ 3,339 ​ 12,578 Long-term financing lease obligations, net ​ ​ 4,599 ​ ​ — Senior notes, net ​ ​ 32,363 ​ ​ — Deferred tax liability, net ​ 6,406 ​ 1,762 Other long-term liabilities ​ ​ 2,532 ​ ​ 965 Total liabilities ​ ​ 117,959 ​ 59,528 ​ ​ ​ ​ ​ ​ ​ Commitments and contingencies ​ — ​ — ​ ​ ​ ​ ​ ​ ​ Stockholders' Equity ​ ​ ​ ​ ​ ​ Preferred stock, $ 0.01 par value, 50,000,000 shares authorized, none issued and outstanding ​ — ​ — Common stock, $ 0.01 par value, 260,000,000 shares authorized, 44,092,981 at December 31, 2021 and 42,706,908 at December 31, 2020 shares issued and outstanding ​ 441 ​ 427 Additional paid-in capital ​ 163,566 ​ 158,859 Retained earnings ​ 47,067 ​ 9,809 Total stockholders' equity ​ 211,074 ​ 169,095 Total Liabilities and Stockholders' Equity ​ $ 329,033 ​ $ 228,623 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 34 Table of Contents Ramaco Resources, Inc. Consolidated Statements of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, In thousands, except per-share amounts 2021 2020 2019 Revenue $ 283,394 $ 168,915 $ 230,213 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Costs and expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of sales (exclusive of items shown separately below) ​ 195,412 ​ 145,503 ​ 162,470 Asset retirement obligations accretion ​ 615 ​ 570 ​ 511 Depreciation and amortization ​ 26,205 ​ 20,912 ​ 19,521 Selling, general and administrative ​ 21,629 ​ 21,023 ​ 18,179 Total costs and expenses ​ 243,861 ​ 188,008 ​ 200,681 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income (loss) ​ 39,533 ​ ( 19,093 ) ​ 29,532 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income ​ 7,429 ​ 11,926 ​ 1,758 Interest expense, net ​ ( 2,556 ) ​ ( 1,224 ) ​ ( 1,193 ) Income (loss) before tax ​ 44,406 ​ ( 8,391 ) ​ 30,097 Income tax expense (benefit) ​ 4,647 ​ ( 3,484 ) ​ 5,163 Net income (loss) ​ $ 39,759 ​ $ ( 4,907 ) ​ $ 24,934 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings (loss) per common share ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 0.90 ​ $ ( 0.12 ) ​ $ 0.61 Diluted ​ $ 0.90 ​ $ ( 0.12 ) ​ $ 0.61 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic weighted average shares outstanding ​ 43,964 ​ 42,460 ​ ​ 40,838 Diluted weighted average shares outstanding ​ 44,257 ​ 42,460 ​ ​ 40,838 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 35 Table of Contents Ramaco Resources, Inc. Consolidated Statements of Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Retained ​ Total ​ Common Paid- Earnings Stockholders’ In thousands Stock in Capital (Deficit) Equity Balance at January 1, 2019 ​ $ 401 ​ $ 150,926 ​ $ ( 10,218 ) ​ $ 141,109 Restricted stock surrendered for withholding taxes payable ​ ​ — ​ ​ ( 20 ) ​ ​ — ​ ​ ( 20 ) Stock-based compensation ​ 9 ​ 4,051 ​ — ​ 4,060 Net income ​ — ​ — ​ 24,934 ​ 24,934 Balance at December 31, 2019 ​ ​ 410 ​ ​ 154,957 ​ ​ 14,716 ​ ​ 170,083 Restricted stock surrendered for withholding taxes payable ​ ​ ( 1 ) ​ ​ ( 220 ) ​ ​ — ​ ​ ( 221 ) Stock-based compensation ​ 18 ​ 4,122 ​ — ​ 4,140 Net loss ​ — ​ — ​ ( 4,907 ) ​ ( 4,907 ) Balance at December 31, 2020 ​ ​ 427 ​ ​ 158,859 ​ ​ 9,809 ​ ​ 169,095 Restricted stock surrendered for withholding taxes payable ​ ​ ( 1 ) ​ ​ ( 538 ) ​ ​ — ​ ​ ( 539 ) Stock-based compensation ​ 15 ​ 5,245 ​ — ​ 5,260 Dividends accrued ($ 0.0567 per common share) ​ ​ — ​ ​ — ​ ​ ( 2,501 ) ​ ​ ( 2,501 ) Net income ​ — ​ — ​ 39,759 ​ 39,759 Balance at December 31, 2021 ​ $ 441 ​ $ 163,566 ​ $ 47,067 ​ $ 211,074 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 36 Table of Contents Ramaco Resources, Inc. Consolidated Statements of Cash Flows ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, In thousands 2021 2020 2019 Cash flows from operating activities: ​ ​ ​ ​ Net income (loss) ​ $ 39,759 ​ $ ( 4,907 ) ​ $ 24,934 Adjustments to reconcile net income (loss) to net cash from operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Accretion of asset retirement obligations ​ 615 ​ 570 ​ 511 Depreciation and amortization ​ 26,205 ​ 20,912 ​ 19,521 Amortization of debt issuance costs ​ 214 ​ 58 ​ 58 Stock-based compensation ​ 5,260 ​ 4,140 ​ 4,060 Other income - employee retention tax credit ​ ​ ( 5,407 ) ​ ​ — ​ ​ — Other income - PPP Loan ​ ​ — ​ ​ ( 8,444 ) ​ ​ — Deferred income taxes ​ 4,644 ​ ( 3,503 ) ​ 5,156 Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts receivable ​ ( 24,154 ) ​ ( 1,043 ) ​ ( 8,527 ) Prepaid expenses and other current assets ​ 5,519 ​ 986 ​ 723 Inventories ​ ( 3,844 ) ​ 3,314 ​ ( 1,076 ) Other assets and liabilities ​ 1,124 ​ ( 1,270 ) ​ 689 Accounts payable ​ ( 1,820 ) ​ 2,753 ​ ( 7,313 ) Accrued expenses ​ 5,225 ​ ( 254 ) ​ 3,646 Net cash from operating activities ​ 53,340 ​ 13,312 ​ 42,382 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flow from investing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Purchases of property, plant and equipment ​ ( 29,466 ) ​ ( 24,753 ) ​ ( 45,722 ) Acquisition of Amonate assets ​ ​ ( 30,147 ) ​ ​ — ​ ​ — Net cash from investing activities ​ ​ ( 59,613 ) ​ ​ ( 24,753 ) ​ ​ ( 45,722 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Proceeds from PPP Loan ​ ​ — ​ ​ 8,444 ​ ​ — Proceeds from borrowings ​ 54,368 ​ 50,043 ​ 73,750 Payments of debt issuance cost ​ ​ ( 2,356 ) ​ ​ — ​ ​ — Repayment of borrowings ​ ( 26,300 ) ​ ( 45,598 ) ​ ( 70,335 ) Repayments of financed insurance payable ​ ​ ( 862 ) ​ ​ ( 1,382 ) ​ ​ ( 570 ) Repayments of financing leased equipment ​ ​ ( 1,942 ) ​ ​ — ​ ​ — Restricted stock surrendered for withholding taxes payable ​ ​ ( 539 ) ​ ​ ( 221 ) ​ ​ ( 20 ) Net cash from financing activities ​ 22,369 ​ 11,286 ​ 2,825 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net change in cash and cash equivalents and restricted cash ​ 16,096 ​ ( 155 ) ​ ( 515 ) Cash and cash equivalents and restricted cash, beginning of period ​ 6,710 ​ 6,865 ​ 7,380 Cash and cash equivalents and restricted cash, end of period ​ $ 22,806 ​ $ 6,710 ​ $ 6,865 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental cash flow information: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash paid for interest ​ $ 1,601 ​ $ 1,095 ​ $ 999 Cash paid for taxes ​ 9 ​ 19 ​ — Non-cash investing and financing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Leased assets obtained under new financing leases ​ 10,002 ​ — ​ — Dividend accrued not paid ​ ​ 2,501 ​ ​ — ​ ​ — Capital expenditures included in accounts payable and accrued expenses ​ 6,652 ​ 1,228 ​ 2,902 Financed insurance ​ 280 ​ 1,588 ​ 939 Additional asset retirement obligations incurred ​ 6,840 ​ 86 ​ 516 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 37 Table of Contents Ramaco Resources, Inc. Notes to Consolidated Financial Statements NOTE 1—DESCRIPTION OF BUSINESS Ramaco Resources, Inc. (“Ramaco”) is a Delaware corporation formed in October 2016. Our principal corporate offices are located in Lexington, Kentucky. We are an operator and developer of high-quality, low-cost metallurgical coal in southern West Virginia, southwestern Virginia, and southwestern Pennsylvania. As used herein, “the Company,” “we,” “us,” “our,” and similar terms include Ramaco Resources, Inc. and its subsidiaries, unless the context indicates otherwise. Our development portfolio includes four primary properties: Elk Creek, Berwind, Knox Creek