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What changed in NACCO INDUSTRIES INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of NACCO INDUSTRIES INC's 2022 and 2023 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 2023 report.

+491 added−471 removedSource: 10-K (2024-03-06) vs 10-K (2023-03-15)

Top changes in NACCO INDUSTRIES INC's 2023 10-K

491 paragraphs added · 471 removed · 345 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

121 edited+76 added−52 removed119 unchanged
Biggest changeThe Red Hills Power Plant supplies electricity to the Tennessee Valley Authority ("TVA") under a long-term Power Purchase Agreement ("PPA"). MLMC’s contract with its 3 Table of Contents customer runs through 2032. TVA’s power portfolio includes coal, nuclear, hydroelectric, natural gas and renewables. The decision of which power plants to dispatch is determined by TVA.
Biggest changeTVA’s power portfolio includes coal, nuclear, hydroelectric, natural gas and renewables. The decision regarding which power plants to dispatch is determined by TVA. Reduction in dispatch of the Red Hills Power Plant will result in reduced earnings at MLMC. During 2023, MLMC completed mining in its original mine area and began mining in a new mine area.
Among the factors that affect competition are the price and availability of oil and natural gas, environmental and related political considerations, the time and expenditures required to develop new energy sources, the cost of transportation, the cost of compliance with governmental regulations, the impact of federal and state energy policies, the impact of subsidies on renewable pricing and the Company's customers' dispatch decisions, which may also take into account carbon dioxide emissions.
Among the factors that affect competition are the price and availability of oil and natural gas, environmental and related political considerations, the time and expenditures required to develop new energy sources, the cost of transportation, the cost of compliance with governmental regulations, the impact of federal and state energy policies, the impact of subsidies on pricing of renewable energy and the Company's customers' dispatch decisions, which may also take into account carbon dioxide emissions.
Resource Conservation and Recovery Act The Resource Conservation and Recovery Act ("RCRA") affects coal mining operations by establishing requirements for the treatment, storage and disposal of wastes, including hazardous wastes. Coal mine wastes, such as overburden and coal cleaning wastes, currently are exempted from hazardous waste management.
Resource Conservation and Recovery Act RCRA affects coal mining operations by establishing requirements for the treatment, storage and disposal of wastes, including hazardous wastes. Coal mine wastes, such as overburden and coal cleaning wastes, currently are exempted from hazardous waste management.
The states, and some counties and municipalities, in which the Company has mineral interests also regulate one or more of the following: • the location of wells; • the method of drilling and casing wells; • the timing of construction or drilling activities, including seasonal wildlife closures; • the rates of production or "allowables"; • the surface use and restoration of properties upon which wells are drilled; • the plugging and abandoning of wells; and • notice to, and consultation with, surface owners and other third parties.
The states, and some counties and municipalities, in which the Company has mineral interests also regulate one or more of the following: • the location of wells; • the method of drilling and casing wells; • the timing of construction or drilling activities, including seasonal wildlife closures; • the rates of production; • the surface use and restoration of properties upon which wells are drilled; • the plugging and abandoning of wells; and • notice to, and consultation with, surface owners and other third parties.
The Inflation Reduction Act contains hundreds of billions of dollars in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles and supporting infrastructure and carbon capture and sequestration, among other provisions. These incentives could further accelerate the transition of the U.S. economy away from the use of fossil fuels and impact demand for fossil fuels.
The Inflation Reduction Act contains hundreds of billions of dollars in incentives for the development of renewable energy sources, clean hydrogen, clean fuels, electric vehicles and supporting infrastructure and carbon capture and sequestration, among other provisions. These incentives could further accelerate the transition of the U.S. economy away from the use of fossil fuels and impact demand for fossil fuels.
The ability of the Coal Mining segment to maintain comparable levels of coal production at existing facilities and develop its reserves will depend upon the interaction of these factors. Electricity generating units are chosen to run primarily based on operating costs, of which fuel costs account for the largest share.
The ability of the Coal Mining segment to maintain comparable levels of coal production at existing facilities and develop its reserves will depend upon the interaction of these factors. Coal-fired electricity generating units are chosen to run primarily based on operating costs, of which fuel costs account for the largest share.
Enactment of laws and passage of regulations regarding GHG emissions by the U.S. or additional states, or other actions to limit carbon dioxide emissions, such as opposition by environmental groups to expansion or modification of coal-fired power plants, could result in electric generators switching from coal to other fuel sources. The U.S.
Enactment of laws and passage of regulations regarding GHG emissions by the U.S. or States, or other actions to limit carbon dioxide emissions, such as opposition by environmental groups to expansion or modification of coal-fired power plants, could result in electric generators switching from coal to other fuel sources. The U.S.
Such mandates, combined with other incentives to use renewable energy sources, such as tax credits, make alternative fuel sources more competitive with coal. Fluctuations in natural gas prices and the availability of renewable generation, particularly wind, can contribute to changes in power plant dispatch and customer demand for coal.
Such mandates, combined with other incentives to use renewable energy sources, such as tax credits, make alternative fuel sources more competitive with coal. Fluctuations in natural gas prices and the availability of renewable energy sources, particularly wind, can contribute to changes in power plant dispatch and customer demand for coal.
The Company continues to pursue activities which can strengthen the resiliency of its existing coal mining operations. The Company remains focused on managing coal production costs and maximizing efficiencies and operating capacity at mine locations to help customers with management fee contracts be more competitive.
The Company also continues to pursue activities which can strengthen the resiliency of its existing coal mining operations. The Company remains focused on managing coal production costs and maximizing efficiencies and operating capacity at mine locations to help customers with management fee contracts be more competitive.
These new rules may raise the cost for CCR disposal at coal-fired power plants, making them less competitive, and/or result in early closure which could have an adverse impact on demand for coal and ultimately result in the early closure of the mines servicing these plants, including closure of the Company's mines.
These rules may raise the cost for CCR disposal at coal-fired power plants, making them less competitive, and/or result in early closure which could have an adverse impact on demand for coal and ultimately result in the early closure of the mines servicing these plants, including closure of the Company's mines.
The acquisition criteria for building a blended portfolio of mineral and royalty interests includes (i) new wells anticipated to come online within one to two years of investment, (ii) areas with forecasted future development within five years after acquisition, or (iii) existing producing wells further along the decline curve that will generate stable cash flow.
The Company's acquisition criteria for building a blended portfolio of mineral and royalty interests includes (i) new wells anticipated to come online within one to two years of investment, (ii) areas with forecasted future development within five years after acquisition and (iii) existing producing wells further along the decline curve that will generate stable cash flow.
The majority of the Company’s legacy reserves were acquired as part of its historical coal mining operations. See “Item 2. Properties" on page 29 in this Form 10-K for discussion of the Company's proved reserves. Customers The principal customers of the Coal Mining segment are electric utilities and an independent power provider.
The majority of the Company’s legacy reserves were acquired as part of its historical coal mining operations. See “Item 2. Properties" on page 31 in this Form 10-K for discussion of the Company's proved reserves. Customers The principal customers of the Coal Mining segment are electric utilities and an independent power provider.
While the current focus is on the acquisition of mineral and royalty interests, the Company would also consider investments in ORRIs, NPRIs or non-operated working interests under certain circumstances. The current acquisition strategy does not contemplate any near-term working interest investments in which the Company would act as the operator.
While the current focus is on the acquisition of mineral and royalty interests, the Company would also consider investments in ORRIs, NPRIs or non-operating working interests under certain circumstances. The current acquisition strategy does not contemplate any near-term working interest investments in which the Company would act as the operator.
In addition to the natural production decline curve, royalty income can fluctuate favorably or unfavorably in response to a number of factors outside of the Company's control, including the number of wells being operated by third parties, fluctuations in commodity prices (primarily oil and natural gas), fluctuations in 6 Table of Contents production rates associated with operator decisions, regulatory risks, the Company's lessees' willingness and ability to incur well-development and other operating costs, and changes in the availability and continuing development of infrastructure.
In addition to the natural production decline curve, royalty income can fluctuate favorably or unfavorably in response to a number of factors outside of the Company's control, including the number of wells being operated by third parties, fluctuations in commodity prices (primarily oil and natural gas), fluctuations in production rates associated with operator decisions, regulatory risks, the Company's lessees' willingness and ability to incur well-development and other operating costs, and changes in the availability and continuing development of infrastructure.
When the EPA adopts new, more stringent NAAQS for a pollutant, some states have to change their existing SIPs. If a state fails to revise its SIP and obtain EPA approval, the EPA may adopt regulations to effect the revision.
When the EPA adopts new, more stringent NAAQS for a pollutant, some states have to change their existing SIPs. If a state fails to revise its SIP and obtain EPA approval, the EPA may adopt regulations to affect the revision.
Congress continues to consider a variety of proposals to reduce GHG emissions from the combustion of coal and other fuels. These proposals include emission taxes, emission reductions, including carbon tax and “cap-and-trade” programs, and mandates or incentives to generate electricity by using renewable resources, such as wind or solar power. Some states have established programs to reduce GHG emissions.
Congress continues to consider a variety of proposals to reduce GHG emissions from the combustion of coal and other fuels. These proposals include emission taxes, emission reductions, including carbon tax and “cap-and-trade” programs, and mandates or incentives to generate electricity by using renewable energy sources, such as wind or solar power. Some states have established programs to reduce GHG emissions.
Each contract specifies the indices and mechanics by which fees change over time, generally in line with broad measures of U.S. inflation. The customers are responsible for funding all mine operating costs, including final mine reclamation, and directly or indirectly providing all of the capital required to build and operate the mine.
Each contract specifies the indices and mechanics by which fees change over time, generally in line with broad 3 Table of Contents measures of U.S. inflation. The customers are responsible for funding all mine operating costs, including final mine reclamation, and directly or indirectly providing all of the capital required to build and operate the mine.
Bellaire was notified by the Pennsylvania Department of Environmental Protection during 2004 that in order to obtain renewal of a permit, Bellaire would be required to establish a mine water 12 Table of Contents treatment trust. See Note 7 and Note 9 to the Consolidated Financial Statements in this Form 10-K for further information on Bellaire.
Bellaire was notified by the Pennsylvania Department of Environmental Protection during 2004 that in order to obtain renewal of a permit, Bellaire would be required to establish a mine water treatment trust. See Note 7 and Note 9 to the Consolidated Financial Statements in this Form 10-K for further information on Bellaire.
The Company believes in hiring, engaging, developing and promoting people who are fully able to meet the demands of each position, regardless of race, color, religion, gender, sexual orientation, gender identity, national origin, age, veteran status or disability. Safety: Employee safety in the workplace is one of the Company’s core values.
The Company believes in hiring, engaging, developing and promoting people who are fully able to meet the demands of each position, regardless of race, color, religion, gender, sexual orientation, gender identity, national origin, age, veteran status or disability. 7 Table of Contents Safety: Employee safety in the workplace is one of the Company’s core values.
Sales of crude oil, condensate and natural gas liquids ("NGLs") are not currently regulated and are made at market prices. Environmental Matters Oil and natural gas exploration, development and production operations are subject to stringent laws and regulations governing the discharge of materials into the environment or otherwise relating to protection of the environment or occupational health and safety.
Sales of crude oil, condensate and natural gas liquids ("NGLs") are not currently regulated and are made at market prices. 14 Table of Contents Environmental Matters Oil and natural gas exploration, development and production operations are subject to stringent laws and regulations governing the discharge of materials into the environment or otherwise relating to protection of the environment or occupational health and safety.
The Company's coal mining operations and power generation customers may be directly affected when the revisions to the SIPs are made and incorporate new NAAQS for sulfur dioxide, nitrogen oxides, ozone and particulate matter. In March 2019, the EPA 9 Table of Contents published a final rule that retains the current primary (health-based) NAAQS for sulfur oxides ("SOx") without revision.
The Company's coal mining operations and power generation customers may be directly affected when the revisions to the SIPs are made and incorporate new NAAQS for sulfur dioxide, nitrogen oxides, ozone and particulate matter. In March 2019, the EPA published a final rule that retains the current primary (health-based) NAAQS for sulfur oxides ("SOx") without revision.
Prior to receiving the membership units from GRE, the Company held a $5.0 million investment in MAG. On December 1, 2022, HLCP Ethanol Holdco, LLC (“HLCP”) completed its acquisition of MAG. Upon closing of the transaction, NACCO transferred its ownership interest in MAG to HLCP and received a cash payment of $18.6 million.
Prior to receiving the membership units from GRE, the Company held a $5.0 million investment in MAG. On December 1, 2022, HLCP Ethanol Holdco, LLC (“HLCP”) completed its acquisition of MAG. Upon closing of the transaction, NACCO 2 Table of Contents transferred its ownership interest in MAG to HLCP and received a cash payment of $18.6 million during 2022.
Legislation affecting the oil and natural gas industry is under constant review for amendment or expansion, which frequently increases the regulatory burden on affected members of the industry and could affect the results of the Company’s Minerals Management segment.
Legislation affecting the oil and natural gas industry is under constant review for amendment or expansion, which frequently 8 Table of Contents increases the regulatory burden on affected members of the industry and could affect the results of the Company’s Minerals Management segment.
Under the NSR program, before constructing a new stationary emission source or a modification of an existing major source, the source owner 10 Table of Contents or operator must determine whether the new source will emit or the modification will increase air emissions above certain thresholds.
Under the NSR program, before constructing a new stationary emission source or a modification of an existing major source, the source owner or operator must determine whether the new source will emit or the modification will increase air emissions above certain thresholds.
The holder of a mineral interest has the right to lease the minerals to an exploration and production company. Upon the execution of an oil and gas lease, the lessee (the exploration and production company) becomes the working interest owner and the lessor (the mineral interest owner) has a royalty interest. • Non-Participating Royalty Interest (“NPRIs”).
The holder of a mineral interest has the right to lease the minerals to an exploration and production company. Upon the execution of an oil and gas lease, the lessee (the 4 Table of Contents exploration and production company) becomes the working interest owner and the lessor (the mineral interest owner) has a royalty interest. • Non-Participating Royalty Interest (“NPRIs”).
Some of the Company’s properties or mineral interests may be located in areas that are or may be designated as habitats for endangered or threatened species, and previously unprotected species may later be designated as threatened or endangered in areas where the Company holds interests.
Some of the Company’s properties or mineral interests may be located in areas that are or may be designated as habitats for endangered or threatened 16 Table of Contents species, and previously unprotected species may later be designated as threatened or endangered in areas where the Company holds interests.
Human Capital As of December 31, 2022, the Company and its subsidiaries had approximately 1,600 employees, including approximately 1,100 employees at the Company’s unconsolidated mining operations, none of which are represented by a collective bargaining agreement. NACCO believes it has good relations with its employees.
Human Capital As of December 31, 2023, the Company and its subsidiaries had approximately 1,700 employees, including approximately 1,100 employees at the Company’s unconsolidated mining operations, none of which are represented by a collective bargaining agreement. NACCO believes it has good relations with its employees.
The Minerals Management segment owns royalty interests, mineral interests, nonparticipating royalty interests and overriding royalty interests. • Royalty Interest. Royalty interests generally result when the owner of a mineral interest leases the underlying minerals to an exploration and production company pursuant to an oil and gas lease.
The Minerals Management segment owns royalty interests, mineral interests, non-participating royalty interests and overriding royalty interests. • Royalty Interest. Royalty interests generally result when the owner of a mineral interest leases the underlying minerals to an exploration and production company pursuant to an oil and gas lease.
Federal and state regulations govern the price and terms for access to oil and natural gas pipeline 13 Table of Contents transportation. FERC’s regulations for interstate oil and natural gas transmission in some circumstances may also affect the intrastate transportation of oil and natural gas.
Federal and state regulations govern the price and terms for access to oil and natural gas pipeline transportation. FERC’s regulations for interstate oil and natural gas transmission in some circumstances may also affect the intrastate transportation of oil and natural gas.
MLMC sells coal to its customer at a contractually agreed-upon price which adjusts monthly, primarily based on changes in the level of established indices which reflect general U.S. inflation rates. Profitability at MLMC is affected by customer demand for coal and changes in the indices that determine sales price and actual costs incurred.
MLMC sells coal to its customer's Red Hills Power Plant at a contractually agreed-upon price which adjusts monthly, primarily based on changes in the level of established indices which reflect general U.S. inflation rates. Profitability at MLMC is affected by customer demand for coal and changes in the indices that determine sales price and actual costs incurred.
Fish and Wildlife Service (“USFWS”) 15 Table of Contents was required to determine whether over 250 species required listing as threatened or endangered under the ESA. USFWS has not yet completed its review, but the potential remains for new species to be listed under the ESA.
Fish and Wildlife Service (“USFWS”) was required to determine whether over 250 species required listing as threatened or endangered under the ESA. USFWS has not yet completed its review, but the potential remains for new species to be listed under the ESA.
As a mineral owner, the Company has limited access to timely information, involvement, and operational control over the volumes of oil, gas and coal produced and sold and the terms and conditions on which such volumes are marketed and sold. In 2022 and 2021, two customers individually accounted for more than 10% of consolidated revenues.
As a mineral owner, the Company has limited access to timely information, involvement, and 5 Table of Contents operational control over the volumes of oil, gas and coal produced and sold and the terms and conditions on which such volumes are marketed and sold. In 2023 and 2022, two customers individually accounted for more than 10% of consolidated revenues.
Competition Coteau, Coyote Creek, Falkirk, MLMC and Sabine each have only one customer for which they extract and deliver coal. The Company's coal mines are directly adjacent to the customer’s property, with economical delivery methods that include 5 Table of Contents conveyor belt delivery systems linked to the customer’s facilities or short-haul rail systems.
Competition Coteau, Coyote Creek, Falkirk and MLMC each have only one customer for which they extract and deliver coal. The Company's coal mines are directly adjacent to the customer’s property, with economical delivery methods that include conveyor belt delivery systems linked to the customer’s facilities or short-haul rail systems.
The following represents the revenue attributable to each of these entities as a percentage of consolidated revenues for those years: Percentage of Consolidated Revenues Segment 2022 2021 Coal Mining customer 39 % 43 % NAMining customer 17 % 19 % The loss of either of these customers could have a material adverse effect on the results of operations attributable to the applicable segment and on the Company's consolidated results of operations.
The following represents the revenue attributable to each of these entities as a percentage of consolidated revenues for those years: Percentage of Consolidated Revenues Segment 2023 2022 Coal Mining customer 40 % 39 % NAMining customer 22 % 17 % The loss of either of these customers could have a material adverse effect on the results of operations attributable to the applicable segment and on the Company's consolidated results of operations.
