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What changed in WARRIOR MET COAL, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of WARRIOR MET COAL, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+485 added−471 removedSource: 10-K (2025-02-13) vs 10-K (2024-02-14)

Top changes in WARRIOR MET COAL, INC.'s 2024 10-K

485 paragraphs added · 471 removed · 371 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

95 edited+51 added−38 removed126 unchanged
Biggest changeIt is possible that the Paris Agreement and subsequent domestic and international regulations will have adverse effects on the market for steelmaking coal, natural gas, and other fossil fuel products. Methane must be expelled from our underground coal mines for mining safety reasons. Our gas operations extract methane from our underground steelmaking coal mines prior to mining.
Biggest changeThough President Trump issued an executive order on January 20, 2025, directing the United States Ambassador to the United Nations to immediately withdraw from the Paris Agreement, it is possible that the Paris Agreement and subsequent domestic and international regulations will have adverse effects on the market for steelmaking coal, natural gas, and other fossil fuel products.
Our low and variable cost structure, and our flexible and efficient rail and barge network underpins our cost advantage and dependable access to the seaborne markets. We sell our coal to a diversified customer base of blast furnace steel producers, primarily located in Europe, South America and Asia.
Our low and variable cost structure, and our flexible and efficient rail and barge network underpins our cost advantage and dependable access to the seaborne markets. We sell our coal to a diversified customer base of blast furnace steel producers, primarily located in Asia, Europe and South America.
Clean Water Act The federal CWA and corresponding state and local laws and regulations affect our operations by restricting the discharge of pollutants, including dredged and fill materials, into waters of the United States. CWA requirements that may directly or indirectly affect our operations include the following: • Water Discharge .
Clean Water Act The federal Clean Water Act ("CWA") and corresponding state and local laws and regulations affect our operations by restricting the discharge of pollutants, including dredged and fill materials, into waters of the United States. CWA requirements that may directly or indirectly affect our operations include the following: • Water Discharge .
In the U.S., environmental laws and regulations include, but are not limited to, the Clean Air Act and its state and local counterparts with respect to air emissions; the Clean Water Act and its state counterparts with respect to water discharges and dredge and fill operations; the Resource Conservation and Recovery Act and its state counterparts with respect to solid and hazardous waste generation, treatment, storage and disposal, as well as the regulation of underground storage tanks; the 13 Comprehensive Environmental Response, Compensation and Liability Act and its state counterparts with respect to releases, threatened releases and remediation of hazardous substances; the Endangered Species Act with respect to protection of threatened and endangered species; the National Environmental Policy Act with respect to the impacts of federal actions such as the issuance of permits and licenses; and the Surface Mining Control and Reclamation Act of 1977 and its state counterparts with respect to environmental protection and reclamation standards for mining activities.
In the U.S., environmental laws and regulations include, but are not limited to, the Clean Air Act and its state and local counterparts with respect to air emissions; the Clean Water Act and its state counterparts with respect to water discharges and dredge and fill operations; the Resource Conservation and Recovery Act and its state counterparts with respect to solid and hazardous waste generation, treatment, storage and disposal, as well as the regulation of underground storage tanks; the Comprehensive Environmental Response, Compensation and Liability Act and its state counterparts with respect to releases, threatened releases and remediation of hazardous substances; the Endangered Species Act with respect to protection of threatened and endangered species; the National Environmental Policy Act with respect to the impacts of federal actions such as the issuance of permits and licenses; and the Surface Mining Control and Reclamation Act of 1977 and its state counterparts with respect to environmental protection and reclamation standards for mining activities.
If the EPA were to make an endangerment finding in the future, we may have to further reduce our methane emissions, install additional air pollution controls, pay certain taxes or fees for our emissions, incur costs to purchase credits that permit us to continue operations as they now exist at our underground coal mines or perhaps curtail coal production.
If the EPA were to make an endangerment finding in the future, we may have to further reduce our methane emissions, install additional air pollution controls, pay certain taxes or fees for our 17 emissions, incur costs to purchase credits that permit us to continue operations as they now exist at our underground coal mines or perhaps curtail coal production.
On December 20, 2016, the OSM published a new, finalized “Stream Protection Rule,” setting standards for “material damage to the hydrologic balance outside the permit area” that are applicable to surface and underground mining operations. However, on February 16, 2017, former President Trump signed a joint congressional resolution disapproving the Stream Protection Rule pursuant to the Congressional Review Act.
On December 20, 2016, the OSM published a new, finalized “Stream Protection Rule,” setting standards for “material damage to the hydrologic balance outside the permit area” that are applicable to surface and underground mining operations. However, on February 16, 2017, President Trump signed a joint congressional resolution disapproving the Stream Protection Rule pursuant to the Congressional Review Act.
These 18 recent actions provide much needed clarity, as confusion over the scope of CWA jurisdiction had led to significant permitting delays, litigation, and uncertainty in the mining industry. Resource Conservation and Recovery Act The Resource Conservation and Recovery Act (“RCRA”) and corresponding state laws establish standards for the management of solid and hazardous wastes generated at our various facilities.
These recent actions provide much needed clarity, as confusion over the scope of CWA jurisdiction had led to significant permitting delays, litigation, and uncertainty in the mining industry. Resource Conservation and Recovery Act The Resource Conservation and Recovery Act (“RCRA”) and corresponding state laws establish standards for the management of solid and hazardous wastes generated at our various facilities.
Our clean balance sheet and its low sustaining capital expenditure requirements position us to generate strong cash flows across a range of steelmaking coal price environments. Additionally, we expect our cash flows to benefit from a low cash tax rate, which will enable strong cash conversion from our operating profits. Disciplined financial policies to ensure stable performance .
Our clean balance sheet and low sustaining capital expenditure requirements position us to generate strong cash flows across a range of steelmaking coal price environments. Additionally, we expect our cash flows to benefit from a low cash tax rate, which will enable strong cash conversion from our operating profits. Disciplined financial policies to ensure stable performance .
Any change or reclassification of this exemption could significantly increase our coal mining costs. Comprehensive Environmental Response, Compensation and Liability Act The Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) and similar state laws affect our steelmaking coal mining operations by, among other things, imposing investigation and cleanup requirements for threatened or actual releases of hazardous substances.
Any change or reclassification of this exemption could significantly increase our coal mining costs. 19 Comprehensive Environmental Response, Compensation and Liability Act The Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) and similar state laws affect our steelmaking coal mining operations by, among other things, imposing investigation and cleanup requirements for threatened or actual releases of hazardous substances.
While the proposed power plant rules do not affect our marketing of our steelmaking coal, the continued regulatory focus could lead to future GHG regulations for the mining industry and its steelmaking customers, which ultimately could make it more difficult or costly for us to conduct our operations or adversely affect demand for our products.
While the power plant rules do not affect our marketing of our steelmaking coal, the continued regulatory focus could lead to future GHG regulations for the mining industry and its steelmaking customers, which ultimately could make it more difficult or costly for us to conduct our operations or adversely affect demand for our products.
The Clean Air Act indirectly affects our mining operations by extensively regulating the air emissions of sulfur dioxide, nitrogen oxides, mercury, ozone and other compounds emitted by steel manufacturers, coke ovens and coal-fired utilities. These laws are constantly evolving and may become more stringent.
The Clean Air Act indirectly affects our mining operations by extensively regulating the air emissions of sulfur dioxide, nitrogen oxides, mercury, ozone and other compounds emitted by steel manufacturers, coke ovens and coal-fired utilities. These 18 laws are constantly evolving and may become more stringent.
Our operations’ high-quality steelmaking coal is considered among the highest quality steelmaking coals in the world and is preferred as a base steelmaking coal in our customers’ blends. Our marketing strategy is to focus on international markets mostly in Europe and South America where we have a shipping time and distance advantage and where our steelmaking coal is in demand.
Our operations’ high-quality steelmaking coal is considered among the highest quality steelmaking coals in the world and is preferred as a base steelmaking coal in our customers’ blends. Our marketing strategy is to focus on international markets mostly in Europe and South America where we have a shipping time and distance advantage.
We have developed a logistics strategy based on multiple modalities, multiple carriers for both rail and river transportation and multiple terminals to ensure reliability of supply and cost-competitive rates. Our ability to move our coals via rail and/or barge is a significant advantage for 6 Warrior.
We have developed a logistics strategy based on multiple modalities, multiple carriers for both rail and river transportation and multiple terminals to ensure reliability of supply and cost-competitive rates. Our ability to move our coals via rail and/or barge is a significant advantage for Warrior.
Operating at approximately 2,000 feet below the surface, Mines No. 4 and No. 7 are two of the deepest underground coal mines in North 8 America. The steelmaking coal is mined using longwall extraction technology with development support from continuous miners.
Operating at approximately 2,000 feet below the surface, Mines No. 4 and No. 7 are two of the deepest underground coal mines in North America. The steelmaking coal is mined using longwall extraction technology with development support from continuous miners.
We also make available on our website (http://www.warriormetcoal.com) all of the documents (including any amendments thereto) that we file or furnish with the SEC, free of charge, as soon as reasonably practicable after we 19 electronically file such material with the SEC.
We also make available on our website (http://www.warriormetcoal.com) all of the documents (including any amendments thereto) that we file or furnish with the SEC, free of charge, as soon as reasonably practicable after we electronically file such material with the SEC.
Our highly flexible cost structure provides us with a key competitive advantage relative to our competitors and which we expect should allow us to remain profitable in all coal market conditions. Robust logistics and significant logistical cost advantage to the seaborne market .
Our highly flexible cost structure provides us with a key competitive advantage relative to our competitors and which we expect should allow us to remain profitable in all coal market conditions. 6 Robust logistics and significant logistical cost advantage to the seaborne market .
These federal mine safety and health laws and regulations have a significant effect on our operating costs. 14 Workers’ Compensation and Black Lung We are insured for workers’ compensation benefits for work related injuries that occur within our operations.
These federal mine safety and health laws and regulations have a significant effect on our operating costs. Workers’ Compensation and Black Lung We are insured for workers’ compensation benefits for work related injuries that occur within our operations.
Laws and regulations governing emissions of GHGs have been adopted by foreign governments (including the European Union and member countries), U.S. Congress and regulatory agencies, individual states in the U.S. and regional governmental 16 authorities.
Laws and regulations governing emissions of GHGs have been adopted by foreign governments (including the European Union and member countries), U.S. Congress and regulatory agencies, individual states in the U.S. and regional governmental authorities.
Further, numerous proposals have been made and are likely to continue to be made at the international, national, regional and state levels of government that are intended to limit emissions of GHGs by enforceable requirements and voluntary measures.
Further, numerous proposals have been made and are likely to continue to be made at the international, regional and state levels of government that are intended to limit emissions of GHGs by enforceable requirements and voluntary measures.
We intend to disclose on our website any amendments or waivers to our Code of Business Conduct and Ethics that are required to be disclosed pursuant to Item 5.05 of Form 8-K. 20
We intend to disclose on our website any amendments or waivers to our Code of Business Conduct and Ethics that are required to be disclosed pursuant to Item 5.05 of Form 8-K.
Waste Management We have a strong environmental compliance record (99.93%) with the EPA's NPDES program, which addresses water pollution by regulating point sources that discharge pollutants into U.S. waters. According to the World Resources Institute, we do not have any mines operating within or near regions identified with high or extremely high baseline water stress.
Waste Management We have a strong environmental compliance record (99.75%) with the EPA's NPDES program, which addresses water pollution by regulating point sources that discharge pollutants into U.S. waters. According to the World Resources Institute, we do not have any mines operating within or near regions identified with high or extremely high baseline water stress.
For more information regarding our customers, see Note 2 to our consolidated financial statements included elsewhere in this Annual Report. 9 Competition Substantially all of our steelmaking coal sales are exported. Our major competitors are businesses that sell into our core business areas of Europe, South America and Asia.
For more information regarding our customers, see Note 2 to our consolidated financial statements included elsewhere in this Annual Report. 9 Competition Substantially all of our steelmaking coal sales are exported. Our major competitors sell into our core business areas of Europe, South America and Asia.
We remain committed to taking steps to decrease our carbon footprint by reducing GHG emissions and minimizing our impact on the environment. Our Business Strategies Our objective is to increase stockholder value through our continued focus on asset optimization and cost management to drive profitability and cash flow generation.
We remain committed to taking steps to decrease our carbon footprint by reducing GHG emissions and water usage, minimizing our impact on the environment. Our Business Strategies Our objective is to increase stockholder value through our continued focus on asset optimization and cost management to drive profitability and cash flow generation.
In 2023, we implemented the EMIS software, which enhances our monitoring and tracking for water quality and usage, waste management, and GHG emissions, among other items. Currently, we control nine certified tailings impoundment facilities that are subject to MSHA regulations and certification.
In 2023, we implemented the EMIS software, which enhances our monitoring and tracking for water quality and usage, waste management, and GHG emissions, among other items. Currently, we control seven certified tailings impoundment facilities that are subject to MSHA regulations and certification.
We also offer our employees paid time off and an Employee Assistance Program which is a comprehensive network of accredited counselors and other specialized professional who provide support on several issues, including mental health, relationships, wellbeing, stress and personal finances.
We also offer our employees paid time off and an Employee Assistance Program which is a comprehensive network of accredited counselors and other specialized professionals who provide support on several issues, including mental health, relationships, wellbeing, stress and personal finances.
As such, we will seek to maintain a conservative financial leverage target of 1.50 - 2.00x based on normalized EBITDA and seek to maintain minimum liquidity of $250 million during the development of Blue Creek. We plan to continually evaluate our liquidity needs based on our estimated capital needs.
During the development of Blue Creek, we will seek to maintain a conservative financial leverage target of 1.50 - 2.00x based on normalized EBITDA and seek to maintain minimum liquidity of $250 million. We plan to continually evaluate our liquidity needs based on our estimated capital needs.
In addition, certain of our subsidiaries are responsible for medical and disability benefits for black lung disease under the Federal Coal Mine Health and Safety Act of 1969, the Mine Act and the Black Lung Benefits Revenue Act of 1977 and the Black Lung Benefits Reform Act of 1977, each as amended (together, the “Black Lung Benefits Act”), and are insured under a guaranteed cost insurance policy beginning on April 1, 2016 through May 31, 2018 for black lung claims of any of our employees.
In addition, certain of our subsidiaries are responsible for medical and disability benefits for black lung disease under the Federal Coal Mine Health and Safety Act of 1969, the Mine Act and the Black Lung Benefits Revenue Act of 1977 and the Black Lung Benefits Reform Act of 1977, each as amended (together, the “Black Lung Benefits Act”), and are insured under a guaranteed cost insurance policy beginning on April 1, 2016 through May 31, 2018 for black lung and workers compensation related claims of any of our employees.
These inflationary pressures have contributed to rising costs for us and may continue to do so in the future. We are applying a number of different strategies to mitigate the impact of inflation on our operations, including placing purchase orders earlier, utilizing short term contracts and leveraging our supplier relationships.
These inflationary pressures have contributed to rising costs for us and may continue to do so in the future. We apply a number of different strategies to mitigate the impact of inflation on our operations, including placing purchase orders earlier, utilizing short term contracts and leveraging our supplier relationships.
The Sustainability, Environmental, Health & Safety Committee of the Board (the "EHS Committee") is tasked with assessing the effectiveness of the Company’s sustainability, environmental, health and safety policies, programs and initiatives, as well as reviewing and monitoring the Company’s compliance with applicable sustainability, environmental, health and safety laws, rules and regulations.
The Sustainability, Environmental, Health & Safety Committee of the Board (the "SEHS Committee") is tasked with assessing the effectiveness of the Company’s sustainability, environmental, health and safety policies, programs and initiatives, as well as reviewing and monitoring the Company’s compliance with applicable sustainability, environmental, health and safety laws, rules and regulations.
We also continuously work to evaluate and test emerging technologies that can optimize our water usage and successfully achieved a 7 99.93% compliance record with the EPA National Pollutant Discharge Elimination System ("NPDES") program, which addresses water pollution by regulating point source discharges.
We also continuously work to evaluate and test emerging technologies that can optimize our water usage and successfully achieved a 99.75% compliance record with the EPA National Pollutant Discharge Elimination System ("NPDES") program, which addresses water pollution by regulating point source discharges.
The EHS Committee receives quarterly reports from Company management, during which the EHS Committee reviews and discusses the Company’s various sustainability, environmental, health and safety initiatives and any issues related to these areas.
The SEHS Committee receives quarterly reports from Company management, during which the SEHS Committee reviews and discusses the Company’s various sustainability, environmental, health and safety initiatives and any issues related to these areas.
Also, in August 2022, President Biden signed the Inflation Reduction Act of 2022 ("IRA") into law. The IRA contains billions of dollars in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles, investments in advanced biofuels and supporting infrastructure and carbon capture and sequestration, amongst other provisions.
Also, in August 2022, President Biden signed the Inflation Reduction Act of 2022 ("IRA") into law. The IRA contains billions of dollars in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles, investments in advanced biofuels and supporting infrastructure, amongst other provisions.
Accordingly, the regulations in effect prior to the Stream Protection Rule apply, including OSM’s 1983 rule, which requires coal companies to keep operations 100 feet from streams or otherwise minimize any damage. It remains unclear whether and how additional actions by the Biden Administration could further impact regulatory or enforcement activities pursuant to the SMCRA.
Accordingly, the regulations in effect prior to the Stream Protection Rule apply, including OSM’s 1983 rule, which requires coal companies to keep operations 100 feet from streams or otherwise minimize any damage. It remains unclear whether and how additional federal actions could further impact regulatory or enforcement activities pursuant to the SMCRA.
The Company recently released its annual Environmental, Social and Corporate Governance ("ESG") sustainability report that was prepared in accordance with the Global Reporting Initiative Standards (Core Option) and the Sustainability Accounting Standards Board standards for Coal Operations and highlights our goals of becoming an industry leader in environmental stewardship, maintaining a strong environmental compliance record and safety statistics that are better than the industry average, and forming collaborative partnerships focused on workforce development and our communities.
The Company recently released its annual Environmental, Social and Corporate Governance ("ESG") sustainability report that was prepared in accordance with the Sustainability Accounting Standards Board standards for Coal Operations and highlights our goals of becoming an industry leader in environmental stewardship, maintaining a strong environmental compliance record and safety statistics that are better than the industry average, and forming collaborative partnerships focused on workforce development and our communities.
Risk Factors — Risks Related to Our Business — We are responsible for medical and disability benefits for black lung disease under federal law." Surface Mining Control and Reclamation Act The Surface Mining Control and Reclamation Act of 1977 (“SMCRA”) requires that comprehensive environmental protection and reclamation standards be met during the course of and following completion of mining activities.
Risk Factors — Risks Related to Regulatory Compliance — We are responsible for medical and disability benefits for black lung disease under federal law." Surface Mining Control and Reclamation Act The Surface Mining Control and Reclamation Act of 1977 (“SMCRA”) requires that comprehensive environmental protection and reclamation standards be met during the course of and following completion of mining activities.
We are self-insured for these black lung liabilities and have posted $18.6 million in surety bonds and $9.0 million of collateral recognized as short term investments in addition to maintaining a black lung trust of $1.8 million that was acquired from Walter Energy.
We are self-insured for these black lung liabilities and have posted $18.6 million in surety bonds and $9.5 million of collateral recognized as short term investments in addition to maintaining a black lung trust of $1.4 million that was acquired from Walter Energy.
We believe this creates an opportunity for Blue Creek to take advantage of favorable pricing dynamics driven by the declining supply of premium High Vol A coals. We expect our fourth longwall to start at Blue Creek in the second quarter of 2026.
We believe this creates an opportunity for Blue Creek to take advantage of favorable pricing dynamics driven by the declining supply of premium High Vol A coals. We expect our fourth longwall to start at Blue Creek no later than the second quarter of 2026.
We are a large-scale, low-cost producer and exporter of premium quality met or steelmaking coal, also known as hard coking coal (“HCC”), operating highly efficient longwall operations in our underground mines based in Alabama, Mine No. 4 and Mine No. 7. Our steelmaking coal production totaled 6.9 million metric tons in 2023.
We are a large-scale, low-cost producer and exporter of premium quality met or steelmaking coal, also known as hard coking coal (“HCC”), operating highly efficient longwall operations in our underground mines based in Alabama, Mine No. 4 and Mine No. 7. Our steelmaking coal production totaled 7.5 million metric tons in 2024.
Beginning on June 1, 2020, the Company has a deductible policy where the Company is responsible for the first $1.0 million for each black lung related claim from any of our employees. We also assumed all of the black lung liabilities of Walter Energy and its U.S. subsidiaries.
Beginning on June 1, 2024, the Company has a deductible policy where the Company is responsible for the first $2.0 million for each black lung and workers compensation related claim from any of our employees. We also assumed all of the black lung liabilities of Walter Energy and its U.S. subsidiaries.
In 2024, our volunteer PTO benefit will continue to be available to all full-time employees to enable them to provide hands-on assistance to organizations or causes that are important to them throughout each year. Governance Our Board oversees our policies, creating strategies and initiatives that embrace ESG matters.
Our volunteer PTO benefit will continue to be available to all full-time employees to enable them to provide hands-on assistance to organizations or causes that are important to them throughout each year. Governance Our Board oversees our policies, which include strategies and initiatives that embrace ESG matters.
Our External Affairs group works and engages with trade associations, community partners, non-governmental organizations (NGOs) and nonprofit organizations to provide helpful information and expertise regarding the Company and industry. In 2023, we contributed over one million dollars to local nonprofits through sponsorships and other donations.
Our External Affairs group works and engages with trade associations, community partners, non-governmental organizations (NGOs) and nonprofit organizations to provide helpful information and expertise 13 regarding the Company and industry. In 2024, we contributed over $1.5 million dollars to local nonprofits through sponsorships and other donations.
Structural failure of an impoundment can result in damage to the environment and natural resources, such as bodies of water that the coal slurry reaches, as well as create liability for related personal injuries, property damages and injuries to wildlife.
Such areas and impoundments are subject to comprehensive regulation. Structural failure of an impoundment can result in damage to the environment and natural resources, such as bodies of water that the coal slurry reaches, as well as create liability for related personal injuries, property damages and injuries to wildlife.
Blue Creek represents one of the last remaining large scale untapped premium quality, High Vol A coal reserves in the U.S. with a mine life of 40 or more years. High Vol A coals have traditionally priced at a slight discount to the Australian premium Low Vol and the U.S.
Blue Creek represents one of the last remaining large scale untapped premium quality, High Vol A coal reserves in the U.S. with a mine life of approximately 40 years assuming a single longwall operation. High Vol A coals have traditionally priced at a slight discount to the Australian premium Low Vol and the U.S.
From June 1, 2018 to May 31, 2020, the Company had a deductible policy where the Company was responsible for the first $0.5 million for each black lung claim from any of our employees.
From June 1, 2018 to May 31, 2020 and June 1, 2020 to May 31, 2024, the Company had a deductible policy where the Company was responsible for the first $0.5 million and $1.0 million, respectively, for each black lung and workers compensation related claim from any of our employees.
Our key strategies to achieve this objective are described below: Maximize profitable production . In the year ended December 31, 2023, we produced 6.9 million metric tons of steelmaking coal from Mine No. 7 and Mine No. 4.
Our key strategies to achieve this objective are described below: Maximize profitable production . In the year ended December 31, 2024, we produced 7.5 million metric tons of steelmaking coal from Mine No. 7, Mine No. 4 and Blue Creek.