and RAM Mine. We believe each of these projects possesses geologic and logistical advantages that make our coal among the lowest delivered-cost U.S. metallurgical coal to a majority of our domestic target customer base, North American blast furnace steel mills and coke plants, as well as international metallurgical coal consumers. We operate three deep mines and a surface mine at our Elk Creek Complex. Development of this complex commenced in 2016 and included construction of a preparation plant and rail load-out facilities. Development of our Berwind Complex began in late-2017. In 2020, we suspended development at the Berwind Complex due to lower pricing and demand largely caused by the economic impacts of the COVID-19 pandemic. We were able to resume development of Berwind in 2021 as coal market conditions improved. The Knox Creek preparation plant processes coal from our Berwind Complex (until the Berwind preparation plant becomes operational in 2022) as well as coal we may purchase from or toll wash for third parties. Our RAM Mine property is scheduled for initial production subject to permitting and market conditions. In 2021, we acquired the long-idled Amonate Assets from Coronado which are directly adjacent to our Berwind Complex. We will refurbish the acquired preparation plant and begin development of the acquired reserves in 2022. COVID-19 Pandemic— The global spread of COVID-19 created significant volatility, uncertainty and economic disruption during 2020. The Company was adversely affected by the deterioration and increased uncertainty in the macroeconomic outlook as a result of the impact of COVID-19. After the initial outbreak, we observed a declining demand for, and declines in the spot price of, metallurgical coal as business and consumer activity decelerated across the globe. Throughout 2021, we saw increases in demand from our primary customers, as the global economic recovery began. U.S. steel prices also have increased significantly due to this recovery and the effects from large-scale government stimulus measures. We continue to actively monitor the situation and may take further actions altering our business operations that we determine are in the best interests of our employees, customers, suppliers, and stakeholders, or as required by federal, state, or local authorities. NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Consolidation —The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and U.S. Securities and Exchange Commission regulations. The financial statements are presented on a consolidated basis for all periods presented. All significant intercompany balances and transactions between consolidated entities have been eliminated in consolidation. Use of estimates —The preparation of these financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The most significant estimates are related to the quantity and value of coal inventories, stock-based compensation, asset retirement 38 Table of Contents obligations, occupational disease obligations, evaluation of long-lived assets for impairment, and the quantities and values of coal reserves. Revenue Recognition —Our primary source of revenue is from the sale of coal through contracts with steel producers usually having durations of less than one year. Revenue is recognized when performance obligations under the terms of a contract with our customers are satisfied. This occurs when control of the coal is transferred to our customers. For coal shipments to domestic customers via rail, control is generally transferred when the railcar is loaded. Control is transferred for export coal shipments to customers via ocean vessel when the vessel is loaded at the port. Our coal sales generally include up to 90-day payment terms following the transfer of control of the goods to our customer. In the case of some of our foreign customers, our contracts also require that letters of credit are posted to secure payment of any outstanding receivable. We do not include extended payment terms in our contracts. Our contracts with customers typically provide for minimum specifications or qualities of the coal we deliver. Variances from these specifications or qualities are settled by means of price adjustments. Generally, these price adjustments are settled within 30 days of delivery and are insignificant. Freight Revenue and Expense —Costs incurred to transport coal to the point of sale at the port facility are included in cost of sales and the gross amounts billed to customers to cover shipping to and handling of the coal at the port are included in revenue. Cash and Cash Equivalents —We classify all highly-liquid instruments with an original maturity of three months or less as cash equivalents. Restricted cash balances at December 31, 2021 and 2020 were $ 0.9 million and $ 1.4 million, respectively, consisted of funds held in escrow for potential future workers’ compensation claims and were classified in other current assets in the consolidated balance sheets. Inventories — Coal is reported as inventory at the point in time it is extracted from the mine. Coal inventories are valued at the lower of average cost or net realizable value, with cost determined on a first-in, first-out inventory valuation method. Coal inventory costs include labor, supplies, equipment costs, freight, operating overhead, depreciation and amortization. Coal inventory quantities are adjusted periodically based on aerial surveys of coal stockpiles. Supply inventories are valued at average cost and totaled $ 2.6 million at December 31, 2021 and $ 2.5 million at December 31, 2020. Property, Plant and Equipment —Property, plant and equipment is recorded at cost. Expenditures which extend the useful lives of existing plant and equipment are capitalized. Planned major maintenance costs which do not extend the useful lives of existing plant and equipment are expensed as incurred. When properties are retired or otherwise disposed, the related cost and accumulated depreciation are removed from the respective accounts and any profit or loss on disposition is recognized in the consolidated statements of operations. Coal exploration costs are expensed as incurred. Coal exploration costs include those incurred to ascertain existence, location, extent or quality of ore or minerals before beginning the development stage of the mine. Mining property and mineral rights costs represent the costs incurred to acquire the rights to access and mine certain coal property either through deeds, leases, or other conveyance agreements. These costs include costs of acquiring, and accessing mineral reserves, resources and surface areas for mining activities. Capitalized mine development costs represent the costs incurred to prepare mine sites and/or seams of coal for future mining. These costs include costs of acquiring, permitting, planning, research, and developing access to identified mineral reserves and other preparations for commercial production as necessary to develop and permit the properties for mining activities. Operating expenditures including certain professional fees and overhead costs are not capitalized but are expensed as incurred. The capitalized mine development costs are depleted or amortized on a units-of-production basis as mining of that mine’s assigned reserves takes place. Depreciation of plant and equipment is calculated on the straight-line method over their estimated useful lives ranging from three to thirty years . 