Texas currently imposes a 4.6% severance tax on the market value of oil production and a 7.5% severance tax on the market value of natural gas production. States also regulate the method of developing new fields, the spacing and operation of wells and the prevention of waste of oil and natural gas resources.
For example, Texas currently imposes a 4.6% severance tax on the 17 Table of Contents market value of oil production and a 7.5% severance tax on the market value of natural gas production. States also regulate the method of developing new fields, the spacing and operation of wells and the prevention of waste of oil and natural gas resources.
States are required to submit to the EPA revisions to their state implementation plans ("SIPs") that demonstrate the manner in which the states will attain national ambient air quality standards ("NAAQS") every time a NAAQS is issued or revised by the EPA. The EPA has adopted NAAQS for several pollutants, which continue to be reviewed periodically for revisions.
In addition, states are required to submit to the EPA revisions to their state implementation plans ("SIPs") that demonstrate the manner in which the states will attain NAAQS every time a NAAQS is issued or revised by the EPA. The EPA has adopted NAAQS for several pollutants, which continue to be reviewed periodically for revisions.
The availability, terms and cost of transportation significantly affect sales of oil and natural gas. The interstate transportation of oil and natural gas and the sale or resale of natural gas is subject to federal regulation, including regulation of the terms, conditions and rates for interstate transportation, storage and various other matters, primarily by the Federal Energy Regulatory Commission (“FERC”).
The interstate transportation of oil and natural gas and the sale or resale of natural gas is subject to federal regulation, including regulation of the terms, conditions and rates for interstate transportation, storage and various other matters, primarily by the Federal Energy Regulatory Commission (“FERC”).
Accordingly, the Company believes that access to oil pipeline transportation services generally will be available to its operators to the same extent as to the Company or its competitors. 16 Table of Contents State Regulation Texas regulates the drilling for, and the production, gathering and sale of, oil and natural gas, including imposing severance taxes and requirements for obtaining drilling permits.
Accordingly, the Company believes that access to oil pipeline transportation services generally will be available to its operators to the same extent as to the Company or its competitors. State Regulation States regulate the drilling for, and the production, gathering and sale of, oil and natural gas, including imposing severance taxes and requirements for obtaining drilling permits.
There exists no arrangement or understanding between any executive officer and any other person pursuant to which such executive officer was selected. EXECUTIVE OFFICERS OF THE COMPANY Name Age Current Position J.C. Butler, Jr. 62 President and Chief Executive Officer of NACCO and President and Chief Executive Officer of NACoal (from prior to 2018) Elizabeth I.
There exists no arrangement or understanding between any executive officer and any other person pursuant to which such executive officer was selected. EXECUTIVE OFFICERS OF THE COMPANY Name Age Current Position J.C. Butler, Jr. 63 President and Chief Executive Officer of NACCO and President and Chief Executive Officer of NACCO Natural Resources Corporation ("NNRC") (from prior to 2018) Elizabeth I.
Maxwell 45 Vice President - Financial Planning and Analysis and Treasurer (from prior to 2018) PRINCIPAL OFFICERS OF THE COMPANY’S SUBSIDIARIES Name Age Current Position J.C. Butler, Jr. 62 President and Chief Executive Officer of NACCO and President and Chief Executive Officer of NACoal (from prior to 2018) Carroll L.
Maxwell 46 Senior Vice President - Financial Planning and Analysis and Treasurer (from prior to 2018) PRINCIPAL OFFICERS OF THE COMPANY’S SUBSIDIARIES Name Age Current Position J.C. Butler, Jr. 63 President and Chief Executive Officer of NACCO and President and Chief Executive Officer of NNRC (from prior to 2018) Carroll L.
Congress has considered climate change legislation aimed at reducing greenhouse gas (“GHG”) emissions, particularly from coal combustion by power plants.
Congress has considered climate change legislation aimed at reducing GHG emissions, particularly from coal combustion by power plants.
Although the regulatory burden on the oil and natural gas industry increases the cost of doing business, these burdens generally do not affect the Company any differently or to any greater or lesser extent than they affect other companies in the industry with similar types, quantities and locations of production.
Although the regulatory burden on the oil and natural gas industry increases the cost of doing business, these burdens generally do not affect the Company any differently or to any greater or lesser extent than they affect other companies in the industry with similar assets. The availability, terms and cost of transportation significantly affect sales of oil and natural gas.
Some laws, as discussed below, place many requirements on the coal mining operations and the limestone quarries where the Company provides services. Federal and state regulations require regular monitoring of the Company's operations to ensure compliance. Many aspects of the production, pricing and marketing of oil and natural gas are regulated by federal and state agencies.
Some laws, as discussed below, place many requirements on the Company's operations and its customers' operations. Federal and state regulations require regular monitoring of the Company's operations to ensure compliance. Many aspects of the production, pricing and marketing of oil and natural gas are regulated by federal and state agencies.
These activities benefit both customers and 1 Table of Contents the Company's Coal Mining segment, since fuel cost is a significant driver for power plant dispatch. An increase in power plant dispatch results in increased demand for coal by the Coal Mining segment's customers.
These activities benefit both customers and the Company's Coal Mining segment, as fuel cost is a significant driver for power plant dispatch. Increased power plant dispatch results in increased demand for coal by the Coal Mining segment's customers.
When a NEPA action is required, the Company provides the required information to the appropriate federal agency so that they may complete the environmental assessment. Historically, this process has been lengthy and may take several years to complete.
When a NEPA action is required, the Company provides the required information to the appropriate federal agency to enable it to complete the required study. Historically, this process has been lengthy and may take several years to complete.
Loveman 53 Vice President and Controller and Principal Financial Officer (from prior to 2018) John D. Neumann 47 Vice President, General Counsel and Secretary of NACCO, Vice President, General Counsel and Secretary of NACoal (from prior to 2018) Thomas A.
Loveman 54 Senior Vice President and Controller and Principal Financial Officer (from prior to 2018) John D. Neumann 48 Senior Vice President, General Counsel and Secretary of NACCO, Senior Vice President, General Counsel and Secretary of NNRC (from prior to 2018) Thomas A.
Ongoing reduction in coal’s share of the capacity for power generation could have a material adverse effect on the Company’s business, financial condition and results of operations.
The general effect of tighter restrictions is to reduce demand for coal. Ongoing reduction in coal’s share of the capacity for power generation could have a material adverse effect on the Company’s business, financial condition and results of operations.
With additional projects in its pipeline for 2023, Mitigation Resources is making strong progress toward its goal to be a top ten provider of stream and wetland mitigation services in the southeastern United States. The Company believes that Mitigation Resources can provide solid rates of return as this business matures.
Mitigation Resources is making strong progress toward its goal of becoming a top ten provider of stream and wetland mitigation services in the southeastern United States. The Company believes that Mitigation Resources can provide solid rates of return on capital employed as this business matures.
The Company recognized $30.9 million in the second quarter of 2022 as GRE paid NACoal $14.0 million in cash, transferred ownership of an office building with an estimated fair value of $4.1 million, and conveyed membership units in Midwest AgEnergy Group, LLC (“MAG”), a North Dakota-based ethanol business, with an estimated fair value of $12.8 million, as agreed to under the termination and release of claims agreement between Falkirk and GRE.
The Company recognized a gain of $30.9 million during 2022 as GRE paid the Company cash, transferred ownership of an office building, and conveyed membership units in Midwest AgEnergy Group, LLC (“MAG”), a North Dakota-based ethanol business as agreed to under the termination and release of claims agreement between Falkirk and GRE.
Business — Government Regulation" on page 8 in this Form 10-K for further discussion. Environmental, social and governance considerations can also have an impact on power plant dispatch and demand for coal. Based on industry information, the Company believes it was one of the ten largest coal producers in the U.S. in 2022 based on total coal tons produced.
Environmental, social and governance considerations can also have an impact on power plant dispatch and demand for coal. Based on industry information, the Company believes it was one of the ten largest coal producers in the U.S. in 2023 based on total coal tons produced.
In each case, NACCO is not the primary beneficiary of the VIE as it does not exercise financial control; therefore, NACCO does not consolidate the results of these operations within its financial statements. Instead, these contracts are accounted for as equity method investments.
Coteau, Coyote Creek, Falkirk and Sabine each meet the definition of a variable interest entity ("VIE"). In each case, NACCO is not the primary beneficiary of the VIE as it does not exercise financial control; therefore, NACCO does not consolidate the results of these operations within its financial statements. Instead, these contracts are accounted for as equity method investments.
Community Engagement: The Company supports its local communities and is committed to helping them remain safe, healthy and resilient. The Company's past activities include corporate donations, volunteerism and education. Community engagement is encouraged and supported through the Company's matching gift program.
Community Engagement: The Company supports its local communities and is committed to helping them remain safe, healthy and resilient. The Company's past activities include corporate donations, volunteerism and education. Community engagement is encouraged and supported through the Company's matching gift program. The Company will match employee contributions up to $5,000 per employee if program criteria are met.
Where state regulatory agencies have adopted federal mining programs under SMCRA, the state becomes the primary regulatory authority. Coal mine operators must obtain SMCRA permits and permit renewals for coal mining operations from the applicable regulatory agency.
Surface Mining Control and Reclamation Act SMCRA establishes mining, environmental protection and reclamation standards for all aspects of surface coal mining operations. Where state regulatory agencies have adopted federal mining programs under SMCRA, the state becomes the primary regulatory authority. Coal mine operators must obtain SMCRA permits and permit renewals for coal mining operations from the applicable regulatory agency.
In the meantime, in January 2023, the EPA published a new rule that redefines WOTUS that relies on the significant nexus test established by the 2006 Rapanos decision. The new definition expands the scope of the federal jurisdiction over land and water features which could cause some of the Company's operations to incur additional costs to mitigate streams and wetlands.
Prior to the SCOTUS issuing a decision, in January 2023, the EPA published a new rule that redefines WOTUS using an expansive significant nexus test. The new definition expanded the scope of federal jurisdiction over land and water features which could cause some of the Company's operations to incur additional costs to mitigate streams and wetlands.
Coal Creek Station was previously owned by Great River Energy (“GRE”). On May 2, 2022, GRE completed the sale of Coal Creek Station and the adjacent high-voltage direct current transmission line to Rainbow Energy Center, LLC (“Rainbow Energy”) and its affiliates.
Falkirk is the sole supplier of lignite coal to the Coal Creek Station power plant. On May 2, 2022, Great River Energy ("GRE") completed the sale of Coal Creek Station and the adjacent high-voltage direct current transmission line to Rainbow Energy Center, LLC (“Rainbow Energy”) and its affiliates.
The Company will match employee contributions up to $5,000 per employee if program criteria are met. 7 Table of Contents Available Information The Company makes its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports available through its website, www.nacco.com, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”).
Available Information The Company makes its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports available through its website, www.nacco.com, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”).
Notwithstanding NDDEQ’s determination, the EPA may require additional costly emission controls and it may not be economically feasible for Coyote Creek's customers to invest in such equipment, which could result in early retirement of Coyote Station and the Coyote Creek mine.
Notwithstanding NDDEQ’s determination, the EPA may require additional costly emission controls and it may not be economically feasible for Coyote Creek's customers to invest in such equipment, which could result in early retirement of Coyote Station and the Coyote Creek mine. Under the CAA, new and modified sources of air pollution must meet certain new source standards (the “NSR program”).
SMCRA stipulates compliance with many other major environmental programs, including the CAA and CWA. The U.S. Army Corps of Engineers regulates activities affecting navigable waters, and the U.S. Bureau of Alcohol, Tobacco and Firearms regulates the use of explosives for blasting. In addition, the U.S. Environmental Protection Agency (the “EPA”), the U.S.
Army Corps of Engineers regulates activities affecting navigable waters, and the U.S. Bureau of Alcohol, Tobacco and Firearms regulates the use of explosives for blasting. In addition, the U.S. Environmental Protection Agency (the “EPA”), the U.S.
Any additional new controls may have an adverse impact on the demand for coal, which may have a material adverse effect on the Company’s business, financial condition or results of operations. Under the CAA, the EPA also adopts national emission standards for hazardous air pollutants.
Any additional new controls may have an adverse impact on the demand for coal, which may have a material adverse effect on the Company’s business, financial condition or results of operations.
Falkirk continues to supply all coal requirements of Coal Creek Station and is paid a management fee per ton of coal delivered. To support the transfer to new ownership, Falkirk agreed to a reduction in the current per ton management fee from the effective date of the CSA through May 31, 2024.
To support the transfer to new ownership, Falkirk agreed to a reduction in the current per ton management fee from the effective date of the CSA through May 31, 2024.
All of the Company's Directors and employees annually complete certifications with respect to compliance with the Company's Code of Corporate Conduct. In addition, all employees of the Company are required to complete annual Code of Corporate Conduct training.
Company Ethics: The Company has processes in place for compliance with its Code of Corporate Conduct, Insider Trading Policy and Anti-Corruption Policy. All of the Company's Directors and employees annually complete certifications with respect to compliance with the Company's Code of Corporate Conduct. In addition, all employees of the Company are required to complete annual Code of Corporate Conduct training.
It acquired $11.4 million of mineral 2 Table of Contents and royalty interests in the Texas portion of the Permian Basin and the Wyoming portion of the Powder River Basin. It also completed a small acquisition of mineral interests in the New Mexico portion of the Permian Basin.
During 2022, Catapult acquired $11.4 million of mineral and royalty interests in the Texas portion of the Permian Basin and the Wyoming portion of the Powder River Basin as well as a small acquisition of mineral interests in the New Mexico portion of the Permian Basin.
Bellaire manages the Company’s long-term liabilities related to former Eastern U.S. underground mining activities. NACCO was incorporated as a Delaware corporation in 1986 in connection with the formation of a holding company structure for a predecessor corporation organized in 1913. Business Strategy NACCO’s portfolio of businesses operates under the umbrella of NACCO Natural Resources.
NACCO was incorporated as a Delaware corporation in 1986 in connection with the formation of a holding company structure for a predecessor corporation organized in 1913. Business Strategy NACCO’s portfolio of businesses operates under the umbrella of NACCO Natural Resources. Management continues to view the long-term business outlook for NACCO positively.
This contract structure eliminates exposure to spot coal market price fluctuations while providing income and cash flow with minimal capital investment. Other than at Coyote Creek, debt financing provided by or supported by the customers is without recourse to NACCO and NACoal.
This contract structure eliminates exposure to spot coal market price fluctuations while providing income and cash flow with minimal capital investment. Other than at Coyote Creek, debt financing provided by or supported by the customers is without recourse to the Company. See Note 16 to the Consolidated Financial Statements in this Form 10-K for further discussion of Coyote Creek's guarantees.
The rule makes it clear that both emissions increases and decreases from a major modification at an existing source are to be considered during Step 1 of the two-step NSR applicability test which is designed to determine if there is a “significant emission increase”.
Both emissions increases and decreases from a major modification at an existing source are to be considered during Step 1 of the two-step NSR applicability test which is designed to determine if there is a “significant 11 Table of Contents emission increase”. Uncertainty around the NSR program rules could adversely impact demand for coal.
The outcome of these rulemakings, and any subsequent actions by the EPA and OSMRE, could impact those Company operations that beneficially use CCRs. If the Company were unable to beneficially use CCRs, its revenues for handling CCRs from its customers may decrease and its costs may increase due to the purchase of alternative materials for beneficial uses.
If the Company were unable to beneficially use CCRs, its revenues for handling CCRs from its customers may decrease and its costs may increase due to the purchase of alternative materials for beneficial uses.
Total consideration for the 2022 and 2021 acquisitions of mineral and royalty interests was $11.9 million and $5.3 million, respectively. The 2022 acquisitions included 13.6 thousand gross acres and 880 net royalty acres. The 2021 acquisitions included 20.6 thousand gross acres and 1.8 thousand net royalty acres.
Total consideration for the 2023 and 2022 acquisitions of mineral and royalty interests was $36.7 million and $11.9 million, respectively. The 2023 acquisition includes 43.4 thousand gross acres and 2.5 thousand net royalty acres. The 2022 acquisitions included 13.6 thousand gross acres and 880 net royalty acres.
The CWA regulates the underground injection of substances through the Underground Injection Control (“UIC”) program. Hydraulic fracturing generally is exempt from regulation under the UIC program, and the hydraulic fracturing process is typically regulated by state oil and gas commissions. However, in recent years efforts have been made to regulate hydraulic fracturing at the federal level.
Hydraulic fracturing generally is exempt from regulation under the UIC program, and the hydraulic fracturing process is typically regulated by state oil and gas commissions. However, in recent years efforts have been made to regulate hydraulic fracturing at the federal level. The Biden administration has also signaled the intent to stop hydraulic fracturing on federal land.
ORRIs that are carved out of working interests are linked to the same underlying oil and gas lease that created the working interest, and therefore, such ORRIs are typically subject to expiration upon the expiration or termination of the oil and gas lease. 4 Table of Contents The Company may own more than one type of mineral and royalty interest in the same tract of land.
ORRIs that are carved out of working interests are linked to the same underlying oil and gas lease that created the working interest, and therefore, such ORRIs are typically subject to expiration upon the expiration or termination of the oil and gas lease.
Operations Coal Mining Segment The Coal Mining segment, operating as The North American Coal Corporation ® ("NACoal"), operates surface coal mines under long-term contracts with power generation companies pursuant to a service-based business model. Lignite coal is surface mined in North Dakota, Texas and Mississippi.
The estimated commercial operation date for this generation facility is 2027. Operations Coal Mining Segment The Coal Mining segment, operating as North American Coal, LLC, operates surface coal mines under long-term contracts with power generation companies pursuant to a service-based business model. Coal is surface mined in North Dakota and Mississippi. Each mine is fully integrated with its customer's operations.
The fee for lignite coal was reduced from $0.08 per ton to $0.064 per ton and for other surface-mined coal from $0.28 per ton to $0.224 per ton. These fees have been reauthorized until the end of fiscal year 2035. SMCRA establishes operational, reclamation and closure standards for surface coal mines.
The 2021 Infrastructure Investment and Jobs Act reauthorized the Abandoned Mine Land fee at a reduced rate. The fee for lignite coal was reduced from $0.08 per ton to $0.064 per ton and for other surface-mined coal from $0.28 per ton to $0.224 per ton. These fees have been reauthorized until the end of fiscal year 2035.
Strategic diversification will generate cash that can be re-invested to strengthen and expand the businesses. The Company also continues to maintain the highest levels of customer service and operational excellence with an unwavering focus on safety and environmental stewardship.