Environmental We work to safely and efficiently produce some of the highest quality HCC steelmaking coal for our global customers while prioritizing the safety of our environmental footprint. This includes accounting for and working to reduce our GHG emissions, water usage and impact on biodiversity. GHG Emissions We are proud of our environmental performance, including our award-winning reclamation activities.
Environmental We work to safely and efficiently produce some of the highest quality HCC steelmaking coal for our global customers while prioritizing the safety of our environmental footprint. This includes accounting for and working to reduce our GHG emissions, water usage and impact on biodiversity.
To help achieve this, we engage a broad range of communication channels, tools, and processes to attract highly capable external candidates to generate an experienced and diverse candidate pool.
Our policies and practices support diversity and equality. To help achieve this, we engage a broad range of communication channels, tools, and processes to attract highly capable external candidates to generate an experienced and diverse candidate pool.
We have also elevated our efforts on minority and veteran recruiting by visiting and recruiting from Historically Black Colleges and Universities, growing existing partnerships and seeking new partnerships with groups to provide diverse internships, and attending and recruiting at military job fairs .
We have also elevated our efforts on minority and veteran recruiting by visiting and recruiting from Historically Black Colleges and Universities, growing existing partnerships and seeking new partnerships with groups to provide diverse internships, and attending and recruiting at military job fairs. In 2024, 24% of new employees hired were from diverse backgrounds.
We are committed to providing our products in a responsible manner. In 2022, we partnered with a third-party consultant to develop a sustainability strategy that is focused on the following objectives, among others: materiality and risk assessment, creating and tracking measurable goals, GHG reduction, water usage reduction, enhancing governance standards and performing a community impact assessment.
We partnered with a third-party consultant to develop a sustainability strategy that is focused on the following objectives, among others: materiality and risk assessment, creating and tracking measurable goals, GHG reduction, water usage reduction, enhancing governance standards and performing a community impact assessment.
As of December 31, 2023, we had outstanding surety bonds with parties for post-mining reclamation at all of our mining operations totaling $44.3 million, $18.6 million for black lung liabilities and $5.2 million for miscellaneous purposes.
As of December 31, 2024, we had outstanding surety bonds with parties for post-mining reclamation at all of our mining operations totaling $50.6 million, $18.6 million for black lung liabilities and $7.7 million for miscellaneous purposes.
The requirements are costly and time-consuming and may delay commencement or continuation of exploration, production or expansion at our operations. Typically, we submit necessary mining permit applications several months, or even years, before we anticipate mining a new area.
In addition, we must also submit a comprehensive plan for mining and reclamation upon the completion of mining operations. The requirements are costly and time-consuming and may delay commencement or continuation of exploration, production or expansion at our operations. Typically, we submit necessary mining permit applications several months, or even years, before we anticipate mining a new area.
Description of Our Business Our underground mining operations are headquartered in Brookwood, Alabama and as of December 31, 2023, based on a reserve report prepared by Marshall Miller & Associates, Inc., were estimated to have approximately 82.9 million metric tons of recoverable reserves located in west central Alabama between the cities of Birmingham and Tuscaloosa.
Description of Our Business Our underground mining operations and our world-class Blue Creek growth project are headquartered in Brookwood, Alabama and as of December 31, 2024, based on a reserve report prepared by Marshall Miller & Associates, Inc., were estimated to have approximately 151.4 million metric tons of recoverable reserves located in west central Alabama between the 8 cities of Birmingham and Tuscaloosa.
Our continued emphasis on enhancing our safety performance has resulted in total reportable incidence rates of 2.02 at Mine No. 4 and 1.82 at Mine No. 7 for the year ended December 31, 2023, which is 57% lower than the national total reportable incidence rate for all underground coal mines in the United States of 4.39 for the nine months ended September 30, 2023, which represents the latest data available.
Our continued emphasis on enhancing our safety performance has resulted in total reportable incidence rates of 1.21 at Mine No. 4, 1.80 at Mine No. 7 and zero at Blue Creek for the year ended December 31, 2024, which is 65% lower than the national total reportable incidence rate for all underground coal mines in the United States of 4.36 for the nine months ended September 30, 2024, which represents the latest data available.
Highly flexible cost structure protects through-the-cycle profitability . We have “variabilized” our cost structure in our labor, royalties and logistics contracts, increasing the proportion of our cost structure that varies in response to changes in HCC prices based on a variety of indices.
We expect to provide updated financial and operational information on Blue Creek in the near future. Highly flexible cost structure protects through-the-cycle profitability . We have “variabilized” our cost structure in our labor, royalties and logistics contracts, increasing the proportion of our cost structure that varies in response to changes in HCC prices based on a variety of indices.
We focus on long-term customer relationships where we have a competitive advantage. We typically sell our steelmaking coal under fixed supply contracts primarily with indexed pricing terms and volume terms of one to three years. Some of our sales of steelmaking coal can, however, occur in the spot market as dictated by available supply and market demand.
We typically sell our steelmaking coal under fixed supply contracts primarily with indexed pricing terms and volume terms of one to three years. Some of our sales of steelmaking coal can, however, occur in the spot market as dictated by available supply and market demand.
The proposed rules require, among other requirements, all self-insured operators to post security of at least 120 percent of their projected black lung liabilities. The changes in the estimated claims to be paid or changes in the amount of collateral required by the DOL may have a greater impact on our profitability and cash flows in the future.
The final rules require, among other requirements, all self-insured operators to post security of at least 100 percent of their projected black lung liabilities. The changes in the final rules required by the DOL may have a greater impact on our profitability and cash flows in 15 the future.
Our Mine No. 4 steelmaking coal transitioned in the second half of the year from a Mid Vol to a High Vol A quality coal that typically trades at a larger discount to the price of coal from Mine No. 7.
Our Mine No. 4 steelmaking coal is a High Vol A quality coal that typically trades at a larger discount to the price of coal from Mine No. 7.
This includes treating everyone with respect, valuing diversity, and fostering safe and inclusive environments. Warrior's Code of Business Conduct and Ethics and Human Rights Policy promote and support diversity by offering a workplace in which people are protected from harassment and discrimination based on gender, race, age, sexual orientation, and other factors.
Warrior's Code of Business Conduct and Ethics and Human Rights Policy promote and support diversity by offering a workplace in which people are protected from harassment and discrimination based on gender, race, age, sexual orientation, and other factors.
Once fully developed, we expect Blue Creek to be a transformational investment that will increase annual production capacity by 60% and expand our product portfolio to our global customers, offering two premium HCCs that are expected to achieve the highest premium steelmaking coal prices in the seaborne markets.
Once fully developed, we expect Blue Creek to be a transformational investment that will increase annual production capacity by 60% and expand our product portfolio to our global customers, offering two premium HCCs.
Our employees are supported with training and development opportunities to pursue their career paths and to ensure compliance with our policies. We incorporate training best practices, provide continuing education and constantly reinforce individual skills.
Training We strive to recruit, hire and retain a talented and diverse team of people. Our employees are supported with training and development opportunities to pursue their career paths and to ensure compliance with our policies. We incorporate training best practices, provide continuing education and constantly reinforce individual skills.
Our Mine No. 4 steelmaking coal transitioned in the second half of the year from a Mid Vol to a High Vol A quality coal that typically trades at a larger discount to the price of Mine No. 7 coal. We now primarily target the East Coast High Vol A indices price for our Mine No. 4 coal.
Our Mine No. 4 steelmaking coal is a High Vol A quality coal that typically trades at a larger discount to the price of Mine No. 7 coal. We now primarily target the East Coast High Vol A indices price for our Mine No. 4 coal. Our Blue Creek mine steelmaking coal is also a High Vol A quality coal.
Surety Bonds/Financial Assurance We use surety bonds and letters of credit to provide financial assurance for certain transactions and business activities. Federal and state laws require us to obtain surety bonds or other acceptable security to secure payment of certain long-term obligations including mine closure or reclamation costs and other miscellaneous obligations.
Federal and state laws require us to obtain surety bonds or other acceptable security to secure payment of certain long-term obligations including mine closure or reclamation costs and other miscellaneous obligations.
We are required to prepare and present to federal, state and local authorities data pertaining to the effect or impact that any proposed exploration project for production of coal or gas may have on the environment, the public and our employees. In addition, we must also submit a comprehensive plan for mining and reclamation upon the completion of mining operations.
We are required to prepare and present to federal, state and local authorities data pertaining to the effect or impact that any proposed exploration 14 project for production of coal or gas may have on the environment, the public and our employees.
If regulation of GHG emissions does not exempt the release of methane, we may have to curtail steelmaking coal production, pay certain taxes or fees for our emissions or incur costs to purchase credits that allow us to continue operations as they now exist at our underground steelmaking coal mines. 17 The existing laws and regulations or other current and future efforts to stabilize or reduce GHG emissions could adversely impact the demand for, price of and value of our products and reserves.
If regulation of GHG emissions does not exempt the release of methane, we may have to curtail steelmaking coal production, pay certain taxes or fees for our emissions or incur costs to purchase credits that allow us to continue operations as they now exist at our underground steelmaking coal mines.
Direct impacts on coal mining may occur through permitting requirements and/or emission control requirements relating to particulate matter, such as fugitive dust, or fine particulate matter measuring 2.5 micrometers in diameter or smaller.
Clean Air Act The Clean Air Act and comparable state laws that regulate air emissions affect coal mining operations both directly and indirectly. Direct impacts on coal mining may occur through permitting requirements and/or emission control requirements relating to particulate matter, such as fugitive dust, or fine particulate matter measuring 2.5 micrometers in diameter or smaller.
In contrast, coal produced in the Central Appalachian region of the United States is typically characterized by medium-to-high VM and a CSR that is below the requirements of the Australian Index price. The steelmaking coal from our Mines No. 4 and No. 7 is sold as high-quality Low Vol and High Vol A steelmaking coal.
In contrast, coal produced in the Central Appalachian region of the United States is typically characterized by medium-to-high VM and a CSR that is below the requirements of the Australian Index price. We have 82.4 million metric tons of recoverable reserves at Mines No. 4 and No. 7.
On July 12, 2022, we received a decision on our appeal from the DOL lowering the amount of collateral required to be posted from $39.8 million to $28.0 million. We appealed this decision. In addition, on January 19, 2023, the DOL proposed revisions to regulations under the Black Lung Benefits Act governing authorization of self-insurers.
On July 12, 2022, we received a decision on our appeal from the DOL lowering the amount of collateral required to be posted from $39.8 million to $28.0 million. We appealed this decision.
Our employees make us who we are, and we offer tools to identify, grow and nurture our talent, including our future leaders development program, annual supervisor and development training, employee education assistance and annual performance evaluations. In 2023, our training initiatives were expansive: over 260 training sessions were conducted, involving more than 1,500 employees.
Our employees make us who we are, and we offer tools to identify, grow and nurture our talent, including our future leaders development program, annual supervisor and development training, employee education assistance and annual performance evaluations. In 2024, our training initiatives were expansive: employees collectively completed nearly 50,000 hours of training, of which more than 21,000 were additional non-required hours.
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” (“AMD”). Treatment of AMD can be costly. Although we do not currently face material costs associated with AMD, there can be no assurance that we will not incur significant costs in the future.
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” (“AMD”). Treatment of AMD can be costly.
Employees have the right and are empowered to report issues via several reporting channels, including our third party-managed confidential employee hotline should they wish to remain anonymous.
Employees have the right and are empowered to report issues via several reporting channels, including our third party-managed confidential employee hotline should they wish to remain anonymous. As of December 31, 2024, our Board was 33% female and 17% racially and/or ethnically diverse and more than 24% of our workforce identified as racially or ethnically diverse.
The Abandoned Mine Land Fund, which is part of SMCRA, imposes a general funding fee on all coal produced. The proceeds are used to reclaim mine lands closed or abandoned prior to 1977.
The Abandoned Mine Land Fund, which is part of SMCRA, imposes a general funding fee on all coal produced. The proceeds are used to reclaim mine lands closed or abandoned prior to 1977. On November 15, 2021, the Abandoned Mine Land Program was extended through September 2034. We maintain extensive coal refuse areas and slurry impoundments at our mining complexes.
In 2023, our total incidence rate was 1.90, which is 57% lower than the national total reportable incidence rate for all underground coal mines in the United States of 4.39 for the nine months ended September 30, 2023, which represents the latest data available. Training We strive to recruit, hire and retain a talented and diverse team of people.
In 2024, our total incidence rate was 1.53, which is a 19% improvement from the prior year's rate of 1.9% and 65% lower than the national total reportable incidence rate for all underground coal mines in the United States of 4.36 for the nine months ended September 30, 2024, which represents the latest data available.
Our total compensation and benefits package is designed to stay competitive and to assist in achieving our goals of attracting, rewarding, and retaining employees by always focusing on employees and their families first.
We also offer full-time employees the opportunity to participate in retirement benefits through a company-sponsored 401(k) account which includes a generous company match. Our total compensation and benefits package is designed to stay competitive and to assist in achieving our goals of attracting, rewarding, and retaining employees by always focusing on employees and their families first.
We also have 67.6 million metric tons of recoverable reserves and 39.7 million metric tons of coal resources exclusive of reserves, which total 107.3 million metric tons, at Blue Creek located to the northwest of Mine No. 4, based on a reserve report prepared by Marshall Miller and Associates, Inc.
We also have alternative outbound logistics routes to increase transportation and vessel shipping optionality. We also have 69.0 million metric tons of recoverable reserves and 39.7 million metric tons of coal resources exclusive of reserves at our Blue Creek mine, based on a reserve report prepared by Marshall Miller and Associates, Inc.
We benefit from the local presence and knowledge of these partners to capture the highest value for our premium coals. Capitalize on opportunities for technological innovation to continue to reduce our impact on the environment. We are fully committed to being a responsible corporate citizen to our employees, customers, communities, and other stakeholders.
When advantageous, we work with strategic partners to assist in the marketing of our coals. We benefit from the local presence and knowledge of these partners to capture the highest value for our premium coals. Capitalize on opportunities for technological innovation to continue to reduce our impact on the environment.
We were also able to reduce Scope 1 and Scope 2 GHG emissions by 13% compared to the 2021 baseline year. We also operate a low-quality gas plant, which is able to improve the quality of ordinarily unsaleable gas that would otherwise escape to the atmosphere. The improved gas is then sold and used by consumers.
We are pleased to report that we reduced our Scope 1 and Scope 2 GHG emissions by 34% from baseline year levels and achieved a 9% decrease in our water consumption. We also operate a low-quality gas plant, which is able to improve the quality of ordinarily unsaleable gas that would otherwise escape to the atmosphere.
Of these nine impoundments, seven are classified as low hazard facilities and only two of the seven are active. Our two high-hazard tailings impoundments undergo rigorous risk analyses and regular independent inspections to ensure safety and compliance.
Of these seven impoundments, five are classified as low hazard facilities and only two of the five are active. Our two high-hazard slurry tailings impoundments are subject to comprehensive risk assessments and third-party inspections to uphold stringent safety standards and regulatory compliance.
The startup of Blue Creek is expected to increase our annual High Vol A production by 4.4 million metric tons per year, thereby increasing our annual production capacity by 60%.
The startup of Blue Creek is expected to increase our annual High Vol A production by 4.4 million metric tons per year, thereby increasing our annual production capacity by 60%. We expect to initially focus on optimizing production volume from the first longwall operation before considering the capital expenditures required and time intensiveness of building a second longwall.
The results are aggregated and then used by management to continually improve our culture and retain our employees. We also offer tuition reimbursement opportunities for those who wish to further their education. In 2023, we invested $0.4 million in leadership development training demonstrating our commitment to fostering a skilled and capable workforce.
The results are aggregated and then used by management to continually improve our culture and retain our employees. We also offer tuition reimbursement opportunities for those who wish to further their education. In 2024, our employee retention rates improved significantly as we have seen a 7% decrease in turnover in 2024 compared to 2023.
Furthermore, following the acquisition of certain assets of Walter Energy, we hired several key personnel with extensive direct operational experience in steelmaking coal longwall mining, including our Chief Operating Officer, Jack Richardson, and a member of our board of directors (the "Board"), Stephen D. Williams. We have a strong record of operating safe mines and are committed to environmental excellence.
("Walter Energy") and has eleven years of direct experience managing Mine No. 4 and Mine No. 7, and over 30 years of experience in longwall coal mining. Furthermore, our Chief Operating Officer, Jack Richardson, has extensive direct operational experience in steelmaking coal longwall mining. We have a strong record of operating safe mines and are committed to environmental excellence.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf the assumptions underlying our accruals are inaccurate, we could be required to expend greater amounts than anticipated; Risks Related to our Financial Results and Finances • Our substantial indebtedness could adversely affect our ability to raise additional capital to fund our operations and dividend policy, limit our ability to react to changes in the economy or our industry and prevent us from making debt service payments on the Notes; • We may be unable to generate sufficient taxable income from future operations, which may limit or eliminate our ability to utilize our significant federal and state tax NOLs or our deferred tax assets; Risks Related to the Ownership of our Common Stock • The market price of our common stock may fluctuate significantly and investors in our common stock could incur substantial losses; • Any declaration and payment of future dividends to holders of our common stock may be limited by restrictive covenants of our ABL Facility and the indenture governing the Notes (the "Indenture"), and will be on the sole discretion of the Board and will also depend on many factors; • Our common stock is subject to the 382 Transfer Restrictions (as defined below) under our certificate of incorporation and the Amended Rights Agreement (as defined below) which are intended to prevent a Section 382 "ownership change," which if not complied with, could result in the forfeiture of such stock and related dividends or substantial dilution of the stock ownership, respectively; and • Delaware law and our charter documents may impede or discourage a takeover or change of control, which could adversely affect the price of our common stock.
Biggest changeIf the assumptions underlying our accruals are inaccurate, we could be required to expend greater amounts than anticipated; Risks Related to our Financial Results and Finances • Our substantial indebtedness could adversely affect our ability to raise additional capital to fund our operations and dividend policy, limit our ability to react to changes in the economy or our industry and prevent us from making debt service payments on the Notes; • We may be unable to generate sufficient taxable income from future operations, which may limit or eliminate our ability to utilize our significant federal and state tax NOLs or our deferred tax assets; Risks Related to the Ownership of our Common Stock • The market price of our common stock may fluctuate significantly and investors in our common stock could incur substantial losses; • Any declaration and payment of future dividends to holders of our common stock may be limited by restrictive covenants of our ABL Facility and the indenture governing the Notes (the "Indenture"), and will be on the sole discretion of the Board and will also depend on many factors; • Our common stock is subject to the 382 Transfer Restrictions (as defined below) under our certificate of incorporation and the Amended Rights Agreement (as defined below) which are intended to prevent a Section 382 "ownership change," which if not complied with, could result in the forfeiture of such stock and related dividends or substantial dilution of the stock ownership, respectively; and • Delaware law and our charter documents may impede or discourage a takeover or change of control, which could adversely affect the price of our common stock. 22 Risks Related to Our Business Our activities may be adversely affected by global pandemics or other widespread illnesses and the related effects on public health, which may prevent us from meeting our targeted production levels and/or executing our planned development initiatives (including, but not limited to, the development of Blue Creek), negatively impact our customers’ demand for steelmaking coal and their ability to honor or renew contracts, adversely affect the health and welfare of Company personnel or prevent our vendors and contractors from performing normal and contracted activities.
This lack of diversification of our business could adversely affect our financial condition, results of operations and cash flows; • Met coal mining involves many hazards and operating risks, and is dependent upon many factors and conditions beyond our control, which may cause our profitability and financial position to decline; • Negative views with respect to environmental and social matters and related governance considerations could harm the perception of our Company by certain investors, environmental and climate change activist groups and financial institutions, including banks and insurance companies, adversely affecting our ability to obtain financing and insurance coverage, and otherwise achieve our strategic priorities; • Our inability to develop steelmaking coal reserves in an economically feasible manner or our inability to acquire additional steelmaking coal reserves that are economically recoverable may adversely affect our business; 21 • Any significant downtime of our major pieces of mining equipment could impair our ability to supply steelmaking coal to our customers and materially and adversely affect our results of operations and cash flows; • We may not recover our investments in our mining, exploration and other assets, which may require us to recognize impairment charges related to those assets; Risks Related to Regulatory Compliance • We are responsible for medical and disability benefits for black lung disease under federal law.
This lack of diversification of our business could adversely affect our financial condition, results of operations and cash flows; • Met coal mining involves many hazards and operating risks, and is dependent upon many factors and conditions beyond our control, which may cause our profitability and financial position to decline; • Negative views with respect to environmental and social matters and related governance considerations could harm the perception of our Company by certain investors, environmental and climate change activist groups and financial institutions, including banks and insurance companies, adversely affecting our ability to obtain financing and insurance coverage, and otherwise achieve our strategic priorities; • Our inability to develop steelmaking coal reserves in an economically feasible manner or our inability to acquire additional steelmaking coal reserves that are economically recoverable may adversely affect our business; • Any significant downtime of our major pieces of mining equipment could impair our ability to supply steelmaking coal to our customers and materially and adversely affect our results of operations and cash flows; • We may not recover our investments in our mining, exploration and other assets, which may require us to recognize impairment charges related to those assets; 21 Risks Related to Regulatory Compliance • We are responsible for medical and disability benefits for black lung disease under federal law.
Any sustained failure to be able to market our 24 coal during such periods would have a material adverse effect on our business, results of operations, cash flows and ability to pay dividends to our stockholders. The failure of our customers to honor or renew contracts could adversely affect our business.
Any 24 sustained failure to be able to market our coal during such periods would have a material adverse effect on our business, results of operations, cash flows and ability to pay dividends to our stockholders. The failure of our customers to honor or renew contracts could adversely affect our business.
These risks, hazards and conditions include, but are not limited to: • variations in geological conditions, such as the thickness of the steelmaking coal seam and amount of rock embedded in the steelmaking coal deposit and variations in rock and other natural materials overlying the steelmaking coal deposit, that could affect the stability of the roof and the side walls of the mine; • mining, process and equipment or mechanical failures, unexpected maintenance problems and delays in moving longwall equipment; • the unavailability of raw materials, equipment (including heavy mobile equipment) or other critical supplies such as tires, explosives, fuel, lubricants and other consumables of the type, quantity and/or size needed to meet production expectations; • adverse weather and natural disasters, such as heavy rains or snow, forest fires, flooding and other natural events, including seismic activities, ground failures, rock bursts or structural cave-ins or slides, affecting our operations or transportation to our customers; 33 • railroad delays or derailments; • environmental hazards, such as subsidence and excess water ingress; • delays and difficulties in acquiring, maintaining or renewing necessary permits or mining rights; • availability of adequate skilled employees and other labor relations matters; • security breaches or terroristic acts; • unexpected mine accidents, including rock-falls and explosions caused by the ignition of met coal dust, natural gas or other explosive sources at our mine sites or fires caused by the spontaneous combustion of steelmaking coal or similar mining accidents; • competition and/or conflicts with other natural resource extraction activities and production within our operating areas, such as natural gas extraction or oil and gas development; and • other hazards that could also result in personal injury and loss of life, pollution and suspension of operations.