39 Table of Contents Advanced Coal Royalties —In most cases, we acquire the right to mine coal reserves under leases which call for the payment of royalties on coal as it is mined and sold. In many cases, these mineral leases require the payment of advance or minimum coal royalties to lessors that are recoupable against future production royalties. These advance payments are deferred and charged to operations as the coal reserves are mined. Impairment of Long-lived Assets —We review and evaluate long-lived assets, including property, plant and equipment and mine development costs, for impairment when events or changes in circumstances indicate that the asset’s carrying value may not be recoverable. Recoverability is measured by comparing the net book value to the fair value. When the net book value exceeds the fair value, an impairment loss is measured and recorded. If it is determined that an undeveloped mineral interest cannot be economically converted to proven and probable reserves, or that the recoverability of capitalized mine development costs is uncertain, such capitalized costs are reduced to their net realizable value and an impairment loss is recorded to expense and future development costs are expensed as incurred. Asset Retirement Obligations —Legal obligations associated with the retirement of long-lived assets are reflected at their estimated fair value, with a corresponding charge to development costs, at the time they are incurred. Our asset retirement obligations primarily consist of spending estimates related to reclaiming metallurgical coal land and support facilities in accordance with federal and state reclamation laws as defined by each mining permit. We estimate and record the fair value of a liability for an asset retirement obligation in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. The liability is accreted to its present value each period and the capitalized cost is amortized using the units-of-production method over estimated recoverable reserves upon commencement of mining. Occupational Disease (Pneumoconiosis) Obligations . We recognize as a liability to provide for occupational disease (pneumoconiosis) benefits to eligible employees, former employees and dependents as required by the Federal Mine Safety and Health Act of 1969, as amended. The occupational disease benefit obligation represents the present value of the actuarially computed present and future liabilities for such benefits over the employees’ applicable years of service using a discount rate. Estimating the future occupational disease (pneumoconiosis) benefits requires management to make estimates and judgments regarding timing and existence of a liability utilizing third-party actuaries to assist in preparing what constitutes adequate liability amounts. Inherent in the fair value calculation are numerous assumptions and judgments including the ultimate costs, inflation factors, credit adjusted discount rates, timing of settlement awards in the legal and regulatory environments. These estimates are subject to uncertainty due to a variety of factors, including extended lag times in the reporting and resolution of claims, and trends or changes in claim settlement patterns, insurance industry practices and legal interpretations. As a result, actual costs could differ significantly from the estimated amounts. Adjustments to estimated liabilities are recorded in the period in which the change in estimate occurs. Deferred Income —We accounted for the SBA Paycheck Protection Program Loan (“PPP Loan”) as an in-substance government grant because we expected to meet the PPP Loan eligibility criteria and concluded that the loan represents, in substance, a grant that is expected to be forgiven. Proceeds from the PPP Loan were initially recognized as a deferred income liability. Subsequently, we reduced this liability and recognized income on a systematic basis over the period in which the related costs for which the PPP Loan was intended were incurred. PPP Loan income is presented as other income within the consolidated statements of operations. Leases —We determine if an arrangement is an operating lease or financing lease at inception. Leases are capitalized on the balance sheet as right-of-use (“ROU”) assets and obligations. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating and financing lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating and 40 Table of Contents financing lease ROU assets also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Financing lease obligations for financing lease payments are reduced over the lease term according to an amortization schedule. Leases of mineral reserves are exempted under U.S. GAAP from recognition as on the consolidated balance sheets. Fair Value Measurements — For assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We use a three-level fair value hierarchy that categorizes assets and liabilities measured at fair value based on the observability of the inputs utilized in the valuation. These levels include: Level 1 - inputs are quoted prices in active markets for the identical assets or liabilities; Level 2 - inputs are other than quoted prices included in Level 1 that are directly or indirectly observable through market-corroborated inputs; and Level 3 - inputs are unobservable, or observable but cannot be market-corroborated, requiring us to make assumptions about pricing by market participants. Income Taxes —Income tax expense (benefit) includes Federal and state income taxes. Certain income and expenses are not reported in tax returns and financial statements in the same year. The tax effect of such temporary differences is reported as deferred income taxes. We account for deferred income taxes by applying statutory tax rates in effect at the reporting date of the balance sheet. A valuation allowance is established if it is more likely than not that the related tax benefits will not be realized. In determining the appropriate valuation allowance, we consider the projected realization of tax benefits based on expected levels of future taxable income, available tax planning strategies and reversals of existing taxable temporary differences. Uncertain tax positions are recognized only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. We had no unrecognized tax positions at December 31, 2021 and 2020. We file income tax returns in the U.S. and in various state and local jurisdictions which may be routinely examined by tax authorities. The statute of limitations is currently open for all tax returns filed. Segment Reporting —Our properties located in West Virginia, Virginia and Pennsylvania each consist of mineral reserves for production of metallurgical coal from both underground and surface mines. These operations are within the Appalachia basin. Geology, coal transportation routes to customers, regulatory environments and coal quality or type are characteristic to a basin. For financial reporting purposes, these operations represent a single segment because each possesses similar production methods, distribution methods, and customer quality and consumption characteristics, resulting in similar long-term expected