The Company also continues to maintain the highest levels of customer service and operational excellence with an unwavering focus on safety and environmental stewardship.
Dewing 66 Vice President - Operations of NACoal (from prior to 2018) John D. Neumann 47 Vice President, General Counsel and Secretary of NACCO, Vice President, General Counsel and Secretary of NACoal (from prior to 2018) J. Patrick Sullivan, Jr. 64 Vice President and Chief Financial Officer of NACoal (from prior to 2018) 18 Table of Contents
Dewing 67 Senior Vice President and Chief Operating Officer of NNRC (from prior to 2018) John D. Neumann 48 Senior Vice President, General Counsel and Secretary of NACCO, Senior Vice President, General Counsel and Secretary of NNRC (from prior to 2018) J. Patrick Sullivan, Jr. 65 Senior Vice President and Chief Financial Officer of NNRC (from prior to 2018)
The EPA also established alternative deadlines to cease receipt of waste to include new site-specific alternatives due to lack of capacity with a deadline to initiate closure no later than October 15, 2023 and a new site-specific alternative due to permanent cessation of coal-fired boilers with two deadlines to complete closure: (a) no later than October 17, 2023 for surface impoundments 40 acres or smaller; and (b) October 17, 2028 for surface impoundments larger than 40 acres.
The EPA also established alternative deadlines to cease receipt of waste to include new site-specific alternatives due to lack of disposal capacity with a deadline to initiate closure and a new site-specific alternative due to permanent cessation of coal-fired boilers with deadlines to complete closure.
The Sabine Mining Company (“Sabine”) operates the Sabine Mine in Texas. All production from Sabine is delivered to Southwestern Electric Power Company's (“SWEPCO”) Henry W. Pirkey Plant (the “Pirkey Plant”). SWEPCO is an American Electric Power (“AEP”) company. AEP intends to retire the Pirkey Plant during March 2023.
The Sabine Mining Company (“Sabine”) operates the Sabine Mine in Texas. All production from Sabine was delivered to Southwestern Electric Power Company's (“SWEPCO”) Henry W. Pirkey Plant (the “Pirkey Plant”). SWEPCO is an American Electric Power (“AEP”) company. As a result of the early retirement of the Pirkey Plant, Sabine ceased deliveries and final reclamation began on April 1, 2023.
The goal is to construct a high-quality diversified portfolio of oil and gas mineral and royalty interests in the United States that deliver near-term cash flow yields and long-term projected growth.
The goal is to construct a high-quality diversified portfolio of oil and gas mineral and royalty interests in the United States that delivers near-term cash flow yields and long-term projected growth. The Company believes this business will provide unlevered after-tax returns on invested capital in the mid-teens as this business model matures.
As of December 31, 2022, NAMining operates mines in Florida, Texas, Arkansas, Indiana, Virginia and Nebraska and will serve as exclusive contract miner for the Thacker Pass lithium project in northern Nevada. Certain of the entities within the NAMining segment are VIEs and are accounted for under the equity method as Unconsolidated Subsidiaries.
In addition, Sawtooth Mining, LLC ("Sawtooth") provides mining design, consulting and will be the exclusive contract miner for the Thacker Pass lithium project in northern Nevada. Certain of the entities within the NAMining segment are VIEs and are accounted for under the equity method as Unconsolidated Subsidiaries.
Army Corps of Engineers and many other state and local authorities also have 14 Table of Contents regulations for plugging and abandonment, decommissioning and site restoration. Although the U.S. Army Corps of Engineers does not require bonds or other financial assurances, some state agencies and municipalities do have such requirements.
Army Corps of Engineers and many other state and local authorities also have regulations for plugging and abandonment, decommissioning and site restoration. Although the U.S.
Army Corps of Engineers and the Office of Surface Mining Reclamation and Enforcement ("OSMRE") have engaged in a series of rulemakings and other administrative actions under the CWA and other statutes that are directed at reducing the impact of coal mining operations on water bodies.
Army Corps of Engineers and the Office of Surface Mining Reclamation and Enforcement ("OSMRE") have engaged in a series of rulemakings and other administrative actions under the CWA and other statutes that are directed at reducing the impact of coal mining operations on water bodies. 9 Table of Contents The Company does not believe there is any significant risk to the Company's subsidiaries' ability to maintain its existing mining permits or its ability to acquire future mining permits for its mines.
Fluctuating natural gas prices and availability of renewable energy sources, such as wind and solar, could affect the amount of electricity dispatched from coal-fired power plants. The Company is committed to maintaining a conservative capital structure as it continues to grow and diversify, while avoiding unnecessary risk.
Fluctuating natural gas prices, weather and availability of renewable energy sources, such as wind and solar, could affect the amount of electricity dispatched from coal-fired power plants.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe Company is subject to burdensome federal and state mining regulations and the assumptions underlying the Company's reclamation and mine closure obligations could be materially inaccurate. Federal and state statutes require the Company to restore mine property in accordance with specified standards and an approved reclamation plan, and require that the Company obtain and periodically renew permits for mining operations.
Biggest changeFederal and state statutes require the Company to restore mine property in accordance with specified standards and an approved reclamation plan, and require that the Company obtain and periodically renew permits for mining operations. Regulations require the Company to incur the cost of reclaiming current mine disturbance at operations where the Company holds the mining permit.
These factors and assumptions include: • Geologic and mining conditions, including the Company's ability to access certain mineral deposits as a result of the nature of the geologic formations of coal deposits or other factors, which may not be fully identified by available exploration data and may differ from past experience; • Demand for the Company's minerals; • Contractual arrangements, operating costs and capital expenditures; • Development and reclamation costs; • Mining technology and processing improvements; • The effects of regulation by governmental agencies; • The ability to obtain, maintain and renew all required permits; • Employee health and safety; and • NACCO's ability to convert all or any part of mineral resources to economically extractable mineral reserves.
These factors and assumptions include: 22 Table of Contents • Geologic and mining conditions, including the Company's ability to access certain mineral deposits as a result of the nature of the geologic formations of coal deposits or other factors, which may not be fully identified by available exploration data and may differ from past experience; • Demand for the Company's minerals; • Contractual arrangements, operating costs and capital expenditures; • Development and reclamation costs; • Mining technology and processing improvements; • The effects of regulation by governmental agencies; • The ability to obtain, maintain and renew all required permits; • Employee health and safety; and • NACCO's ability to convert all or any part of mineral resources to economically extractable mineral reserves.
Historically, oil and natural gas prices have been volatile and are subject to fluctuations in response to changes in supply and demand, market uncertainty and a variety of additional factors that are beyond the Company's control; market expectations about future prices of oil and natural gas; the level of global oil and natural gas exploration and production; the cost of exploring for, developing, producing and delivering oil and natural gas; the price and quantity of foreign imports and U.S. exports of oil and natural gas; the level of U.S. domestic production; political and economic conditions in oil producing regions; the ability of members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls; trading in oil and natural gas derivative contracts; the level of consumer product demand; weather conditions and natural disasters; technological advances affecting energy consumption, energy storage and energy supply; domestic and foreign governmental regulations and taxes; the continued threat of terrorism and the impact of military and other action, including the ongoing conflict between Russia and Ukraine and associated oil and natural gas import bans as well as 24 Table of Contents U.S. military operations in the Middle East and economic sanctions such as those imposed by the U.S. on oil and gas exports from Iran; the proximity, cost, availability and capacity of oil and natural gas pipelines and other transportation facilities; the price and availability of alternative fuels; and overall domestic and global economic conditions.
Historically, oil and natural gas prices have been volatile and are subject to fluctuations in response to changes in supply and demand, market uncertainty and a variety of additional factors that are beyond the Company's control; market expectations about future prices of oil and natural gas; the level of global oil and natural gas exploration and production; the cost of exploring for, developing, producing and delivering oil and natural gas; the price and quantity of foreign imports and U.S. exports of oil and natural gas; the level of U.S. domestic production; political and economic conditions in oil producing regions; the ability of members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls; trading in oil and natural gas derivative contracts; the level of consumer product demand; weather conditions and natural disasters; technological advances affecting energy consumption, energy storage and energy supply; domestic and foreign governmental regulations and taxes; the continued threat of terrorism and the impact of military and other action, including the ongoing conflict between Israel and Hamas, the conflict between Russia and Ukraine and associated oil and natural gas import bans as well as U.S. military operations in the Middle East and economic sanctions such as those imposed by the U.S. on oil and gas exports from Iran; the proximity, cost, availability and capacity of oil and natural gas pipelines and other transportation facilities; the price and availability of alternative fuels; and overall domestic and global economic conditions.
Information concerning the Company's mining operations in "Item 2 - Properties" on page 28 has been prepared in accordance with the requirements of subpart 1300 of Regulation S-K. A mineral is economically recoverable when the price at which it can be sold exceeds the costs and expenses of mining, processing and selling the mineral.
Information concerning the Company's mining operations in "Item 2 - Properties" on page 31 has been prepared in accordance with the requirements of subpart 1300 of Regulation S-K. A mineral is economically recoverable when the price at which it can be sold exceeds the costs and expenses of mining, processing and selling the mineral.
The Company’s wholly-owned subsidiary, NACoal, has a revolving line of credit of up to $150.0 million that expires in November 2025.
The Company’s wholly-owned subsidiary has a revolving line of credit of up to $150.0 million that expires in November 2025.
NAMining operations are currently geographically concentrated and therefore subject to regional economic risk, regulatory conditions, natural disasters, severe weather events or other circumstances affecting Florida. As of December 31, 2022, over 75% of the quarries NAMining operates are located in Florida.
NAMining operations are currently geographically concentrated and therefore subject to regional economic risk, regulatory conditions, natural disasters, severe weather events or other circumstances affecting Florida. As of December 31, 2023, over 75% of the quarries NAMining operates are located in Florida.
The Company has two classes of common stock: Class A common stock and Class B common stock. Holders of Class A common stock are entitled to cast one vote per share and, as of December 31, 2022, accounted for approximately 27 percent of the voting power of the Company.
The Company has two classes of common stock: Class A common stock and Class B common stock. Holders of Class A common stock are entitled to cast one vote per share and, as of December 31, 2023, accounted for approximately 27 percent of the voting power of the Company.
Natural gas wells have high initial production rates and follow a natural decline before settling into relatively stable, long-term production. Decline rates can vary due to factors like well depth, well length, formation pressure, and facility design. Any of these risks could materially reduce the Company’s expected royalty income and the Company’s profitability.
Natural gas wells have high initial production rates and follow a natural decline before settling into relatively stable, long-term production. Decline rates can vary due to 24 Table of Contents factors like well depth, well length, formation pressure, and facility design. Any of these risks could materially reduce the Company’s expected royalty income and the Company’s profitability.
Certain financial institutions have taken actions to limit available financing to entities that produce or use fossil fuels. The volatility in the energy industry combined with recent bankruptcies and additional perceived credit risks of companies with coal and/or oil and gas exposure has resulted in traditional bank lenders seeking to reduce or eliminate their lending exposure to these companies.
Certain financial institutions have taken actions to limit available financing to entities that produce or use fossil fuels. The volatility in the energy industry and additional perceived credit risks of companies with coal and/or oil and gas exposure has resulted in traditional bank lenders seeking to reduce or eliminate their lending exposure to these companies.
Further, NACCO could be the subject of securities class action litigation due to any such stock price volatility, which could divert management’s attention and have a material adverse effect on the Company's operating results. NACCO's certificate of incorporation and by-laws include provisions that may discourage a takeover attempt.
Further, NACCO could 25 Table of Contents be the subject of securities class action litigation due to any such stock price volatility, which could divert management’s attention and have a material adverse effect on the Company's operating results. NACCO's certificate of incorporation and by-laws include provisions that may discourage a takeover attempt.
Additionally, reserve and resource estimates may be adversely affected in the future by interpretations of, or changes to, the SEC’s property disclosure requirements for mining companies. 22 Table of Contents A defect in title or the loss of a leasehold interest in certain property could limit the Company's ability to mine coal reserves or result in significant unanticipated costs.
Additionally, reserve and resource estimates may be adversely affected in the future by interpretations of, or changes to, the SEC’s property disclosure requirements for mining companies. A defect in title or the loss of a leasehold interest in certain property could limit the Company's ability to mine coal reserves or result in significant unanticipated costs.
Business — Business Developments" on page 2 in this Form 10-K for further discussion. MLMC is subject to risks associated with its capital investment, operating and equipment costs, growing use of alternative generation that competes with coal-fired generation, changes in customer demand and inflationary adjustments.
Business — Business Developments" on page 2 in this Form 10-K for further discussion. 20 Table of Contents MLMC is subject to risks associated with its capital investment, operating and equipment costs, growing use of alternative generation that competes with coal-fired generation, changes in customer demand and inflationary adjustments.
In addition, as a result of increasing credit pressures on the coal industry, it is possible that surety bond providers could demand cash collateral as a condition to providing or maintaining surety bonds. Any such demands, could have a material adverse impact on the Company’s liquidity and financial position.
In addition, as a result of increasing credit pressures on the coal industry, it is possible that surety bond providers could demand other forms of collateral as a condition to providing or maintaining surety bonds. Any such demands, could have a material adverse impact on the Company’s liquidity and financial position.
Moreover, hardware, software or applications the Company may use have inherent defects of design, manufacture or operations or could be inadvertently or intentionally implemented or used in a manner that could compromise information security. A security breach and loss of information may not be discovered for a significant period of time after it occurs.
Moreover, hardware, software or applications the Company may use have inherent defects of design, manufacture or operations or could be inadvertently or intentionally implemented or used in a manner that could compromise information security. 28 Table of Contents A security breach and loss of information may not be discovered for a significant period of time after it occurs.
Changes in customer demand for any reason, including, but not limited to, reduced mechanical availability of the customer’s power plant, dispatch of power generated by other energy sources ahead of coal, fluctuations in demand due to unanticipated weather conditions, regulations or comparable policies which may promote planned and unplanned outages at the Red Hills Power Plant, economic conditions, including an economic slowdown and a corresponding decline in the use of electricity, governmental regulations and inflationary adjustments could have a material adverse effect on MLMC's financial condition, results of operations and cash flows.
Any reduction in customer demand at MLMC, including, but not limited to, reduced mechanical availability of the customer’s power plant, dispatch of power generated by other energy sources ahead of coal, fluctuations in demand due to unanticipated weather conditions, regulations or comparable policies which may promote planned and unplanned outages at the Red Hills Power Plant, economic conditions, including an economic slowdown and a corresponding decline in the use of electricity, governmental regulations and inflationary adjustments could have a material adverse effect on MLMC's financial condition, results of operations and cash flows.
In addition, if a lessee were to experience financial difficulty, the lessee might not be able to pay its royalty payments or continue operations. A failure on the part of the lessee to make royalty payments gives the Company the right to terminate the lease, repossess the property and enforce payment obligations under the lease.
In addition, if a lessee were to experience financial difficulty, the lessee might not be able to pay its royalty payments or continue operations. A failure on the part of the lessee to make royalty payments may give the Company the right to terminate the lease, repossess the property and enforce payment obligations under the lease.
Holders of Class B common stock are entitled to cast ten votes per share and, as of December 31, 2022, accounted for the remaining voting power of the Company.
Holders of Class B common stock are entitled to cast ten votes per share and, as of December 31, 2023, accounted for the remaining voting power of the Company.
NAMining cannot be certain that its existing customers will continue to outsource these services to NAMining in the future, which could adversely affect the NAMining business, operating results and financial condition. The Company is subject to risks involved in the development of new mining projects.
NAMining cannot be certain that its existing customers will continue to outsource these services to NAMining in the future, which could adversely affect the NAMining business, operating results and financial condition. 23 Table of Contents The Company is subject to risks involved in the development of new mining projects.
Furthermore, the stock repurchase program does not obligate the Company to repurchase any dollar amount or number of shares of the Company's 25 Table of Contents Class A common stock, and it may be suspended or discontinued at any time and any suspension or discontinuation could cause the market price of the Company's Class A common stock to decline.
Furthermore, the stock repurchase program does not obligate the Company to repurchase any dollar amount or number of shares of the Company's Class A common stock, and it may be suspended or discontinued at any time and any suspension or discontinuation could cause the market price of the Company's Class A common stock to decline.
Because certain members of the Company's extended founding family could prevent other stockholders from exercising significant influence over significant corporate actions, the Company may be a less attractive takeover target, which could adversely affect the market price of its common stock.
Because certain members of the Company's extended founding family could prevent 26 Table of Contents other stockholders from exercising significant influence over significant corporate actions, the Company may be a less attractive takeover target, which could adversely affect the market price of its common stock.
Increasing attention to climate change risk has also resulted in a recent trend of governmental investigations and private litigation by local and state governmental agencies as well as private plaintiffs in an effort to hold energy companies 27 Table of Contents accountable for the effects of climate change.
Increasing attention to climate change risk has also resulted in a recent trend of governmental investigations and private litigation by local and state governmental agencies as well as private plaintiffs in an effort to hold energy companies accountable for the effects of climate change.
As of December 31, 2022, certain members of the Company's extended founding family held approximately 34 percent of the Company's outstanding Class A common stock and approximately 99 percent of the Company's outstanding Class B common stock.
As of December 31, 2023, certain members of the Company's extended founding family held approximately 34 percent of the Company's outstanding Class A common stock and approximately 99 percent of the Company's outstanding Class B common stock.
An inability to obtain bank financing, or 26 Table of Contents refinance with terms that are as favorable as the existing terms of such indebtedness, could have a material adverse effect on the Company's operating results and financial condition.
An inability to obtain bank financing, or refinance with terms that are as favorable as the existing terms of such indebtedness, could have a material adverse effect on the Company's operating results and financial condition.
New legislation and/or regulations and orders may materially adversely affect the Company's mining operations or its cost structure, or its customers. All of these factors could significantly reduce the Company's profitability. See “Item 1. Business — Government Regulation" on page 8 in this Form 10-K for further discussion.
New legislation and/or regulations and orders may materially adversely affect the Company's mining operations or its cost structure, or its customers. All of these factors could significantly reduce the Company's profitability. See “Item 1. Business — Government Regulation" on page 8 in this Form 10-K for discussion of regulations that could materially adversely affect the Coal Mining segment.
Federal and state mandates for increased use of electricity derived from renewable energy sources have also adversely affected demand for coal-fired electric power generation. Such mandates make alternative fuel sources more competitive with coal-fired electric power generation.
Federal and state mandates for increased use of electricity derived from renewable energy sources 21 Table of Contents have also adversely affected demand for coal-fired electric power generation. Such mandates make alternative fuel sources more competitive with coal-fired electric power generation.