These risks, hazards and conditions include, but are not limited to: • variations in geological conditions, such as the thickness of the steelmaking coal seam and amount of rock embedded in the steelmaking coal deposit and variations in rock and other natural materials overlying the steelmaking coal deposit, that could affect the stability of the roof and the side walls of the mine; • mining, process and equipment or mechanical failures, unexpected maintenance problems and delays in moving longwall equipment; • the unavailability of raw materials, equipment (including heavy mobile equipment) or other critical supplies such as tires, explosives, fuel, lubricants and other consumables of the type, quantity and/or size needed to meet production expectations; • adverse weather and natural disasters, such as heavy rains or snow, forest fires, flooding and other natural events, including seismic activities, ground failures, rock bursts or structural cave-ins or slides, affecting our operations or transportation to our customers; • railroad delays or derailments; • environmental hazards, such as subsidence and excess water ingress; • delays and difficulties in acquiring, maintaining or renewing necessary permits or mining rights; • availability of adequate skilled employees and other labor relations matters; • security breaches or terroristic acts; 33 • unexpected mine accidents, including rock-falls and explosions caused by the ignition of met coal dust, natural gas or other explosive sources at our mine sites or fires caused by the spontaneous combustion of steelmaking coal or similar mining accidents; • competition and/or conflicts with other natural resource extraction activities and production within our operating areas, such as natural gas extraction or oil and gas development; and • other hazards that could also result in personal injury and loss of life, pollution and suspension of operations.
The IRA contains billions of dollars in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles, investments in advanced biofuels and supporting infrastructure and carbon capture and sequestration, amongst other provisions. These incentives could accelerate the transition of the economy 41 away from the use of fossil fuels towards lower- or zero-carbon emissions alternatives.
The IRA contains billions of dollars in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles, investments in advanced biofuels and supporting infrastructure and 41 carbon capture and sequestration, amongst other provisions. These incentives could accelerate the transition of the economy away from the use of fossil fuels towards lower- or zero-carbon emissions alternatives.
Our ability to pay principal and interest on the Notes and the ABL Facility and to satisfy our other debt obligations will depend upon, among other things: 44 • our future financial and operating performance (including the realization of any cost savings described herein), which will be affected by prevailing economic, industry and competitive conditions and financial, business, legislative, regulatory and other factors, many of which are beyond our control; and • our future ability to borrow under the ABL Facility, the availability of which depends on, among other things, our complying with the covenants in the ABL Facility.
Our ability to pay principal and interest on the Notes and the ABL Facility and to satisfy our other debt obligations will depend upon, among other things: • our future financial and operating performance (including the realization of any cost savings described herein), which will be affected by prevailing economic, industry and competitive conditions and financial, business, legislative, regulatory and other factors, many of which are beyond our control; and 44 • our future ability to borrow under the ABL Facility, the availability of which depends on, among other things, our complying with the covenants in the ABL Facility.
The ABL Facility and the Indenture contain, and any other existing or future indebtedness of ours would likely contain, a number of covenants that will impose significant operating and financial restrictions on us, including restrictions on our and our subsidiaries' ability to, among other things: • incur additional debt, guarantee indebtedness or issue certain preferred shares; 45 • pay dividends on or make distributions in respect of, or repurchase or redeem, our capital stock or make other restricted payments; • prepay, redeem or repurchase subordinated debt; • make loans or certain investments; • sell certain assets; • grant or assume liens; • consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; • enter into certain transactions with our affiliates; • alter the businesses we conduct; • enter into agreements restricting our subsidiaries’ ability to pay dividends; and • designate our subsidiaries as unrestricted subsidiaries.
The ABL Facility and the Indenture contain, and any other existing or future indebtedness of ours would likely contain, a number of covenants that will impose significant operating and financial restrictions on us, including restrictions on our and our subsidiaries' ability to, among other things: • incur additional debt, guarantee indebtedness or issue certain preferred shares; • pay dividends on or make distributions in respect of, or repurchase or redeem, our capital stock or make other restricted payments; 45 • prepay, redeem or repurchase subordinated debt; • make loans or certain investments; • sell certain assets; • grant or assume liens; • consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; • enter into certain transactions with our affiliates; • alter the businesses we conduct; • enter into agreements restricting our subsidiaries’ ability to pay dividends; and • designate our subsidiaries as unrestricted subsidiaries.
There are numerous factors and assumptions inherent in estimating steelmaking coal quantities, qualities and costs to mine, including many factors beyond our control, such as the following: • geological and mining conditions, including faults in the steelmaking coal seam; • historical production from the area compared with production from other producing areas; • the percentage of steelmaking coal ultimately recoverable; • the assumed effects of regulations and taxes and other payments to governmental agencies; • our ability to obtain, maintain and renew all required permits; • future improvements in mining technology; • assumptions concerning the timing of the development of the reserves; and • assumptions concerning equipment and operational productivity, future steelmaking coal prices, operating costs, including those for critical supplies such as fuel, tires and explosives, capital expenditures and development and reclamation costs.
There are numerous factors and assumptions inherent in estimating steelmaking coal quantities, qualities and costs to mine, including many factors beyond our control, such as the following: • geological and mining conditions, including faults in the steelmaking coal seam; • historical production from the area compared with production from other producing areas; 36 • the percentage of steelmaking coal ultimately recoverable; • the assumed effects of regulations and taxes and other payments to governmental agencies; • our ability to obtain, maintain and renew all required permits; • future improvements in mining technology; • assumptions concerning the timing of the development of the reserves; and • assumptions concerning equipment and operational productivity, future steelmaking coal prices, operating costs, including those for critical supplies such as fuel, tires and explosives, capital expenditures and development and reclamation costs.
These aspects of our strategy are subject to numerous risks and uncertainties, including: • an inability to retain or hire experienced crews and other personnel and other labor relations matters; • a lack of customer demand for our mined steelmaking coal; • an inability to secure necessary equipment, raw materials or engineering in a timely manner to successfully execute our expansion plans; • unanticipated delays that could limit or defer the production or expansion of our mining activities and jeopardize our long-term relationships with our existing customers and adversely affect our ability to obtain new customers for our mined steelmaking coal; and • a lack of available cash or access to sufficient debt or equity financing for investment in our expansion .
These aspects of our strategy are subject to numerous risks and uncertainties, including: 25 • an inability to retain or hire experienced crews and other personnel and other labor relations matters; • a lack of customer demand for our mined steelmaking coal; • an inability to secure necessary equipment, raw materials or engineering in a timely manner to successfully execute our expansion plans; • unanticipated delays that could limit or defer the production or expansion of our mining activities and jeopardize our long-term relationships with our existing customers and adversely affect our ability to obtain new customers for our mined steelmaking coal; and • a lack of available cash or access to sufficient debt or equity financing for investment in our expansion .
These may have adverse consequences including, but not limited to: • restricting our ability to access capital and financial markets in the future; • excluding our securities from the portfolios of certain investment funds and investors; • reducing the demand and price for our equity securities; • increasing the cost of borrowing; • causing a decline in our credit ratings; • reducing the availability, and/or increasing the cost of, third-party insurance; • increasing our retention of risk through self-insurance; 35 • making it more difficult to obtain surety bonds, letters of credit, bank guarantees or other financing; and • limiting our flexibility in business development activities such as the development of Blue Creek, mergers, acquisitions or divestitures.
These may have adverse consequences including, but not limited to: • restricting our ability to access capital and financial markets in the future; • excluding our securities from the portfolios of certain investment funds and investors; • reducing the demand and price for our equity securities; • increasing the cost of borrowing; • causing a decline in our credit ratings; • reducing the availability, and/or increasing the cost of, third-party insurance; • increasing our retention of risk through self-insurance; • making it more difficult to obtain surety bonds, letters of credit, bank guarantees or other financing; and • limiting our flexibility in business development activities such as the development of Blue Creek, mergers, acquisitions or divestitures.
For example, it could: • restrict us from making strategic acquisitions, engaging in development activities, introducing new technologies or exploiting business opportunities; • cause us to make non-strategic divestitures; • require us to dedicate a substantial portion of our cash flow from operations to the repayment of our indebtedness, thereby reducing funds available to us for other purposes, including the payment of quarterly dividends or any special dividends, as well as engaging in any stock repurchases; • limit our flexibility in planning for, or reacting to, changes in our operations or business; • limit our ability to raise additional capital for working capital, capital expenditures, operations, debt service requirements, strategic initiatives or other purposes; • limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow additional funds or dispose of assets; • prevent us from raising the funds necessary to repurchase all of the Notes tendered to us upon the occurrence of certain changes of control, which failure to repurchase would constitute a default under the Indenture; • make it more difficult for us to satisfy our obligations with respect to our indebtedness, including the Notes, and any failure to comply with the obligations of any of our debt instruments, including restrictive covenants and borrowing conditions, could result in an event of default under the Indenture and the agreements governing other indebtedness; • make us more highly leveraged than some of our competitors, which may place us at a competitive disadvantage; • make us more vulnerable to downturns in our business or the economy; or • expose us to the risk of increased interest rates, as certain of our borrowings, including borrowings under the ABL Facility, are at variable rates of interest and are based upon benchmarks that are subject to potential change or elimination, including as a result of the FCA Announcement (as defined below).
For example, it could: • restrict us from making strategic acquisitions, engaging in development activities, introducing new technologies or exploiting business opportunities; • cause us to make non-strategic divestitures; • require us to dedicate a substantial portion of our cash flow from operations to the repayment of our indebtedness, thereby reducing funds available to us for other purposes, including the payment of quarterly dividends or any special dividends, as well as engaging in any stock repurchases; • limit our flexibility in planning for, or reacting to, changes in our operations or business; • limit our ability to raise additional capital for working capital, capital expenditures, operations, debt service requirements, strategic initiatives or other purposes; • limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow additional funds or dispose of assets; • prevent us from raising the funds necessary to repurchase all of the Notes tendered to us upon the occurrence of certain changes of control, which failure to repurchase would constitute a default under the Indenture; • make it more difficult for us to satisfy our obligations with respect to our indebtedness, including the Notes, and any failure to comply with the obligations of any of our debt instruments, including restrictive covenants and borrowing conditions, could result in an event of default under the Indenture and the agreements governing other indebtedness; • make us more highly leveraged than some of our competitors, which may place us at a competitive disadvantage; • make us more vulnerable to downturns in our business or the economy; or • expose us to the risk of increased interest rates, as certain of our borrowings, including borrowings under the ABL Facility, are at variable rates of interest and are based upon benchmarks that are subject to potential change or elimination, including as a result of the FCA Announcement.
Our planned development of Blue Creek involves numerous risks, including, but not limited to, the following: • uncertainties in the national and worldwide economy and the price of steelmaking coal; • our ability to obtain additional debt and/or equity financing to fund the development, permitting, construction and mining activities of Blue Creek on terms that are acceptable to us, or at all; • difficulties or delays in securing federally owned mineral leases within the mine plan; • the diversion of management’s attention from our existing mining operations; • our ability to obtain favorable tax or other incentives; • potential opposition from non-governmental organizations, local groups, or local residents; • the fact that our development, construction, ramp-up and operating costs may be higher than our estimates and further increase our planned capital expenditure and liquidity requirements; • shortages of construction materials and equipment or delays in the delivery of such materials and equipment; • unanticipated facility or equipment malfunctions or breakdowns; • delays from unexpected adverse geological and/or weather conditions, accidents, and other factors beyond our control, including the COVID-19 pandemic; • failure to obtain, or delays in obtaining, all necessary governmental and third-party rights-of-way, easements, permits, licenses and approvals; • local infrastructure conditions and other logistical challenges; • the possibility that we may have insufficient expertise to engage in such development activity profitably or without incurring inappropriate amounts of risks; 26 • the fact that the steelmaking coal reserves at Blue Creek may not be as economically recoverable as planned; • difficulties in integrating Blue Creek with our existing mining operations and failure to achieve any estimated economies of scale; and • our ability to hire qualified construction and other personnel.
Our planned development of Blue Creek involves numerous risks, including, but not limited to, the following: • uncertainties in the national and worldwide economy and the price of steelmaking coal; • our ability to obtain additional debt and/or equity financing to fund the development, permitting, construction and mining activities of Blue Creek on terms that are acceptable to us, or at all; • difficulties or delays in securing federally owned mineral leases within the mine plan; • the diversion of management’s attention from our existing mining operations; • our ability to obtain favorable tax or other incentives; • potential opposition from non-governmental organizations, local groups, or local residents; • the fact that our development, construction, ramp-up and operating costs may be higher than our estimates and further increase our planned capital expenditure and liquidity requirements; • shortages of construction materials and equipment or delays in the delivery of such materials and equipment; • unanticipated facility or equipment malfunctions or breakdowns; • delays from unexpected adverse geological and/or weather conditions, accidents, and other factors beyond our control; • failure to obtain, or delays in obtaining, all necessary governmental and third-party rights-of-way, easements, permits, licenses and approvals; • local infrastructure conditions and other logistical challenges; • the possibility that we may have insufficient expertise to engage in such development activity profitably or without incurring inappropriate amounts of risks; • the fact that the steelmaking coal reserves at Blue Creek may not be as economically recoverable as planned; 26 • difficulties in integrating Blue Creek with our existing mining operations and failure to achieve any estimated economies of scale; and • our ability to hire qualified construction and other personnel.
Such risks and uncertainties include, but are not limited to: • longer sales-cycles and time to collection; • tariffs and international trade barriers and export license requirements, including any that might result from the current global trade uncertainties; • fewer or less certain legal protections for contract rights; • different and changing legal and regulatory requirements; • potential liability under the U.S.
Such risks and uncertainties include, but are not limited to: • longer sales-cycles and time to collection; • tariffs and international trade barriers and export license requirements, including any that might result from the current global trade uncertainties; 29 • fewer or less certain legal protections for contract rights; • different and changing legal and regulatory requirements; • potential liability under the U.S.
On December 20, 2016, the OSM published a new, finalized “Stream Protection Rule,” setting standards for “material damage to the hydrologic balance outside the permit area” that are applicable to surface and underground mining operations. However, on February 16, 2017, former President Trump signed a joint congressional resolution disapproving the Stream Protection Rule pursuant to the Congressional Review Act.
On December 20, 2016, the OSM published a new, finalized “Stream Protection Rule,” setting standards for “material damage to the hydrologic balance outside the permit area” that are applicable to surface and underground mining operations. However, on February 16, 2017, President Trump signed a joint congressional resolution disapproving the Stream Protection Rule pursuant to the Congressional Review Act.
As a result of market conditions, premiums and deductibles for certain insurance policies can increase substantially, and in some instances certain insurance may become unavailable or available only for reduced amounts of coverage. As a result, we may not be able to renew our existing insurance policies or procure other desirable insurance on commercially 34 reasonable terms, if at all.
As a result of market conditions, premiums and deductibles for certain insurance policies can increase substantially, and in some instances certain insurance may become unavailable or available only for reduced amounts of coverage. As a result, we may not be able to renew our existing insurance policies or procure other desirable insurance on commercially reasonable terms, if at all.
The Clean Air Act and comparable state laws that regulate air emissions affect coal mining operations both directly and indirectly. Direct impacts on coal mining may occur through permitting requirements and/or emission control requirements relating to particulate matter, such as fugitive dust, or fine particulate matter measuring 2.5 micrometers in diameter or smaller.
The Clean Air Act and comparable state laws that regulate air emissions affect coal mining operations both directly and indirectly. Direct impacts on coal mining may occur through permitting requirements and/or emission control requirements relating to particulate matter, such as fugitive dust, or fine particulate matter measuring 2.5 micrometers in diameter or smaller (PM 2.5).
We accrue for the costs of current mine disturbance and of final mine closure and reclamation, including the cost of treating mine water discharge where necessary. The amounts recorded are dependent upon a number of variables, including the estimated future closure costs, estimated proven reserves, assumptions involving profit margins, 43 inflation rates and the assumed credit-adjusted risk-free interest rates.
We accrue for the costs of current mine disturbance and of final mine closure and reclamation, including the cost of treating mine water discharge where necessary. The amounts recorded are dependent upon a number of variables, including the estimated future closure costs, estimated proven reserves, assumptions involving profit margins, inflation rates and the assumed credit-adjusted risk-free interest rates.
The Amended Rights Agreement also gives discretion to the Board to determine that someone is an Acquiring Person even if they do not own 4.99% or more of the outstanding common stock but do own 4.99% or more in value of the Company’s outstanding stock, as determined pursuant to Section 382 of the Code and the regulations promulgated thereunder.
The Amended Rights Agreement also gives discretion to the Board to determine that someone is an Acquiring Person even if they do not own 4.99% or more of the outstanding common stock but do own 4.99% or more in value of the Company’s outstanding 51 stock, as determined pursuant to Section 382 of the Code and the regulations promulgated thereunder.
These factors, in addition to adversely affecting the competitiveness of our steelmaking coal in international markets, may also negatively impact our collection of trade receivables from our customers and could reduce our profitability or result in lower steelmaking coal sales. 29 Our sales in foreign jurisdictions are subject to risks and uncertainties that may have a negative impact on our profitability.
These factors, in addition to adversely affecting the competitiveness of our steelmaking coal in international markets, may also negatively impact our collection of trade receivables from our customers and could reduce our profitability or result in lower steelmaking coal sales. Our sales in foreign jurisdictions are subject to risks and uncertainties that may have a negative impact on our profitability.
As a result of our qualifying for the aforementioned exception, were we to have undergone a 47 subsequent ownership change prior to April 1, 2018, our federal and state NOLs would effectively be reduced to zero. An ownership change after such date would severely limit our ability to utilize our federal and state NOLs and other tax attributes.
As a result of our qualifying for the aforementioned exception, were we to have undergone a subsequent ownership change prior to April 1, 2018, our federal and state NOLs would effectively be reduced to zero. An ownership change after such date would severely limit our ability to utilize our federal and state NOLs and other tax attributes.
In connection with the acquisition of certain assets of Walter Energy, we negotiated the Collective Bargaining Agreement (“CBA”) with the UMWA, which was ratified by the UMWA’s members on February 16, 2016 and had a five-year term. The CBA contract with the UMWA expired on April 1, 2021, and the UMWA initiated a strike.
In connection with the acquisition of certain assets of Walter Energy, we negotiated the Collective Bargaining Agreement (“CBA”) with the UMWA, which was ratified by the UMWA’s members on February 16, 2016 and had a five-year term. The CBA contract with the UMWA expired on April 1, 2021, and the 28 UMWA initiated a strike.
Our efforts to recover inflation-based cost increases from suppliers or customers may be hampered as a result of the structure of our contracts and the contract bidding process as well as competitive pressure in the industry, economic conditions and the countries to which we sell our export coal.
Our efforts to recover inflation-based cost increases from suppliers or customers may be hampered as a result of the structure of our contracts and the contract bidding process as well as competitive pressure in the industry, economic conditions and the countries to which we sell our coal.
A key element of our business strategy involves increasing production at our existing mines and developing Blue Creek recoverable reserves in a cost-efficient manner. As we expand our business activities, there will be additional demands 25 on our financial, technical, operational and management resources.
A key element of our business strategy involves increasing production at our existing mines and developing Blue Creek recoverable reserves in a cost-efficient manner. As we expand our business activities, there will be additional demands on our financial, technical, operational and management resources.
We update our estimates of the quantity and quality of proven and probable steelmaking coal reserves at least annually to reflect the production of steelmaking coal from the reserves, updated geological models and mining recovery data, the tonnage contained in new lease areas acquired and 36 estimated costs of production and sales prices.
We update our estimates of the quantity and quality of proven and probable steelmaking coal reserves at least annually to reflect the production of steelmaking coal from the reserves, updated geological models and mining recovery data, the tonnage contained in new lease areas acquired and estimated costs of production and sales prices.
Item 1A. Risk Factors Our business involves substantial risks. Any of the risk factors described below or elsewhere in this Annual Report could significantly and adversely affect our business prospects, financial condition and results of operations. The risks described below are not the only ones facing us.
Item 1A. Risk Factors Our business involves substantial risks. Any of the risk factors described below or elsewhere in this Annual Report could significantly and adversely affect our business prospects, financial condition and results of operations. The risks 20 described below are not the only ones facing us.
If these accruals are insufficient or our liability in a particular year is greater than currently anticipated, our future operating results could be materially affected. Risks Related to our Financial Results and Finances We have a substantial amount of indebtedness.
If these accruals are insufficient or our liability in a particular year is greater than currently anticipated, our future operating results could be materially affected. 43 Risks Related to our Financial Results and Finances We have a substantial amount of indebtedness.
Certain transactions, including public offerings by us or our stockholders and redemptions may cause us to undergo an “owner shift” which by itself or when aggregated with other owner shifts that we have undergone or will undergo could cause us to experience an ownership change.
Certain transactions, including public offerings by us or our stockholders and redemptions may cause us to undergo an “owner shift” which by itself or when aggregated with other owner shifts that we have undergone or will undergo could cause 47 us to experience an ownership change.
In addition, perspectives on ESG considerations continue to evolve, and we cannot currently predict how regulators’, investors’ and other stakeholders’ views on ESG matters may affect the regulatory and investment landscape and affect our business, financial condition, and results of operations.
In addition, perspectives on ESG considerations continue to evolve, and we cannot currently predict how regulators’, investors’ and other stakeholders’ views on 35 ESG matters may affect the regulatory and investment landscape and affect our business, financial condition, and results of operations.
Reserve estimates are based on a number of sources of information, including engineering, geological, mining and property control maps and data, our operational experience of historical production from similar areas with similar conditions and assumptions governing future pricing and operational costs.
Reserve and resource estimates are based on a number of sources of information, including engineering, geological, mining and property control maps and data, our operational experience of historical production from similar areas with similar conditions and assumptions governing future pricing and operational costs.
Overall price increases in our 27 transportation costs could make our steelmaking coal less competitive with the same or alternative products from competitors with lower transportation costs. We typically depend upon overland conveyor, trucks, rail or barges to transport our products.
Overall price increases in our transportation costs could make our steelmaking coal less competitive with the same or alternative products from competitors with lower transportation costs. We typically depend upon overland conveyor, trucks, rail or barges to transport our products.
As a public company, we must comply with laws, regulations and requirements, certain corporate governance provisions of the Sarbanes-Oxley Act of 2002, related regulations of the SEC and the requirements of the New York Stock Exchange.
As a public company, we must comply with laws, regulations and requirements, certain corporate governance provisions of the Sarbanes-Oxley Act of 2002, related regulations of the SEC and the requirements of the New York Stock 49 Exchange.
If we do not make adequate provision for our workers’ compensation and black lung liabilities, or we are pursued for applicable sanctions, costs and liabilities, our operations and profitability could be adversely affected.
If we do not make adequate provision for our workers’ compensation and black lung liabilities, or we are pursued for applicable sanctions, costs and liabilities, our operations 34 and profitability could be adversely affected.
Also, at the international level, in December 2015, the United States participated in the 21st Conference of the Parties of the United Nations Framework Convention on Climate Change (“Conference of Parties”) in Paris, France.
At the international level, in December 2015, the United States participated in the 21st Conference of the Parties of the United Nations Framework Convention on Climate Change (“Conference of Parties”) in Paris, France.
For the year ended December 31, 2023, revenues from the sale of steelmaking coal accounted for approximately 98.3% of our total revenues. As noted above, demand for steelmaking coal depends on domestic and foreign steel demand. At times, the pricing and availability of steel can be volatile due to numerous factors beyond our control.