financial performance. Stock-Based Compensation —We account for employee stock-based compensation using the fair value method. Compensation cost for equity incentive awards is based on the fair value of the equity instrument generally on the date of grant and is recognized over the requisite service period. Forfeitures are recognized as they occur. The fair value of restricted stock awards is determined using the publicly-traded price of our common stock on the grant date. The fair value of option awards is calculated using the Black-Scholes option-pricing model. The Black-Scholes model requires us to make assumptions and judgments about the variables used in the calculation, including the expected term, expected volatility, risk-free interest rate, dividend rate and service period. Concentrations —Our operations are all related to metallurgical coal within the mining industry. A reduction in metallurgical coal prices or other disturbances in the metallurgical coal markets could have an adverse effect on our operations. In 2021, 2020 and 2019, approximately 51 %, 71 % and 74 %, respectively, of our revenue was derived from coal shipments to customers in North American markets. Financial instruments that potentially subject us to a significant concentration of credit risk consist primarily of cash and cash equivalents, restricted cash and accounts receivable. We maintain deposits in federally insured financial 41 Table of Contents institutions in excess of federally insured limits. We monitor the credit ratings and concentration of risk with these financial institutions on a continuing basis to safeguard cash deposits. We have a limited number of customers. Contracts with these customers provide for billings principally upon shipment and compliance with payment terms is monitored on an ongoing basis. Outstanding receivables beyond payment terms are promptly investigated and discussed with the specific customer. We estimate an allowance for doubtful accounts based on an analysis of specific customers, taking into consideration the age of past due accounts and an assessment of the customer’s ability to pay. An allowance for doubtful accounts was not necessary as of December 31, 2021 and 2020. During 2021, sales to three customers accounted for approximately 58 % of total revenue. The total balance due from these customers at December 31, 2021 was approximately 58 % of total accounts receivable. During 2020, sales to three customers accounted for approximately 70 % of total revenue. The total balance due from these customers at December 31, 2020 was approximately 46 % of total accounts receivable. During 2019, sales to three customers accounted for approximately 53 % of total revenue. Reclassifications —Financial statements presented for prior periods include reclassifications that were made to conform to the current-year presentation. Recent Accounting Pronouncements Adopted —In February 2016, the FASB issued ASU 2016-02, Leases , which aims to make leasing activities more transparent and comparable and requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. Leases of mineral reserves and related land leases are exempted from the standard. We adopted ASU 2016-02 on January 1, 2019. We elected the “ package of practical expedients ” within the standard which permits us not to reassess prior conclusions about lease identification, lease classification and initial direct costs. We made an accounting policy election to not separate lease and non-lease components for all leases. The adoption of this standard resulted in the recognition of right-of-use assets and lease liabilities of $ 0.3 million in 2020, which were not previously recorded on our consolidated balance sheet. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses , which replaces the existing incurred loss impairment model with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. We adopted this standard effective January 1, 2020. The adoption of this ASU did not have a material impact on our consolidated financial statements because we do not have a history of credit losses on our financial instruments and have no material expected losses. In August 2018, the FASB issued ASU 2018-15, Internal-Use Software , which addresses the accounting for implementation costs associated with a hosted service. The standard provides that implementation costs be evaluated for capitalization using the same criteria as that used for internal-use software development costs, with amortization expense being recorded in the same income statement expense line as the hosted service costs and over the expected term of the hosting arrangement. We adopted this standard as of January 1, 2020 on a prospective basis. The adoption of this ASU did not have a material impact on our consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes , which enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law. The standard was effective for us in the first quarter of 2021. The adoption of this ASU did not have a material impact on our consolidated financial statements. Recent Accounting Pronouncements Being Assessed —In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments are effective for all entities beginning on March 12, 2020 through December 31, 2022. The Company may elect to apply the 42 Table of Contents amendments prospectively through December 31, 2022. The Company has not adopted this ASU as of December 31, 2021. The Company is currently assessing the impact of adopting this standard on its financial statements and the timing of adoption. ​ NOTE 3—PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, (In thousands) 2021 2020 Plant and equipment ​ $ 167,019 ​ $ 155,173 Mining property and mineral rights ​ ​ 26,064 ​ ​ 76 Construction in process ​ 9,972 ​ 7,245 Capitalized mine development costs ​ 104,291 ​ 74,279 Less: accumulated depreciation and amortization ​ ( 80,269 ) ​ ( 56,242 ) Total property, plant and equipment, net ​ $ 227,077 ​ $ 180,531 ​ Capitalized amounts related to coal reserves at properties where we are not currently engaged in mining operations totaled $ 25.1 million as of December 31, 2021 and $ 15.4 million as of December 31, 2020. Depreciation and amortization included: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, (In thousands) 2021 2020 2019 Depreciation of plant and equipment ​ $ 17,945 ​ $ 17,094 ​ $ 14,219 Depreciation of right of use assets ​ ​ 1,109 ​ ​ — ​ ​ — Amortization of capitalized ​ ​ ​ ​ ​ ​ ​ ​ ​ mine development costs ​ 7,151 ​ 3,818 ​ ​ 5,302 Total depreciation and amortization ​ $ 26,205 ​ $ 20,912 ​ $ 19,521 ​ On January 3, 2020, we entered into a mineral lease with the McDonald Land Company for coal reserve tracts which, in many cases, are located immediately adjacent to our Elk Creek complex. In December 2021, we acquired what are referred to as the “Amonate Assets” from Coronado, pursuant to an asset purchase agreement. The acquisition, for a total cash consideration of $ 30 million, included a mine complex located in McDowell County, West Virginia and Tazewell County, Virginia adjacent and contiguous to the Company’s existing Berwind Complex. The acquisition primarily consists of high quality, low and mid-vol metallurgical coal reserves and resources, much of which will be mined from the Company’s Berwind Complex. Also purchased were several additional permitted mines and a currently idled 1.3-million-ton per annum capacity coal preparation plant. 