As a result, reduced coal usage by customers for any reason, including, but not limited to, fluctuations in demand due to unanticipated weather conditions, scheduled and unscheduled outages at the Coal Mining segment's customers' facilities, unplanned equipment failures, economic conditions or governmental regulations or comparable policies which may promote dispatch of power generated by renewables, such as wind or solar, and the realignment of customers' power generation portfolios that reduce the electric power generated from coal could have a material adverse effect on the Company's results of operations.
As a result, reduced coal usage by customers for any reason, including, but not limited to, fluctuations in demand due to unanticipated weather conditions, scheduled and unscheduled outages at the Coal Mining segment's customers' facilities, unplanned equipment failures including U.S. power grid reliability issues, economic conditions or governmental regulations or comparable policies which may promote dispatch of power generated by renewable energy sources, such as wind or solar, and the realignment of customers' power generation portfolios that reduce the electric power generated from coal could have a material adverse effect on the Company's results of operations.
These projects are subject to significant risks, including delays, extreme weather events, unexpected increases in the cost of required materials, and disputes with third party providers of materials, equipment or services, and a completed project may not yield the anticipated operational or financial benefit, any of which could have a material adverse effect on the Company’s business, financial condition and results of operations.
These projects are subject to significant risks, including delays or reductions in making capital expenditures by NAMining's customers, extreme weather events, unexpected increases in the cost of required materials, and disputes with third party providers of materials, equipment or services, and a completed project may not yield the anticipated operational or financial benefit, any of which could have a material adverse effect on the Company’s business, financial condition and results of operations.
As the Company is required by state and federal law to have bonds or other acceptable security in place before mining can commence or continue, the failure to maintain surety bonds, letters of credit or other guarantees or security arrangements would materially and adversely affect NACCO's ability to mine.
As the Company is required by state and federal law to have bonds or other acceptable security in place before mining can commence or for certain projects to move forward, the failure to maintain surety bonds, letters of credit or other guarantees or security arrangements would materially and adversely affect NACCO's ability to mine.
Decisions regarding whether or not to pay dividends and the amount of any dividends are based on earnings, capital and future expense requirements, financial conditions and other factors the Board of Directors may consider.
The Board of Directors has the power to determine the amount and frequency of the payment of dividends. Decisions regarding whether or not to pay dividends and the amount of any dividends are based on earnings, capital and future expense requirements, financial conditions and other factors the Board of Directors may consider.
Federal and state laws require the Company to provide financial assurance or financial security to secure performance or payment of certain long-term obligations, such as mine closure or reclamation costs, federal and state workers’ compensation and black lung benefit costs, leases and other obligations.
Federal and state laws require the Company to provide financial assurance or financial security to secure performance or payment of certain long-term obligations, such as mine closure or reclamation costs, federal and state workers’ compensation and black lung benefit costs, leases, transmission interconnection construction costs, power purchase agreement delivery obligations and other obligations.
Risks related to the NAMining segment The Company has experienced growth in its NAMining business in recent periods and it may not be able to sustain growth or manage future growth effectively. The Company has expanded its overall NAMining business, operations and headcount in recent periods.
Risks related to the NAMining segment The Company has experienced growth in its NAMining business in recent periods and it may not be able to sustain growth or manage future growth effectively. The Company has expanded its overall NAMining business, operations and headcount in recent periods. NAMining’s operating expenses may continue to increase as the Company scales the NAMining business.
The Company uses employee awareness training around phishing, malware, and other cyber risks. The Company believes these incidents are likely to continue and is unable to predict the direct or indirect impact of future attacks or breaches to business operations.
The Company is continuously installing new and upgrading existing information technology systems. The Company uses employee awareness training around phishing, malware, and other cyber risks. The Company believes these incidents are likely to continue and is unable to predict the direct or indirect impact of future attacks or breaches to business operations.
The Company owns mineral and royalty interests in the continental United States. The Company does not develop oil and gas reserves and is not a natural gas and oil producer. The Company derives income from royalty-based leases under which lessees make payments to the Company based on their sale of natural gas, oil and coal.
The Company does not develop oil and gas reserves and is not a natural gas and oil producer. The Company primarily derives income from royalty-based leases under which lessees make payments to the Company based on their sale of natural gas, oil and coal.
Similar to the Company's unconsolidated mines, all production costs at MLMC are capitalized into inventory and recognized in cost of sales as tons are delivered.
As such, increased costs at MLMC or decreased revenues could materially reduce the Company's profitability. Similar to the Company's unconsolidated mines, all production costs at MLMC are capitalized into inventory and recognized in cost of sales as tons are delivered.
A number of global insurance companies have taken steps to limit coverage for companies in the fossil fuel industry, including coal mining, which could result in significant increases in costs of insurance or in the Company’s ability to maintain insurance coverage at current levels.
A number of global insurance companies have taken steps to limit coverage for companies in the fossil fuel industry, including coal mining, which could result in significant increases in costs of insurance or in the Company’s ability to maintain insurance coverage at current levels. 27 Table of Contents The Company holds a number of insurance policies, including director and officers’ liability and property and casualty insurance coverages.
The Company holds a number of insurance policies, including director and officers’ liability and property and casualty insurance coverages. Because the Company is involved in coal mining, costs of insurance may increase substantially or insurance carriers may limit or decide not to insure the Company in the future.
Because the Company is involved in coal mining, costs of insurance may increase substantially or insurance carriers may limit or decide not to insure the Company in the future.
Changes in federal and state mandates that would include an acceleration in the use of electricity derived from renewable energy sources could result in a decrease in coal consumption by the electric power generation industry and the Company’s customers. 20 Table of Contents Certain of the Coal Mining segment’s customers, including MLMC's customer, benefit or have benefited from a tax credit under Section 45 of the Internal Revenue Code.
Changes in federal and state mandates that would include an acceleration in the use of electricity derived from renewable energy sources could result in a decrease in coal consumption by the electric power generation industry and the Company’s customers.
NAMining’s operating expenses may continue to increase as the Company scales the NAMining business, including growth outside of Florida. As NACCO continues to grow the NAMining business, the Company must effectively integrate, develop and motivate new employees, as well as existing employees who are promoted or moved into new roles, while maintaining the effectiveness of its business execution.
As NACCO continues to grow the NAMining business, the Company must effectively integrate, develop and motivate new employees, as well as existing employees who are promoted or moved into new roles, while maintaining the effectiveness of its business execution. In part, NAMining’s success depends on its ability to integrate new customers in an efficient and effective manner.
Regulations require the Company to incur the cost of reclaiming current mine disturbance at operations where the Company holds the mining permit. Estimates of the Company's total reclamation and mine closing liabilities are based upon permit requirements and the Company's engineering expertise related to these requirements.
Estimates of the Company's total reclamation and mine closing liabilities are based upon permit requirements and the Company's engineering expertise related to these requirements.
Any of these risks could result in a decrease in coal consumption by the Company’s customers and could have a material adverse effect on the Company’s business, financial condition and results of operations. Government regulations could impose costly requirements on the Company and its customers.
Any of these risks could result in a decrease in coal consumption by the Company’s customers and could have a material adverse effect on the Company’s business, financial condition and results of operations. The Company is subject to burdensome federal and state mining regulations and the assumptions underlying the Company's reclamation and mine closure obligations could be materially inaccurate.
A prolonged economic downturn or adverse change in regulatory conditions in the Florida mining or construction industry could result in a significant reduction in demand for NAMining’s services.
A prolonged economic downturn or adverse change in regulatory conditions in the Florida mining or construction industry could result in a significant reduction in demand for NAMining’s services. The occurr ence of one or more natural disasters, severe weather events, terrorist attacks, or disruptive political events in Florida could adversely affect the NAMining business.
Future federal and state laws and regulations may require higher amounts of financial security, including as a result of changes to certain factors used to calculate the bonding or security amounts. Bond issuers may demand higher fees or additional collateral, including cash or letters of credit or other terms less favorable upon renewals.
Future federal and state laws and regulations, regional transmission organizations and power purchase agreement customers may require higher amounts of financial security, including as a result of changes to certain factors used to calculate the bonding or security amounts.
The occurr ence of one or more natural disasters, severe weather events, terrorist attacks, or disruptive political events in Florida could adversely affect the NAMining business. 23 Table of Contents Risks related to the Minerals Management segment The Company has no control over the timing of the development and operation of its natural gas, oil and coal reserves extracted by third parties.
Risks related to the Minerals Management segment The Company has no control over the timing of the development and operation of its natural gas, oil and coal reserves extracted by third parties. The Company owns mineral and royalty interests in the continental United States.
A substantial or extended decline in commodity prices may adversely affect the Minerals Management segment’s financial condition or results of operations. Risks related to corporate structure The amount and frequency of dividend payments made on NACCO's common stock could change. The Board of Directors has the power to determine the amount and frequency of the payment of dividends.
Any significant disruption in the U.S. power grid, gathering system or transportation, processing, or refining-facility capacity could reduce our third-party lessee’s ability to market oil production and may adversely affect the Minerals Management segment’s financial condition or results of operations. Risks related to corporate structure The amount and frequency of dividend payments made on NACCO's common stock could change.
In periods of limited or no deliveries, MLMC may be required to reduce its inventory carrying value using the lower of cost and net realizable value approach, which could adversely affect MLMC’s results of operations. 19 Table of Contents MLMC has approximately $125 million of long-lived assets, including property, plant and equipment and a coal supply agreement intangible asset, which are subject to periodic impairment analysis and review.
In periods of limited or no deliveries, MLMC may be required to reduce its inventory carrying value using the lower of cost and net realizable value approach, which could adversely affect MLMC’s results of operations. Profitability at MLMC is affected by customer demand for coal and changes in the indices that determine sales price and actual costs incurred.
Business — Government Regulation" on page 8 in this Form 10-K for further discussion. 21 Table of Contents The Coal Mining segment's customers' operations require significant capital expenditures. Maintaining and installing environmental controls on power plants requires significant capital expenditures.
Such changes could have a material adverse effect on the Company’s business and could significantly reduce its profitability. The Coal Mining segment's customers' operations require significant capital expenditures. Maintaining and installing environmental controls on power plants requires significant capital expenditures.
The general effect of tighter restrictions is to reduce demand for coal. A reduction in coal’s share of the capacity for power generation could have a material adverse effect on the Company’s business, financial condition and results of operations. See “Item 1.
Any suspension of operations at Coal Creek Station would eliminate the need for lignite coal during the suspension period. Any such suspension of operations at Coal Creek Station or any of the power plants supplied by the Company's mines could have a material adverse effect on the Company’s business, financial condition and results of operations.
Removed
See “Item 1. Business — Business Developments" on page 2 in this Form 10-K for discussion of Sabine's 2023 closure. See “Item 1.
Added
The coal mining industry is subject to ongoing complex governmental regulations and legislation that could adversely impact the Company’s long-term mining contracts and the Company’s results of operations, liquidity, financial condition and cash flow.
Removed
Business — Government Regulation" on page 8 in this Form 10-K for discussion of regulations that could materially adversely affect the Coal Mining segment, particularly the discussion of the implementation of the EPA’s Regional Haze Rule and its potential impact at Coyote Creek.
Added
The United States Environmental Protection Agency (the “EPA”) has a comprehensive regulatory program to manage the disposal of coal combustion residuals (“CCR”) from coal-fired power plants as non-hazardous material under the Resource Conservation and Recovery Act (“RCRA”). Individual states administer some or all of the RCRA provisions.
Removed
As such, increased costs at MLMC or decreased revenues could materially reduce the Company's profitability. Any reduction in customer demand at MLMC, including reductions related to reduced mechanical availability of the customer’s power plant, would adversely affect the Company's operating results and could result in significant impairments.
Added
The North Dakota Department of Environmental Quality approved Falkirk’s customer's plan for an alternate disposal liner to store coal ash at the Coal Creek Station power plant. In the first quarter of 2023, the EPA proposed to deny the application.
Removed
Identifying and assessing whether impairment indicators exist, or if events or changes in circumstances have occurred, including assumptions about future power plant dispatch levels, changes in operating costs and other factors that impact anticipated revenue and customer demand, requires significant judgment.
Added
If denied, a new liner or new waste management unit(s) may need to be installed, which could result in the temporary suspension of operations at Coal 19 Table of Contents Creek Station.
Removed
Actual future operating results could differ significantly from these estimates, which may result in an impairment charge in a future period, which could have a substantial impact on the Company’s results of operations. Profitability at MLMC is affected by customer demand for coal and changes in the indices that determine sales price and actual costs incurred.
Added
To minimize any impact to operations, Coal Creek Station is moving forward with plans to dry CCR materials produced by the plant, reducing the need to utilize the lined area in question. Falkirk is the sole supplier of lignite coal to Coal Creek Station.
Removed
The benefit results in a reduction to the cost of coal-fired electric power generation.
Added
The EPA also has a comprehensive regulatory program to manage airborne emissions from coal-fired power plants. During 2023, the EPA proposed updated rules related to mercury and greenhouse gas emissions from coal-fired power plants. The first update was to the Mercury Air Toxics Standard, or MATS.
Removed
The elimination or expiration of the Section 45 tax credit would increase the cost of the coal-fired electric power generation from these facilities and could result in the power these facilities produce being less economical than other sources of power generation, which could reduce demand and result in a decrease in coal consumption.
Added
In this update, the EPA proposed to eliminate a mercury emission standard for lignite-fired power plants that currently permits higher mercury emissions by lignite plants than other coal plants.
Removed
Such changes could have a material adverse effect on the Company’s business and could significantly reduce its profitability. The Clean Air Act could reduce the demand for coal. The process of burning coal can cause many compounds and impurities in the coal to be released into the air, including carbon dioxide, sulfur dioxide, nitrogen oxides, mercury, particulates and other matter.
Added
In the event this rule is adopted as proposed, and not successfully legally challenged, it could result in the closure of many lignite-fired power plants, potentially including all of those supplied by the Company. The second update was the EPA’s proposed new rule for greenhouse gas emissions from coal-fired power plants.
Removed
The CAA and the corresponding state laws that extensively regulate the emissions of materials into the air affect coal mining operations both directly and indirectly. Direct impacts on coal mining operations occur through CAA permitting requirements and/or emission control requirements relating to air contaminants, especially particulate matter.
Added
In this proposed new rule, the EPA requires that power plant owners that intend to operate the plants beyond 2031 utilize controls, including reduced levels of power generation, co-firing coal and natural gas and installing carbon capture and sequestration to reduce greenhouse gas emissions.
Removed
Indirect impacts on coal mining operations occur through regulation of the air emissions of carbon dioxide, sulfur dioxide, nitrogen oxides, mercury, particulate matter and other compounds emitted by coal-fired power plants. The EPA has discussed issuing or issued regulations that impose tighter emission restrictions on a number of these compounds, some of which are currently subject to litigation.
Added
Each of these controls may impact the plant owners’ profitability and could result in the closure of coal-fired power plants, potentially including all of those supplied by the Company. The closure of any of the power plants supplied by the Company could have a material adverse effect on the Company’s business, financial condition and results of operation.
Removed
In part, NAMining’s success depends on its ability to integrate new customers in an efficient and effective manner.
Added
A substantial or extended decline in commodity prices may adversely affect the Minerals Management segment’s financial condition or results of operations. The marketability of oil and natural gas production is dependent upon transportation, pipelines and refining facilities and continued operation of the U.S. power grid.
Removed
For example, although the Company has not experienced any material impacts from the SolarWinds Orion cybersecurity breach that was widely publicized in December 2020, similar future events could have a material impact on the Company. The Company is continuously installing new and upgrading existing information 28 Table of Contents technology systems.
Added
Any limitation in the availability of these items could interfere with our third-party lessee’s ability to market oil and natural gas production and may adversely affect the Minerals Management segment’s financial condition or results of operations.
Removed
The Company’s results of operations, financial condition, cash flows and stock price could be adversely affected by pandemics, epidemics or other public health emergencies. The Company’s results of operations, financial condition, cash flows and stock price could be adversely affected by pandemics, epidemics or other public health emergencies.
Added
The marketability of our third-party lessee’s production depends in part on the availability, proximity, and capacity of pipelines, tanker trucks, and other transportation methods, and processing and refining facilities owned by third parties as well as continued reliable operation of the U.S power grid.
Removed
Although the Company operates facilities consistent with federal guidelines and state and local orders, any pandemic and the preventive or protective actions taken by governmental authorities may have a material adverse effect on the Company’s operations, work force, supply chain or customers, including business shutdowns or disruptions.
Added
Bond issuers may demand higher fees or additional collateral, including cash or letters of credit or other terms less favorable upon renewals.
Removed
The extent to which pandemics may adversely impact the Company's businesses depends on future developments, which are highly uncertain and unpredictable, including the extent of new outbreaks, the nature of government public health guidelines and the public's adherence to those guidelines.
Removed
Any resulting financial impact cannot reasonably be estimated at this time, but could have a material adverse effect on the Company’s financial condition, cash flows and results of operations. Even after any pandemic has subsided, the Company may experience material adverse effects due to a decline in economic activity.

Item 2. Properties

Properties — owned and leased real estate

86 edited+15 added−16 removed103 unchanged
Biggest changeThe following table includes the Company's estimate of developed and undeveloped acreage based on the gross acres in a basin or region and includes mineral interests, NPRIs, and ORRIs: December 31, 2022 December 31, 2021 Developed Acreage Undeveloped Acreage Gross Acreage Developed Acreage Undeveloped Acreage Gross Acreage Appalachia 32,027 2,634 34,661 28,011 6,650 34,661 Gulf Coast 22,191 5,741 27,932 21,784 6,148 27,932 Permian 73,862 3,416 77,278 62,496 1,502 63,998 Rockies 326 — 326 — — — Williston — 1,194 1,194 — 1,194 1,194 Total 128,406 12,985 141,391 112,291 15,494 127,785 Undeveloped acres are either unleased and open or are leased acres on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil or natural gas, regardless of whether such acreage contains proved reserves. 46 Table of Contents Production and Price History The following table sets forth the estimated oil and natural gas production data related to the Company’s mineral and royalty interests as well as certain price and cost information for the years ended December 31: 2022 (4) 2021 (4) Production data: Oil (bbl) (1) 46,571 32,627 NGL (bbl) (1) 61,511 63,559 Residue gas (Mcf) (2) 7,329,985 6,225,422 Total BOE (3) 1,329,747 1,133,756 Average realized prices: Oil (bbl) (1) $ 94.31 $ 66.87 NGL (bbl) (1) $ 36.81 $ 29.33 Residue gas (Mcf) (2) $ 5.87 $ 3.36 Average unit cost BOE (3) $ 4.26 $ 4.99 (1) Bbl.