For the year ended December 31, 2024, revenues from the sale of steelmaking coal accounted for approximately 98.3% of our total revenues. As noted above, demand for steelmaking coal depends on domestic and foreign steel demand. At times, the pricing and availability of steel can be volatile due to numerous factors beyond our control.
If new debt is added to our current debt levels, the related risks that we and our subsidiaries now face could intensify. Additionally, we may recapitalize, incur additional indebtedness and take a number of other actions that could have the effect of diminishing our ability to make payments on the Notes when due.
If new debt is added to our current debt levels, the related risks that we and our subsidiaries now face could increase. Additionally, we may recapitalize, incur additional indebtedness and take a number of other actions that could have the effect of diminishing our ability to make payments on the Notes when due.
Inflation rates in the U.S. have increased to levels not seen in several years, and have been even higher in the mining sector, which may result in decreased demand for our products, increases in our operating costs, constrained credit and liquidity, reduced government spending and volatility in financial markets.
Inflation rates in the U.S. have increased to levels not seen in several years, and have been and continue to be even higher in the mining sector, which may result in decreased demand for our products, increases in our operating costs, constrained credit and liquidity, reduced government spending and volatility in financial markets.
The market price of our common stock could fluctuate significantly due to a number of factors, including: • our quarterly or annual earnings, or those of other companies in our industry; • actual or anticipated fluctuations in our operating and financial results, including reserve estimates; • changes in accounting standards, policies, guidance, interpretations or principles; • the public reaction to our press releases, our other public announcements and our filings with the SEC; 48 • announcements by us or our competitors of significant acquisitions, dispositions or innovations; • changes in financial estimates and recommendations by securities analysts following our stock, or the failure of securities analysts to cover our common stock; • changes in earnings estimates by securities analysts or our ability to meet those estimates; • the operating and stock price performance of other comparable companies; • declaration of bankruptcy by any of our customers or competitors; • general economic conditions, overall market fluctuations, and changes in the price of steelmaking coal, steel or other commodities, including the impact of the COVID-19 pandemic on any of the foregoing; • additions or departures of key management personnel; • actions by our stockholders; • the trading volume of our common stock; • sales of our common stock by us or the perception that such sales may occur; and • changes in business, legal or regulatory conditions, or other developments (including the COVID-19 pandemic) affecting participants in, and publicity regarding, the steelmaking coal mining business, the domestic steel industry or any of our significant customers.
The market price of our common stock could fluctuate significantly due to a number of factors, including: • our quarterly or annual earnings, or those of other companies in our industry; • actual or anticipated fluctuations in our operating and financial results, including reserve estimates; • changes in accounting standards, policies, guidance, interpretations or principles; • the public reaction to our press releases, our other public announcements and our filings with the SEC; • announcements by us or our competitors of significant acquisitions, dispositions or innovations; • changes in financial estimates and recommendations by securities analysts following our stock, or the failure of securities analysts to cover our common stock; 48 • changes in earnings estimates by securities analysts or our ability to meet those estimates; • the operating and stock price performance of other comparable companies; • declaration of bankruptcy by any of our customers or competitors; • general economic conditions, overall market fluctuations, and changes in the price of steelmaking coal, steel or other commodities; • additions or departures of key management personnel; • actions by our stockholders; • the trading volume of our common stock; • sales of our common stock by us or the perception that such sales may occur; and • changes in business, legal or regulatory conditions, or other developments affecting participants in, and publicity regarding, the steelmaking coal mining business, the domestic steel industry or any of our significant customers.
The risk of increased insurance costs may be exasperated where an adverse event results in us asserting an insurance claim, the cost of which our insurers may seek to recoup during a future insurance renewal through increased premiums or limitations on coverage.
The risk of increased insurance costs may be exacerbated where an adverse event results in us asserting an insurance claim, the cost of which our insurers may seek to recoup during a future insurance renewal through increased premiums or limitations on coverage.
Our businesses are subject to numerous federal, state and local laws and regulations with respect to matters such as: • permitting and licensing requirements; • employee health and safety, including occupational and mine health and safety; • workers’ compensation; • black lung disease; • reclamation and restoration of property; and • environmental laws and regulations, including those related to GHGs and climate change, air quality, water quality, stream and surface water quality and protection, management of materials generated by mining operations, the storage, treatment and disposal of wastes, protection of plant and wildlife such as endangered species, protection of wetlands and remediation of contaminated soil and groundwater.
Our businesses are subject to numerous federal, state and local laws and regulations with respect to matters such as: • permitting and licensing requirements; • employee health and safety, including occupational and mine health and safety; • workers’ compensation; • black lung disease; • reclamation and restoration of property; and • environmental laws and regulations, including those related to GHGs and climate change; air quality; water quality; stream and surface water quality and protection; management of materials generated by mining operations; the storage, treatment and disposal of wastes; protection of plants and wildlife such as threatened or endangered species; protection of wetlands; and remediation of contaminated soil and groundwater.
New and existing tariffs as well as other trade measures that may be implemented by the U.S. or retaliatory trade measures or tariffs implemented by other countries could result in reduced economic activity, increased costs in operating our business, reduced demand and/or changes in purchasing behaviors for steelmaking coal, material changes in the pricing of steelmaking coal, limits on trade with the United States or other potentially adverse economic outcomes.
New and existing tariffs as well as other trade measures that may be implemented by the U.S. or retaliatory trade measures or tariffs implemented by other countries could result in reduced economic activity, increased costs in operating our business, reduced demand and/or changes in purchasing behaviors for steelmaking coal, disruptions in our supply chain, material changes in the pricing of steelmaking coal, limits on trade with the United States or other potentially adverse economic outcomes.
Our ability to obtain bank financing or our ability to access the capital markets for future equity or debt offerings, on the other hand, may be limited by our financial condition at the time of any such financing or offering and the covenants in our existing debt agreements, as well as by general economic conditions, contingencies and uncertainties that are beyond our control, such as the COVID-19 pandemic.
Our ability to obtain bank financing or our ability to access the capital markets for future equity or debt offerings, on the other hand, may be limited by our financial condition at the time of any such financing or offering and the covenants in our existing debt agreements, as well as by general economic conditions, contingencies and uncertainties that are beyond our control.
As a result, our renouncing our interest and expectancy in any business opportunity that may be from time to time presented to our stockholders and their affiliates, or our non-employee directors, could adversely impact our business or prospects if attractive business opportunities are procured by such parties for their own benefit rather than for ours. 53 Item 1B.
As a result, our renouncing our interest and expectancy in any business opportunity that may be from time to time presented to our stockholders and their affiliates, or our non-employee directors, could adversely impact our business or prospects if attractive business opportunities are procured by such parties for their own benefit rather than for ours.
Increases in transportation costs could also reduce overall demand for coal or make our coal production less competitive than coal produced from other sources or other regions. Our business may require substantial ongoing capital expenditures, and we may not have access to the capital required to reach full productive capacity at our mines.
Increases in transportation costs could also reduce overall demand for coal or make our coal production less competitive than coal produced from other sources or other regions. Our business may require substantial capital investment and maintenance expenditures, and we may not have access to the capital required to reach full productive capacity at our mines.
If the EPA were to make an endangerment finding in the future, we may have to further reduce our methane emissions, install additional air pollution controls, pay certain taxes or fees for our emissions, incur costs to purchase credits that permit us to continue operations as they now exist at our underground steelmaking coal mines or perhaps curtail steelmaking coal production.
If the EPA were to make an endangerment finding in the future, we may have to further reduce our methane emissions, install additional air pollution controls, pay certain taxes or fees for our emissions, incur costs to purchase credits that permit us to continue operations as they now exist at our underground steelmaking coal mines, explore carbon sequestration options or perhaps curtail steelmaking coal production.
As a result of this concentration, we may be disproportionately exposed to the impact of delays or interruptions in production caused by significant governmental regulation, transportation capacity constraints, constraints on the availability of required equipment, facilities, personnel or services, curtailment of production, extreme weather conditions, natural disasters, pandemics (such as the COVID-19 pandemic) or interruption of transportation or other events that impact Alabama or its surrounding areas.
As a result of this concentration, we may be disproportionately exposed to the impact of delays or interruptions in production caused by significant governmental regulation, transportation capacity constraints, constraints on the availability of required equipment, facilities, personnel or services, curtailment of production, extreme weather conditions, natural disasters, pandemics or interruption of transportation or other events that impact Alabama or its surrounding areas.
Such developments may include, with respect to any global pandemic, the geographic spread of the virus, the severity of the disease, the duration of the outbreak, the actions that may be taken by various governmental authorities in response to the outbreak and the impact on the U.S. or global economy.
Such developments may include, with respect to any global pandemic or other widespread illness, the geographic spread of the virus, the severity of the disease, the duration of the outbreak, the actions that may be taken by various governmental authorities in response to the outbreak and the impact on the U.S. or global economy.
On February 16, 2023, the labor union representing certain of the Company's hourly employees announced that they were ending the strike and made an unconditional offer to return to work. The return-to-work process for eligible employees who wished to return to work which began in February has been completed.
On February 16, 2023, the labor union representing certain of the Company's hourly employees announced that they were ending the strike and made an unconditional offer to return to work. The return-to-work process for eligible employees who wished to return to work has been completed.
A significant reduction of, or loss of, purchases by our largest customers could materially adversely affect our profitability. For the year ended December 31, 2023, we derived approximately 56.7% of our total sales revenues from our five largest customers.
A significant reduction of, or loss of, purchases by our largest customers could materially adversely affect our profitability. For the year ended December 31, 2024, we derived approximately 56% of our total sales revenues from our five largest customers.
This lack of diversification of our business could adversely affect our financial condition, results of operations and cash flows. We rely on the steelmaking coal production from our two active steelmaking coal mines for substantially all of our revenues.
Substantially all of our revenues are derived from the sale of steelmaking coal. This lack of diversification of our business could adversely affect our financial condition, results of operations and cash flows. We rely on the steelmaking coal production from our two active steelmaking coal mines for substantially all of our revenues.
Implementation of our business strategies, including the development of Blue Creek, could also be affected by a number of factors beyond our control, such as global economic conditions (including effects of the COVID-19 pandemic), steelmaking coal prices, domestic and foreign steel demand, inflation and environmental, health and safety laws and regulations.
Implementation of our business strategies, including the development of Blue Creek, could also be affected by a number of factors beyond our control, such as global economic conditions, steelmaking coal prices, domestic and foreign steel demand, inflation and environmental, health and safety laws and regulations.
We expect to renew, extend or enter into new supply agreements with these and other customers; however, we may be unsuccessful in obtaining such agreements with these customers and these customers may discontinue purchasing steelmaking coal from us, reduce the quantity of steelmaking coal that they have historically purchased from us or pressure us to reduce the prices that we charge for our steelmaking coal due to market, economic or competitive conditions, including effects from the COVID-19 pandemic.
We expect to renew, extend or enter into new supply agreements with these and other customers; however, we may be unsuccessful in obtaining such agreements with these customers and these customers may discontinue purchasing steelmaking coal from us, reduce the quantity of steelmaking coal that they have historically purchased from us or pressure us to reduce the prices that we charge for our steelmaking coal due to market, economic or competitive conditions.
If any of our suppliers experiences an adverse event (including as a result of the COVID-19 pandemic), decides to cease producing products used by the mining industry, or decides to no longer do business with us, we may be unable to obtain sufficient equipment and raw materials in a timely manner or at a reasonable price to allow us to meet our production goals and our revenues may be materially adversely impacted.
If any of our suppliers experiences an adverse event, decides to cease producing products used by the mining industry, or decides to no longer do business with us, we may be unable to obtain sufficient equipment and raw materials in a timely manner or at a reasonable price to allow us to meet our production goals and our revenues may be materially adversely impacted.
If our customers do not honor contract commitments, or if they terminate agreements or exercise force majeure provisions allowing for the temporary suspension of performance during specified events beyond the parties’ control, such as the COVID-19 pandemic, and we are unable to replace the contract, our revenues will be materially and adversely affected.
If our customers do not honor contract commitments, or if they terminate agreements or exercise force majeure provisions allowing for the temporary suspension of performance during specified events beyond the parties’ control, and we are unable to replace the contract, our revenues will be materially and adversely affected.
Accordingly, the regulations in effect prior to the Stream Protection Rule now apply, including OSM’s 1983 rule. It remains unclear whether and how additional actions by the Biden Administration could further impact regulatory or enforcement activities pursuant to the SMCRA.
Accordingly, the regulations in effect prior to the Stream Protection Rule now apply, including OSM’s 1983 rule. It remains unclear whether and how additional federal actions could further impact regulatory or enforcement activities pursuant to the SMCRA.
Disruption or delays of any of these transportation services due to weather-related problems, which are variable and unpredictable, strikes or lock-outs, accidents, infrastructure damage, governmental regulation, third-party actions, lack of capacity or other events beyond our control, such as the COVID-19 pandemic, could impair our ability to supply our products to our customers and result in lost sales and reduced profitability.
Disruption or delays of any of these transportation services due to weather-related problems, which are variable and unpredictable, strikes or lock-outs, accidents, infrastructure damage, governmental regulation, third-party actions, lack of 27 capacity or other events beyond our control could impair our ability to supply our products to our customers and result in lost sales and reduced profitability.
The occurrence of an event that is not fully covered by insurance or that results in a mine shutdown could have a material adverse effect on our business, financial condition, results of operations and cash flows.
The occurrence of an event that is not fully covered by insurance, failure by insurers to make payments or an event that results in a mine shutdown could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Despite our current indebtedness, we may be able to incur substantial additional debt in the future, including secured indebtedness. As of December 31, 2023, the Company had no amounts drawn under the ABL Facility and there were $8.7 million of letters of credit issued and outstanding under the ABL Facility.
Despite our current indebtedness, we may be able to incur substantial additional debt in the future, including secured indebtedness. As of December 31, 2024, the Company had no amounts drawn under the ABL Facility and there were $2.5 million of letters of credit issued and outstanding under the ABL Facility.
As of December 31, 2023, we have posted $18.6 million in surety bonds and $9.0 million of collateral recognized as short term investments in addition to maintaining a black lung trust of $1.8 million that was acquired in the acquisition of certain assets of Walter Energy.
As of December 31, 2024, we have posted $18.6 million in surety bonds and $9.5 million of collateral recognized as short term investments in addition to maintaining a black lung trust of $1.4 million that was acquired in the acquisition of certain assets of Walter Energy.
The Act makes several changes to the state’s business tax structure. Among the provisions of the Act, is the repeal of the so-called corporate income tax “throwback rule.” That rule required all sales originating in Alabama and delivered to a jurisdiction where the seller was not subject to tax, to be included in the seller’s Alabama income tax base.
Among the provisions of the Act, is the repeal of the so-called corporate income tax “throwback rule.” That rule required all sales originating in Alabama and delivered to a jurisdiction where the seller was not subject to tax, to be included in the seller’s Alabama income tax base.
We depend on several major pieces of mining equipment to produce and transport our steelmaking coal, including, but not limited to, longwall mining systems, continuous mining units, our preparation plant and blending facilities, and conveyors. Obtaining or repairing these major pieces of mining equipment often involves long lead times.
We depend on several major pieces of mining equipment to produce and transport our steelmaking coal, including, but not limited to, longwall mining systems, continuous mining units, our preparation plant and blending facilities, and conveyors. We procure this equipment from a concentrated group of suppliers and obtaining or repairing these major pieces of mining equipment often involves long lead times.
Despite our current indebtedness levels, we may still be able to incur substantially more debt, including secured indebtedness. As of December 31, 2023, we had approximately $173.2 million of total debt outstanding (consisting of $156.5 million of Notes, net of $3.5 million in unamortized debt discount and debt issuance costs, and $20.2 million of financing lease obligations).
Despite our current indebtedness levels, we may still be able to incur substantially more debt, including secured indebtedness. As of December 31, 2024, we had approximately $173.0 million of total debt outstanding (consisting of $156.5 million of Notes, net of $2.9 million in unamortized debt discount and debt issuance costs, and $19.4 million of financing lease obligations).
As of December 31, 2023, we had approximately $173.2 million of outstanding indebtedness (consisting of $156.5 million of Notes, net of $3.5 million in unamortized debt discount and debt issuance costs and $20.2 million of financing lease obligations), all of which are secured, and $107.4 million of availability under our ABL Facility (subject to meeting the borrowing base and other conditions therein).
As of December 31, 2024, we had approximately $173.0 million of outstanding indebtedness (consisting of $156.5 million of Notes, net of $2.9 million in unamortized debt discount and debt issuance costs and $19.4 million of financing lease obligations), all of which are secured, and $113.5 million of availability under our ABL Facility (subject to meeting the borrowing base and other conditions therein).
The proposed rules require, among other requirements, all self-insured operators to post security of at least 120 percent of their projected black lung liabilities. For additional information see “Part I, Item 1. Business-Environmental and Regulatory Matters-Workers’ Compensation and Black Lung.” Our estimated total black lung liabilities as of December 31, 2023 were $28.8 million (net of the black lung trust).
The final rules require, among other requirements, all self-insured operators to post security of at least 100 percent of their projected black lung liabilities. For additional information see “Part I, Item 1. Business-Environmental and Regulatory Matters-Workers’ Compensation and Black Lung.” Our estimated total black lung liabilities as of December 31, 2024 were $36.6 million (net of the black lung trust).
While conventional blast furnace technology has been the most economic large-scale steel production technology for a number of years, and while emergent technologies typically take many years to commercialize, there can be no assurance that over the longer term competitive technologies not reliant on HCC could emerge which could reduce demand and price premiums for HCC. 32 Substantially all of our revenues are derived from the sale of steelmaking coal.
While conventional blast furnace technology has been the most economic large-scale steel production technology for a number of years, and while emergent technologies typically take many years to commercialize, there can be no assurance that over the longer term competitive technologies not reliant on HCC could emerge which could reduce demand and price premiums for HCC.
We may elect not to obtain insurance for any or all of these risks if we believe that the cost of available insurance is excessive relative to the risks presented. In addition, pollution or environmental risks generally are not fully insurable. Moreover, a significant mine accident could potentially cause a mine shutdown.
We may elect not to obtain insurance for any or all of these risks if we believe that the cost of available insurance is excessive relative to the risks presented. In addition, pollution or environmental risks generally are not fully insurable.
The extent to which the COVID-19 pandemic, or any other global pandemic, will ultimately affect our business, financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted.
The extent to which a global pandemic or other widespread illness, ultimately affects our business, financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted.
If cash flow generated by our operations or available borrowings under our bank financing arrangements are insufficient to meet our capital requirements and we are unable to access the capital markets on acceptable terms or at all, we could be forced to curtail the expansion of our existing mines and the development of our properties, which, in turn, could lead to a decline in our production and could materially and adversely affect our business, financial condition and results of operations.. 28 Work stoppages, such as the strike initiated by the UMWA in April 2021, and other labor relations matters may harm our business.
If cash flow generated by our operations or available borrowings under our bank financing arrangements are insufficient to meet our capital requirements and we are unable to access the capital markets on acceptable terms or at all, we could be forced to curtail the expansion of our existing mines and the development of our properties, which, in turn, could lead to a decline in our production and could materially and adversely affect our business, financial condition and results of operations.
However, there can be no assurances that we will be able to mitigate such conditions as they arise. Met coal has been an extremely volatile commodity over the past ten years and prices may become volatile again in the future given the rapid increase of the last few years and the sharp decline in the second half of 2019.
However, there can be no assurances that we will be able to mitigate such conditions as they arise. Met coal has been an extremely volatile commodity over the past ten years and prices may become volatile again in the future.
At December 31, 2023, we had state NOLs of approximately $928.2 million. These state NOLs represent a deferred tax asset of approximately $6.9 million, net of the valuation allowance. Our federal and state NOLs are subject to adjustment on audit by the Internal Revenue Service (the “IRS”) and state authorities.
At December 31, 2024, these state NOLs represent a deferred tax asset of approximately $4.1 million, net of the valuation allowance. Our federal and state NOLs are subject to adjustment on audit by the Internal Revenue Service (the “IRS”) and state authorities.
Issuances of common stock or voting preferred stock would reduce an investor’s influence over matters on which our stockholders vote and, in the case of issuances of preferred stock, likely would result in its interest in us being subject to the prior rights of holders of that preferred stock.
Issuances of common stock or voting preferred stock would reduce an investor’s influence over matters on which our stockholders vote and, in the case of issuances of preferred stock, likely would result in its interest in us being subject to the prior rights of holders of that preferred stock. 50 We may issue preferred stock whose terms could adversely affect the voting power or value of our common stock.
Therefore, at December 31, 2023, we have a valuation allowance against our state deferred income tax assets of approximately $41.0 million.
Therefore, at December 31, 2024, we have a valuation allowance against our state deferred income tax assets of approximately $44.7 million.
Such changes could cause delays if manufacturers and suppliers are unable to make the required changes in compliance with mandated deadlines. 37 If either our preparation plant or river barge load-out facilities, or those of a third party processing or loading our steelmaking coal, suffer extended downtime, including major damage, or are destroyed, our ability to process and deliver steelmaking coal to prospective customers would be materially impacted, which would materially adversely affect our business, results of operations, financial condition and cash flows.
If either our preparation plant or river barge load-out facilities, or those of a third party processing or loading our steelmaking coal, suffer extended downtime, including major damage, or are destroyed, our ability to process and deliver 37 steelmaking coal to prospective customers would be materially impacted, which would materially adversely affect our business, results of operations, financial condition and cash flows.
Such expectations and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved in measuring and reporting on many ESG matters. In March 2022, the SEC proposed new rules relating to the disclosure of a range of climate-related risks and other information.
Such expectations and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved in measuring and reporting on many ESG matters. The SEC published final rules on March 6, 2024, relating to the disclosure of a range of climate-related risks and other information. Several lawsuits have been filed challenging the rules.
As a result, if economic conditions in the global steelmaking industry deteriorate as they have in past years, the demand for steelmaking coal may decrease. In addition, the global financial markets have been experiencing volatility and disruption over the last several years including, due to the COVID-19 pandemic.
Demand for steelmaking coal depends on domestic and foreign steel demand. As a result, if economic conditions in the global steelmaking industry deteriorate as they have in past years, the demand for steelmaking coal may decrease. In addition, the global financial markets have been experiencing volatility and disruption over the last several years.
Our certificate of incorporation and bylaws contain provisions that may make acquiring control of our company difficult, including: • the Board's ability to issue, from time to time, one or more series of preferred stock and, with respect to each such series, to fix the terms thereof by resolution; • provisions relating to the appointment of directors upon an increase in the number of directors or vacancy on the Board; • provisions requiring stockholders to hold at least a majority of our outstanding common stock in the aggregate to request special meetings; 52 • provisions that restrict transfers of our stock (including any other instruments treated as stock for purposes of Section 382) that could limit our ability to utilize federal and state NOLs; • provisions that provide that the doctrine of “corporate opportunity” will not apply with respect to the Company, to any of our stockholders or directors, other than any stockholder or director that is an employee, consultant or officer of ours; and • provisions that set forth advance notice procedures for stockholders’ nominations of directors and proposals for consideration at meetings of stockholders.