43 Table of Contents NOTE 4—FAIR VALUES OF FINANCIAL INSTRUMENTS The carrying amounts and fair values of our financial assets and liabilities were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 ​ December 31, 2020 ​ Carrying Fair Carrying Fair (In thousands) Amount Value Amount Value Financial Assets: ​ ​ ​ ​ Cash and cash equivalents ​ $ 21,891 ​ $ 21,891 ​ $ 5,300 ​ $ 5,300 Accounts receivable ​ 44,453 ​ 44,453 ​ 20,299 ​ 20,299 Other current assets - restricted cash ​ ​ 915 ​ ​ 915 ​ ​ 1,410 ​ ​ 1,410 Financial liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts payable ​ ( 15,346 ) ​ ( 15,346 ) ​ ( 11,742 ) ​ ( 11,742 ) Debt ​ ( 19,073 ) ​ ( 19,073 ) ​ ( 17,450 ) ​ ( 17,450 ) Senior notes, excluding discounts of $ 2,137 ​ ​ ( 34,500 ) ​ ​ ( 37,978 ) ​ ​ — ​ ​ — Other current liabilities - financed insurance payable ​ ( 280 ) ​ ( 280 ) ​ ( 862 ) ​ ( 862 ) ​ The estimated fair value of cash, accounts receivable, and accounts payable approximate the carrying amount due to the relatively short maturity of these instruments. The fair value of the Company’s other debt approximates its fair value because the debt has terms that are at prevailing market terms currently available to the Company. We use an observable market data approach to determine the fair value of our Senior Notes, a Level 1 fair-value measurement. Nonrecurring fair value measurements include asset retirement and occupational disease obligations, the estimated fair value of which is calculated as the present value of estimated cash flows related to its liabilities using Level 3 inputs. The significant inputs used to calculate such liabilities include estimates of costs to be incurred, our discount rate, inflation rates and estimated date of expenditures. NOTE 5—ASSET RETIREMENT OBLIGATIONS We estimate asset retirement obligations (“ARO”) for final reclamation based upon detailed engineering calculations of the amount and timing of the future cash spending for a third-party to perform the required work. Spending estimates were escalated for inflation at 2.3 % and 2.0 % per year in 2021 and 2020, respectively, and the estimated cash outflows were then discounted at 4 % at both December 31, 2021 and 2020. Amounts recorded related to asset retirement obligations were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, (In thousands) 2021 2020 Balance at beginning of year ​ $ 15,156 ​ $ 14,605 Additional asset retirement obligations acquired/incurred ​ 6,919 ​ — Expenditures made ​ ​ ( 62 ) ​ ​ ( 105 ) Accretion expense ​ 615 ​ 570 Revisions to estimates ​ ( 79 ) ​ 86 Balance at end of year ​ $ 22,549 ​ $ 15,156 ​ ​ NOTE 6—WORKERS’ COMPENSATION AND OCCUPATIONAL DISEASE OBLIGATIONS We are self-insured for certain losses relating to workers’ compensation claims and occupational disease obligations under the Federal Mine Safety and Health Act of 1969, as amended. We purchase insurance coverage to reduce our exposure to significant levels of these claims. Self-insured losses are accrued based upon estimates of the aggregate liability for uninsured claims incurred as of the balance sheet date using current and historical claims experience and certain actuarial assumptions. The occupational disease benefit obligation represents the present value of the actuarially computed present and future liabilities for such benefits over the employees’ applicable years of service using a discount rate of 3.26 %. ​ 44 Table of Contents As of December 31, 2021, the estimated aggregate liability for uninsured claims totaled $ 3.9 million, including $ 1.4 million of occupational disease obligations. Of the aggregate liability, $ 2.4 million was included in other long-term liabilities within the consolidated balance sheets. As of December 31, 2020, the estimated aggregate liability for uninsured claims totaled $ 1.7 million, including $ 0.9 million in other long-term liabilities. ​ NOTE 7—DEBT Our outstanding debt consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, (In thousands) 2021 2020 Term loan ​ $ 3,334 ​ $ 6,672 Revolving Credit Facility ​ — ​ 7,000 Equipment Loans ​ ​ 7,679 ​ ​ 3,778 Senior Notes ​ ​ 32,363 ​ ​ — Total debt ​ $ 43,376 ​ $ 17,450 Current portion of long-term debt ​ 7,674 ​ 4,872 Long-term debt, net ​ $ 35,702 ​ $ 12,578 ​ Revolving Credit Facility and Term Loan— On November 2, 2018, we entered into a Credit and Security Agreement (as amended or amended and restated) with KeyBank, as the administrative agent, and other lenders party thereto. The Credit Agreement was amended on February 20, 2020 and March 19, 2021. On October 29, 2021, we entered into the Amendment and Restatement with KeyBank. Prior to the Amendment and Restatement, the Credit Agreement consisted of the $ 10.0 million Term Loan and up to $ 30.0 million revolving line of credit, including $ 3.0 million letter of credit availability. The Amendment and Restatement increased the overall availability under the revolving credit line to $ 40.0 million and extended the maturity date to December 31, 2024. All personal property assets, including, but not limited to accounts receivable, coal inventory and certain mining equipment are pledged to secure the Revolving Credit Facility. The Revolving Credit Facility has a maturity date of December 31, 2024 and bears interest based on SOFR + 2.0 % or Base Rate + 1.5 %. “Base Rate” is the highest of (i) KeyBank’s prime rate, (ii) Federal Funds Effective Rate + 0.5 %, or (iii) SOFR + 2.0 %. Advances under the Revolving Credit Facility are made initially as Base Rate loans but may be converted to SOFR rate loans at certain times at our discretion. At December 31, 2021, there was no amount outstanding under the Revolving Credit Facility and we had remaining availability of $ 39.1 million. The Term Loan is secured under a Master Security Agreement with a pledge of certain underground and surface mining equipment, bears interest at LIBOR + 5.15 % and is required to be repaid in monthly installments of $ 278 thousand including accrued interest. The Credit Agreement contains usual and customary covenants including limitations on liens, additional indebtedness, investments, restricted payments, asset sales, mergers, affiliate transactions and other customary limitations, as well as financial covenants. At December 31, 2021, we were in compliance with all financial covenants under the Credit Agreement. Key Equipment Finance Loan— On April 16, 2020, we entered into an equipment loan with Key Equipment Finance, a division of KeyBank, as lender, in the principal amount of approximately $ 4.7 million for the financing of existing underground and surface equipment (the “Equipment Loan”). The Equipment Loan bears interest at 7.45 % per annum and is payable in 36 monthly installments of $ 147 thousand. There is a 3 % premium for prepayment of the note within the first 12 months. This premium declines by 1 % during each successive 12-month period. 