Biggest changeThe following table includes the Company's estimate of developed and undeveloped acreage based on the gross acres in a basin or region and includes mineral interests, NPRIs, and ORRIs: December 31, 2023 December 31, 2022 Developed Acreage Undeveloped Acreage Gross Acreage Developed Acreage Undeveloped Acreage Gross Acreage Appalachia 32,156 2,505 34,661 32,027 2,634 34,661 Gulf Coast 22,191 5,741 27,932 22,191 5,741 27,932 Permian 117,220 3,416 120,636 73,862 3,416 77,278 Rockies 326 — 326 326 — 326 Williston — 1,194 1,194 — 1,194 1,194 Total 171,893 12,856 184,749 128,406 12,985 141,391 Undeveloped acres are either unleased and open or are leased acres on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil or natural gas, regardless of whether such acreage contains proved reserves.
Lignite Coal Resource Classification Tonnage (Kiloton "Kt") Grades/Qualities Calorific Value (Btu/lb) Moisture (%wt) Ash (%wt) Sulfur (%wt) Mississippi Lignite Mining Company Measured 4,300 5,210 44.6 12.8 0.6 Mississippi Lignite Mining Company Indicated 500 5,300 43.6 12.7 0.7 Mississippi Lignite Mining Company Measured + Indicated 4,800 5,220 44.5 12.8 0.6 Mississippi Lignite Mining Company Inferred 1,600 5,370 46.0 9.9 0.5 Note: – Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability and there is no certainty that all or any part of such Mineral Resources will be converted into Mineral Reserves. – Mineral Resources are in-situ and exclusive of 25.4 million tons (Mt) of Mineral Reserves. – Mineral Resources are reported using an economic cutoff of $29.66 per ton. – Resources are presented with a minimum 1 foot seam thickness, a maximum as received moisture basis ash content of 30%, and a minimum calorific value of 4000 BTUs on an as received moisture basis cutoff. – Resources are estimated using Vulcan Software. – Tonnages and qualities have been rounded to an accuracy level deemed appropriate by the QP.
Lignite Coal Resource Classification Tonnage (Kiloton "Kt") Grades/Qualities Calorific Value (Btu/lb) Moisture (%wt) Ash (%wt) Sulfur (%wt) Mississippi Lignite Mining Company Measured 4,300 5,210 44.6 12.8 0.6 Mississippi Lignite Mining Company Indicated 500 5,300 43.6 12.7 0.7 Mississippi Lignite Mining Company Measured + Indicated 4,800 5,220 44.5 12.8 0.6 Mississippi Lignite Mining Company Inferred 1,600 5,370 46.0 9.9 0.5 Note: – Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability and there is no certainty that all or any part of such Mineral Resources will be converted into Mineral Reserves. – Mineral Resources are in-situ and exclusive of 22.5 million tons (Mt) of Mineral Reserves. – Mineral Resources are reported using an economic cutoff of $29.66 per ton. – Resources are presented with a minimum 1 foot seam thickness, a maximum as received moisture basis ash content of 30%, and a minimum calorific value of 4000 BTUs on an as received moisture basis cutoff. – Resources are estimated using Vulcan Software. – Tonnages and qualities have been rounded to an accuracy level deemed appropriate by the QP.
In addition, Coyote Creek Mine owns in fee 160 acres of surface interests and has four easements to conduct coal mining operations on approximately 352 acres. 40 Table of Contents Figure 2.4 – Coyote Creek Mine Location The towns of Beulah, Hazen, and Stanton along with other smaller communities are within a 40-mile radius of the Coyote Creek Mine and provide a vast supply and employment base.
In addition, Coyote Creek Mine owns in fee 160 acres of surface interests and has four easements to conduct coal mining operations on approximately 352 acres. 41 Table of Contents Figure 2.4 – Coyote Creek Mine Location The towns of Beulah, Hazen, and Stanton along with other smaller communities are within a 40-mile radius of the Coyote Creek Mine and provide a vast supply and employment base.
Material assumptions and criteria used in the determination of Mineral Resource and Mineral Reserves reported herein are provided within the filed TRS for the Mississippi Lignite Mining Company – Red Hills Mine dated December 2022. Section 11.0 of the TRS describes the key assumptions, parameters, and methods used for the estimation of Mineral Resources.
Material assumptions and criteria used in the determination of Mineral Resource and Mineral Reserves reported herein are provided within the filed TRS for the Mississippi Lignite Mining Company – Red Hills Mine dated December 31, 2022. Section 11.0 of the TRS describes the key assumptions, parameters, and methods used for the estimation of Mineral Resources.
Section 12.0 of the TRS describes the key assumptions, parameters, and methods used for the estimation of Mineral Reserves, and include the following: • Maximum stripping ratio: 14:1; • Mining production rates on a cubic yard and per ton basis remain relatively consistent with historical performance; • Mining costs on a unit basis remain relatively consistent with historical performance; • Minimum minable lignite thickness: 1.0 feet; • Minimum parting thickness before seams are composited: 6.0 inches; • Maximum depth of mining: approximately 320 feet; • Lignite density defined by seam from coal core drilling data and modified by dilution parameters and approximately 80 lb/ft³; and 33 Table of Contents • Recovery rates by seam ranging from 67% to 100%.
Section 12.0 of the TRS describes the key assumptions, parameters, and methods used for the estimation of Mineral Reserves, and include the following: • Maximum stripping ratio: 14:1; • Mining production rates on a cubic yard and per ton basis remain relatively consistent with historical performance; • Mining costs on a unit basis remain relatively consistent with historical performance; • Minimum minable lignite thickness: 1.0 feet; • Minimum parting thickness before seams are composited: 6.0 inches; • Maximum depth of mining: approximately 320 feet; • Lignite density defined by seam from coal core drilling data and modified by dilution parameters and approximately 80 lb/ft³; and • Recovery rates by seam ranging from 67% to 100%.
Costs included within revenue include all production, transportation and maintenance costs including, without limitation, the following types of costs: 35 Table of Contents ◦ Labor, which include wages and all related payroll taxes, benefits and fringes, including welfare plans; group insurance, vacations and other comparable benefits of employees ◦ Materials and supplies, ◦ Tools, ◦ Machinery and equipment not capitalized or leased, ◦ Costs of acquiring interests in coal reserves and surface lands, ◦ Rental of machinery and equipment, ◦ Power costs, ◦ Reasonable and necessary services by third parties ◦ Insurance including worker’s compensation ◦ Certain taxes, and ◦ Cost of reclamation The contractually-determined coal sales price includes reimbursement of all costs incurred and the agreed-upon profit.
Costs included within revenue include all production, transportation and maintenance costs including, without limitation, the following types of costs: ◦ Labor, which include wages and all related payroll taxes, benefits and fringes, including welfare plans; group insurance, vacations and other comparable benefits of employees ◦ Materials and supplies, ◦ Tools, ◦ Machinery and equipment not capitalized or leased, ◦ Costs of acquiring interests in coal reserves and surface lands, ◦ Rental of machinery and equipment, ◦ Power costs, ◦ Reasonable and necessary services by third parties ◦ Insurance including worker’s compensation ◦ Certain taxes, and ◦ Cost of reclamation The contractually-determined coal sales price includes reimbursement of all costs incurred and the agreed-upon profit.
Travel to the Freedom Mine by air is possible by means of the Bismarck Municipal Airport, Bismarck, ND, which is approximately 90 miles southeast of the mine.
Location of the Freedom Mine. Travel to the Freedom Mine by air is possible by means of the Bismarck Municipal Airport, Bismarck, ND, which is approximately 90 miles southeast of the mine.
NAMining mined de minimis amounts of limestone at this location during the 2022 and 2021 periods. NAMining's customers control all of the limestone and sand reserves within their respective mines. NAMining has no title, claim, lease or option to acquire any of the reserves at any of the mines where it provides services.
NAMining mined de minimis amounts at this location during the 2023 and 2022 periods. NAMining's customers control all of the limestone and sand reserves within their respective mines. NAMining has no title, claim, lease or option to acquire any of the reserves at any of the mines where it provides services.
Alternatively, the Golden Triangle Regional Airport is a smaller airport approximately 50 miles from the Red Hills Mine by means of Highway 82 west, Highway 15 south, and Highway 9 north. The Red Hills Mine is in close proximately to river ports of the Tennessee-Tombigbee Waterway and the Mississippi River.
Alternatively, the Golden Triangle Regional Airport is a smaller airport approximately 50 miles from the Red Hills Mine by means of Highway 82 west, Highway 15 south, and Highway 9 north. The Red Hills Mine is in close proximity to river ports of the Tennessee-Tombigbee Waterway and the Mississippi River.
Coal Mining and Minerals Management lease corporate headquarters office space in Plano, Texas. NAMining leases office and warehouse space in Medley, Florida. 49 Table of Contents Item 3. LEGAL PROCEEDINGS Neither the Company nor any of its subsidiaries is a party to any material legal proceeding other than ordinary routine litigation incidental to its respective business.
Coal Mining and Minerals Management lease corporate headquarters office space in Plano, Texas. NAMining leases office and warehouse space in Medley, Florida. Item 3. LEGAL PROCEEDINGS Neither the Company nor any of its subsidiaries is a party to any material legal proceeding other than ordinary routine litigation incidental to its respective business.
There are some instances where the stripping ratio for a single year could exceed 14:1, but the average for the entire area evaluated is less than 14:1. – Historical coal recovery rates at Red Hills Mine have been applied to generate the Mineral Reserve tonnages. – Mineral Reserves are estimated using Vulcan Software. 34 Table of Contents – Tonnages and qualities have been rounded to an accuracy level deemed appropriate by the Qualified person ("QP").
There are some instances where the stripping ratio for a single year could exceed 14:1, but the average for the entire area evaluated is less than 14:1. – Historical coal recovery rates at Red Hills Mine have been applied to generate the Mineral Reserve tonnages. – Mineral Reserves are estimated using Vulcan Software. – Tonnages and qualities have been rounded to an accuracy level deemed appropriate by the Qualified person ("QP").
No mineral processing occurs at the Falkirk Mine. 39 Table of Contents Figure 2.3 – Falkirk Mine Location Coyote Creek The Coyote Creek Mine generally produces between 1.5 million and 2.0 million tons of lignite annually.
No mineral processing occurs at the Falkirk Mine. 40 Table of Contents Figure 2.3 – Falkirk Mine Location Coyote Creek The Coyote Creek Mine generally produces between 1.5 million and 2.0 million tons of lignite annually.
The following mines were operational during 2022: Location Name Aggregate Location State Customer Year NACCO Started Operations White Rock — North Limestone Miami FL WRQ 1995 Krome Limestone Miami FL Cemex 2003 Alico Limestone Ft.
The following mines were operational during 2023: Location Name Aggregate Location State Customer Year NACCO Started Operations White Rock — North Limestone Miami FL WRQ 1995 Krome Limestone Miami FL Cemex 2003 Alico Limestone Ft.
Access to the Queensfield Mine is by means of paved road from Dabney's Mill Road (SR 604). Access to the Newberry mine is by means of paved road from NW County Road 235 (CR 235). Access to the Seven Diamonds mine is by means of a paved road from US-41 S/Broad St.
Access to the Queenfield Mine is by means of paved road from Dabney's Mill Road (SR 604). Access to the Newberry mine is by means of paved road from NW County Road 235 (CR 235). Access to the Seven Diamonds mine is by means of a paved road from US-41 S/Broad St.
Summation errors due to rounding may exist. Table 2.3 Mineral Reserves Summary as of December 31, 2022 Table 2.4 describes the difference between the Mineral Reserves and Mineral Resources reported as of December 31, 2021 and December 31, 2022.
Summation errors due to rounding may exist. Table 2.3 Mineral Reserves Summary as of December 31, 2023 Table 2.4 describes the difference between the Mineral Reserves and Mineral Resources reported as of December 31, 2022 and December 31, 2023.
Ongoing mining of the mineral deposit, coupled with product quality validation pursuant to Company and customer expectations, provides further empirical evidence as to the homogeneity, continuity and characteristics of the deposit. Geologic modeling assumptions are evaluated to historic mining results and are adjusted if necessary to better reflect actual mining results.
Ongoing mining of the mineral deposit, coupled with product quality validation pursuant to Company and customer expectations, provides further empirical evidence as to the homogeneity, continuity and characteristics of the deposit. Geologic modeling assumptions are evaluated to historic mining 43 Table of Contents results and are adjusted if necessary to better reflect actual mining results.
The Mineral Resources presented in Table 2.2 below have been estimated by applying a series of geologic and physical limits as well as high-level mining and economic constraints. The mining and economic constraints were limited to a level sufficient to support reasonable prospect for future economic extraction of the estimated Mineral Resources.
The Mineral Resources as of December 31, 2023 presented in Table 2.2 below have been estimated by applying a series of geologic and physical limits as well as high-level mining and economic constraints. The mining and economic constraints were limited to a level sufficient to support reasonable prospect for future economic extraction of the estimated Mineral Resources.
Total net proved reserves are defined as those natural gas and hydrocarbon liquid reserves to the Company's interests after deducting all royalties, overriding royalties, and reversionary interests owned by outside parties that become effective upon 47 Table of Contents payout of specified monetary balances.
Total net proved reserves are defined as those natural gas and hydrocarbon liquid reserves to the Company's interests after deducting all royalties, overriding royalties, and reversionary interests owned by outside parties that become effective upon payout of specified monetary balances.
Management adjusts forward-looking models by reference to historic mining results, including by reviewing actual versus predicted levels of production from the mineral deposit, and if necessary, re-evaluating mining 42 Table of Contents methodologies if production outcomes were not realized as predicted.
Management adjusts forward-looking models by reference to historic mining results, including by reviewing actual versus predicted levels of production from the mineral deposit, and if necessary, re-evaluating mining methodologies if production outcomes were not realized as predicted.
Therefore, readers are cautioned not to assume that all or any part of an inferred mineral resource exists, that it can be the basis of an economically viable project, or 29 Table of Contents that it will ever be upgraded to a higher category.
Therefore, readers are cautioned not to assume that all or any part of an inferred mineral resource exists, that it can be the basis of an economically viable project, or that it will ever be upgraded to a higher category.
Tons (in millions) 2020 2021 2022 The Coteau Properties Company 12.6 12.5 13.4 The Falkirk Mining Company 7.2 7.9 7.6 Coyote Creek Mining Company 2.0 2.0 1.8 Mississippi Lignite Mining Company 2.5 3.0 3.2 Totals 24.3 25.4 26.0 Table 1.1 Production Summary 2.0 MINING PROPERTIES SUBJECT TO SUBPART 1300 OF REGULATION S-K REPORTING 2.1 Red Hills Mine — Mississippi Lignite Mining Company MLMC is the owner and operator of the Red Hills Mine.
Tons (in millions) 2021 2022 2023 The Coteau Properties Company 12.5 13.4 11.4 The Falkirk Mining Company 7.9 7.6 6.6 Coyote Creek Mining Company 2.0 1.8 2.2 Mississippi Lignite Mining Company 3.0 3.2 2.7 Totals 25.4 26.0 22.9 Table 1.1 Production Summary 2.0 MINING PROPERTIES SUBJECT TO SUBPART 1300 OF REGULATION S-K REPORTING 2.1 Red Hills Mine — Mississippi Lignite Mining Company MLMC is the owner and operator of the Red Hills Mine.
MLMC currently has all permits in place for the Red Hills Mine to operate and adhere to a mine plan projected through April 2032. No mineral processing occurs at the Red Hills Mine. The geology encountered at the Red Hills Mine is stratigraphic in nature with depositional sequences of sands, silts, clays, and lignite.
MLMC currently has all permits in place for the Red Hills Mine to operate and adhere to a mine plan projected through April 1, 2032. No mineral processing occurs at the Red Hills Mine. 33 Table of Contents The geology encountered at the Red Hills Mine is stratigraphic in nature with depositional sequences of sands, silts, clays, and lignite.
The total cost of the property, plant and equipment, net of applicable accumulated amortization, depreciation and impairment as of December 31, 2022 is $22.4 million. The Falkirk Mine currently has no significant encumbrances to the property. No Notice of Violations (NOVs) have been issued at the Falkirk Mine in the past three years.
The total cost of the property, plant and equipment, net of applicable accumulated amortization, depreciation and impairment as of December 31, 2023 is $58.4 million. The Falkirk Mine currently has no significant encumbrances to the property. No Notice of Violations (NOVs) have been issued at the Falkirk Mine in the past three years.
Additionally, MLMC delivered 3.2 million tons during 2022. 2.2 Material Properties with no Mineral Resources or Mineral Reserves The lignite coal tonnages at Coteau, Falkirk and Coyote Creek have not been classified as “measured resources”, “indicated resources”, or “inferred resources” as defined in Items 1300 through 1305 of Regulation S-K, and as a result, do not have any “proven” or “probable” reserves under such definition and are therefore classified as an “Exploration Stage Property” pursuant to Items 1300 through 1305 of Regulation S-K.
Additionally, MLMC delivered 2.9 million tons during 2023. 36 Table of Contents 2.2 Material Properties with no Mineral Resources or Mineral Reserves The lignite coal tonnages at Coteau, Falkirk and Coyote Creek have not been classified as “measured resources”, “indicated resources”, or “inferred resources” as defined in Items 1300 through 1305 of Regulation S-K, and as a result, do not have any “proven” or “probable” reserves under such definition and are therefore classified as an “Exploration Stage Property” pursuant to Items 1300 through 1305 of Regulation S-K.
Lignite Coal Reserve Classification Tonnage (Kt) Grades/Qualities Calorific Value (Btu/lb) Moisture (%wt) Ash (%wt) Sulfur (%wt) Mississippi Lignite Mining Company Proven 18,000 5,090 43.4 14.8 0.6 Mississippi Lignite Mining Company Probable 7,400 5,120 42.6 15.4 0.7 Mississippi Lignite Mining Company Total 25,400 5,100 43.1 15.0 0.6 Note: – Mineral Reserves have been demonstrated to be economic based on a positive cash flow – Mineral Reserves are stated on a Run of Mine basis – An economic cutoff in the Life of Mine plan averaged $36.06 per ton and was used to demonstrate coal reserves – Recovery varies by coal seam and ranges from 67% to 100% – Mineral Reserves use an economic cut-off of a maximum cumulative stripping ratio of 14:1.