Our certificate of incorporation and bylaws contain provisions that may make acquiring control of our company difficult, including: • the Board's ability to issue, from time to time, one or more series of preferred stock and, with respect to each such series, to fix the terms thereof by resolution; • provisions relating to the appointment of directors upon an increase in the number of directors or vacancy on the Board; • provisions requiring stockholders to hold at least a majority of our outstanding common stock in the aggregate to request special meetings; • provisions that restrict transfers of our stock (including any other instruments treated as stock for purposes of Section 382) that could limit our ability to utilize federal and state NOLs; • provisions that provide that the doctrine of “corporate opportunity” will not apply with respect to the Company, to any of our stockholders or directors, other than any stockholder or director that is an employee, consultant or officer of ours; and • provisions that set forth advance notice procedures for stockholders’ nominations of directors and proposals for consideration at meetings of stockholders. 52 In addition, we have elected to opt out of Section 203 of the Delaware General Corporation Law ("DGCL"), which, subject to some exceptions, prohibits business combinations between a Delaware corporation and an interested stockholder, which is generally defined as a stockholder who becomes a beneficial owner of 15% or more of a Delaware corporation’s voting stock for a three-year period following the date that the stockholder became an interested stockholder.
Further, potential changes to international trade agreements, trade concessions, foreign currency fluctuations or other political and economic arrangements may benefit steelmaking coal producers operating in countries other than the United States. We may be adversely impacted on the basis of price or other factors with companies that in the future may benefit from favorable foreign trade policies or other arrangements.
In addition, potential changes to international trade agreements, trade policies, trade concessions or other political and economic arrangements may benefit coal producers operating in countries other than the United States. We may not be able to compete based on price or other factors with companies that, in the future, benefit from favorable foreign trade policies or other arrangements.
We may be subject to litigation, the disposition of which could negatively affect our profitability and cash flow in a particular period, or have a material adverse effect on our business, financial condition and results of operations.
Additionally, changes in regulatory and trade policies in other countries may impact demand for downstream products. We may be subject to litigation, the disposition of which could negatively affect our profitability and cash flow in a particular period, or have a material adverse effect on our business, financial condition and results of operations.
It is possible that any, or a combination, of these occurrences could have a material adverse effect on our business, financial condition and results of operations. 30 In addition, we have become increasingly dependent upon digital technologies, including information systems, infrastructure and cloud applications and services, to operate our businesses, process and record financial and operating data, communicate with our employees and business partners, analyze seismic and drilling information, estimate quantities of steelmaking coal reserves, as well as other activities related to our businesses.
In addition, we have become increasingly dependent upon digital technologies, including information systems, infrastructure and cloud applications and services, to operate our businesses, process and record financial and operating data, communicate with our employees and business partners, analyze seismic and drilling information, estimate quantities of 30 steelmaking coal reserves, as well as other activities related to our businesses.
Accordingly, the Company cannot make any assurance that future dividends will be paid or future repurchases will be made. 50 An investor’s percentage ownership in us may be diluted by future issuances of capital stock or securities or instruments that are convertible into our capital stock, which could reduce its influence over matters on which stockholders vote.
An investor’s percentage ownership in us may be diluted by future issuances of capital stock or securities or instruments that are convertible into our capital stock, which could reduce its influence over matters on which stockholders vote.
Demand for, and therefore the price of, steelmaking coal is driven by a variety of factors, including, but not limited to, the following: • the domestic and foreign supply and demand for steelmaking coal; • the quantity and quality of steelmaking coal available from competitors; • the demand for and price of steel; • adverse weather, climatic and other natural conditions, including natural disasters; • domestic and foreign economic conditions, including slowdowns in domestic and foreign economies and financial markets; • global and regional political events; • domestic and foreign legislative, regulatory and judicial developments, environmental regulatory changes and changes in energy policy and energy conservation measures that could adversely affect the steelmaking coal industry; • capacity, reliability, availability and cost of transportation and port facilities, and the proximity of available steelmaking coal to such transportation and port facilities; and • other factors beyond our control, such as terrorism, war, and pandemics, including the COVID-19 pandemic.
Demand for, and therefore the price of, steelmaking coal is driven by a variety of factors, including, but not limited to, the following: • the domestic and foreign supply and demand for steelmaking coal; 31 • the quantity and quality of steelmaking coal available from competitors; • the demand for and price of steel; • adverse weather, climatic and other natural conditions, including natural disasters; • domestic and foreign economic conditions, including slowdowns in domestic and foreign economies and financial markets; • global and regional political events, including the unknown geopolitical consequences of the wars between Ukraine and Russia and between Israel and Hamas and other events of global unrest; • domestic and foreign legislative, regulatory and judicial developments, environmental regulatory changes and changes in energy policy and energy conservation measures that could adversely affect the steelmaking coal industry, such as legislation further limiting carbon emissions; • widespread acceptance of carbon sequestration and proliferation of improved carbon sequestration technology; • capacity, reliability, availability and cost of transportation and port facilities, and the proximity of available steelmaking coal to such transportation and port facilities; • technological advancements, including those related to electric arc furnaces; and • other factors beyond our control, such as terrorism, war, and pandemics.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe continue to make investments in people, processes and technology to enhance our cybersecurity risk assessment, identification and management capabilities and to strengthen our cybersecurity risk response posture. Additionally, as part of the Company's Information Technology controls framework, management has established a suite of preventative and detective controls which enhance and strengthen the Company's cybersecurity program.
Biggest changeAdditionally, as part of the Company's Information Technology controls framework, management has established a suite of preventative and detective controls which enhance and strengthen the Company's cybersecurity program. We rely on information systems and networks as well as various other technologies to conduct and support our business.
Although we are not aware of any material cybersecurity incidents, because 54 of the past cybersecurity threats and what we have learned in responding to those threats, we have enhanced our cybersecurity protection efforts.
Although we are not aware of any material cybersecurity incidents, because of the past cybersecurity threats and what we have learned in responding to those threats, we have enhanced our cybersecurity protection efforts.
We rely on information systems and networks as well as various other technologies to conduct and support our business. We have implemented security protocols, controls, and systems with the intent of maintaining the physical and electronic security of our operations and protecting our and our counterparties’ confidential information and information related to identifiable individuals against unauthorized access.
We have implemented security protocols, controls, and systems with the intent of maintaining the physical and electronic security of our operations and protecting our and our counterparties’ confidential information and information related to identifiable individuals against unauthorized access.
As such, technology failures or cybersecurity breaches could still create system disruptions or unauthorized disclosure or alterations of confidential information and disruptions to the systems of our third-party suppliers and providers.
As such, technology failures or cybersecurity breaches could still create system disruptions or unauthorized disclosure or alterations of confidential information and disruptions to the systems of our third-party suppliers and providers. 54 We have been and may be subject to security breaches, which have resulted in and could result in unauthorized access to our facilities or the information that we are trying to protect.
These risks include, among other things, operational risks; intellectual property theft; fraud; extortion; harm to employees or customers; violation of privacy or security laws; other litigation and legal risk; and reputational risks. We have in place and continuously monitor and improve cybersecurity processes, technologies, and controls to aid in our efforts to assess, identify, and manage such material risks.
These risks include, among other things, operational risks; intellectual property theft; fraud; extortion; harm to employees or customers; violation of privacy or security laws; other litigation and legal risk; and reputational risks.
Removed
We have been and may be subject to security breaches, which have resulted in and could result in unauthorized access to our facilities or the information that we are trying to protect.
Added
Our enhanced approach is grounded in industry-leading practices, including the National Institute of Standards and Technology Cybersecurity Framework version 2.0, and is designed to actively manage cyber risks while embedding cybersecurity into our Company's workplace culture.
Added
We have in place and continuously monitor and improve cybersecurity processes, technologies, and controls to aid in our efforts to assess, identify, and manage such material risks. We continue to make investments in people, processes and technology to enhance our cybersecurity risk assessment, identification and management capabilities and to strengthen our cybersecurity risk response posture.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table provides a comparison of our material proven and probable mineral reserves as of December 31, 2023 and December 31, 2022: Summary of Material Mineral Reserves as of December 31, 2023 as compared to December 31, 2022 (in millions of metric tons) (1) As of December 31, Change Mine 2023 2022 Tons % No. 4 Material Reserves (2) Proven (3) 36.0 38.7 (2.7) (7) % Probable (3) 0.5 0.5 — — % Reserves (2) 36.5 39.2 (2.7) (7) % No. 7 Material Reserves (2) Proven (3) 34.1 38.4 (4.3) (11) % Probable (3) 12.3 11.3 1.0 9 % Reserves (2) 46.4 49.7 (3.3) (7) % Blue Creek Material Reserves (2) Proven (3) 43.3 42.8 0.5 1 % Probable (3) 24.3 25.4 (1.1) (4) % Reserves (2) 67.6 68.2 (0.6) (1) % (1) 1 metric ton is equivalent to 1.102311 short tons.
Biggest changeThe following table provides a comparison of our material proven and probable mineral reserves as of December 31, 2024 and December 31, 2023: Summary of Material Mineral Reserves as of December 31, 2024 as compared to December 31, 2023 (in millions of metric tons) (1) As of December 31, Change Mine 2024 2023 Tons % No. 4 Material Reserves (2) Proven (3) 32.7 36.0 (3.3) (9) % Probable (3) 0.6 0.5 0.1 20 % Reserves (2) 33.3 36.5 (3.2) (9) % No. 7 Material Reserves (2) Proven (3) 33.3 34.1 (0.8) (2) % Probable (3) 15.8 12.3 3.5 28 % Reserves (2) 49.1 46.4 2.7 6 % Blue Creek Material Reserves (2) Proven (3) 43.6 43.3 0.3 1 % Probable (3) 25.4 24.3 1.1 5 % Reserves (2) 69.0 67.6 1.4 2 % (1) 1 metric ton is equivalent to 1.102311 short tons.
Proven reserves are reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites of inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established.
Proven reserves are reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites of inspection, sampling and measurement are spaced so closely, and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established.
Probable reserves are reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than for proven reserves, is high enough to assume continuity between points of observation.
Probable reserves are reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than for proven reserves, is high enough to assume continuity between points of observation.
The Mine No. 4 and Mine No. 7 change in proven and probable mineral reserves and quality is primarily attributable to production and incorporation of additional exploration drilling and associated coal quality data. The Blue Creek change in proven and probable mineral reserves is primarily due to results from additional exploration and changes in property control.
The Mine No. 4 and Mine No. 7 change in proven and probable mineral reserves and quality is primarily attributable to production, incorporation of additional exploration drilling and associated coal quality data and changes in property control. The Blue Creek change in proven and probable mineral reserves is primarily due to results from additional exploration and changes in property control.
Mine No. 7 Mine No. 7 was opened by Jim Walter Resources in 1974 and has been in operation since. In connection with the acquisition of certain assets of Walter Energy, we acquired the mineral rights for Mine No. 7 in April 2016.
Mine No. 7 Mine No. 7 was opened by Jim Walter Resources in 1974 and has been in operation since. In connection with the acquisition of certain assets of Walter Energy, we acquired mineral rights for Mine No. 7 in April 2016.
Mine No. 7 also uses the No. 5 preparation plant via an 64 overland conveyor. The Mine No. 7 preparation plant has a capacity to process 1,260 raw metric tons per hour and the Mine No. 5 preparation plant has the capacity to process 900 raw metric tons per hour.
Mine No. 7 also uses the No. 5 preparation plant 64 via an overland conveyor. The Mine No. 7 preparation plant has a capacity to process 1,260 raw metric tons per hour and the Mine No. 5 preparation plant has the capacity to process 900 raw metric tons per hour.
Development for the longwall is conducted by the extraction of coal from the production faces using continuous miners and haulage using shuttle cars to a feeder-breaker located at the tail of the section conveyor belt. The feeder-breaker crushes large pieces of coal and rock and regulates coal feed onto the mine conveyor.
Development for the longwall is conducted by the extraction of coal from the production faces using continuous miners and haulage using shuttle cars to a feeder-breaker located at the tail of the section conveyor belt. The feeder-breaker crushes large pieces of coal and rock and regulates coal feed onto the mine conveyor.
Our controlled reserves are either through direct ownership of the property or through third-party leases. Third-party leases have initial terms extending up to 30 years and generally provide for terms or renewals through the anticipated life of the associated mine. These renewals are conditioned upon the payment of minimum royalties.
Our controlled reserves are either through direct ownership of the property or through third-party leases. Third-party leases have initial terms extending up to 30 years and generally provide for terms or renewals through the anticipated life of the associated mine. These renewals are conditioned upon the payment of minimum royalties.
Under current mining plans, assigned reserves reported will be mined out within the period of existing leases or within the time period of probable lease renewal periods. All recoverable reserves reported are either 100% owned or controlled through lease agreements. There are no significant title encumbrances to the property.
Under current mining plans, assigned reserves reported will be mined out within the period of existing leases or within the time period of probable lease renewal periods. All recoverable reserves reported are either 100% owned or controlled through lease agreements. There are no significant title encumbrances to the property.
Our controlled reserves are either through direct ownership of the property or through third-party leases. Third-party leases have initial terms extending up to 30 years and generally provide for terms or renewals through the anticipated life of the associated mine. These renewals are conditioned upon the payment of minimum royalties.
Our controlled reserves are either through direct ownership of the property or through third-party leases. Third-party leases have initial terms extending up to 30 years and generally provide for terms or renewals through the anticipated life of the associated mine. These renewals are conditioned upon the payment of minimum royalties.
Under current mining plans, assigned reserves reported will be mined out within the period of existing leases or within the time period of probable lease renewal periods. All recoverable reserves reported are either 100% owned or controlled through lease agreements. There are no significant title encumbrances to the property.
Under current mining plans, assigned reserves reported will be mined out within the period of existing leases or within the time period of probable lease renewal periods. All recoverable reserves reported are either 100% owned or controlled through lease agreements. There are no significant title encumbrances to the property.
We believe we will have the ability to add a second longwall subsequent to finalization of development. The project includes surface facilities to be constructed at multiple locations in close proximity. Rail transportation for the proposed mine site is a major rail line and river transportation is available on the Black Warrior River.
We believe we will have the ability to add a second longwall subsequent to finalization of development. The project includes surface facilities to be constructed at multiple locations in close 65 proximity. Rail transportation for the proposed mine site is a major rail line and river transportation is available on the Black Warrior River.
The categories for proven and probable coal reserves are based on distances from valid points of measurement as determined by the qualified person for the area under consideration. Measured resources, which may convert to proven reserves, is based on a 0.25 mile radius from a valid point of observation.
The categories for proven and probable coal reserves are based on distances from valid points of measurement as determined by the qualified person for the area under consideration. Measured resources, which may convert to proven reserves, are based on a 0.25-mile radius from a valid point of observation.
We update our reserve estimates annually to reflect past coal production, new drilling information and other geological or mining data, and acquisitions or sales of coal properties.
We update our reserve estimates annually to reflect past coal production, new drilling information and other geological or mining data, and acquisitions or sales of coal properties. 66
Mine 7 is located at approximately 87°14’46” latitude and 33°19’35”N longitude which is approximately 20 miles east of Tuscaloosa, Alabama and 30 miles southwest of Birmingham, Alabama. Access to Mine No. 7 is by Hannah Creek road, a well maintained, paved, two-lane road with interstate access in close proximity to the south via Lock 17 Road.
Mine 7 is located at approximately 33°19’35”N latitude and 87°14’46”W longitude which is approximately 20 miles east of Tuscaloosa, Alabama and 30 miles southwest of Birmingham, Alabama. Access to Mine No. 7 is by Hannah Creek road, a well-maintained, paved, two-lane road with interstate access in close proximity to the south via Lock 17 Road.
Portions of the 59 following information are based on assumptions, qualifications and procedures that are not fully described herein. Reference should be made to the full text of the TRSs, incorporated herein by reference and made a part of this Annual Report on Form 10-K.
Portions of the 59 following information are based on assumptions, qualifications and procedures that are not fully described herein. Reference should be made to the full text of the TRS, incorporated herein by reference and made a part of this Annual Report on Form 10-K.
Blue Creek We believe that Blue Creek represents one of the few remaining untapped reserves of premium High Vol A steelmaking coal in the United States and that it has the potential to provide us with meaningful growth.
Blue Creek We believe that Blue Creek represents one of the last remaining untapped reserves of premium High Vol A steelmaking coal in the United States and that it has the potential to provide us with meaningful growth.
We believe that the combination of a low production cost and the high quality of the High Vol A steelmaking coal mined from Blue Creek, assuming we achieve our expected price realizations, will generate some of the highest steelmaking coal margins in the U.S., generate strong investment returns for us and achieve a rapid payback of our investment across a range of steelmaking coal price environments.
We believe that the combination of a low production cost and the premium quality of the High Vol A steelmaking coal mined from Blue Creek, assuming we achieve our expected price realizations, will generate some of the highest steelmaking coal margins in the U.S., generate strong investment returns and achieve a rapid payback of our investment across a range of steelmaking coal price environments.
Summary of Mineral Resources Exclusive of Reserves as of December 31, 2023 (1) (in millions of metric tons) (2) Demonstrated Coal Resources (in-place) Quality (Dry Basis) Location/Mine Status of Operation (3) Measured Indicated Measured + Indicated Inferred % Ash % Sulfur % VM Alabama: Blue Creek Development — 39.7 39.7 — 18.8 1.4 31 Total Alabama — 39.7 39.7 — Total Warrior Met Coal — 39.7 39.7 — (1) The price used and the time frame and point of reference used is discussed in the description of Blue Creek below.
Summary of Mineral Resources Exclusive of Reserves as of December 31, 2024 (1) (in millions of metric tons) (2) Demonstrated Coal Resources (in-place) Quality (Dry Basis) Location/Mine Status of Operation (3) Measured Indicated Measured + Indicated Inferred % Ash % Sulfur % VM Alabama: Blue Creek Development — 39.7 39.7 — 18.8 1.4 31 Total Alabama — 39.7 39.7 — Total Warrior Met Coal — 39.7 39.7 — (1) The price used and the time frame and point of reference used are discussed in the description of Blue Creek below.
Mine No 4 is located at approximately 87°19’32” latitude and 33°19’49”N longitude which is approximately 20 miles east of Tuscaloosa, Alabama and 30 miles southwest of Birmingham, Alabama.
Mine No 4 is located at approximately 33°19’49”N latitude and 87°19’32”W longitude which is approximately 20 miles east of Tuscaloosa, Alabama and 30 miles southwest of Birmingham, Alabama.
Portions of the following information are based on assumptions, qualifications and procedures that are not fully described herein. Reference should be made to the full text of the TRSs, incorporated herein by reference and made a part of this Annual Report on Form 10-K.
Portions of the following information are based on assumptions, qualifications and procedures that are not fully described herein. Reference should be made to the full text of each TRS, incorporated herein by reference and made a part of this Annual Report on Form 10-K.
The range of steelmaking coal sales prices used to assess our Blue Creek reserves were based on the IHS High Volatile A price forecast through 2030 and was held constant beyond that date and varies between $172 to $206 per metric ton.
The range of steelmaking coal sales prices used to assess our Blue Creek reserves were based on the IHS High Volatile A price forecast through 2030 and was held constant beyond that date and varies between $168 to $209 per metric ton.
The proven and probable mineral reserves for these properties were prepared by McGehee Engineering Corporation. The following table provides the location and quality of our measured, indicated and inferred mineral resources, exclusive of reserves, as of December 31, 2023.
The proven and probable mineral reserves for these properties were prepared by McGehee Engineering Corporation. The following table provides the location and quality of our Blue Creek measured, indicated and inferred mineral resources, exclusive of reserves, as of December 31, 2024.
(6) Total Blue Creek Mine reserve tonnage includes: 11.3 million owned, 49.2 million leased, and an additional 7.1 million with option to mine. (7) Our other mines consist of other surface steelmaking and thermal coal mines, two of which are currently under lease to third parties and four of which are not operating.
(6) Total Blue Creek Mine reserve tonnage includes: 11.2 million owned, 50.8 million leased, and an additional 7.0 million with option to mine. (7) Our other mines consist of other surface steelmaking and thermal coal mines, two of which are currently under lease to third parties and four of which are not operating.
The following table provides a comparison of our material mineral resources exclusive of reserves as of December 31, 2023 and December 31, 2022: 60 Summary of Material Mineral Resources as of December 31, 2023 as compared to December 31, 2022 (in millions of metric tons) (1) As of December 31, Change Mine 2023 2022 Tons % Blue Creek Mineral Resources Measured — — — — % Indicated 39.7 39.2 0.5 1 % Measured + Indicated 39.7 39.2 0.5 1 % (1) 1 metric ton is equivalent to 1.102311 short tons.
The following table provides a comparison of our Boue Creek material mineral resources exclusive of reserves as of December 31, 2024 and December 31, 2023: 60 Summary of Material Mineral Resources as of December 31, 2024 as compared to December 31, 2023 (in millions of metric tons) (1) As of December 31, Change Mine 2024 2023 Tons % Blue Creek Mineral Resources Measured — — — — % Indicated 39.7 39.7 — — % Measured + Indicated 39.7 39.7 — — % (1) 1 metric ton is equivalent to 1.102311 short tons.
Overview and Highlights As of December 31, 2023, and under the SEC's new rules governing mineral reserves, specifically subpart 1300 of Regulation S-K under the Modernization of Property Disclosures for Mining Registrants, we had estimated reserves totaling 159.1 million metric tons and estimated mineral resources exclusive of reserves of 39.7 million metric tons.
Overview and Highlights As of December 31, 2024, and under the SEC's new rules governing mineral reserves, specifically subpart 1300 of Regulation S-K under the Modernization of Property Disclosures for Mining Registrants, we had estimated reserves totaling 157.8 million metric tons and estimated mineral resources exclusive of reserves of 39.7 million metric tons.
The range of steelmaking coal sales prices used to assess our Mine No. 7 reserves were based on 98 percent of the premium low-vol forecast through 2030 and was held constant beyond that date and varies between $156 to $191 per metric ton.
The range of steelmaking coal sales prices used to assess our Mine No. 7 reserves were based on 98 percent of the premium low-vol forecast through 2035 and was held constant beyond that date and varies between $229 to $329 per metric ton.
The net book value of property, plant and equipment associated with Mine No. 4 as of December 31, 2023, was $213.8 million. As of the filing of this annual report Mine No. 4 is currently active with three continuous mining sections and one longwall.
The net book value of property, plant and equipment associated with Mine No. 4 as of December 31, 2024, was $ 225.0 million. As of the filing of this annual report, Mine No. 4 is currently active with three continuous mining sections and one longwall.
The net book value of property, plant and equipment associated with Mine No. 7 as of December 31, 2023, was $328.1 million. As of the filing of this annual report Mine No. 7 is currently active with two longwall sections and six continuous mining sections.
The net book value of property, plant and equipment associated with Mine No. 7 as of December 31, 2024, was $ 298.4 million. As of the filing of this annual report Mine No. 7 is currently active with two longwall sections and six continuous mining sections.
Coal royalty expense was $120.5 million, $138.9 million, and $65.4 million, for the years ended December 31, 2023, December 31, 2022, and December 31, 2021, respectively. The following table provides the location and quality of our proven and probable mineral reserves as of December 31, 2023.
Coal royalty expense was $123.0 million, $120.5 million, and $138.9 million, for the years ended December 31, 2024, December 31, 2023, and December 31, 2022, respectively. The following table provides the location and quality of our proven and probable mineral reserves as of December 31, 2024.