9.00% Senior Unsecured Notes due 2026— On July 13, 2021, we completed an offering of $ 34.5 million, in the aggregate, of the Company’s 9.00 % Senior Unsecured Notes due 2026 (the “Senior Notes”), less $ 2.4 million for note offering costs. The Senior Notes mature on July 30, 2026, unless redeemed prior to maturity. The Senior Notes bear interest at a rate of 9.00 % per annum, payable quarterly in arrears on the 30th day of January, April, July and October of 45 Table of Contents each year, commencing on July 30, 2021. We may redeem the Senior Notes in whole or in part, at our option, at any time on or after July 30, 2023, or upon certain change of control events, at a redemption price equal to 100 % of the principal amount plus accrued and unpaid interest to, but not including, the date of redemption Issuance costs for the Senior Notes included underwriters’ fees, attorney, accounting and filing costs totaling $ 2.4 million These issuance costs are reported as a debt discount which is being amortized over the Senior Notes term using an effective rate method. The outstanding principal balance under the Senior Notes was $ 34.5 million at December 31, 2021 and is presented net of unamortized discounts of $ 2.1 million. The effective interest rate is approximately 10.45 %. ​ J. H. Fletcher & Co. Loan— On July 23, 2021 and November 24, 2021, we entered into equipment loans with J. H. Fletcher & Co., as lender, in the principal amount of approximately $ 0.9 million and $ 3.9 million, respectively, for the financing of underground equipment (the “Fletcher Equipment Loan”). The Fletcher Equipment Loan bears interest at 0 % per annum and is payable in 24 monthly installments totaling $ 200 thousand. Komatsu Financial Limited Partnership Loan— On August 16, 2021, we entered into an equipment loan with Komatsu Financial Limited Partnership, as lender, in the principal amount of approximately $ 1.0 million for the financing of surface equipment (the “Komatsu Equipment Loan”). The Komatsu Equipment Loan bears interest at 4.6 % per annum and is payable in 36 monthly installments of $ 36 thousand for the first six months and then at $ 28 thousand until maturity. SBA Paycheck Protection Program Loan— On April 20, 2020, we received proceeds from the PPP Loan in the amount of $ 8.4 million from KeyBank, as lender, pursuant to the PPP of the CARES Act. The purpose of the PPP is to encourage the continued employment of workers. We used all of the PPP Loan proceeds for eligible payroll expenses, lease, interest and utility payments. We recognized $ 8.4 million of other income during 2020 for the anticipated full forgiveness of Paycheck Protection Program loan we received. On July 29, 2021, we were notified by KeyBank that full forgiveness had been approved by the SBA. Maturities of our long-term debt are as follows: ​ ​ ​ ​ ​ (In thousands) ​ ​ ​ Years ending December 31: ​ 2022 ​ $ 7,674 2023 ​ 3,119 2024 ​ ​ 220 2025 ​ ​ — 2026 ​ ​ 34,500 Total debt before discounts ​ $ 45,513 ​ ​ ​ ​ ​ ​ ​ ​ ​ 46 Table of Contents NOTE 8— LEASES ​ The Company has various financing leases for mining equipment which originated in the second and third quarters of 2021. These leases are generally for terms up to 36 months and expire through 2024. We have one operating lease for office space that will expire mid-2022. Operating lease expense was $ 0.1 million per year in 2021, 2020 and 2019. ​ Right-of-use assets and lease liabilities are determined as the present value of the lease payments, discounted using either the implicit interest rate in the lease or our estimated incremental borrowing rate based on similar terms, payments and the economic environment where the leased asset is located. Below is a summary of our leases: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In thousands) Classification December 31, 2021 December 31, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ Right-of-use assets ​ ​ ​ ​ ​ ​ ​ ​ Financing ​ Financing lease right-of-use assets, net ​ $ 9,128 ​ $ — Operating ​ Other assets ​ ​ 25 ​ ​ 110 Total right-of-use assets ​ ​ ​ $ 9,153 ​ $ 110 ​ ​ ​ ​ ​ ​ ​ ​ ​ Current lease liabilities ​ ​ ​ ​ ​ ​ ​ ​ Financing ​ Current portion of financing lease obligations ​ $ 3,461 ​ $ — Operating ​ Other current liabilities ​ ​ 25 ​ ​ 79 Non-current lease liabilities ​ ​ ​ ​ ​ ​ ​ ​ Financing ​ Long-term portion of financing lease obligations ​ $ 4,599 ​ $ — Operating ​ Other long-term liabilities ​ ​ — ​ ​ 31 Total lease liabilities ​ ​ ​ $ 8,085 ​ $ 110 ​ Minimum lease payments for our lease obligations are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 (In thousands) Financing Operating Total Future minimum lease payments: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ $ 3,716 ​ $ 33 ​ $ 3,749 2023 ​ ​ 3,452 ​ ​ — ​ ​ 3,452 2024 ​ ​ 1,204 ​ ​ — ​ ​ 1,204 Total undiscounted lease payments ​ ​ 8,372 ​ ​ 33 ​ ​ 8,405 Less: Amounts representing interest ​ ​ ( 312 ) ​ ​ ( 8 ) ​ ​ ( 320 ) Present value of lease obligations ​ $ 8,060 ​ $ 25 ​ $ 8,085 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average remaining term (years) ​ ​ 2.4 ​ ​ 0.3 ​ ​ ​ Weighted average discount rate ​ ​ 4.1 % ​ ​ 8.5 % ​ ​ ​ ​ As of December 31, 2021, we had financing lease obligations of $ 8.1 million and $0.02 million of operating leases. Of this amount, $ 3.5 million was included in current liabilities within the consolidated balance sheets. As of December 31, 2020, we had no financing lease obligations and $ 0.1 million of operating leases. Coal Leases and Associated Royalty Commitments —Leases of mineral reserves and related land leases are exempted under U.S. GAAP from recognition within the financial statements. We lease coal reserves under agreements that require royalties to be paid as the coal is mined and sold. Many of these agreements require minimum annual royalties to be paid regardless of the amount of coal mined and sold. Total royalty expense was $ 18.5 million, $ 11.8 million and $ 15.6 million for the years ended December 31, 2021, 2020 and 2019, respectively. These agreements generally have terms running through exhaustion of all the mineable and merchantable coal covered by the respective lease. Royalties or throughput payments are based on a percentage of the gross selling price received for the coal we mine. Payments of minimum coal royalties and throughput payments for leases with Ramaco Coal, LLC commenced in 47 Table of Contents 2017 pursuant to the terms of the agreements. Please see Note 12 to the Notes to Consolidated Financial Statements for further discussion related parties. Future minimum coal lease and royalty payments for each of the next five years and thereafter are as follows: ​ ​ ​ ​ ​ (In thousands) ​ ​ Years ending December 31: ​ ​ 2022 ​ $ 5,965 2023 ​ 5,975 2024 ​ 5,975 2025 ​ 5,975 2026 ​ 2,810 Thereafter ​ 11,588 Total minimum payments ​ $ 38,288 ​ ​ NOTE 9—EQUITY We are authorized to issue up to a total of 260,000,000 shares of common stock and 50,000,000 shares of preferred stock, each having a par value of $ 0.01 per share. Holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders and to receive ratably in proportion to the shares of common stock held by them any dividends declared from time to time by the board of directors. Our common stock has no preferences or rights of conversion, exchange, pre-exemption or other subscription rights. Stock-Based Compensation —We have a stock-based compensation plan under which stock options, restricted stock, performance-based stock awards and other stock-based awards may be granted. At December 31, 2021, 1.9 million shares were available