Lignite Coal Reserve Classification Tonnage (Kt) Grades/Qualities Calorific Value (Btu/lb) Moisture (%wt) Ash (%wt) Sulfur (%wt) Mississippi Lignite Mining Company Proven 15,100 5,102 43.4 14.8 0.6 Mississippi Lignite Mining Company Probable 7,400 5,120 42.5 15.2 0.7 Mississippi Lignite Mining Company Total 22,500 5,107 43.1 14.9 0.6 Note: – Mineral Reserves have been demonstrated to be economic based on a positive cash flow – Mineral Reserves are stated on a Run of Mine basis – An economic cutoff in the Life of Mine plan averaged $36.06 per ton and was used to demonstrate coal reserves – Recovery varies by coal seam and ranges from 67% to 100% – Mineral Reserves use an economic cut-off of a maximum cumulative stripping ratio of 14:1.
The main entrance to the Freedom Mine is accessed by means of a paved road and is located on County Road 15. Coteau holds 374 leases granting the right to extract approximately 33,966 acres of coal interests and the right to utilize approximately 23,451 acres of surface interests.
The main entrance to the Freedom Mine is accessed by means of a paved road and is located on County Road 15. Coteau holds 368 leases granting the right to extract approximately 33,676 acres of coal interests and the right to utilize approximately 23,451 acres of surface interests.
Access to the Mid Coast Aggregates mine is by means of a paved road from State Road 50. Access to the West Florida Aggregates mine is by means of a paved road from Cortez Boulevard. Access to the St. Catherine mine is by means of a paved road from County Road 673.
Access to the Mid Coast Aggregates mine is by means of a paved road from State Road 50. Access to the West Florida Aggregates mine is by means of a paved road from Cortez Boulevard. 45 Table of Contents Access to the St. Catherine mine is by means of a paved road from County Road 673.
Access to the FEC mine is by means of a paved road from NW 118th Avenue. 44 Table of Contents Access to the SCL mine is by means of a paved road from NW 137th Avenue. Access to the Central State Aggregates mine is by means of a paved road from Yonkers Boulevard.
Access to the FEC mine is by means of a paved road from NW 118th Avenue. Access to the SCL mine is by means of a paved road from NW 137th Avenue. Access to the Central State Aggregates mine is by means of a paved road from Yonkers Boulevard.
The equipment is well maintained, in good physical condition and is either updated or replaced periodically with newer models or upgrades available to keep up with modern technology. As equipment wears out, Coteau evaluates what replacement option will be the most cost-efficient, including the evaluation of both new and used equipment.
The equipment is well maintained, in good physical condition and is either updated or replaced periodically with newer models or upgrades available to keep up with modern technology. As equipment wears out, the mines evaluate what replacement option will be the most cost-efficient, including the evaluation of both new and used equipment, and proceed with that replacement.
The total cost of the property and equipment, net of applicable accumulated amortization, depreciation and impairment as of December 31, 2022 is $80.4 million. The Red Hills Mine currently has no significant encumbrances to the property. No mining permit violations have been issued at the Red Hills Mine in the past ten years.
The total cost of the property and equipment, net of applicable accumulated amortization, depreciation and impairment as of December 31, 2023 is $52.8 million. The Red Hills Mine currently has no significant encumbrances to the property. No mining permit violations have been issued at the Red Hills Mine in the past ten years.
As equipment wears out, Coyote Creek evaluates what replacement option will be the most cost-efficient, including the evaluation of both new and used equipment. The total cost of the property, plant and equipment, net of applicable accumulated amortization, depreciation and impairment as of December 31, 2022 is $122.7 million.
As equipment wears out, Coyote Creek evaluates what replacement option will be the most cost-efficient, including the evaluation of both new and used equipment. The total cost of the property, plant and equipment, net of applicable accumulated amortization, depreciation and impairment as of December 31, 2023 is $114.6 million.
The mine began delivering coal in 2016 to the Coyote Station owned by Otter Tail Power Company, Northern Municipal Power Agency, Montana-Dakota Utilities Company and Northwestern Corporation. The Coyote Creek Mine is located approximately 70 miles northwest of Bismarck, North Dakota (Figure 2.4).
The mine began delivering coal in 2016 to the Coyote Station owned by Otter Tail Power Company, Northern Municipal Power Agency, Montana-Dakota Utilities Company and Northwestern Corporation. The term of the existing lignite sales agreement terminates in 2040. The Coyote Creek Mine is located approximately 70 miles northwest of Bismarck, North Dakota (Figure 2.4).
Pooling proportionately reduces the Company’s royalty interest in wells drilled in a pooled unit, and it proportionately increases the number of wells in which the Company has such reduced royalty interest. 45 Table of Contents The following table includes the Company's estimate of acreage for oil and gas mineral interests, NPRIs, and ORRIs: December 31, 2022 December 31, 2021 Gross Acres Net Royalty Acres Gross Acres Net Royalty Acres Appalachia 34,661 36,199 34,661 36,199 Gulf Coast 27,932 20,105 27,932 20,105 Permian 77,278 2,050 63,998 1,243 Rockies 326 72 — — Williston 1,194 2,388 1,194 2,388 Total 141,391 60,814 127,785 59,935 The Company may own more than one type of interest in the same tract of land, but the overlap is not significant.
Pooling proportionately reduces the Company’s royalty interest in wells drilled in a pooled unit, and it proportionately increases the number of wells in which the Company has such reduced royalty interest. 46 Table of Contents The following table includes the Company's estimate of acreage for oil and gas mineral interests, NPRIs, and ORRIs: December 31, 2023 December 31, 2022 Gross Acres Net Royalty Acres Gross Acres Net Royalty Acres Appalachia 34,661 36,199 34,661 36,199 Gulf Coast 27,932 20,105 27,932 20,105 Permian 120,636 4,556 77,278 2,050 Rockies 326 72 326 72 Williston 1,194 2,388 1,194 2,388 Total 184,749 63,320 141,391 60,814 The Company may own more than one type of interest in the same tract of land, but the overlap is not significant.
Myers FL Titan America 2017 Palm Beach Aggregates Limestone Loxahatchee FL Palm Beach Aggregates 2017 Perry Limestone Lamont FL Martin Marietta 2018 SDI Aggregates Limestone Florida City FL Blue Water Industries 2018 Queensfield Sand and gravel King William County VA King William Sand and Gravel Company, Inc. 2018 Newberry Limestone Alachua County FL Argos USA, LLC 2019 Titan Pennsuco (a) Limestone Miami FL Titan America 2020 Seven Diamonds Limestone Pasco County FL Seven Diamonds, LLC 2021 Johnson County Sand and gravel Johnson County IN Martin Marietta 2021 Little River Sand and gravel Ashdown AR Lehigh Hanson 2021 Rosser Sand and gravel Ennis TX Lehigh Hanson 2021 Brooksville Cement Plant Limestone Brooksville FL Cemex 2021 Ash Grove Limestone Louisville NE Ash Grove 2022 (a) The Titan Pennsuco contract was terminated during the second quarter of 2022.
Myers FL Titan America 2017 Palm Beach Aggregates Limestone Loxahatchee FL Palm Beach Aggregates 2017 Perry Limestone Lamont FL Martin Marietta 2018 SDI Aggregates Limestone Florida City FL Blue Water Industries 2018 Queenfield Sand and gravel King William County VA King William Sand and Gravel Company, Inc. 2018 Newberry Limestone Alachua County FL Argos USA, LLC 2019 Seven Diamonds Limestone Pasco County FL Seven Diamonds, LLC 2021 Johnson County (a) Sand and gravel Johnson County IN Martin Marietta 2021 Little River Sand and gravel Ashdown AR Lehigh Hanson 2021 Rosser Sand and gravel Ennis TX Lehigh Hanson 2021 Brooksville Cement Plant Limestone Brooksville FL Cemex 2021 Ash Grove Limestone Louisville NE Ash Grove 2022 (a) The Johnson County quarry was idled during 2023.
The mine road is approximately 1 mile west from Highway 9 along Pensacola Road. Travel to the Red Hills Mine by air is possible using the Jackson-Medgar Wiley Evers International Airport in Jackson, Mississippi, approximately 104 miles south of the mine, and then using ground transportation, traveling via Highway 25, Highway 15, and Highway 9.
Travel to the Red Hills Mine by air is possible using the Jackson-Medgar Wiley Evers International Airport in Jackson, Mississippi, approximately 104 miles south of the mine, and then using ground transportation, traveling via Highway 25, Highway 15, and Highway 9.
Summation errors due to rounding may exist. Table 2.2 Mineral Resources Summary as of December 31, 2022 The Mineral Reserves presented in Table 2.3 below were determined to be the economically mineable portion of the measured and indicated Mineral Resources after the consideration of modifying factors related to the mining process. Inferred Mineral Resources were not considered for Mineral Reserves.
Summation errors due to rounding may exist. Table 2.2 Mineral Resources Summary as of December 31, 2023 35 Table of Contents The Mineral Reserves as of December 31, 2023 presented in Table 2.3 below were determined to be the economically mineable portion of the measured and indicated Mineral Resources after the consideration of modifying factors related to the mining process.
In addition, the results of drilling, testing, and production may justify revisions of such estimates. Accordingly, reserve estimates often differ from the quantities of oil and natural gas that are ultimately recovered.
As a result, the estimates of different engineers often vary. In addition, the results of drilling, testing, and production may justify revisions of such estimates. Accordingly, reserve estimates often differ from the quantities of oil and natural gas that are ultimately recovered.
As of December 31, 2022, PUD reserves consists of 42 wells in various stages of drilling or completions. As of December 31, 2022, approximately 6% of the Company's total proved reserves were classified as PUDs. Headquarter locations NACCO leases office space in Mayfield Heights, Ohio, a suburb of Cleveland, Ohio, which serves as its corporate headquarters.
As of December 31, 2023, PUD reserves consists of 45 wells in various stages of drilling or completions. As of December 31, 2023, less than 1% of the Company's total proved reserves were classified as PUDs. Headquarter locations NACCO leases office space in Mayfield Heights, Ohio, a suburb of Cleveland, Ohio, which serves as its corporate headquarters.
The mining method and total cost of the property, plant and equipment, net of applicable accumulated amortization, depreciation and impairment as of December 31, 2022 is set forth in the chart below: Location Mining Method Total Historical Cost of Mine Property, Plant and Equipment (excluding Coal Land, Real Estate and Construction in Progress), Net of Applicable Accumulated Amortization, Depreciation and Impairment Unconsolidated Mining Operations (in millions) Freedom Mine — The Coteau Properties Company Dragline operation with 3 draglines $ 90.4 Falkirk Mine — The Falkirk Mining Company Dragline operation with 4 draglines $ 22.4 South Hallsville No. 1 Mine — The Sabine Mining Company Dragline operation with 4 draglines $ 15.0 Coyote Creek Mine — Coyote Creek Mining Company, LLC Dragline operation with 1 dragline $ 122.7 43 Table of Contents Consolidated Mining Operations Red Hills Mine — Mississippi Lignite Mining Company Dragline operation with 1 dragline $ 80.4 NAMining Segment - Operations NAMining provides contract mining services for independently owned mines and quarries, primarily operating and maintaining draglines at limestone quarries and utilizing other mining equipment at sand and gravel quarries.
The mining method and total cost of the property, plant and equipment, net of applicable accumulated amortization, depreciation and impairment as of December 31, 2023 is set forth in the chart below: Location Mining Method Total Historical Cost of Mine Property, Plant and Equipment (excluding Coal Land, Real Estate and Construction in Progress), Net of Applicable Accumulated Amortization, Depreciation and Impairment Unconsolidated Mining Operations (in millions) Freedom Mine — The Coteau Properties Company Dragline operation with 3 draglines $ 116.2 Falkirk Mine — The Falkirk Mining Company Dragline operation with 4 draglines $ 58.4 Coyote Creek Mine — Coyote Creek Mining Company, LLC Dragline operation with 1 dragline $ 114.6 Consolidated Mining Operations Red Hills Mine — Mississippi Lignite Mining Company Dragline operation with 1 dragline $ 52.8 44 Table of Contents NAMining Segment - Operations NAMining provides contract mining services for independently owned mines and quarries, primarily operating and maintaining draglines at limestone quarries and utilizing other mining equipment at sand and gravel quarries.
Figure 1.1 Surface Coal Mines Operational During 2022 Subject to SEC Section 1300 Reporting 30 Table of Contents A summary of coal production at the Mines subject to SEC Section 1300 Reporting for the past three years has been tabulated and is presented on Table 1.1 Production Summary.
Locations of the properties subject to SEC Section 1300 reporting are shown in Figure 1.1 Surface Coal Mines Operational During 2023 Subject to SEC Section 1300 Reporting. 31 Table of Contents Figure 1.1 Surface Coal Mines Operational During 2023 Subject to SEC Section 1300 Reporting A summary of coal production at the Mines subject to SEC Section 1300 Reporting for the past three years has been tabulated and is presented on Table 1.1 Production Summary.
The entrance to the mine is by means of a paved road located approximately one mile west of Highway 9. MLMC owns in fee approximately 7,773 acres of surface interest and 4,761 acres of coal interests.
The entrance to the mine is by means of a paved road located approximately one mile west of Highway 9. MLMC owns in fee approximately 8,026 acres of surface interest and 5,015 acres of coal interests.
Prices in Table 2.2 are based on economic cut-off grades of $29.66 per ton at MLMC. Prices in Table 2.3 are based on economic cut-off grades of $36.06 per ton at MLMC.
Based on the December 31, 2022 TRS, prices in Table 2.2 are based on economic cut-off grades of $29.66 per ton at MLMC and prices in Table 2.3 are based on economic cut-off grades of $36.06 per ton at MLMC.
MLMC holds leases granting the right to mine approximately 5,538 acres of coal interests and the right to utilize approximately 5,065 acres of surface interests. MLMC holds subleases under which it has the right to mine approximately 1,623 acres of coal interest.
MLMC holds leases granting the right to mine approximately 5,490 acres of coal interests and the right to utilize approximately 4,956 acres of surface interests. MLMC holds subleases under which it has the right to mine approximately 1,663 acres of coal interest.
The following table presents the Company's estimated net proved oil and natural gas reserves based on the reserve report prepared by Haas Engineering, the Company’s independent petroleum engineering firm. All of the Company’s reserves are located in the United States.
The following table presents the Company's estimated net proved oil and natural gas reserves based on the reserve report prepared by Haas Engineering, the Company’s independent petroleum engineering firm.
Reserve engineering is a subjective process of estimating volumes of economically recoverable oil and natural gas that cannot be measured in an exact manner. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation. As a result, the estimates of different engineers often vary.
A reserves audit is not the same as a financial audit. Reserve engineering is a subjective process of estimating volumes of economically recoverable oil and natural gas that cannot be measured in an exact manner. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation.
Funding for mine reclamation is the responsibility of SWEPCO. 5.0 Facilities and Equipment The facilities and equipment for each of the coal mines are maintained to allow for safe and efficient operation. The equipment is well maintained, in good physical condition and is either updated or replaced periodically with newer models or upgrades available to keep up with modern technology.
The facilities and equipment are maintained to allow for safe and efficient operation. The equipment is well maintained, in good physical condition and is either updated or replaced periodically with newer models or upgrades available to keep up with modern technology.
Risks inherent in overestimated reserves can impact financial performance when revealed, such as changes in amortizations that are based on life of mine estimates. 4.0 Customer-owned Properties South Hallsville No. 1 Mine — The Sabine Mining Company The South Hallsville No. 1 Mine generally produces between 1.5 million and 2.0 million tons of lignite annually.
Risks inherent in overestimated reserves can impact financial performance when revealed, such as changes in amortizations that are based on life of mine estimates. 4.0 Customer-owned Properties South Hallsville No. 1 Mine — The Sabine Mining Company The Sabine Mining Company (“Sabine”) operated the Sabine Mine in Texas.
The main entrance to the Freedom Mine is accessed by traveling north of Beulah on Highway 49 for one mile, then north on County Road 21 for two miles, then west on County Road 26 for three miles, and then north on County Road 15 for two miles as shown on Figure 2.2. Location of the Freedom Mine.
The Freedom Mine has, or is currently constructing, all supporting infrastructure for mining operations. 38 Table of Contents The main entrance to the Freedom Mine is accessed by traveling north of Beulah on Highway 49 for one mile, then north on County Road 21 for two miles, then west on County Road 26 for three miles, and then north on County Road 15 for two miles as shown on Figure 2.2.
One stock tank barrel, or 42 U.S. gallons liquid volume. (2) Mcf. One thousand cubic feet of natural gas at the contractual pressure and temperature bases. (3) BOE. Barrel of Oil Equivalent, a conversion factor of 6 MCF of gas was used for 1 equivalent bbl of oil.
One stock tank barrel, or 42 U.S. gallons liquid volume. (2) Mcf. One thousand cubic feet of natural gas at the contractual pressure and temperature bases. (3) BOE.
During 2022, NAMining operated 32 draglines and other equipment at 25 quarries. Of the 32 draglines, 8 are owned by the Company and 24 are owned by customers. At December 31, 2022, NAMining had $42.4 million in property, plant and equipment, net of applicable accumulated amortization, depreciation and impairment.
At December 31, 2023, NAMining operated 30 draglines and other equipment at 23 quarries. Of the 30 draglines, 7 are owned by the Company and 23 are owned by customers. At December 31, 2023, NAMining had $75.8 million in property, plant and equipment, net of applicable accumulated amortization, depreciation and impairment.
The following table sets forth the Company’s estimate of the number of gross and net productive wells: December 31, 2022 December 31, 2021 Gross Net Gross Net Oil 1,049 3.3 467 0.9 Natural Gas 251 10.1 398 11.4 Total 1,300 13.4 865 12.3 Gross wells are the total wells in which an interest is owned.
The following table sets forth the Company’s estimate of the number of gross and net productive wells: December 31, 2023 December 31, 2022 Gross Net Gross Net Oil 1,646 6.6 1,049 3.3 Natural Gas 246 13.5 251 10.1 Total 1,892 20.1 1,300 13.4 Gross wells are the total wells in which an interest is owned.
MLMC sells coal to its customer at a contractually agreed-upon price which adjusts monthly, primarily based on changes in the level of established indices which reflect general U.S. inflation rates. Profitability at MLMC is affected by customer demand for coal and changes in the indices that determine sales price and actual costs incurred.
MLMC sells coal to its customer at a contractually agreed-upon price which adjusts monthly, primarily based on changes in the level of established indices which reflect general U.S. inflation rates.
Access to the Johnson County mine is by means of a paved road from Old State 37/N Waverly Park Road. Access to the Little River mine is by means of an unpaved road from Little River 60. Access to the Rosser mine is by means of a paved road from TX-34 S.