The Blue Creek mine will be a similar operation to our currently active operations, Mine No. 4 and Mine No. 7. The net book value of property, plant and equipment associated with Blue Creek as of December 31, 2023, was $371.9 million. The mine property is located approximately 87°26’35” latitude and 33°35’21”N longitude.
The Blue Creek mine will be a similar operation to our currently active operations, Mine No. 4 and Mine No. 7. The net book value of property, plant and equipment associated with Blue Creek as of December 31, 2024, was $736.6 million. The mine property is located approximately 33°35’21”N latitude and 87°26’35”W longitude.
As of December 31, 2023, we had outstanding surety bonds with parties for post-mining reclamation at all of our mining operations totaling $44.3 million and $5.2 million for miscellaneous purposes. A substantial amount of the coal that the Company mines is produced from mineral reserves leased from third-party landowners.
As of December 31, 2024, we had outstanding surety bonds with parties for post-mining reclamation at all of our mining operations totaling $50.6 million and $7.7 million for miscellaneous purposes. A substantial amount of the coal that the Company mines is produced from mineral reserves leased from third-party landowners.
The following map shows the major locations of our mining operations. In addition to our underground and surface mines, we utilize a substantial amount of existing infrastructure which includes administration buildings, a central supply maintenance shop, a central supply warehouse, a training center, a central lab for coal quality testing, and a barge loading facility.
In addition to our underground and surface mines, we utilize a substantial amount of existing infrastructure which includes administration buildings, a central supply maintenance shop, a central supply warehouse, a training center, a central lab for coal quality testing, and a barge loading facility.
With regard to Mine No. 7 and Mine No. 4, there have been no material changes in the mineral reserves or mineral resources from the TRSs filed for Mine No. 7 and Mine No. 4 as Exhibits 96.1 and 96.2, respectively, to the Amendment No. 1 on Form 19-K/A to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2023 Mine No. 7 and Mine No. 4 TRSs”).
With regard to Mine No. 4 there have been no material changes in the mineral reserves or mineral resources from the TRS filed as Exhibit 96.2 to Amendment No. 1 on Form 10-K/A to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the "2022 Mine No. 4 TRS").
The mine plan was generated based on previous mine plans, anticipated lease acquisitions, and operational criteria with modifications where necessary due to geologic mapping or other factors.
The mine plan was generated based on previous mine plans, anticipated lease acquisitions, and operational criteria with modifications where necessary due to geologic mapping or other factors. Carlson Mining software was utilized to generate the life of mine plan.
Steel, The Pittsburgh & Midway Coal Mining Company and Walter Energy, Inc. The majority 61 of the drilling was accomplished by means of conventional core hole exploration and air rotary drilling with geophysical logging for coalbed methane wells. The following shows the current property and facilities layout of Mine No 4.
The majority of the drilling was accomplished by means of conventional core hole exploration and air rotary drilling with geophysical logging for coalbed methane wells. 61 The following shows the current property and facilities layout of Mine No 4.
Mine No. 7, inclusive of depleted mine works and future reserve areas, is composed of approximately 43,000 total acres. Of the 43,000 acres, approximately 10,100 are associated with future mining areas. Future mining areas include approximately 10,000 acres of leased mineral holdings and approximately 100 acres of owned mineral holdings and 300 acres of uncontrolled mineral holdings.
Mine No. 7, inclusive of depleted mine works and future reserve areas, is composed of approximately 45,000 total acres. Of the 45,000 acres, approximately 12,100 are associated with future mining areas. Future mining areas include approximately 11,850 acres of leased mineral holdings and approximately 75 acres of owned mineral holdings and 175 acres of uncontrolled mineral holdings.
The Company is therefore not filing new TRSs for Mine No. 7 and Mine No. 4 in connection with this Annual Report and is incorporating the 2023 Mine No. 7 and Mine No. 4 TRSs herein by reference.
The Company is therefore not filing a new TRS for Mine No. 4 nor Blue Creek in connection with this Annual Report and is incorporating the 2022 Mine No. 4 TRS and 2023 Blue Creek TRS herein by reference.
The following table provides the production (in thousands of metric tons) for our operating mines for each of the three years ended December 31, 2023, 2022 and 2021: Production Location/Mine 2023 2022 2021 Alabama: Warrior Met Coal Mining, LLC No. 4 2,272 1,415 736 No. 7 4,664 4,314 4,349 Total Alabama 6,936 5,729 5,085 All mining operations are subject to federal and state laws and must obtain permits to operate mines, coal preparation and related facilities, haul roads, and other incidental surface disturbances necessary for mining to occur.
Specialized mining service providers including slope, shaft, and preparation plant construction companies are located in the immediate area. 57 The following table provides the production (in thousands of metric tons) for our operating mines for each of the three years ended December 31, 2024, 2023 and 2022: Production Location/Mine 2024 2023 2022 Alabama: Warrior Met Coal Mining, LLC No. 4 2,512 2,272 1,415 No. 7 4,780 4,664 4,314 Blue Creek 190 — — Total Alabama 7,482 6,936 5,729 All mining operations are subject to federal and state laws and must obtain permits to operate mines, coal preparation and related facilities, haul roads, and other incidental surface disturbances necessary for mining to occur.
Carlson Mining software was utilized to generate the life of mine plan. 66 The range of steelmaking coal sales prices used to assess our reserves were based on IHS High Volatile A price forecast through 2030 and was held constant beyond that date and varies between $143 to $177 per metric ton.
The range of steelmaking coal sales prices used to assess our reserves were based on IHS High Volatile A price forecast through 2030 and was held constant beyond that date and varies between $168 to $209 per metric ton.
Access to Mine No. 4 is by State Route 59 ("Lock 17 Road"), a well maintained, paved, two-lane road with interstate access in close proximity to the south, and a short access road to the main entrance of the mine.
Access to Mine No. 4 is by State Route 59 ("Lock 17 Road"), a well-maintained, paved, two-lane road with interstate access in close proximity to the south, and a short access road to the main entrance of the mine. All of the facilities are in close proximity to high-quality public roads and lie within 2 miles of each other.
Summary of Mineral Reserves as of December 31, 2023 (1) (in millions of metric tons) (2) Mineral Reserves (3)(5) Quality (Dry Basis) Location/Mine Status of Operation (4) Proven (3) Probable (3) Reserves (3) Owned Leased % Ash % Sulfur % VM Alabama: No. 4 Production 36.0 0.5 36.5 — 36.5 10.2 1 30 No. 7 Production 34.1 12.3 46.4 0.3 46.1 10.2 0.7 22 Blue Creek (6) Development 43.3 24.3 67.6 11.3 49.2 10.0 0.7 32 Other (7) Various 8.6 — 8.6 6.9 1.7 3.2 - 23.5 0.7 - 6.01 N/A Total 122.0 37.1 159.1 18.5 133.5 Total Warrior Met Coal 122.0 37.1 159.1 18.5 133.5 (1) The price used and the time frame and point of reference used is discussed in the description of each mine below.
Summary of Mineral Reserves as of December 31, 2024 (1) (in millions of metric tons) (2) Mineral Reserves (3)(5) Quality (Dry Basis) Location/Mine Status of Operation (4) Proven (3) Probable (3) Reserves (3) Owned Leased % Ash % Sulfur % VM Alabama: No. 4 Production 32.7 0.6 33.3 — 33.3 10.2 1.0 30.0 No. 7 Production 33.3 15.8 49.1 0.3 48.8 10.2 0.7 23.0 Blue Creek (6) Production 43.6 25.4 69.0 11.2 57.8 10.0 0.7 32.0 Other (7) Various 6.4 — 6.4 6.3 0.1 3.2 - 23.5 0.7 - 6.01 N/A Total 116.0 41.8 157.8 17.8 140.0 Total Warrior Met Coal 116.0 41.8 157.8 17.8 140.0 (1) The price used and the time frame and point of reference used are discussed in the description of each mine below.
Upon our acquisition of Mine No. 4 in April 2016, the mine began production. The property has been extensively explored as early as 1916 by subsurface drilling efforts carried out by numerous entities, the majority of which were completed prior to our acquisition of the assets including: by Tennessee Coal, Iron & Railroad Company, U.S.
The property has been extensively explored as early as 1916 by subsurface drilling efforts carried out by numerous entities, the majority of which were completed prior to our acquisition of the assets including: by Tennessee Coal, Iron & Railroad Company, U.S. Steel, The Pittsburgh & Midway Coal Mining Company and Walter Energy, Inc.
The Mine No. 4 preparation plant has a capacity to process 1,300 raw metric tons per hour. Rail transportation for the mine sites is provided by CSX railroad and river transportation is available on the Black Warrior River. The rail line and Black Warrior River serves as the primary means of transportation of coal from the mine.
Rail transportation for the mine sites is provided by CSX railroad and river transportation is available on the Black Warrior River. The rail line and Black Warrior River serves as the primary means of transportation of coal from the mine.
Mine No. 4 and Mine No. 7, our two operating mines, had approximately 82.9 million metric tons of recoverable reserves and our undeveloped 56 Blue Creek mine contained 67.6 million metric tons of recoverable reserves and 39.7 million metric tons of in-place mineral resources exclusive of reserves, which total 107.3 million metric tons.
Mine No. 4 and Mine No. 7, our two operating mines, had approximately 82.4 million metric tons of recoverable reserves and our Blue Creek mine contained 69.0 million metric tons of recoverable reserves and 39.7 million metric tons of in-place mineral resources exclusive of reserves. 56 The following map shows the major locations of our mining operations.
All of the facilities are in close proximity to high quality, public roads and lie within 2 miles of each other. On site facilities include an administration building, maintenance shop, preparation plant and a stock yard. Mine No. 4 preparation plant services the mine via a skip system which transports extracted coal from an underground bunker to the surface facility.
On site facilities include an administration building, maintenance shop, preparation plant and a stock yard. Mine No. 4 preparation plant services the mine via a skip system which transports extracted coal from an underground bunker to the surface facility. The Mine No. 4 preparation plant has a capacity to process 1,300 raw metric tons per hour.
The Blue Creek change in coal resources exclusive of reserves is primarily due to results from additional exploration and labratory testing. Mine No. 4 Mine No. 4 was opened by Jim Walter Resources in 1974 and has been in operation since. In 2015, in connection with the chapter 11 filing by Walter Energy, Mine No. 4 was idled.
Mine No. 4 Mine No. 4 was opened by Jim Walter Resources in 1974 and has been in operation since. In 2015, in connection with the chapter 11 filing by Walter Energy, Mine No. 4 was idled. Upon our acquisition of Mine No. 4 in April 2016, the mine began production.
Our operations also are well serviced by major mining equipment manufacturers, 57 rebuild facilities, and mine supply vendors. Specialized mining service providers including slope, shaft, and preparation plant construction companies are located in the immediate area.
Our operations also are well serviced by major mining equipment manufacturers, rebuild facilities, and mine supply vendors.
Removed
Based on the current schedule, we expect the first development tons from continuous miner units to occur in the third quarter of 2024 with the longwall scheduled to start in the second quarter of 2026. We initially expected to invest approximately $650.0 to $700.0 million over five years to develop Blue Creek.
Added
With regard to Blue Creek there have been no material changes in the mineral reserves or resources from the TRS filed as Exhibit 96.3 to the Company's Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 Blue Creek TRS").
Removed
These costs include, among others, costs to construct a preparation plant and coal handling facility, longwall and continuous miner equipment, belts and advancement material, outside facilities and related matters. Beyond the initial investment, additional capital will be required for sustaining production. This includes rebuilds and replacement of equipment, mine development and multiple bleeder, intake and return shafts.
Removed
More than a year after the relaunch of the Blue Creek mine development in May 2022, Warrior has initiated important and highly beneficial project scope changes that will require incremental capital expenditures over the life of the project while lowering operating costs, increasing flexibility to manage risks, and making better use of multi-channel transportation methods. 65 Most of these scope changes are transportation and logistics-related, with additional amounts related to inflation for these changes only.
Removed
These scope changes are expected to increase total capital expenditures for the Blue Creek mine by approximately $120 - $130 million over the remainder of the project development period.
Removed
While the Company originally planned on a single channel to transport coal from the Blue Creek mine via an overland belt to a third-party owned and operated barge loadout facility, it now plans to build a belt conveyor system to a railroad loadout to transport the majority of the coal.
Removed
We expect this change to de-risk the single channel to market, lower operating cost and move volumes faster to the port. Warrior will also build and operate a barge loadout itself rather than utilizing a third-party provider.
Removed
The Company believes that the potential economic benefits associated with these scope changes should provide Warrior with an inherently robust and cost competitive outbound logistics model that will provide additional flexibility to manage alternative transportation methods.
Removed
The inclusion of the benefits and incremental capital expenditures relating to these specific scope changes did not have a material impact to the project economic metrics of net present value and internal rate of return.
Removed
In addition, the Company has experienced inflationary cost increases ranging from 25 to 35 percent in both operating expenses and capital expenditures for its existing mining operations since late 2021.
Removed
The Company is also experiencing inflationary pressures at Blue Creek, especially in relation to labor, construction materials and certain equipment, that is expected to continue during the remainder of the project development period.
Removed
As a number of key material contracts are currently being negotiated, and due to uncertainty regarding future inflation rates, the Company is not providing an estimate of the impact of inflation at this time.
Removed
However, as the Company negotiates and enters into contracts for the larger project components, the Company expects that more information will become available to allow it to provide revised guidance. While cost inflation has impacted the cost of the project, these inflationary pressures are expected to be offset by an inflationary increase in the long-term price assumption for steelmaking coal.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following graph shows a comparison from April 13, 2017 (the date our common stock commenced trading on the NYSE) through December 31, 2023 of the cumulative total return for our common stock, the S&P Metals and Mining Index and the Russell 3000 Stock Index.
Biggest changeThe following graph shows a comparison from December 31, 2019 through December 31, 2024 of the cumulative total return for our common stock, the S&P Metals and Mining Index and the Russell 3000 Stock Index.
Stock Repurchases There were no share repurchases of our common stock made during the quarter ended December 31, 2023.
Stock Repurchases There were no share repurchases of our common stock made during the quarter ended December 31, 2024.
The graph assumes that $100 was invested on April 13, 2017 in our common stock and each index and that all dividends were reinvested. 68 Note that historical stock price performance is not necessarily indicative of future stock price performance.
The graph assumes that $100 was invested on December 31, 2019 in our common stock and each index and that all dividends were reinvested. 68 Note that historical stock price performance is not necessarily indicative of future stock price performance.
Management’s Discussion and Analysis of Financial Conditions and Results of Operation—Liquidity and Capital Resources—ABL Facility” and “—Senior Secured Notes.” During the year ended December 31, 2023, we paid $61.1 million of regular quarterly and special cash dividends under the Capital Allocation Policy. Holders As of January 17, 2024, we had approximately 362 holders of record of our common stock.
Management’s Discussion and Analysis of Financial Conditions and Results of Operation—Liquidity and Capital Resources—ABL Facility” and “—Senior Secured Notes.” During the year ended December 31, 2024, we paid $43.8 million of regular quarterly and special cash dividends under the Capital Allocation Policy. Holders As of January 21, 2025, we had approximately 372 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

97 edited+32 added−22 removed133 unchanged
Biggest changeResults of Operations Year Ended December 31, 2023 and 2022 The following table summarizes certain financial information relating to our operating results that have been derived from our audited financial statements for the years ended December 31, 2023 and 2022. 74 For the years ended December 31, (in thousands) 2023 % of Total Revenues 2022 % of Total Revenues Revenues: Sales $ 1,647,992 98.3 % $ 1,707,579 98.2 % Other revenues 28,633 1.7 % 31,159 1.8 % Total revenues 1,676,625 100.0 % 1,738,738 100.0 % Costs and expenses: Cost of sales (exclusive of items shown separately below) 910,269 54.3 % 710,605 40.9 % Cost of other revenues (exclusive of items shown separately below) 37,486 2.2 % 27,047 1.6 % Depreciation and depletion 127,356 7.6 % 115,279 6.6 % Selling, general and administrative 51,817 3.1 % 48,791 2.8 % Business interruption 8,291 0.5 % 23,455 1.3 % Idle mine — — % 12,137 0.7 % Total costs and expenses 1,135,219 67.7 % 937,314 53.9 % Operating income 541,406 32.3 % 801,424 46.1 % Interest expense (17,960) (1.1) % (31,433) (1.8) % Interest income 40,699 2.4 % 12,438 0.7 % Loss on early extinguishment of debt (11,699) (0.7) % — — % Other (expense) income (1,027) (0.1) % 675 — % Income before income tax expense 551,419 32.9 % 783,104 45.0 % Income tax expense $ 72,790 4.3 % 141,806 8.2 % Net income $ 478,629 28.5 % $ 641,298 36.9 % Sales, production and cost of sales components on a per unit basis for the years ended December 31, 2023 and 2022 were as follows: For the years ended December 31, 2023 2022 Steelmaking Coal (metric tons in thousands) Metric tons sold 6,820 5,099 Metric tons produced 6,936 5,729 Average net selling price per metric ton $ 241.64 $ 334.89 Cash cost of sales per metric ton $ 132.60 $ 138.35 Cost of production % 60 % 53 % Transportation and royalties % 40 % 47 % The following list highlights our key accomplishments for the year ended December 31, 2023: • we achieved strong net income of $478.6 million, or $9.20 per diluted share and adjusted EBITDA of $698.9 million; • we achieved annual sales volumes of 6.8 million metric tons, a 34% increase compared to the prior year, and production volume of 6.9 million metric tons, a 21% increase compared to the prior year, which represent run rates not seen since 2020; • we delivered positive cash flows from operations of $701.1 million and free cash flow of $176.3 million while continuing to invest a record high $524.8 million in property, plant and equipment and mine development and retired early approximately 50% of our senior secured notes; 75 • we maintained a strong balance sheet with total liquidity of $845.6 million, consisting of cash and cash equivalents of $738.2 million and $107.4 million available under our ABL Facility; • we made excellent progress in developing our world class Blue Creek growth project, which remains on schedule and invested $319.1 million for the year ended December 31, 2023; • we achieved a total reportable incidence rate of 1.90, which is 57% lower than the national total reportable incidence rate for all underground coal mines in the United States of 4.39 for the nine months ended September 30, 2023, which represents the latest data available; and • we demonstrated an ongoing commitment to returning capital to our stockholders paying a regular quarterly dividend of $0.07 per share, an increase of approximately 17% compared to the prior year and special dividends of $0.88 per share.
Biggest changeFor the years ended December 31, (in thousands) 2024 % of Total Revenues 2023 % of Total Revenues Revenues: Sales $ 1,499,980 98.3 % $ 1,647,992 98.3 % Other revenues 25,240 1.7 % 28,633 1.7 % Total revenues 1,525,220 100.0 % 1,676,625 100.0 % Costs and expenses: Cost of sales (exclusive of items shown separately below) 1,007,297 66.0 % 910,269 54.3 % Cost of other revenues (exclusive of items shown separately below) 45,449 3.0 % 37,486 2.2 % Depreciation and depletion 153,982 10.1 % 127,356 7.6 % Selling, general and administrative 63,078 4.1 % 51,817 3.1 % Business interruption 524 — % 8,291 0.5 % Total costs and expenses 1,270,330 83.3 % 1,135,219 67.7 % Operating income 254,890 16.7 % 541,406 32.3 % Interest expense (4,271) (0.3) % (17,960) (1.1) % Interest income 33,047 2.2 % 40,699 2.4 % Loss on early extinguishment of debt — — % (11,699) (0.7) % Other expense — — % (1,027) (0.1) % Income before income tax expense 283,666 18.6 % 551,419 32.9 % Income tax expense 33,063 2.2 % 72,790 4.3 % Net income $ 250,603 16.4 % $ 478,629 28.5 % Sales, production and cost of sales components on a per unit basis for the years ended December 31, 2024 and 2023 were as follows: For the years ended December 31, 2024 2023 Steelmaking Coal (metric tons in thousands) Metric tons sold 7,235 6,820 Metric tons produced 7,482 6,936 Average net selling price per metric ton $ 207.32 $ 241.64 Cash cost of sales per metric ton $ 138.10 $ 132.60 Cost of production % 64 % 60 % Transportation and royalties % 36 % 40 % The following list highlights our key accomplishments for the year ended December 31, 2024: • we achieved strong net income of $250.6 million, or $4.79 per diluted share and adjusted EBITDA of $447.9 million; 76 • we achieved annual sales volumes of 7.2 million metric tons, a 6% increase compared to the prior year, and production volume of 7.5 million metric tons, a 8% increase compared to the prior year, which represent run rates not seen since 2019 and record high annual production for Mine No. 4 of 2.5 million metric tons; • we delivered positive cash flows from operations of $367.4 million, enabling the second highest annual amount spent on capital expenditures of $488.3 million for the growth of the business; • we made excellent progress in developing our world-class Blue Creek growth project, which remains on schedule, and invested $350.5 million in the continued development of Blue Creek, which brings the total project spend to $716.5 million, all self-funded from operating cash flows; • we began production at Blue Creek on time and on budget; • we commenced continuous miner development at Blue Creek, producing 190 thousand metric tons; • we maintained a strong balance sheet with total liquidity of $654.7 million, consisting of cash and cash equivalents of $491.5 million, short-term investments of $5.1 million, net of $9.5 million posted as collateral, long-term investments of $44.6 million, and $113.5 million available under our ABL Facility; • we achieved a total reportable incidence rate of 1.53, which is 65% lower than the national total reportable incidence rate for all underground coal mines in the United States of 4.36 for the nine months ended September 30, 2024 which represents the latest data available; and • we demonstrated an ongoing commitment to returning capital to our stockholders paying a regular quarterly dividend of $0.08 per share and special dividends of $0.50 per share.
Investing Activities Net cash used in investing activities was $527.2 million for the year ended December 31, 2023, primarily comprised of $491.7 million of purchases of property, plant and equipment and $33.1 million of capitalized mine development costs associated with our Blue Creek development.
Net cash used in investing activities was $527.2 million for the year ended December 31, 2023, primarily comprised of $491.7 million of purchases of property, plant and equipment and $33.1 million of capitalized mine development costs associated with our Blue Creek development.
Financing Activities Net cash used in financing activities was $265.2 million for the year ended December 31, 2023, primarily due to the retirements of debt related to our Notes of $162.4 million, payment of quarterly and special dividends of $61.1 million and principal repayments of financing lease obligations of $32.3 million.
Net cash used in financing activities was $265.2 million for the year ended December 31, 2023, primarily due to the retirements of debt related to our Notes of $162.4 million, payment of quarterly and special dividends of $61.1 million and principal repayments of financing lease obligations of $32.3 million.
The Rights will expire on the earliest of (i) the close of business on April 19, 2026, (ii) the time at which the Rights are redeemed as provided in the Amended Rights Agreement, (iii) the time at which the Rights are exchanged as provided in the Amended Rights Agreement, (iv) the time at which the Board determines that the NOLs are fully utilized or no longer available under Section 382 of the Code, (v) the effective date of the repeal of Section 382 of the Code if the Board determines that the Amended Rights Agreement is no longer necessary or desirable for the preservation of NOLs, or (vi) the closing of any merger or other acquisition transaction involving the Company pursuant to an agreement of the type described in the Amended Rights Agreement.