under the current plan for future awards. Options for the purchase of a total of 937,424 shares of our common stock for $ 5.34 per share were granted to two executives on August 31, 2016. The options have a ten-year term from the grant date and are fully vested. The options remain outstanding and unexercised and were in-the-money at December 31, 2021 and had an intrinsic value of $ 7.7 million. We grant restricted stock to certain senior executive employees and directors. The shares generally vest over one to three and a half years from the date of grant. During the vesting period, the participants have voting rights and may receive dividends, but the shares may not be sold, assigned, transferred, pledged or otherwise encumbered. Unvested shares are forfeited upon termination of employment, unless an employee enters into another written arrangement. The fair value of the restricted shares on the date of the grant is amortized ratably over the service period. Compensation expense for restricted stock awards totaled $ 5.3 million in 2021, $ 4.1 million in 2020 and $ 4.1 million in 2019. As of December 31, 2021, there was $ 7.2 million of total unrecognized compensation cost related to unvested restricted stock to be recognized over a weighted average period of 1.6 years. 48 Table of Contents The following table summarizes restricted awards outstanding, as well as activity for the periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ Average Grant ​ ​ Shares Date Fair Value Outstanding at December 31, 2019 1,628,241 ​ $ 6.32 Granted 1,867,477 ​ 3.05 Vested ( 640,920 ) ​ 5.30 Forfeited ( 9,273 ) ​ 3.49 Outstanding at December 31, 2020 2,845,525 ​ ​ 4.28 Granted 1,592,659 ​ 4.37 Vested ( 567,135 ) ​ 6.55 Forfeited ( 129,279 ) ​ 4.11 Outstanding at December 31, 2021 3,741,770 ​ $ 3.98 ​ The total fair value of awards vested was $ 5.1 million during 2021 and $ 1.5 million during 2020. In December 2019, we entered into modification agreements with 14 executives and employees holding 1.4 million shares of unvested restricted stock whereby the vesting periods for these share grants was extended an additional six months . In exchange for the modification, we made an additional restricted stock grant to each of these executives and employees. In all, we granted 22,000 additional restricted shares in the modification. Incremental compensation costs associated with these modifications totaled $ 0.8 million and was recognized during 2020. NOTE 10—COMMITMENTS AND CONTINGENCIES Environmental Liabilities — Environmental liabilities are recognized when the expenditures are considered probable and can be reasonably estimated. Measurement of liabilities is based on currently enacted laws and regulations, existing technology and undiscounted site-specific costs. Generally, such recognition would coincide with a commitment to a formal plan of action. No amounts have been recognized for environmental liabilities. Surety Bond — In accordance with state laws, we are required to post reclamation bonds to assure that reclamation work is completed. Reclamation bonds outstanding at December 31, 2021 totaled approximately $ 16.8 million. Additionally, we had $ 0.3 million of surety bonds that secured performance obligations. Contingent Transportation Purchase Commitments —We secure the ability to transport coal through rail contracts and export terminals that are sometimes funded through take-or-pay arrangements. As of December 31, 2021, contingent liabilities under these take-or-pay arrangements expiring between December 31, 2022 and March 31, 2024 totaled $ 13.2 million. The level of these take or pay liabilities will be reduced at a per ton rate as such rail and export terminal services are utilized against the required minimum tonnage amounts over the contract term stipulated in such rail and export terminal contracts. Litigation —From time to time, we are subject to various litigation and other claims in the normal course of business. No amounts have been accrued in the consolidated financial statements with respect to any matters. On November 5, 2018, one of our three raw coal storage silos that fed our Elk Creek plant experienced a partial structural failure. A temporary conveying system completed in late-November 2018 restored approximately 80% of our plant capacity. We completed a permanent belt workaround and restored the preparation plant to its full processing capacity in mid-2019. Our insurance carrier, Federal Insurance Company, disputed our claim for coverage based on certain exclusions to the applicable policy and, therefore, on August 21, 2019 we filed suit against Federal Insurance Company and Chubb INA Holdings, Inc. in Logan County Circuit Court in West Virginia seeking a declaratory judgment that the partial silo collapse was an insurable event and to require coverage under our policy. Defendants removed the case to the United States District Court for the Southern District of West Virginia, and upon removal, we substituted ACE American Insurance Company as a defendant in place of Chubb INA Holdings, Inc. The trial in the matter commenced on June 29, 2021, in Charleston, West Virginia. On July 15, 2021, the jury returned a verdict in our 49 Table of Contents favor for $ 7.7 million in compensatory damages and on July 16, 2021, made an additional award of $ 25.0 million for inconvenience and aggravation. On August 12, 2021, the defendants filed a post-trial motion for judgment as a matter of law or in the alternative to alter or amend the judgment or for a new trial. The parties fully briefed the motion and it stood submitted on August 31, 2021. On March 4, 2022, the court entered its memorandum opinion and order on the motion reducing the jury award to a total of $ 1.8 million, including pre-judgment interest, based largely on the court’s decision to vacate and set aside, in its entirety, the jury award of damages for inconvenience and aggravation. The same day, the court entered the judgment in accordance with the memorandum opinion and order. We are considering our options related to this decision, including an appeal to the US Court of Appeals for the 4th Circuit. NOTE 11—REVENUE Our revenue is derived from contracts for the sale of coal which is recognized when the performance obligations under the contracts are satisfied, which is at the point in time control is transferred to our customer. Generally, domestic sales contracts have terms of about one year and the pricing is typically fixed. Export sales have spot or term contracts and pricing can either be by fixed-price or a price derived against index-based pricing mechanisms. Disaggregated information about our revenue is presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, (In thousands) 2021 2020 2019 Coal Sales ​ ​ ​ ​ North American revenues ​ $ 143,946 ​ $ 119,981 ​ $ 170,927 Export revenues, excluding Canada ​ 139,448 ​ 48,934 ​ 59,286 Total revenues ​ $ 283,394 ​ $ 168,915 ​ $ 230,213 ​ As of December 31, 2021, outstanding performance obligations for 2022 totaled approximately 1.8 million tons for contracts having fixed pricing and 0.1 million tons for contracts with index-based pricing mechanisms . NOTE 12—RELATED PARTY TRANSACTIONS Mineral Lease and Surface Rights Agreements —Much of the coal reserves and surface rights that we control were acquired through