Access to the Little River mine is by means of an unpaved road from Little River 60. Access to the Rosser mine is by means of a paved road from TX-34 S. Access to Brooksville Cement plant is by means of a paved road from Cement Plant Road.
Fuel for equipment is supplied by multiple local vendors including: Farstad Oil, Missouri Valley Petroleum, and Enerbase Cooperative Resources. The main entrance to the Falkirk Mine is accessed by traveling north from Bismarck on State Highway 83 for approximately 50 miles, then going west on the access road, 1st Street SW located four miles south of Underwood.
The main entrance to the Falkirk Mine is accessed by traveling north from Bismarck on State Highway 83 for approximately 50 miles, then going west on the access road, 1st Street SW located four miles south of Underwood. The mine office is located two miles to the west.
However, additional exploration may also be scheduled in areas farther out to increase confidence in future mine plan projections. Coteau utilizes standard surface mining techniques to extract coal from the proposed permit area. Mining operations will typically occur in a sequence of seven events: SPGM removal, overburden removal, coal removal, overburden replacement, final grading, SPGM replacement, and revegetation.
However, additional exploration may also be scheduled in areas farther out to increase confidence in future mine plan projections. Coteau utilizes standard surface mining techniques to extract coal from the proposed permit area.
The mine started delivering coal in 1978 primarily for the Coal Creek Station, an electric power generating station. Coal Creek Station was owned by GRE until May 1, 2022 when it was purchased by Rainbow Energy. In 2014, Falkirk began delivering coal to Spiritwood Station, another electric power generating station owned by GRE.
Falkirk Mine The Falkirk Mine generally produces between 7 million and 8 million tons of lignite coal annually. The mine started delivering coal in 1978 primarily for the Coal Creek Station, an electric power generating station. Coal Creek Station was owned by GRE until May 1, 2022 when it was purchased by Rainbow Energy.
Resource Classification December 31, 2021 Tonnage (Kt) December 31, 2022 Tonnage (Kt) Percent Change Measured 11,500 4,300 (63)% Indicated 15,200 500 (97)% Measured + Indicated 26,700 4,800 (82)% Inferred — 1,600 N/A Reserve Classification December 31, 2021 Tonnage (Kt) December 31, 2022 Tonnage (Kt) Percent Change Proven 17,200 18,000 4% Probable 10,300 7,400 (28)% Proven + Probable 27,400 25,400 (7)% Table 2.4.
Resource Classification December 31, 2022 Tonnage (Kt) December 31, 2023 Tonnage (Kt) Percent Change Measured 4,300 4,300 —% Indicated 500 500 —% Measured + Indicated 4,800 4,800 —% Inferred 1,600 1,600 —% Reserve Classification December 31, 2022 Tonnage (Kt) December 31, 2023 Tonnage (Kt) Percent Change Proven 18,000 15,100 (16)% Probable 7,400 7,400 —% Proven + Probable 25,400 22,500 (11)% Table 2.4.
Minerals Management - Operations As an owner of royalty and mineral interests, the Company’s access to information concerning activity and operations of its royalty and mineral interests is limited.
Access to Ash Grove Louisville Quarry is by means of a paved road from HWY 50. Minerals Management - Operations As an owner of royalty and mineral interests, the Company’s access to information concerning activity and operations of its royalty and mineral interests is limited.
Coteau currently has all permits in place for the Freedom Mine to operate through 2031. Permit expansions required to extend the life of the mine through 2045 will be acquired as needed. No mineral processing occurs at the Freedom Mine. Falkirk Mine The Falkirk Mine generally produces between 7 million and 8 million tons of lignite coal annually.
No NOVs have been issued at the Freedom Mine in the past three years. Coteau currently has all permits in place for the Freedom Mine to operate through 2031. Permit expansions required to extend the life of the mine through 2045 will be acquired as needed. No mineral processing occurs at the Freedom Mine.
From these locations, the mine can be accesses via ground transportation on Interstate 29 or Interstate 94 and various highways.
From these locations, the mine can be accessed via ground transportation on Interstate 29 or Interstate 94 and various highways. The main highways are US Highway 2, US Highway 83, US Highway 85, US Highway 200, and US Highway 281.
Permitting requirements are discussed in Section 17.0 of the TRS. 32 Table of Contents Figure 2.1 – Red Hills Mine Location Mineral resources and reserves have been summarized from the TRS for MLMC and have been included as Table 2.2 and Table 2.3. Qualities are being reported on an as-received moisture basis.
Permitting requirements are discussed in Section 17.0 of the TRS. Figure 2.1 – Red Hills Mine Location 34 Table of Contents Mineral Resources and Reserves have been summarized from the December 31, 2022 TRS for MLMC and have been modified from mining depletion.
Employees also come from the cities of Bismarck, Minot, and Dickinson, all of which are less than 100 miles away from the mine. The Freedom Mine sources power for mine office facilities and operations from Roughrider Electric Cooperative, and water for the mine office facilities from the Southwest Water Authority. Fuel for equipment is supplied by multiple local vendors.
The Freedom Mine sources power for mine office facilities and operations from Roughrider Electric Cooperative, and water for the mine office facilities from the Southwest Water Authority. Fuel for equipment is supplied by multiple local vendors.
The coal tonnages are located in Mercer County, North Dakota, starting approximately six miles southwest of Beulah, North Dakota. The formations of sedimentary origin were deposited in the Williston Basin, the dominant structural feature of western North Dakota.
North Dakota’s freight rail service is largely provided by Burlington Northern Santa Fe Railway and Canadian Pacific Railway. 42 Table of Contents The coal tonnages are located in Mercer County, North Dakota, starting approximately six miles southwest of Beulah, North Dakota. The formations of sedimentary origin were deposited in the Williston Basin, the dominant structural feature of western North Dakota.
The income before income taxes associated with these VIEs is reported as Earnings of unconsolidated operations on the Consolidated Statements of Operations, and the Company’s investment is reported on the line Investments in Unconsolidated Subsidiaries in the Consolidated Balance Sheets Coteau The Freedom Mine, operated by Coteau, generally produces between 12.5 million and 13.5 million tons of lignite coal annually.
The income before income taxes associated with these VIEs is reported as Earnings of unconsolidated operations on the 37 Table of Contents Consolidated Statements of Operations, and the Company’s investment is reported on the line Investments in unconsolidated subsidiaries in the Consolidated Balance Sheets.
The main highways are US Highway 2, US Highway 83, US Highway 85, US Highway 200, and US Highway 281. 37 Table of Contents North Dakota’s freight rail service is largely provided by Burlington Northern Santa Fe Railway and Canadian Pacific Railway.
From these locations, the mine can be accessed via ground transportation on Interstate 29 or Interstate 94 and various highways. The main highways are US Highway 2, US Highway 83, US Highway 85, US Highway 200, and US Highway 281. North Dakota’s freight rail service is largely provided by Burlington Northern Santa Fe Railway and Canadian Pacific Railway.
Structurally, the area is located on an intercratonic basin containing a thick sequence of sedimentary rocks. The economically mineable coal occurs in the Sentinel Butte Formation and the Bullion Creek Formation and are unconformably overlain by the Coleharbor Formation. The Sentinel Butte Formation conformably overlies the Bullion Creek Formation.
The economically mineable coal occurs in the Sentinel Butte Formation and the Bullion Creek Formation and are unconformably overlain by the Coleharbor Formation. The Sentinel Butte Formation conformably overlies the Bullion Creek Formation.
The mine office is located two miles to the west. 38 Table of Contents Travel to the Falkirk Mine by air is possible using the Bismarck Airport in Bismarck, ND, approximately 55 miles south of the mine, and then using ground transportation, traveling via US Highway 83.
Travel to the Falkirk Mine by air is possible using the Bismarck Airport in Bismarck, ND, approximately 55 miles south of the mine, and then using ground transportation, traveling via US Highway 83. The main railway systems near the Falkirk Mine are Canadian Pacific, BNSF, and Dakota Missouri Valley & Western (DMVW). DMVW crosses through the Falkirk Mine Reserve.
Fuel for equipment is supplied by Dickerson 31 Table of Contents Petroleum located in Kosciusko. The Red Hills Mine has, or is currently constructing, all supporting infrastructure for mining operations.
Fuel for equipment is supplied by Dickerson Petroleum located in Kosciusko. The Red Hills Mine has, or is currently constructing, all supporting infrastructure for mining operations. Local access to the Red Hills Mine is by way of Highway 9 between Ackerman, Mississippi and Eupora, Mississippi which connects to Pensacola Road that leads to the Red Hills Mine paved access road.
The towns of Underwood and Washburn are located within ten miles of the mine, with other small communities also nearby. Numerous employees also reside in Bismarck and Mandan, a distance of about 50 miles. The Falkirk Mine receives both its power and water from Coal Creek Station. However, Falkirk’s East shift change building receives water from McLean-Sheridan Rural Water.
Numerous employees also reside in Bismarck and Mandan, a distance of about 50 miles. The Falkirk Mine receives both its power and water from Coal Creek Station. However, Falkirk’s East shift change building receives water from McLean-Sheridan Rural Water. Fuel for equipment is supplied by multiple local vendors including: Farstad Oil, Missouri Valley Petroleum, and Enerbase Cooperative Resources.
A summary of coal production at MLMC for the past three years has been tabulated and is presented on Table 2.1 Production Summary. Tons (in millions) 2020 2021 2022 Mississippi Lignite Mining Company 2.5 3.0 3.2 Table 2.1 Production Summary The Red Hills Mine generally produces between 2 million and 3 million tons of lignite coal annually.
Tons (in millions) 2021 2022 2023 Mississippi Lignite Mining Company 3.0 3.2 2.7 Table 2.1 Production Summary The Red Hills Mine generally produces between 2 million and 3 million tons of lignite coal annually. The Red Hills Mine started delivering coal in 2000. All production from the mine is delivered to its customer's Red Hills Power Plant.
The mine started delivering coal in 1983. All production from the mine is delivered to Dakota Coal Company, a wholly owned subsidiary of Basin Electric. Dakota Coal Company then sells the coal to the Synfuels Plant, Antelope Valley Station and Leland Olds Station, all of which are operated by affiliates of Basin Electric.
Coteau The Freedom Mine, operated by Coteau, generally produces between 12.5 million and 13.5 million tons of lignite coal annually. The mine started delivering coal in 1983. All production from the mine is delivered to Dakota Coal Company, a wholly owned subsidiary of Basin Electric.
In addition, Falkirk owns in fee 40,666 acres of surface interests and 1,788 acres of coal interests. Substantially all of the leases held by Falkirk were acquired in the early 1970s with initial terms that have been further extended by the continuation of mining operations.
Substantially all of the leases held by Falkirk were acquired in the early 1970s with initial terms that have been further extended by the continuation of mining operations. The towns of Underwood and Washburn are located within ten miles of the mine, with other small communities also nearby.
The Falkirk Mine, operated by Falkirk, is located approximately 50 miles north of Bismarck, North Dakota on a paved access road off U.S. Highway 83 (Figure 2.3). Falkirk holds 340 leases granting the right to extract approximately 43,648 acres of coal interests and the right to utilize approximately 24,164 acres of surface interests.
In 2014, Falkirk began delivering coal to Spiritwood Station, another electric power generating station owned by GRE. 39 Table of Contents The Falkirk Mine, operated by Falkirk, is located approximately 50 miles north of Bismarck, North Dakota on a paved access road off U.S. Highway 83 (Figure 2.3).
The Synfuels Plant is a coal gasification plant that manufactures synthetic natural gas and produces fertilizers, solvents, phenol, carbon dioxide, and other chemical products for sale. The Freedom Mine is located approximately 90 miles northwest of Bismarck, North Dakota (Figure 2.2).
Dakota Coal Company then sells the coal to the Synfuels Plant, Antelope Valley Station and Leland Olds Station, all of which are operated by affiliates of Basin Electric. The Synfuels Plant is a coal gasification plant that manufactures synthetic natural gas and produces fertilizers, solvents, phenol, carbon dioxide, and other chemical products for sale.
Net reserves as of December 31, 2022 Net reserves as of December 31, 2021 Oil (bbl) (1) NGL (bbl) (1) Residue gas (Mcf) (2) Oil (bbl) (1) NGL (bbl) (1) Residue gas (Mcf) (2) Proved developed 305,710 408,280 25,907,890 167,430 282,230 16,617,360 Proved undeveloped 32,570 11,030 1,784,670 220 90 1,210 Total 338,280 419,310 27,692,560 167,650 282,320 16,618,570 (1) Bbl.
All of the Company’s reserves are located in the United States. 48 Table of Contents Net reserves as of December 31, 2023 Net reserves as of December 31, 2022 Oil (bbl) (1) NGL (bbl) (1) Residue gas (Mcf) (2) Oil (bbl) (1) NGL (bbl) (1) Residue gas (Mcf) (2) Proved developed 656,370 380,650 23,596,110 305,710 408,280 25,907,890 Proved undeveloped 9,020 3,720 26,420 32,570 11,030 1,784,670 Total 665,390 384,370 23,622,530 338,280 419,310 27,692,560 (1) Bbl.
The properties evaluated for proved reserves are located in Alabama, Louisiana, Ohio, Pennsylvania, Texas and Wyoming and represent all of the Company’s oil and gas reserves. A reserves audit is not the same as a financial audit.
A copy of Haas Engineering's estimated proved reserve report as of December 31, 2023 is incorporated by reference herein to Exhibit 99.1 to this Form 10-K. The properties evaluated for proved reserves are located in Alabama, Louisiana, New Mexico, Ohio, Pennsylvania, Texas and Wyoming and represent all of the Company’s oil and gas reserves.
The total cost of the property, plant and equipment, net of applicable accumulated amortization, depreciation and impairment as of December 31, 2022 is $90.4 million. The Freedom Mine currently has no significant encumbrances to the property. No NOVs have been issued at the Freedom Mine in the past three years.
As equipment wears out, Coteau evaluates what replacement option will be the most cost-efficient, including the evaluation of both new and used equipment. The total cost of the property, plant and equipment, net of applicable accumulated amortization, depreciation and impairment as of December 31, 2023 is $116.2 million. The Freedom Mine currently has no significant encumbrances to the property.
Substantially all of the leases held by Coteau were acquired in the early 1970s and have been replaced with new leases or have lease terms for a period sufficient to meet Coteau’s contractual production requirements. 36 Table of Contents Figure 2.2 – Freedom Mine Location The towns of Beulah, Hazen, and Stanton along with other smaller communities are within a 40-mile radius of the Freedom Mine and provide a vast supply of the employment base.
In addition, Coteau owns in fee 33,888 acres of surface interests and 4,107 acres of coal interests. Substantially all of the leases held by Coteau were acquired in the early 1970s and have been replaced with new leases or have lease terms for a period sufficient to meet Coteau’s contractual production requirements.
Evaluation and Review of Reserves The reserve estimates as of December 31, 2022 were prepared by Haas Petroleum Engineering Services, Inc. ("Haas Engineering"). Haas Engineering has provided reservoir engineering services, consulting and ongoing support for major and independent petroleum companies, public utilities, financial institutions, investors, and government agencies since 1980.
Haas Engineering has provided reservoir engineering services, consulting and ongoing support for major and independent petroleum companies, public utilities, financial institutions, investors, and government agencies since 1980. Haas Engineering does not own an interest in NACCO or any of the Company's properties, nor is it employed on a contingent basis.
Local access to the Red Hills Mine is by way of Highway 9 between Ackerman, Mississippi and Eupora, Mississippi which connects to Pensacola Road that leads to the Red Hills Mine paved access road. Pensacola Road connects with Highway 9 approximately 5 miles north of Ackerman, MS.
Pensacola Road connects with Highway 9 approximately 5 miles north of Ackerman, MS. The mine road is approximately 1 mile west from Highway 9 along Pensacola Road.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+0 added−0 removed2 unchanged
Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers Issuer Purchases of Equity Securities (1) Period (a) Total Number of Shares Purchased (b) Average Price Paid per Share (c) Total Number of Shares Purchased as Part of the Publicly Announced Program (d) Maximum Number of Shares (or Approximate Dollar Value) that May Yet Be Purchased Under the Program (1) October 1 to 31, 2022 — $ — — $ 22,659,516 November 1 to 30, 2022 — $ — — $ 22,659,516 December 1 to 31, 2022 — $ — — $ 22,659,516 Total — $ — — $ 22,659,516 (1) On November 10, 2021, the Company's Board of Directors approved a stock purchase program ("2021 Stock Repurchase Program") providing for the purchase of up to $20.0 million of the Company’s outstanding Class A common stock through December 31, 2023.
Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers Issuer Purchases of Equity Securities (1) Period (a) Total Number of Shares Purchased (b) Average Price Paid per Share (c) Total Number of Shares Purchased as Part of the Publicly Announced Program (d) Maximum Number of Shares (or Approximate Dollar Value) that May Yet Be Purchased Under the Program (1) October 1 to 31, 2023 13,398 $ 34.33 13,398 $ 18,716,958 November 1 to 30, 2023 15,090 $ 34.46 15,090 $ 18,196,957 December 1 to 31, 2023 37,717 $ 34.47 37,717 $ 16,896,852 Total 66,205 $ 34.44 66,205 $ 16,896,852 (1) On November 7, 2023, the Company's Board of Directors approved a stock purchase program providing for the purchase of up to $20.0 million of the Company’s outstanding Class A common stock through December 31, 2025.
The Class B common stock is convertible into Class A common stock on a one-for-one basis. At December 31, 2022, there were 683 Class A common stockholders of record and 120 Class B common stockholders of record.
The Class B common stock is convertible into Class A common stock on a one-for-one basis. At December 31, 2023, there were 660 Class A common stockholders of record and 113 Class B common stockholders of record.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

25 edited+6 added−5 removed19 unchanged
Biggest changeCONSOLIDATED FINANCIAL SUMMARY The results of operations for NACCO were as follows for the years ended December 31: 2022 2021 Revenues: Coal Mining $ 95,204 $ 82,831 NAMining 85,664 78,944 Minerals Management 60,242 31,003 Unallocated Items 2,952 4,695 Eliminations (2,343) (5,627) Total revenue $ 241,719 $ 191,846 Operating profit (loss): Coal Mining $ 38,309 $ 45,784 NAMining 2,202 3,384 Minerals Management 52,214 26,080 Unallocated Items (23,233) (19,553) Eliminations 494 (285) Total operating profit $ 69,986 $ 55,410 Interest expense 2,034 1,719 Interest income (1,449) (449) Closed mine obligations 1,179 1,297 Loss (gain) on equity securities 283 (3,423) Income from equity method investee (2,194) — Other contract termination settlements (16,882) — Other, net (708) (584) Other income, net (17,737) (1,440) Income before income tax provision 87,723 56,850 Income tax provision 13,565 8,725 Net income $ 74,158 $ 48,125 Effective income tax rate 15.5 % 15.3 % The components of the change in revenues and operating profit are discussed below in "Segment Results." Other income, net During the second quarter of 2022, GRE transferred ownership of an office building with an estimated fair value of $4.1 million and conveyed membership units in Midwest AgEnergy Group, LLC (“MAG”), a North Dakota-based ethanol business, with an estimated fair value of $12.8 million, as agreed to under the termination and release of claims agreement between Falkirk and GRE.