The Rights will expire on the earliest of (i) the close of business on April 19, 2026, (ii) the time at which the Rights are redeemed as provided in the Amended Rights Agreement, (iii) the time at which the Rights are exchanged as provided in the Amended Rights Agreement, (iv) the time at which the Board determines that the NOLs are fully utilized or no longer available 85 under Section 382 of the Code, (v) the effective date of the repeal of Section 382 of the Code if the Board determines that the Amended Rights Agreement is no longer necessary or desirable for the preservation of NOLs, or (vi) the closing of any merger or other acquisition transaction involving the Company pursuant to an agreement of the type described in the Amended Rights Agreement.
Net cash provided by operating activities was $701.1 million for the year ended December 31, 2023, and was primarily attributed to net income of $478.6 million adjusted for depreciation and depletion expense of $127.4 million, deferred income tax expense of $52.9 million, stock-based compensation expense of $18.2 million, loss on early extinguishment of debt of $11.7 million, accretion and valuation adjustment of asset retirement obligations of $4.5 million and amortization of debt issuance costs and debt discount of $2.1 million and a decrease in net working capital of $5.7 million.
Net cash provided by operating activities was $701.1 million for the year ended December 31, 2023, and was primarily attributed to net income of $478.6 million adjusted for depreciation and depletion expense of $127.4 million, deferred income tax expense of $52.9 million, stock-based compensation expense of $18.2 million, loss on early extinguishment of debt of $11.7 million, accretion and valuation adjustment of asset retirement obligations of $4.5 million and amortization of debt issuance 80 costs and debt discount of $2.1 million and a decrease in net working capital of $5.7 million.
Pursuant to the terms of the Restricted Payment Offer: (1) an automatic pro ration factor of 49.5674% was applied to the $0.2 million aggregate principal amount of the Notes that were validly tendered and not validly withdrawn in the Restricted Payment Offer (rounded down to avoid the purchase of Notes in a principal amount other than in integrals of $1,000), which resulted in $0.1 million aggregate principal amount of the Notes (the “RP Pro-Rated Tendered Notes”); (2) we accepted all $0.1 million aggregate principal amount of the RP Pro-Rated Tendered Notes for payment of the Restricted Payment Repurchase Price in cash; and (3) the remaining balance of $0.1 million aggregate principal amount of the Notes tendered that were not RP Pro-Rated Tendered Notes were not accepted for payment and were returned to the tendering holder of the Notes.
Pursuant to the terms of the Restricted Payment Offer: (1) an automatic pro ration factor of 49.5674% was applied to the $0.2 million aggregate principal amount of the Notes that were validly tendered and not validly withdrawn in the Restricted Payment Offer (rounded down to avoid the purchase of 83 Notes in a principal amount other than in integrals of $1,000), which resulted in $0.1 million aggregate principal amount of the Notes (the “RP Pro-Rated Tendered Notes”); (2) we accepted all $0.1 million aggregate principal amount of the RP Pro-Rated Tendered Notes for payment of the Restricted Payment Repurchase Price in cash; and (3) the remaining balance of $0.1 million aggregate principal amount of the Notes tendered that were not RP Pro-Rated Tendered Notes were not accepted for payment and were returned to the tendering holder of the Notes.
Cash cost of sales is used as a supplemental financial measure by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess: • our operating performance as compared to the operating performance of other companies in the coal industry, without regard to financing methods, historical cost basis or capital structure; and • the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities, such as Blue Creek.
Cash cost of sales is used as a supplemental financial measure by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess: • our operating performance as compared to the operating performance of other companies in the coal industry, without regard to financing methods, historical cost basis or capital structure; and 73 • the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities, such as Blue Creek.
While the Amended Rights Agreement is in effect, any person or group that acquires beneficial ownership of 4.99% or more of the common stock or any existing stockholder who currently owns 5.00% or more of the common stock that acquires any additional shares of common stock (such person, group or existing stockholder, an "Acquiring Person") without approval 84 from the Board would be subject to significant dilution in their ownership interest in the Company.
While the Amended Rights Agreement is in effect, any person or group that acquires beneficial ownership of 4.99% or more of the common stock or any existing stockholder who currently owns 5.00% or more of the common stock that acquires any additional shares of common stock (such person, group or existing stockholder, an "Acquiring Person") without approval from the Board would be subject to significant dilution in their ownership interest in the Company.
Offers to Purchase the Notes On August 9, 2023, we commenced an offer to purchase (the “Restricted Payment Offer”), in cash, up to $150.0 million principal amount of its outstanding Notes, at a repurchase price of 103% of the aggregate principal amount of such Notes, plus accrued and unpaid interest with respect to such Notes to, but not including, the date of repurchase (the “Restricted 82 Payment Repurchase Price”).
Offers to Purchase the Notes On August 9, 2023, we commenced an offer to purchase (the “Restricted Payment Offer”), in cash, up to $150.0 million principal amount of its outstanding Notes, at a repurchase price of 103% of the aggregate principal amount of such Notes, plus accrued and unpaid interest with respect to such Notes to, but not including, the date of repurchase (the “Restricted Payment Repurchase Price”).
Cash cost of sales should not be considered an alternative to cost of sales or any other measure of financial performance or liquidity presented in accordance with GAAP. Cash cost of sales excludes some, but not all, items that 72 affect cost of sales, and our presentation may vary from the presentations of other companies.
Cash cost of sales should not be considered an alternative to cost of sales or any other measure of financial performance or liquidity presented in accordance with GAAP. Cash cost of sales excludes some, but not all, items that affect cost of sales, and our presentation may vary from the presentations of other companies.
The cost of our capital expenditures are also impacted by inflation and any prolonged inflation could result in higher costs and decreased margins and earnings. While a significant amount of the capital expenditures required at our mines has been spent, we must continue to invest capital to maintain our production.
The cost of our capital expenditures are also impacted by inflation and any prolonged inflation could result in higher costs and decreased margins and earnings. While a significant amount of the capital expenditures required at our mines has been spent, we must continue to 84 invest capital to maintain our production.
(2) Represents non-cash stock compensation expense associated with equity awards (see Note 12 to our consolidated financial statements). (3) Represents non-cash accretion expense and valuation adjustments associated with our black lung obligations (see Note 10 to our consolidated financial statements). (4) Represents non-cash mark-market losses recognized on our gas hedges (see Note 17 to our consolidated financial statements).
(2) Represents non-cash stock compensation expense associated with equity awards (see Note 12 to our consolidated financial statements). (3) Represents non-cash accretion expense and valuation adjustments associated with our black lung obligations (see Note 10 to our consolidated financial statements). (4) Represents non-cash mark-to-market losses (gains) recognized on our gas hedges (see Note 17 to our consolidated financial statements).
Borrowings under the ABL Facility bear interest at a rate equal to either (i) SOFR, plus a credit adjustment spread, ranging currently from approximately 11 bps to 43 bps depending on the interest period selected by us, or (ii) an alternate base 81 rate plus, in each case of the foregoing (i) and (ii), an applicable margin, which is determined based on the average availability of the commitments under the ABL Facility, ranging currently from 150 bps to 200 bps or 50 bps to 100 bps, respectively.
Borrowings under the ABL Facility bear interest at a rate equal to either (i) SOFR, plus a credit adjustment spread, ranging currently from approximately 11 bps to 43 bps depending on the interest period selected by us, or (ii) an alternate base 82 rate plus, in each case of the foregoing (i) and (ii), an applicable margin, which is determined based on the average availability of the commitments under the ABL Facility, ranging currently from 150 bps to 200 bps or 50 bps to 100 bps, respectively.
Please see “ Forward-Looking Statements. ” For a discussion and analysis of our results of operations and financial condition for the year ended December 31, 2021, please refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Please see “ Forward-Looking Statements. ” For a discussion and analysis of our results of operations and financial condition for the year ended December 31, 2022, please refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Additionally, the ABL Facility contains a springing fixed charge coverage ratio of not less than 1.00 to 1.00, which ratio is tested if availability under the ABL Facility is less than a certain amount. As of December 31, 2023, we were not subject to this covenant.
Additionally, the ABL Facility contains a springing fixed charge coverage ratio of not less than 1.00 to 1.00, which ratio is tested if availability under the ABL Facility is less than a certain amount. As of December 31, 2024, we were not subject to this covenant.
Going forward, we will use cash to fund debt service payments on our Notes, the ABL Facility and our other indebtedness, to fund operating activities, working capital, capital expenditures, our reclamation obligations, professional fees and other non-recurring transaction expenses and strategic investments, the development of Blue Creek, and, if declared, to pay our quarterly and/or special dividends.
Going forward, we will use cash to fund debt service payments on our Notes, the ABL Facility and our other indebtedness, to fund operating activities, working capital, the development of Blue Creek, capital expenditures, our 78 reclamation obligations, our black lung obligations, professional fees and other non-recurring transaction expenses and strategic investments, and, if declared, to pay our quarterly and/or special dividends.
Subject to customary grace periods and notice requirements, the ABL Facility also contains customary events of default. We were in compliance with all applicable covenants under the ABL Facility as of December 31, 2023.
Subject to customary grace periods and notice requirements, the ABL Facility also contains customary events of default. We were in compliance with all applicable covenants under the ABL Facility as of December 31, 2024.
As of December 31, 2022, the Company has repurchased 0.5 million shares for approximately $10.6 million, leaving $59.4 million of share repurchases authorized under the New Stock Repurchase Program.
As of December 31, 2024, the Company has repurchased 0.5 million shares for approximately $10.6 million, leaving $59.4 million of share repurchases authorized under the New Stock Repurchase Program.
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis provides a narrative of our results of operations and financial condition for the years ended December 31, 2023 and December 31, 2022.
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis provides a narrative of our results of operations and financial condition for the years ended December 31, 2024 and December 31, 2023.
Other revenues for the year ended December 31, 2023 were $28.6 million compared to $31.2 million for the year ended December 31, 2022. Other revenues are comprised of revenue derived from our natural gas operations, gains and losses on our natural gas hedges and earned royalty revenue.
Other revenues for the year ended December 31, 2024 were $25.2 million compared to $28.6 million for the year ended December 31, 2023. Other revenues are comprised of revenue derived from our natural gas operations, gains and losses on our natural gas hedges and earned royalty revenue.
As of December 31, 2023, no loans were outstanding under the ABL Facility and there were $8.7 million of letters of credit issued and outstanding under the ABL Facility. During the year ended December 31, 2023, we repurchased in the open market and extinguished approximately $8.0 million principal amount of our Notes at a discount to par value.
As of December 31, 2024, no loans were outstanding under the ABL Facility and there were $2.5 million of letters of credit issued and outstanding under the ABL Facility. During the year ended December 31, 2023 , we repurchased in the open market and extinguished approximately $8.0 million principal amount of our Notes at a discount to par value.
We have posted $18.6 million in surety bonds and $9.0 million of collateral recognized as short term investments in addition to maintaining a black lung trust of $1.8 million that was acquired from Walter Energy. We received a letter from the U.S.
We have posted $18.6 million in surety bonds and $9.5 million of collateral recognized as short term investments in addition to maintaining a black lung trust of $1.4 million that was acquired from Walter Energy. We received a letter from the U.S.
There can be no assurance that we will have or continue to have access to the capital markets on terms acceptable to us or at all. Statements of Cash Flows Cash balances were $738.2 million, $829.5 million and $395.8 million at December 31, 2023, December 31, 2022, and December 31, 2021, respectively.
There can be no assurance that we will have or continue to have access to the capital markets on terms acceptable to us or at all. Statements of Cash Flows Cash balances were $491.5 million, $738.2 million and $829.5 million at December 31, 2024, December 31, 2023, and December 31, 2022, respectively.
Our ability to obtain bank financing or our ability to access the capital markets for future equity or debt offerings may be limited by our financial condition at the time of any such financing or offering and the covenants in our current or future debt agreements, as well as by general economic conditions, contingencies and uncertainties, including as a result of the COVID-19 pandemic, that are beyond our control.
Our ability to obtain bank financing or our ability to access the capital markets for future equity or debt offerings may be limited by our financial condition at the time of any such financing or offering and the covenants in our current or future debt agreements, as well as by general economic conditions, contingencies and uncertainties, that are beyond our control.
Historically, our primary uses of cash have been for funding the operations of our coal and natural gas production operations, working capital, our capital expenditures, our reclamation obligations, payment of principal and interest on our Notes, professional fees and other non-recurring transaction expenses.
Historically, our primary uses of cash have been for funding the operations of our coal and natural gas production operations, working capital, our capital expenditures, including capital expenditures and mine development for the development of Blue Creek, our reclamation obligations, payment of principal and interest on our Notes, professional fees and other non-recurring transaction expenses.
Therefore, at December 31, 2023, we have a valuation allowance against our state deferred income tax assets of approximately $41.0 million. Recently Adopted Accounting Standards See Note 2 of our consolidated financial statements for disclosures related to new accounting pronouncements. 88
Therefore, at December 31, 2024, we have a valuation allowance against our state deferred income tax assets of approximately $44.7 million . Recently Adopted Accounting Standards See Note 2 of our consolidated financial statements for disclosures related to new accounting pronouncements. 88
We are a large-scale, low-cost producer and exporter of premium steelmaking coal, also known as hard coking coal (“HCC”), operating highly efficient longwall operations in our underground mines based in Alabama, Mine No. 4 and Mine No. 7.
We are a large-scale, low-cost producer and exporter of premium quality steelmaking coal, also known as hard coking coal (“HCC”), operating highly efficient longwall operations in our underground mines based in Alabama, Mine No. 4 and Mine No. 7. We also are developing our world-class Blue Creek mine based in Alabama.
If our assumptions differ from actual experience, or if changes in the regulatory environment occur, our actual cash expenditures and costs that we incur could be materially different than currently estimated. At December 31, 2023, we had recorded asset retirement obligation liabilities of $84.2 million, including $12.5 million reported as a current liability.
If our assumptions differ from actual experience, or if changes in the regulatory environment occur, our actual cash expenditures and costs that we incur could be materially different than currently estimated. At December 31, 2024, we had recorded asset retirement obligation liabilities of $85.2 million, including $13.0 million reported as a current liability.
During the year ended December 31, 2023, we have paid $61.1 million of regular quarterly and special cash dividends under the Capital Allocation Policy . 80 Stock Repurchase Program On March 26, 2019, the Board approved the Company's second stock repurchase program (the “New Stock Repurchase Program”) that authorizes repurchases of up to an aggregate of $70.0 million of the Company's outstanding common stock.
During the year ended December 31, 2024, we have paid $43.8 million of regular quarterly and special cash dividends under the Capital Allocation Policy . 81 Stock Repurchase Program On March 26, 2019, the Board approved the Company's second stock repurchase program (the “New Stock Repurchase Program”) that authorizes repurchases of up to an aggregate of $70.0 million of the Company's outstanding common stock.
The following table sets forth, a summary of the net cash provided by (used in) operating, investing and financing activities for the period (in thousands): For the years ended December 31, 2023 2022 2021 Net cash provided by operating activities $ 701,108 $ 841,904 $ 351,543 Net cash used in investing activities (527,207) (255,144) (71,146) Net cash (used in) provided by financing activities (265,184) (153,119) (96,474) Net (decrease) increase in cash and cash equivalents and restricted cash $ (91,283) $ 433,641 $ 183,923 Operating Activities Net cash flows from operating activities consist of net income adjusted for noncash items, such as depreciation and depletion of property, plant and equipment and mineral interests, deferred income tax expense, stock-based compensation, amortization of debt issuance costs and debt discount, accretion expense and valuation adjustment associated with our asset retirement obligations, mark-to-market adjustments on gas hedges, loss on early extinguishment of debt and changes in net working capital.
The following table sets forth, a summary of the net cash provided by (used in) operating, investing and financing activities for the period (in thousands): For the years ended December 31, 2024 2023 2022 Net cash provided by operating activities $ 367,448 $ 701,108 $ 841,904 Net cash used in investing activities (538,002) (527,207) (255,144) Net cash used in financing activities (68,511) (265,184) (153,119) Net (decrease) increase in cash and cash equivalents and restricted cash $ (239,065) $ (91,283) $ 433,641 Operating Activities Net cash flows from operating activities consist of net income adjusted for noncash items, such as depreciation and depletion of property, plant and equipment and mineral interests, deferred income tax expense, stock-based compensation, amortization of debt issuance costs and debt discount, accretion expense and valuation adjustment associated with our asset retirement obligations, mark-to-market adjustments on gas hedges, loss on early extinguishment of debt and changes in net working capital.
Our deferred mine development costs were $33.1 million and $48.9 million for the years ended December 31, 2023 and December 31, 2022, respectively, and primarily relate to the development of Blue Creek and Mine No. 4.
Our deferred mine development costs were $31.1 million and $33.1 million for the years ended December 31, 2024 and December 31, 2023, respectively, and primarily relate to the development of Blue Creek and Mine No. 4 North.
For the year ended December 31, 2023, we recognized income tax expense of $72.8 million or an effective tax rate of 13.2% primarily due to pre-tax income of $551.4 million offset partially by an income tax benefit of $26.1 million due to a deduction under Section 250 of the Code: Foreign-Derived Intangible Income ("FDII") and $21.8 million of depletion.
For the year ended December 31, 2023, we recognized income tax expense of $72.8 million or an effective tax rate of 13.2% primarily due to pre-tax income of $551.4 million offset partially by an income tax benefit of $26.1 million due to the FDII deduction and $21.8 million of depletion.
The Company believes that the potential economic benefits associated with this scope change should provide Warrior with an inherently robust and cost competitive outbound logistics model that will provide additional flexibility to manage alternative transportation methods.
We believe that the potential economic benefits associated with this scope change should provide us with an inherently robust and cost competitive outbound logistics model that will provide additional flexibility to manage alternative transportation methods.
The inclusion of the benefits and incremental capital expenditures relating to these specific scope changes did not have a material impact to the project economic metrics of net present value and internal rate of return.
The inclusion of the benefits and incremental capital expenditures relating to these specific scope changes are not expected to have a material impact on the project's economic metrics of net present value and internal rate of return and did not change the project timeline.
While the Company originally planned on a single channel to transport coal from the Blue Creek mine via an overland belt to a third-party owned and operated barge loadout facility, it now plans to build a belt conveyor system to a railroad loadout to transport the majority of the coal.
While we originally planned on a single channel to transport coal from the Blue Creek mine via an overland belt to a third-party owned and operated barge loadout facility, we are now constructing a belt conveyor system to a railroad loadout to transport the majority of the coal.
For the years ended December 31, 2023 2022 2021 (in thousands) Cost of sales $ 910,269 $ 710,605 $ 554,282 Asset retirement obligation accretion and valuation adjustment (2,109) (1,801) (2,802) Stock compensation expense (3,841) (3,379) (1,917) Cash cost of sales $ 904,319 $ 705,425 $ 549,563 Adjusted EBITDA We define Adjusted EBITDA as net income before net interest (income) expense, income tax expense, depreciation and depletion, non-cash asset retirement obligation accretion and valuation adjustments, non-cash stock compensation expense, other non-cash accretion and valuation adjustments, non-cash mark-to-market (gain) loss on gas hedges, loss on early extinguishment of debt, business interruption expenses, idle mine expenses and other income and expenses.
For the years ended December 31, 2024 2023 2022 (in thousands) Cost of sales $ 1,007,297 $ 910,269 $ 710,605 Asset retirement obligation accretion and valuation adjustment (3,243) (2,109) (1,801) Stock compensation expense (4,866) (3,841) (3,379) Cash cost of sales $ 999,188 $ 904,319 $ 705,425 Adjusted EBITDA We define Adjusted EBITDA as net income before net interest (income) expense, income tax expense, depreciation and depletion, non-cash asset retirement obligation accretion and valuation adjustments, non-cash stock compensation expense, other non-cash accretion and valuation adjustments, non-cash mark-to-market (gain) loss on gas hedges, loss on early extinguishment of debt, business interruption expenses, idle mine expenses and other income and expenses.
As of December 31, 2023, we had outstanding surety bonds and letters of credit with parties for post-mining reclamation at all of our mining operations totaling $44.3 million, $18.6 million as collateral for self-insured black lung related claims and $5.2 million for miscellaneous purposes.
As of December 31, 2024, we had outstanding surety bonds and letters of credit with parties for post-mining reclamation at all of our mining operations totaling $50.6 million, $18.6 million as collateral for self-insured black lung related claims and $7.7 million for miscellaneous purposes.
Our Mine No. 4 steelmaking coal transitioned in the second half of the year from a Mid Vol to a High Vol A quality that typically trades at a larger discount to the price of coal from Mine No. 7. We now primarily target the East Coast High Vol A indices price for our Mine No. 4 coal.
Our Mine No. 4 steelmaking coal is a High Vol A quality that typically trades at a larger discount to the price of coal from Mine No. 7. We now primarily target the East Coast High Vol A indices price for our Mine No. 4 coal.
For the year ended December 31, 2023, we recognized a loss on early extinguishment of debt of $11.7 million upon the extinguishment of $146.1 million of our Notes. The loss on early extinguishment of debt represents a premium paid to retire the debt, fees incurred in connection with the transaction, accelerated amortization of debt discount and debt issuance costs.
Loss on early extinguishment of debt for the year ended December 31, 2023 represents a premium paid for the early retirement $146.1 million of our Notes, accelerated amortization of debt discount and debt issuance costs and fees incurred in connection with the transaction.
Our capital expenditures were $491.7 million and $205.2 million for the years ended December 31, 2023 and December 31, 2022, respectively.
Our capital expenditures were $457.2 million and $491.7 million for the years ended December 31, 2024 and December 31, 2023, respectively.
While we expect inflation to continue to ease in the overall economy during 2024, we have not seen it easing in the coal mining industry and expect that inflation will continue to negatively impact our profitability, as we expect inflation to remain high for steel prices, freight rates, labor and other materials and supplies.
While inflation in the overall economy has eased in the last twelve months, we have not seen it easing significantly in the coal mining industry. We expect that inflation will continue to negatively impact our profitability, as we expect inflation to remain high for steel prices, freight rates, labor and other materials and supplies.
We expect this change to de-risk the single channel to market, lower operating cost and move volumes faster to the port. Warrior will also build and operate a barge loadout itself rather than utilizing a third-party provider.
We expect this change to de-risk the single channel to market, lower operating costs and move volumes faster to the port. We are also constructing and will operate a barge loadout ourselves rather than utilizing a third-party provider.
Sales were $1.6 billion for the year ended December 31, 2023, compared to $1.7 billion for the year ended December 31, 2022.
Sales were $1.5 billion for the year ended December 31, 2024, compared to $1.6 billion for the year ended December 31, 2023.
In the first quarter of 2022, we restarted operations at Mine No. 4. Due to the reduced operations at Mine No. 4 and Mine No. 7, we incurred idle mine expenses of $12.1 million and $33.9 million for the years ended December 31, 2022 and December 31, 2021, respectively.
In the first quarter of 2022, we restarted operations at Mine No. 4. Due to the reduced operations at Mine No. 4 and Mine No. 7, we incurred idle mine expense of $12.1 million for the year ended December 31, 2022.