a series of mineral leases and surface rights agreements with Ramaco Coal, LLC. Production royalty payables due to Ramaco Coal, LLC totaling $ 0.4 million at both December 31, 2021 and 2020, were included in accounts payable in the consolidated balance sheets. Royalties paid to Ramaco Coal, LLC in 2021, 2020 and 2019 totaled $ 5.7 million, $ 4.5 million and $ 9.0 million, respectively. On-going Administrative Services —Under a Mutual Services Agreement dated December 22, 2017 but effective as of March 31, 2017, the Company and Ramaco Coal, LLC agreed to share the services of certain of each company’s employees. Each party will pay the other a fee on a quarterly basis for such services calculated as the annual base salary of each employee providing services multiplied by the percentage of time each employee spent providing services for the other party. The services will be provided for 12-month terms, but may be terminated by either party at the end of any 12-month term by providing written notice at least 30 days prior to the end of the then-current term. Charges to Ramaco Coal, LLC were $ 0.1 million in 2021 and $ 0.2 million in both 2020 and 2019. 50 Table of Contents NOTE 13—INCOME TAXES Income tax expense (benefit) consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, (In thousands) 2021 2020 2019 Current taxes: ​ ​ ​ ​ ​ ​ ​ ​ ​ Federal ​ $ — ​ $ — ​ $ — State ​ 3 ​ 19 ​ 7 Current taxes ​ 3 ​ 19 ​ 7 Deferred taxes: ​ ​ ​ ​ ​ ​ ​ ​ ​ Federal ​ 6,518 ​ ( 3,164 ) ​ 3,228 State ​ ( 1,874 ) ​ ( 339 ) ​ 1,928 Deferred taxes ​ 4,644 ​ ( 3,503 ) ​ 5,156 Income tax expense (benefit) ​ $ 4,647 ​ $ ( 3,484 ) ​ $ 5,163 ​ The items accounting for differences between income taxes computed at the federal statutory rate and the provision recorded for income taxes were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, (In thousands) 2021 2020 2019 Income taxes computed at the federal statutory rate ​ $ 9,325 ​ $ ( 1,762 ) ​ $ 6,320 Effect of: ​ ​ ​ ​ ​ ​ ​ ​ ​ State taxes, net of federal benefits ​ 796 ​ ( 253 ) ​ 945 State tax rate changes, net of federal benefits ​ ​ ( 2,274 ) ​ ​ — ​ ​ — Percentage depletion ​ ( 3,363 ) ​ ( 714 ) ​ ( 2,093 ) PPP Loan forgiveness ​ — ​ ( 1,773 ) ​ — Stock-based compensation ​ ( 194 ) ​ 473 ​ 109 Other, net ​ 357 ​ 545 ​ ( 118 ) Total ​ $ 4,647 ​ $ ( 3,484 ) ​ $ 5,163 ​ Deferred tax assets and liabilities were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, (In thousands) 2021 2020 Deferred tax assets: ​ ​ Loss carryforwards U.S. - Federal/States ​ $ 15,975 ​ $ 22,873 Asset retirement obligations ​ 5,175 ​ 3,972 Accrued expenses ​ 744 ​ 856 Stock-based compensation ​ 2,331 ​ 2,200 Other ​ — ​ — Total deferred tax assets ​ 24,225 ​ 29,901 ​ ​ ​ ​ ​ ​ ​ Deferred tax liabilities: ​ ​ ​ ​ ​ ​ Depreciation & amortization ​ ( 30,631 ) ​ ( 31,663 ) Net deferred tax liabilities ​ $ ( 6,406 ) ​ $ ( 1,762 ) ​ As of December 31, 2021, our federal net operating loss carryforwards were approximately $ 67 million. Total state loss carryforwards were approximately $ 57 million. If not utilized, federal and state net operating loss carryforwards approximating $ 33 million and $ 11 million, respectively, will expire between 2035 and 2037. The remaining net operating loss carryforwards have no statutory expiration. 51 Table of Contents NOTE 14—EARNINGS (LOSS) PER SHARE The following table is a calculation of the net earnings (loss) per basic and diluted share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, (In thousands, except per share amounts) 2021 2020 2019 Numerator ​ ​ ​ ​ Net income (loss) ​ $ 39,759 ​ $ ( 4,907 ) ​ $ 24,934 Denominator ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average shares used to compute basic earnings (loss) per share ​ 43,964 ​ ​ 42,460 ​ ​ 40,838 Dilutive effect of stock option awards ​ 293 ​ ​ — ​ ​ — Weighted average shares used to compute diluted earnings (loss) per share ​ 44,257 ​ 42,460 ​ 40,838 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings (loss) per share ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 0.90 ​ $ ( 0.12 ) ​ $ 0.61 Diluted ​ $ 0.90 ​ $ ( 0.12 ) ​ $ 0.61 ​ Diluted EPS for 2020 and 2019 excludes 937,424 options to purchase our common stock because their effect would be anti-dilutive. ​ NOTE 15—SUBSEQUENT EVENTS On February 18, 2022, the Company announced that its Board of Directors (“Board”) approved a 100 % increase in its initial regular quarterly dividend to $ 5.0 million from the formerly approved $ 2.5 million quarterly dividend that was announced in December 2021. This will involve a commensurate increase in its annual base dividend to $ 20 million from $ 10 million. Specifically, the first quarter dividend will be paid on March 15, 2022, to shareholders of record on March 1, 2022 in the amount of approximately $ 0.11 per share, which annualizes to approximately $ 0.45 per share. On February 23, 2022, Ramaco Development, LLC (“Development”), a wholly owned subsidiary of the Company, entered into a unit purchase agreement (the “Agreement”) with the Company, Ramaco Coal Holdings, LLC (the “Seller”) and Ramaco Coal, LLC (“Target”), pursuant to which Development agreed to purchase 100 % of the issued and outstanding equity interests of Target for cash consideration of $ 65 million (the “Purchase Price”). The Purchase Price consists of $ 5 million to be paid upon the closing of the transaction and $ 60 million in deferred cash payments, to be paid quarterly in such amounts, with interest thereon, as provided in the Agreement. Such deferred payments shall be completed no later than December 31, 2023. On February 28, 2022 the Company issued the following statement related to the death of Steven H. Hively of Philippi, West Virginia at the Berwind Mine Complex operated by Ramaco Resources, LLC, a subsidiary of the Company. “We were saddened to learn early this morning that a contract employee working underground at our Berwind Mine Complex in McDowell County, West Virginia passed away. We extend our heartfelt thoughts, prayers, and condolences to Mr. Hively’s family, friends and co-workers. Mr. Hively was an experienced miner employed by GMS Mine Repair & Maintenance, Inc. a longtime independent contractor for the Company. The accident was reported immediately to state and federal safety authorities who, along with the company and contractor, are now investigating. The Company is committed to find the cause of this accident.” 52 Table of Contents Regarding the November 5, 2018 Elk Creek raw coal silo failure litigation, on August 12, 2021, the defendants filed a post-trial motion for judgment as a matter of law or in the alternative to alter or amend the judgment or for a new trial. The parties fully briefed the motion and it stood submitted on August 31, 2021. On March 4, 2022, the court entered its memorandum opinion and order on the motion reducing the jury award to a total of $ 1.8 million, including pre-judgment interest, based largely on the court’s decision to vacate and set aside, in its entirety, the jury award of damages for inconvenience and aggravation. The same day, the court entered the judgment in accordance with the memorandum opinion and order. We are considering our options related to this decision, including an appeal to the US Court of Appeals for the 4th Circuit. * * * * * ​ 53 Table of Contents