Overview

We are an operator and developer of high-quality, low-cost metallurgical coal in southern West Virginia and southwestern Virginia. Our development portfolio primarily includes the Elk Creek, Berwind, Knox Creek, and Maben properties. We believe these properties have geological and logistical advantages that make our coal among the lowest delivered-cost U.S. metallurgical coal for domestic and international customers.

Our primary revenue source is the sale of metallurgical coal. We are a pure-play metallurgical coal company with 59 million reserve tons and 1,119 million measured and indicated resource tons of high-quality metallurgical coal. Our plan is to grow annual production to approximately 7 million clean tons over the next few years, subject to market conditions, permitting, and additional capital deployment.

The overall outlook for the metallurgical coal business depends on factors like pricing, regulatory uncertainties, and global economic conditions. Coal consumption and production in the U.S. is driven by the U.S. and global economies, the U.S. dollar’s strength, and production cuts. Blast furnace steelmaking is more prevalent outside the U.S., creating demand for metallurgical coal exports.

Global metallurgical coal markets softened in 2024 due to constrained economic growth in some regions and continued overseas conflict. The global steel market experienced slower growth, especially in China, leading to lower steel use and elevated Chinese steel exports, which negatively impacted pricing in the Company’s traditional markets. Longer-term, the Company believes limited investment in new coking coal production capacity and an eventual return to economic growth will support coking coal markets.

During the first six months of 2024, the Company sold 1.8 million tons of coal and recognized $328.0 million in revenue, with 33% from North American markets and 67% from export markets. This compares to 1.5 million tons sold and $303.8 million in revenue in the same period of 2023, with 31% from North American markets and 69% from exports.

The Company continues to assess its potential rare earth and critical minerals deposit in Wyoming and is making progress on initial mine development and related testing. Analysis indicates elevated levels of rare earth elements and significant concentrations of critical minerals Gallium and Germanium. The Company expects to complete a techno-economic analysis of the commercial aspects later this year and anticipates constructing a demonstration processing facility in 2025.

Results of Operations

The table below summarizes the Company’s financial results for the three and six months ended June 30, 2024 and 2023:

Three Months Ended June 30, 2024 vs. Three Months Ended June 30, 2023:

• Revenue increased 13% driven by a 28% increase in tons sold, partially offset by a 11% decrease in revenue per ton sold.
• Cost of sales increased 24% due to the higher sales volume, but cost per ton sold decreased 4%.
• Adjusted EBITDA decreased 4% due to the impact of lower pricing.

Six Months Ended June 30, 2024 vs. Six Months Ended June 30, 2023:

• Revenue increased 8% driven by a 25% increase in tons sold, partially offset by a 14% decrease in revenue per ton sold.
• Cost of sales increased 25% due to the higher sales volume, with a 1% decrease in cost per ton sold.
• Adjusted EBITDA decreased 32% due to the impact of lower pricing.

The decreases in revenue per ton and cost per ton were primarily driven by the softening of global metallurgical coal markets in 2024 compared to 2023.

Liquidity and Capital Resources

The Company prioritizes managing its financial position and liquidity, while controlling costs and capital expenditures and returning value to shareholders.

On May 3, 2024, the Company amended its Revolving Credit Facility to extend the maturity date to May 3, 2029 and increase the size to $200 million, with an accordion feature to increase by an additional $75 million.

As of June 30, 2024, the Company had $27.6 million in cash and cash equivalents and $43.7 million available under the Revolving Credit Facility. Total current assets exceeded total current liabilities by $39.9 million.

Key sources and uses of cash in the first six months of 2024 included:

• $59.6 million provided by operating activities
• $40.1 million in capital expenditures, primarily for the Maben preparation plant
• $34.0 million in financing activities, including $15.6 million in debt repayments and $16.5 million in dividends

The Company expects to fund its capital and liquidity requirements for the next 12 months and the foreseeable future with cash on hand, borrowings under the Revolving Credit Facility, and projected cash flows from operations. Factors that could adversely impact liquidity include transportation delays, late customer payments, cost overruns, and adverse changes in metallurgical coal markets.

Critical Accounting Estimates and Off-Balance Sheet Arrangements remained consistent with the prior year’s Annual Report.

Non-GAAP Financial Measures

The Company uses the following non-GAAP financial measures to assess its performance:

• Adjusted EBITDA - A reconciliation to net income is provided in the financial statements.
• Revenue per Ton Sold (FOB mine) - Calculated as coal sales revenue less transportation and demurrage, divided by tons sold.
• Cash Cost per Ton Sold (FOB mine) - Calculated as cash cost of sales less transportation, alternative mineral, and idle mine costs, divided by tons sold.

These non-GAAP measures provide useful information to investors by excluding certain items and allowing for better comparisons to peer companies and prior periods.