The following table presents a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measure, on a historical basis for each of the periods indicated. 73 For the years ended December 31, 2023 2022 2021 (in thousands) Net income $ 478,629 $ 641,298 $ 150,881 Interest (income) expense, net (22,739) 18,995 $ 35,389 Income tax expense $ 72,790 141,806 49,096 Depreciation and depletion 127,356 115,279 141,418 Asset retirement obligation accretion and valuation adjustment (1) 4,535 1,941 3,427 Stock compensation expense (2) 18,300 17,621 9,370 Other non-cash accretion and valuation adjustments (3) 205 (5,344) 1,881 Non-cash mark-to-market loss on gas hedges (4) (1,227) 27,708 1,595 Loss on early extinguishment of debt (5) 11,699 — 9,678 Business interruption (6) 8,291 23,455 21,372 Idle mine (7) — 12,137 33,899 Other (expense) income (8) 1,027 (675) (998) Adjusted EBITDA $ 698,866 $ 994,221 $ 457,008 (1) Represents non-cash accretion expense and valuation adjustment associated with our asset retirement obligations (see Note 8 to our consolidated financial statements).
The following table presents a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measure, on a historical basis for each of the periods indicated. 74 For the years ended December 31, 2024 2023 2022 (in thousands) Net income $ 250,603 $ 478,629 $ 641,298 Interest (income) expense, net (28,776) (22,739) 18,995 Income tax expense 33,063 72,790 141,806 Depreciation and depletion 153,982 127,356 115,279 Asset retirement obligation accretion and valuation adjustment (1) 5,435 4,535 1,941 Stock compensation expense (2) 22,070 18,300 17,621 Other non-cash accretion and valuation adjustments (3) 9,114 205 (5,344) Non-cash mark-to-market loss (gain) on gas hedges (4) 1,835 (1,227) 27,708 Loss on early extinguishment of debt (5) — 11,699 — Business interruption (6) 524 8,291 23,455 Idle mine (7) — — 12,137 Other expense (income) (8) — 1,027 (675) Adjusted EBITDA $ 447,850 $ 698,866 $ 994,221 (1) Represents non-cash accretion expense and valuation adjustment associated with our asset retirement obligations (see Note 8 to our consolidated financial statements).
Some of the factors and assumptions, which will change from time to time, that impact mineral reserve and resource estimates include, among other factors: • mining activities; • new engineering and geological data; • acquisition or divestiture of reserve holdings; and • modification of mining plans or mining methods.
Some of the factors and assumptions, which will change from time to time, that impact mineral reserve and resource estimates include, among other factors: • mining activities; • new engineering and geological data; • acquisition or divestiture of reserve holdings; and • modification of mining plans or mining methods. 86 Each of these factors may vary considerably from the assumptions used in estimating reserves and resources.
Net cash provided by operating activities was $841.9 million for the year ended December 31, 2022, and was primarily attributed to net income of $641.3 million adjusted for depreciation and depletion expense of $115.3 million, deferred income tax expense of $141.8 million, stock-based compensation expense of $17.6 million, mark-to-market loss on gas hedges of $4.0 million, amortization of debt issuance costs and debt discount of $3.2 million, accretion expense and valuation adjustment of asset retirement obligations of $1.9 million, an increase in other operating activities of $0.8 million and an increase in net 79 working capital of $84.0 million.
Net cash provided by operating activities was $367.4 million for the year ended December 31, 2024, and was primarily attributed to net income of $250.6 million adjusted for depreciation and depletion expense of $154.0 million, stock-based compensation expense of $22.1 million, accretion and valuation adjustment of asset retirement obligations of $5.4 million, deferred income tax benefit of $8.1 million, mark-to-market loss on gas hedges of $1.8 million, amortization of debt issuance costs and debt discount of $1.6 million and an increase in net working capital of $55.2 million.
Each of these factors may vary considerably from the assumptions used in estimating reserves and resources. For these reasons, estimates of economically recoverable quantities of coal attributable to a particular group of properties, and 86 classifications of these reserves and resources based on risk of recovery and estimates of future net cash flows, may vary substantially.
For these reasons, estimates of economically recoverable quantities of coal attributable to a particular group of properties, and classifications of these reserves and resources based on risk of recovery and estimates of future net cash flows, may vary substantially.
As of December 31, 2023, we had estimated reserves totaling 159.1 million metric tons and estimated mineral resources exclusive of reserves of 39.7 million metric tons.
As of December 31, 2024, we had estimated reserves totaling 157.8 million metric tons and estimated mineral resources exclusive of reserves of 39.7 million metric tons.
Cost of other revenues was $37.5 million for the year ended December 31, 2023, compared to $27.0 million for the year ended December 31, 2022.
Cost of other revenues was $45.4 million for the year ended December 31, 2024, compared to $37.5 million for the year ended December 31, 2023.
Capital Expenditures Our mining operations require investments to maintain, expand, upgrade or enhance our operations and to comply with environmental regulations. Maintaining and expanding mines and related infrastructure is capital intensive. Specifically, the exploration, permitting and development of steelmaking coal reserves, mining costs, the maintenance of machinery and equipment and compliance with applicable laws and regulations require ongoing capital expenditures.
Maintaining and expanding mines and related infrastructure is capital intensive. Specifically, the exploration, permitting and development of steelmaking coal reserves, mining costs, the maintenance of machinery and equipment and compliance with applicable laws and regulations require ongoing capital expenditures.
The $3.0 million increase in selling, general and administrative expenses is primarily driven by an increase in employee related expenses. 76 Business interruption expenses were $8.3 million, 0.5% of total revenues for the year ended December 31, 2023, compared to $23.5 million, or 1.3% of total revenues for the year ended December 31, 2022.
Selling, general and administrative expenses were $63.1 million, or 4.1% of total revenues for the year ended December 31, 2024 compared to $51.8 million, or 3.1% of total revenues for the year ended December 31, 2023. The $11.3 million increase in selling, general and administrative expenses is primarily driven by an increase in employee related expenses.
The Company's principal contractual commitments include repayments of long-term debt and related interest, potential minimum throughput payments associated with our rail and port providers, asset retirement obligation payments, black lung obligation payments, payments on various coal and land leases, payments under financing lease obligations and payments 78 associated with our natural gas swap contracts.
However, we will continue to assess our liquidity needs in light of the current weakness in steelmaking coal prices. 79 The Company's principal contractual commitments include repayments of long-term debt and related interest, potential minimum throughput payments associated with our rail and port providers, asset retirement obligation payments, black lung obligation payments, payments on various coal and land leases, payments under financing lease obligations and payments associated with our natural gas swap contracts.
As of December 31, 2023, we believe we have utilized all of our federal NOLs and federal general business credit carryforwards, subject to the filing of the 2023 federal income tax return. The Company has state NOL carryforwards of approximately $928.2 million, which expire predominantly on December 31, 2029 through December 31, 2034.
As of December 31, 2024, we believe we have utilized all of our federal NOLs and federal general business credit carryforwards. The Company has state NOL carryforwards of approximately $945.2 million , which expire predominantly on December 31, 2029 through December 31, 2035.
We incurred business interruption expenses of approximately $8.3 million, $23.5 million and $21.4 million for the years ended December 31, 2023, December 31, 2022, and December 31, 2021, respectively, which represent non-recurring expenses that were directly attributable to the labor strike for incremental safety and security, labor negotiations and other expenses.
We incurred $8.3 million and $23.5 million for the years ended December 31, 2023 and December 31, 2022, respectively, which represent non-recurring expenses that were directly attributable to the labor strike for incremental safety and security, labor negotiations and other expenses. These expenses are also presented separately in the Statements of Operations.
As of December 31, 2023, no loans were outstanding under the ABL Facility and there were $8.7 million of letters of credit issued and outstanding under the ABL Facility. At December 31, 2023, the Company had $107.4 million of availability under the ABL Facility.
As of December 31, 2024, no loans were outstanding under the ABL Facility and there were $2.5 million of letters of credit issued and outstanding under the ABL Facility. At December 31, 2024, the Company had $113.5 million of availability under the ABL Facility.
In connection with the payments for the RP Pro-Rated Tendered Notes and the TO Pro-Rated Tendered Notes, we recognized a loss on early extinguishment of debt of $11.7 million during the year ended December 31, 2023. 83 Short-Term Investments During the year ended December 31, 2023, we had $9.0 million of collateral recognized as short term investments.
We consummated the Tender Offer on September 11, 2023. In connection with the payments for the RP Pro-Rated Tendered Notes and the TO Pro-Rated Tendered Notes, we recognized a loss on early extinguishment of debt of $11.7 million during the year ended December 31, 2023.
As of December 31, 2023, Mine No. 4 and Mine No. 7, our two operating mines, had approximately 82.9 million metric tons of recoverable reserves and our undeveloped Blue Creek mine contained 67.6 million metric tons of recoverable reserves and 39.7 million metric tons of coal resources exclusive of reserves, which total 107.3 million metric tons.
As of December 31, 2024, Mine No. 4 and Mine No. 7, our two operating mines, had approximately 82.4 million metric tons of recoverable reserves and our Blue Creek mine contained 69.0 million metric tons of recoverable reserves and 39.7 million metric tons of coal resources exclusive of reserves.
The $59.6 million decrease in sales was primarily driven by a $635.9 million decrease related to a $93.25 decrease in the average net selling price per metric ton of steelmaking coal offset partially by a $576.3 million increase due to a 34% or 1.7 million metric ton increase in steelmaking coal sales volume.
The $148.0 million or 9.0% decrease in sales was primarily driven by a $248.2 million decrease related to a $34.32 decrease in the average net selling price per metric ton of steelmaking coal offset partially by a $100.3 million increase due to a 6% or 0.4 million metric ton increase in steelmaking coal sales volume.
Net cash used in investing activities was $255.1 million for the year ended December 31, 2022, primarily comprised of $205.2 million of purchases of property, plant and equipment and $48.9 million of capitalized mine development costs associated with our Mine No. 4 and Blue Creek development.
Investing Activities Net cash used in investing activities was $538.0 million for the year ended December 31, 2024, primarily comprised of $457.2 million of purchases of property, plant and equipment, $31.1 million of capitalized mine development costs associated with our Blue Creek development and the purchase of $49.7 million in investments.
For the years ended December 31, 2023 2022 2021 (in thousands) Segment Adjusted EBITDA $ 737,723 $ 996,974 $ 474,001 Metric tons sold 6,820 5,099 5,699 Metric tons produced 6,936 5,729 5,084 Average net selling price per metric ton $ 241.64 $ 334.89 $ 180.43 Cash cost of sales per metric ton $ 132.60 $ 138.35 $ 96.43 Adjusted EBITDA $ 698,866 $ 994,221 $ 457,008 71 Segment Adjusted EBITDA We define Segment Adjusted EBITDA as net income adjusted for other revenues, cost of other revenues, depreciation and depletion, selling, general and administrative expenses, business interruption expenses, idle mine expenses, loss on early extinguishment of debt, other (expense) income, net interest (income) expense, income tax expense and certain transactions or adjustments that the CEO, our Chief Operating Decision Maker does not consider for the purposes of making decisions to allocate resources among segments or assessing segment performance.
These metrics are significant factors in assessing our operating results and profitability and include: (i) Segment Adjusted EBITDA; (ii) sales volumes and average selling price, which drive coal sales revenue; (iii) cash cost of sales, a non-GAAP financial measure; and (iv) Adjusted EBITDA, a non-GAAP financial measure. 72 For the years ended December 31, 2024 2023 2022 (in thousands) Segment Adjusted EBITDA $ 492,683 $ 737,723 $ 996,974 Metric tons sold 7,235 6,820 5,099 Metric tons produced 7,482 6,936 5,729 Average net selling price per metric ton $ 207.32 $ 241.64 $ 334.89 Cash cost of sales per metric ton $ 138.10 $ 132.60 $ 138.35 Adjusted EBITDA $ 447,850 $ 698,866 $ 994,221 Segment Adjusted EBITDA We define Segment Adjusted EBITDA as net income adjusted for other revenues, cost of other revenues, depreciation and depletion, selling, general and administrative expenses, business interruption expenses, idle mine expenses, loss on early extinguishment of debt, other (expense) income, net interest (income) expense, income tax expense and certain transactions or adjustments that the CEO, our Chief Operating Decision Maker does not consider for the purposes of making decisions to allocate resources among segments or assessing segment performance.
The $12.1 million increase in depreciation and depletion is primarily driven by a 34% or 1.7 million metric ton increase in steelmaking coal sales volumes as depreciation and depletion is first capitalized into coal inventory and relieved when the tons are sold.
The $26.6 million increase in depreciation and depletion is primarily driven by additional assets placed in service throughout the year and a 6% or 0.4 million metric ton increase in steelmaking coal sales volumes as depreciation and depletion is first capitalized into coal inventory and relieved when the tons are sold.
For the year ended December 31, 2023, the Company's geographic customer mix was 48% in Europe, 29% in Asia, 21% in South America and 2% in the U.S. For the year ended December 31, 2022, the Company's geographic customer mix was 61% in Europe, 20% in Asia and 19% in South America.
For the year ended December 31, 2024, the Company's geographic customer mix was 42% in Asia, 38% in Europe, 19% in South America and 1% in the U.S. For the year ended December 31, 2023, the Company's geographic customer mix was 48% in Europe, 33% in Asia and 19% in South America.
The increase in our working capital was primarily attributable to an increase in inventories and trade accounts receivable offset partially by an increase in accrued expenses and other current liabilities.
The increase in our working capital was primarily attributable to increases in trade accounts receivable, inventories and prepaid expenses partially offset by decreases to income tax receivable and other receivables.
Our ability to fund our capital needs, including the development of Blue Creek, going forward will depend on our ongoing ability to generate cash from operations and borrowing availability under the ABL Facility, and, in the case of any future strategic investments, capital needs, the development of Blue Creek, or special dividends financed partially or wholly with debt financing and our ability to access the capital markets to raise additional capital. 77 Our ability to generate positive cash flow from operations in the future will be, at least in part, dependent on continued stable global economic conditions and a resolution of the CBA contract negotiations with the labor union representing certain of our hourly employees.
Our ability to fund our capital needs, including the development of Blue Creek, going forward will depend on our ongoing ability to generate cash from operations and borrowing availability under the ABL Facility, and, in the case of any future strategic investments, capital needs, the development of Blue Creek, or special dividends financed partially or wholly with debt financing and our ability to access the capital markets to raise additional capital.
The 34% increase in sales volumes was driven by increased production due to both Mine No. 4 and Mine No. 7 operating at higher capacity levels combined with improved performance by our rail transportation provider and the McDuffie Terminal.
The 6% increase in sales volumes was driven by increased production due to both Mine No. 4 and Mine No. 7 operating at higher capacity levels.
Other expense for the year ended December 31, 2023 represents non-recurring expenses incurred in connection with the ransomware attack discovered by the Company on July 29, 2023 and proceeds received from the Chapter 11 Cases (as defined below) from Walter Energy, Inc. We do not anticipate any additional material expenses in the future related to this ransomware incident.
Other expense for the year ended December 31, 2023 represents non-recurring expenses incurred in connection with the ransomware attack discovered by the Company on July 29, 2023 offset partially by proceeds received from the chapter 11 cases from Walter Energy, Inc.
These NOLs represent a deferred tax asset of approximately $6.9 million, net of the valuation allowance. See Note 7 of the Notes to the Financial Statements for more information.
At December 31, 2024, we had state NOLs of approximately $945.2 million. These NOLs represent a deferred tax asset of approximately $4.1 million, net of the valuation allowance. See Note 7 of the Notes to the Financial Statements for more information.
Interest expense was $18.0 million, or 1.1%, of total revenues, for the year ended December 31, 2023, compared to $31.4 million, or 1.8% of total revenues, for the year ended December 31, 2022. The $13.5 million decrease is due to the retirement of debt of $162.4 million.
Interest expense was $4.3 million, or 0.3%, of total revenues, for the year ended December 31, 2024, compared to $18.0 million, or 1.1% of total revenues, for the year ended December 31, 2023.
Update on the Development of Blue Creek More than a year after the relaunch of the Blue Creek mine development in May 2022, Warrior has initiated important and highly beneficial project scope changes that will require incremental capital expenditures over the life of the project while lowering operating costs, increasing flexibility to manage risks, and making better use of multi-channel transportation methods.
Also, in 2023, we initiated important and highly beneficial project scope changes that we expect will require incremental capital expenditures over the life of the project while lowering operating costs, increasing flexibility to manage risks, and making better use of multi-channel transportation methods.
Interest income was $40.7 million, or 2.4% of total revenues, for the year ended December 31, 2023, compared to $12.4 million, or 0.7% of total revenues, for the year ended December 31, 2022. The $28.3 million increase was primarily driven by an increase in yields earned on cash investments.
Interest income was $33.0 million, or 2.2% of total revenues, for the year ended December 31, 2024, compared to $40.7 million, or 2.4% of total revenues, for the year ended December 31, 2023. The $7.7 million decrease was primarily driven by a decrease in invested cash balances and lower rates of return earned on our investments.
Our capital spending is expected to range from $435.0 million to $500.0 million for the full year 2024, consisting of sustaining capital expenditures of approximately $100.0 to $110.0 million and discretionary capital expenditures of approximately $335.0 to $390.0 million for the development of Blue Creek reserves and Mine No. 4.
Our capital spending is expected to range from $315.0 million to $350.0 million for the full year 2025, consisting of sustaining capital expenditures of approximately $90.0 to $100.0 million and discretionary capital expenditures of approximately $225.0 to $250.0 million for the development of Blue Creek.
These expenses are reported separately in the Statements of Operations and represent expenses incurred while the respective mine was idled or operating below normal capacity, such as electricity, insurance and maintenance labor.
This expense is reported separately in the Statements of Operations and represents expenses incurred while the respective mine was idled or operating below normal capacity, such as electricity, insurance and maintenance labor. We incurred no idle mine expenses for the years ended December 31, 2023 or December 31, 2024.
During 2023, we spent approximately $91.7 million in sustaining capital and an additional $400.0 million in other discretionary capital, which primarily included capital spent on the development of Blue Creek of $319.1 million, final payments on two extra sets of longwall shields of $50.9 million and capital spent on the bunker at Mine No. 4 of $24.5 million.
During 2024, we spent approximately $87.0 million in sustaining capital and an additional $370.0 million in other discretionary capital, which primarily included capital spent on the development of Blue Creek of $350.5 million, capital spent on the bunker at Mine No. 4 of $17.2 million and other discretionary capital of $2.5 million.
The $199.7 million increase in cost of sales was primarily driven by a $238.1 million increase due to a 34% or 1.7 million metric ton increase in steelmaking coal sales volumes offset partially by a $39.2 million decrease due to a $5.75 per metric ton decrease in the average cash cost of sales per metric ton.
The $97.0 million increase in cost of sales was primarily driven by a $55.0 million increase due to a 6% or 0.4 million metric ton increase in steelmaking coal sales volumes combined with a $39.8 million increase due to a $5.50 per metric ton increase in the average cash cost of sales per metric ton.
The discounts to par value and the interest expense savings from this open-market purchase is estimated to be approximately $4.0 million through the maturity of our Notes. In connection with the extinguishment of our Notes, we recognized a loss on early extinguishment of debt of $0.1 million which is included in interest income (expense), net in the Statements of Operations.
In connection with the extinguishment of our Notes, we recognized a loss on early extinguishment of debt of $0.1 million which is included in interest expense in the Statements of Operations.
(5) Represents a loss incurred in connection with the early extinguishment of debt (see Note 13 to our consolidated financial statements). (6) Represents business interruption expenses associated with the UMWA strike. (7) Represents idle mine expenses incurred in connection with reduced operations at Mine No 4 and Mine No. 7.
(5) Represents a loss incurred in connection with the early extinguishment of debt (see Note 13 to our consolidated financial statements).
Similarly, if alternative ingredients are used in substitution for steelmaking coal in the integrated steel mill process, the demand for steelmaking coal would materially decrease, which could also materially adversely affect demand for our steelmaking coal. Recent Developments U.S. inflation remains at 3.4%, driven by increased energy and food costs, supply constraints and strong consumer demand.
Similarly, if alternative ingredients are used in substitution for steelmaking coal in the integrated steel mill process, the demand for steelmaking coal would materially decrease, which could also materially adversely affect demand for our steelmaking coal.
Beginning on June 1, 2018 through May 31, 2020, we had a deductible policy where we are responsible for the first $0.5 million for each black lung claim. Since June 1, 2020, we have a deductible policy where we are responsible for the first $1.0 million for each black lung claim.
From June 1, 2018 to May 31, 2020 and June 1, 2020 to May 31, 2024, the Company had a deductible policy where the Company was responsible for the first $0.5 million and $1.0 million, respectively, for each black lung claim from any of our employees.
We spent approximately $87.1 million in sustaining capital and spent an additional $118.1 million in other discretionary capital, which primarily included deposits on two extra sets of longwall shields of $55.3 million and capital spent on the development of Blue Creek of $47.1 million and the portal facilities at Mine No. 4 of $15.7 million.
We spent approximately $87.0 million in sustaining capital and spent an additional $370.0 million in other discretionary capital, which primarily included capital spent on the development of Blue Creek of $350.5 million, capital spent on the bunker at Mine No. 4 of $17.2 million and capital spent on the Mine No. 7 overland belt of $2.5 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe historically have not entered into any derivative commodity instruments to manage the exposure to changing price risk for supplies. Credit Risk Financial instruments that potentially subject us to a concentration of credit risk consist principally of trade receivables. We provide our products to customers based on an evaluation of the financial condition of our customers.
Biggest changeWe manage our risk for these items through strategic sourcing contracts in normal quantities with our suppliers. We historically have not entered into any derivative commodity instruments to manage the exposure to changing price risk for supplies. Credit Risk Financial instruments that potentially subject us to a concentration of credit risk consist principally of trade receivables.
For the years ended December 31, 2023 and 2022 we did not have any allowances for credit losses associated with our trade accounts receivables. Interest Rate Risk We are exposed to market risk from changes in interest rates.
We monitor the exposure to credit losses and maintain allowances for anticipated losses. For the years ended December 31, 2024 and 2023 we did not have any allowances for credit losses associated with our trade accounts receivables. Interest Rate Risk We are exposed to market risk from changes in interest rates.
As of December 31, 2023, assuming we had $116.0 million outstanding under our ABL Facility, a 100 basis point increase or decrease in interest rates would increase or decrease our annual interest expense under the ABL Facility by approximately $1.1 million.
As of December 31, 2024, assuming we had $113.5 million outstanding under our ABL Facility, a 100 basis point increase or decrease in interest rates would increase or decrease our annual interest expense under the ABL Facility by approximately $1.1 million.
In some instances, we require letters of credit, cash collateral or prepayments from our customers on or before shipment to mitigate the risk of loss. Exposure to losses on receivables is principally dependent on each customer’s financial condition. We monitor the exposure to credit losses and maintain allowances for anticipated losses.
We provide our products to customers based on an evaluation of the financial condition of our customers. In some instances, we require letters of credit, cash collateral or prepayments from our customers on or before shipment to mitigate the risk of loss. Exposure to losses on receivables is principally dependent on each customer’s financial condition.
As of December 31, 2023, the Company had no natural gas swap contracts outstanding. We have exposure to price risk for supplies that are used directly or indirectly in the normal course of production, such as diesel fuel, steel, explosives and other items. We manage our risk for these items through strategic sourcing contracts in normal quantities with our suppliers.
As of December 31, 2024, the Company had 5.5 metric million British thermal unit gas contracts outstanding. We have exposure to price risk for supplies that are used directly or indirectly in the normal course of production, such as diesel fuel, steel, explosives and other items.

Other HCC 10-K year-over-year comparisons