Biggest changeAND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) CONSOLIDATED FINANCIAL SUMMARY The results of operations for NACCO were as follows for the years ended December 31: 2023 2022 Revenues: Coal Mining $ 85,415 $ 95,204 NAMining 90,532 85,664 Minerals Management 32,985 60,242 Unallocated Items 8,459 2,952 Eliminations (2,597) (2,343) Total revenue $ 214,794 $ 241,719 Operating (loss) profit: Coal Mining $ (71,342) $ 38,309 NAMining 3,348 2,202 Minerals Management 19,418 52,214 Unallocated Items (21,461) (23,233) Eliminations (100) 494 Total operating profit $ (70,137) $ 69,986 Interest expense 2,460 2,034 Interest income (6,081) (1,449) Closed mine obligations 3,585 1,179 (Gain) loss on equity securities (1,958) 283 Other contract termination settlements — (16,882) Other, net (3,985) (2,902) Other income, net (5,979) (17,737) (Loss) income before income tax (benefit) provision (64,158) 87,723 Income tax (benefit) provision (24,571) 13,565 Net (loss) income $ (39,587) $ 74,158 Effective income tax rate 38.3 % 15.5 % The components of the change in revenues and operating profit are discussed below in "Segment Results." Other income, net During 2023, the Board of Directors of the Company approved the termination of the Combined Defined Benefit Plan for NACCO and its subsidiaries (the “Combined Plan”) and Combined Plan participants were offered lump-sum distributions as part of the termination process.
The change during 2022 compared with 2021 was due to fluctuations in the market prices of the exchange-traded equity securities. See Note 9 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company's invested assets reported at fair value .
The change during 2023 compared with 2022 was due to fluctuations in the market prices of the exchange-traded equity securities. See Note 9 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company's invested assets reported at fair value .
Identifying and assessing whether impairment indicators exist, or if events or changes in circumstances have occurred, including assumptions about future power plant dispatch levels, changes in operating costs and other factors that impact anticipated revenue and customer demand, requires significant judgment.
Identifying and assessing whether impairment indicators exist, or if events or changes in circumstances have occurred, including assumptions about future power plant dispatch levels, changes in future sales price, operating costs and other factors that impact anticipated revenue and customer demand, requires significant judgment.
Upon identification of indicators of impairment, the Company evaluates the carrying value of the asset by comparing the estimated future undiscounted cash flows generated from the use of the asset and its eventual disposition with the asset's net carrying value.
Upon identification of indicators of impairment, the Company evaluates the carrying value of the asset by comparing the estimated future undiscounted cash flows generated from the use of the asset or asset group and its eventual disposition with the asset's net carrying value.
Income Taxes Income tax expense of $13.6 million for the year ended December 31, 2022 includes $1.5 million of discrete tax benefits, primarily from the reversal of uncertain tax positions as a result of the conclusion of the IRS examination of the Company’s 2013, 2014, 2015 and 2016 federal income tax returns.
Income tax expense of $13.6 million for the year ended December 31, 2022 included $1.5 million of discrete tax benefits, primarily from the reversal of uncertain tax positions as a result of the conclusion of the IRS examination of the Company’s 2013, 2014, 2015 and 2016 federal income tax returns.
Since 2021, the Company has participated in a voluntary program with the IRS called Compliance Assurance Process (“CAP”). The objective of CAP is to contemporaneously work with the IRS to achieve federal tax compliance and resolve all or most issues prior to the filing of the tax return. 53 Table of Contents Item 7.
Since 2021, the Company has participated in a voluntary program with the IRS called Compliance Assurance Process (“CAP”). The objective of CAP is to contemporaneously work with the IRS to achieve federal tax compliance and resolve all or most issues prior to the filing of the tax return.
Interest income increased $1.0 million primarily due to higher interest rates and a higher average invested cash balance during 2022 compared with 2021. Loss (gain) on equity securities represents changes in the market price of invested assets reported at fair value.
Interest income increased $4.6 million primarily due to higher interest rates and a higher average invested cash balance during 2023 compared with 2022. (Gain) loss on equity securities represents changes in the market price of invested assets reported at fair value.
During the third quarter of 2022, the Company recorded $2.2 million, which represented its share of MAG's earnings on the "Income from equity method investee" line within the accompanying Consolidated Statements of Operations. On December 1, 2022, HLCP Ethanol Holdco, LLC (“HLCP”) completed its acquisition of MAG.
During the third quarter of 2022, the Company recorded $2.2 million, which represented its share of MAG's earnings on the "Other, net" line within the accompanying Consolidated Statements of Operations. On December 1, 2022, HLCP Ethanol Holdco, LLC (“HLCP”) completed its acquisition of MAG.
These temporary differences create deferred tax assets and liabilities using currently enacted tax rates. The objective of accounting for income taxes is to recognize the amount of taxes payable or refundable for the current year, and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the financial statements or tax returns.
The objective of accounting for income taxes is to recognize the amount of taxes payable or refundable for the current year, and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the financial statements or tax returns.
At MLMC, the costs of mining operations are not reimbursed by MLMC's customer. As such, increased costs at MLMC or decreased revenues could materially reduce the Company's profitability. Any reduction in customer demand at MLMC, including reductions related to reduced mechanical availability of the customer’s power plant, would adversely affect the Company's operating results and could result in significant impairments.
A reduction in customer demand at MLMC, including reductions related to reduced mechanical availability of the customer’s power plant, could adversely affect the Company's operating results. The costs of mining operations are not reimbursed by MLMC's customer. As such, increased costs at MLMC could materially reduce the Company's profitability.
Additional information relating to financial and operating data on a segment basis (including unallocated items) is set forth in Note 15 to the Consolidated Financial Statements contained in this Form 10-K.
Business" beginning on page 1 in this Form 10-K for further discussion of NACCO's subsidiaries. Additional information relating to financial and operating data on a segment basis (including unallocated items) is set forth in Note 15 to the Consolidated Financial Statements contained in this Form 10-K.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) Long-lived assets: The Company periodically evaluates long-lived assets for impairment when changes in circumstances or the occurrence of certain events indicate the carrying amount of an asset may not be recoverable.
Long-lived assets: The Company periodically evaluates long-lived assets for impairment when changes in circumstances or the occurrence of certain events indicate the carrying amount of an asset or asset group may not be recoverable.
The Company accounts for revenue in accordance with Accounting Standards Codification ("ASC") Topic 606, "Revenue from Contracts with Customers." See Note 3 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company's revenue recognition. 52 Table of Contents Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
The Company accounts for revenue in accordance with Accounting Standards Codification ("ASC") Topic 606, "Revenue from Contracts with Customers." See Note 3 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company's revenue recognition.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC. AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) See Note 13 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company's income taxes.
See Note 13 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company's income taxes. 53 Table of Contents Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
See Note 13 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company's income taxes. 55 Table of Contents
The benefit from percentage depletion is not directly related to the amount of pre-tax income recorded in a period. See Note 13 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company's income taxes. 55 Table of Contents
The Company has items not directly attributable to a reportable segment that are not included as part of the measurement of segment operating profit, which primarily includes administrative costs related to public company reporting requirements at the parent company and the financial results of Mitigation Resources and Bellaire Corporation ("Bellaire").
The Company has items not directly attributable to a reportable segment that are not included in the reported financial results of the operating segment. These items primarily include administrative costs related to public company reporting requirements, including management and board compensation, and the financial results of Bellaire Corporation ("Bellaire"), Mitigation Resources and other developing businesses.
All financial statement line items below operating profit (other income, including interest expense and interest income, the provision for income taxes and net income) are presented and discussed within this Form 10-K on a consolidated basis. See “Item 1. Business" beginning on page 1 in this Form 10-K for further discussion of NACCO's subsidiaries.
Bellaire manages the Company’s long-term liabilities related to former Eastern U.S. underground mining activities. All financial statement line items below operating loss/profit (other income, including interest expense and interest income, the benefit/provision for income taxes and net loss/income) are presented and discussed within this Form 10-K on a consolidated basis. See “Item 1.
Subsequent to the receipt of the additional membership units, the Company began to account for the investment under the equity method of 54 Table of Contents Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC. AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) accounting.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) Prior to receiving the membership units from GRE, the Company held a $5.0 million investment in MAG. Subsequent to the receipt of the additional membership units, the Company began to account for the investment under the equity method of accounting.
The long-lived assets, which included land, prepaid royalties and capitalized leasehold costs, were written off in 2022 and resulted in non-cash asset impairment charges of $3.9 million. See Note 9 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company's fair value measurements.
As a result, the Company estimated the fair value of the asset group which resulted in a non-cash, long-lived asset impairment charge of $65.9 million in 2023. See Note 9 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company's impairment analysis.
Fair value is estimated as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company regularly performs reviews of potential future development projects and identified certain legacy coal assets where future development is unlikely.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) that the carrying value of the long-lived asset or asset group exceeds its fair value. Fair value is estimated as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The increase in the effective income tax rate for 2022 compared to 2021, excluding the impact of discrete items, is primarily due to an increase in earnings at entities that do not qualify for percentage depletion. The benefit from percentage depletion is not directly related to the amount of pre-tax income recorded in a period.
Excluding the $1.5 million of discrete tax benefits, the effective income tax rate in 2022 was 17.1%. The change in the effective income tax rate for 2023 compared to 2022, excluding the impact of the long-lived asset impairment charge and discrete items, is primarily due to a decrease in earnings at entities that qualify for percentage depletion.
Tax law requires certain items to be included in the tax return at different times than the items are reflected in the financial statements. Some of these differences are permanent, such as expenses that are not deductible for tax purposes, and some differences are temporary, reversing over time, such as depreciation expense.
Some of these differences are permanent, such as expenses that are not deductible for tax purposes, and some differences are temporary, reversing over time, such as depreciation expense. These temporary differences create deferred tax assets and liabilities using currently enacted tax rates.
As a result, the Company recognized $16.9 million on the "Other contract termination settlements" line within the accompanying Consolidated Statements of Operations. Prior to receiving the membership units from GRE, the Company held a $5.0 million investment in MAG.
As a result, the Company recognized $16.9 million on the "Other contract termination settlements" line within the accompanying Consolidated Statements of Operations. 54 Table of Contents Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
If the carrying value of an asset is considered impaired, an impairment charge is recorded for the amount that the carrying value of the long-lived asset exceeds its fair value.
If the carrying value of an asset is considered impaired, an impairment charge is recorded for the amount 52 Table of Contents Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
Excluding the $1.5 million of discrete tax benefits, the effective income tax rate in 2022 was 17.1%. Income tax expense of $8.7 million for the year ended December 31, 2021 included $1.0 million of discrete tax expense. Excluding the $1.0 million of discrete tax expense, the effective income tax rate in 2021 was 13.5%.
Income Taxes Income tax benefit of $24.6 million for the year ended December 31, 2023 includes $4.0 million of discrete tax benefits, primarily the reversal of uncertain tax positions and the impact of U.S. federal provision to return adjustments. Excluding the $4.0 million of discrete tax benefits, the effective income tax rate in 2023 was 32.0%.
Removed
Bellaire manages the Company’s long-term liabilities related to former Eastern U.S. underground mining activities. Effective January 1, 2022, the Company changed the composition of its reportable segments.
Added
The Company determined that indicators of impairment existed at MLMC during the fourth quarter of 2023 and, as a result, MLMC's long-lived assets were reviewed for impairment. The Company assessed the recoverability of the MLMC asset group and determined that the assets were not fully recoverable when compared to the remaining future undiscounted cash flows from these assets.
Removed
As a result, the Company retrospectively changed its computation of segment operating profit to reclassify the results of Caddo Creek Resources Company, LLC (“Caddo Creek”) and Demery Resources Company, LLC ("Demery") from the Coal Mining segment into the NAMining segment as these operations provide mining solutions for producers of industrial minerals, rather than for power generation.
Added
Income taxes: The Company files income tax returns in the U.S. federal jurisdiction, and in various state and foreign jurisdictions. Tax law requires certain items to be included in the tax return at different times than the items are reflected in the financial statements.
Removed
The Coal Mining segment now includes only mines that deliver coal to power generation companies. This segment reporting change has no impact on consolidated operating results. All prior period segment information has been reclassified to conform to the new presentation.
Added
As a result of the lump-sum distributions, the Company recognized a non-cash, pension settlement charge of $1.8 million on the line "Other, net" within the accompanying Consolidated Statements of Operations. The $1.8 million charge represents a pro rata portion of the unrecognized net loss recorded in Accumulated other comprehensive loss.
Removed
MLMC has approximately $125 million of long-lived assets, including property, plant and equipment and its coal supply agreement intangible asset, which are subject to periodic impairment analysis and review.
Added
See Note 14 to the Consolidated Financial Statements in this Form 10-K for further information on the Combined Plan.
Removed
Actual future operating results could differ significantly from these estimates, which may result in an impairment charge in a future period, which could have a substantial impact on the Company’s results of operations. Income taxes: The Company files income tax returns in the U.S. federal jurisdiction, and in various state and foreign jurisdictions.
Added
During 2022, GRE transferred ownership of an office building with an estimated fair value of $4.1 million and conveyed membership units in Midwest AgEnergy Group, LLC (“MAG”), a North Dakota-based ethanol business, with an estimated fair value of $12.8 million, as agreed to under the termination and release of claims agreement between Falkirk and GRE.
Added
The Company received additional cash payments totaling $3.6 million during 2023 in connection with MAG's post-closing purchase price adjustment and the release of amounts held in escrow. The Company recognized the $3.6 million gain on the line "Other, net" within the accompanying Consolidated Statements of Operations.

Item 7. Management's Discussion & Analysis

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

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Biggest changeAmong the factors that could cause plans, actions and results to differ materially from current expectations are, without limitation: (1) changes to or termination of customer or other third-party contracts, or a customer or other third party default under a contract, (2) any customer's premature facility closure, (3) a significant reduction in purchases by the Company's customers, including as a result of changes in coal consumption patterns of U.S. electric power generators, or changes in the power industry that would affect demand for the Company's coal and other mineral reserves, (4) changes in the prices of hydrocarbons, particularly diesel fuel, natural gas, natural gas liquids and oil, (5) failure or delays by the Company's lessees in achieving expected production of natural gas and other hydrocarbons; the availability and cost of transportation and processing services in the areas where the Company's oil and gas reserves are located; federal and state legislative and regulatory initiatives relating to hydraulic fracturing; and the ability of lessees to obtain capital or financing needed for well-development operations and leasing and development of oil and gas reserves on federal lands, (6) failure to obtain adequate insurance coverages at reasonable rates, (7) supply chain disruptions, including price increases and shortages of parts and materials, (8) changes in tax laws or regulatory requirements, including the elimination of, or reduction in, the percentage depletion tax deduction, changes in mining or power plant emission regulations and health, safety or environmental legislation, (9) the ability of the Company to access credit in the current economic environment, or obtain financing at reasonable rates, or at all, and to maintain surety bonds for mine reclamation as a result of current market sentiment for fossil fuels, (10) impairment charges, (11) the effects of investors’ and other stakeholders’ increasing attention to environmental, social and governance matters, (12) changes in costs related to geological and geotechnical conditions, repairs and maintenance, new equipment and replacement parts, fuel or other similar items, (13) regulatory actions, changes in mining permit requirements or delays in obtaining mining permits that could affect deliveries to customers, (14) weather conditions, extended power plant outages, liquidity events or other events that would change the level of customers' coal or aggregates requirements, (15) weather or equipment problems that could affect deliveries to customers, (16) changes in the costs to reclaim mining areas, (17) costs to pursue and develop new mining, mitigation and oil and gas opportunities and other value-added service opportunities, (18) delays or reductions in coal or aggregates deliveries, (19) the ability to successfully evaluate investments and achieve intended financial results in new business and growth initiatives, (20) disruptions from natural or human causes, including severe weather, accidents, fires, earthquakes and terrorist acts, any of which could result in suspension of operations or harm to people or the environment, and (21) the ability to attract, retain, and replace workforce and administrative employees. 67 Table of Contents Item 7A.
Biggest changeAmong the factors that could cause plans, actions and results to differ materially from current expectations are, without limitation: (1) changes to or termination of customer or other third-party contracts, or a customer or other third party default under a contract, (2) any customer's premature facility closure or extended project development delay, (3) regulatory actions, including the United States EPA's 2023 proposed rules relating to mercury and greenhouse gas emissions for coal-fired power plants, changes in mining permit requirements or delays in obtaining mining permits that could affect deliveries to customers, (4) a significant reduction in purchases by the Company's customers, including as a result of changes in coal consumption patterns of U.S. electric power generators, or changes in the power industry that would affect demand for the Company's coal and other mineral reserves, (5) changes in the prices of hydrocarbons, particularly diesel fuel, natural gas, natural gas liquids and oil, (6) failure or delays by the Company's lessees in achieving expected production of natural gas and other hydrocarbons; the availability and cost of transportation and processing services in the areas where the Company's oil and gas reserves are located; federal and state legislative and regulatory initiatives relating to hydraulic fracturing and U.S. export of natural gas; and the ability of lessees to obtain capital or financing needed for well-development operations and leasing and development of oil and gas reserves on federal lands, (7) failure to obtain adequate insurance coverages at reasonable rates, (8) supply chain disruptions, including price increases and shortages of parts and materials, (9) changes in tax laws or regulatory requirements, including the elimination of, or reduction in, the percentage depletion tax deduction, changes in mining or power plant emission regulations and health, safety or environmental legislation, (10) the ability of the Company to access credit in the current economic environment, or obtain financing at reasonable rates, or at all, and to maintain surety bonds for mine reclamation as a result of current market sentiment for fossil fuels, (11) impairment charges, (12) changes in costs related to geological and geotechnical conditions, repairs and maintenance, new equipment and replacement parts, fuel or other similar items, (13) weather conditions, extended power plant outages, liquidity events or other events that would change the level of customers' coal or aggregates requirements, (14) weather or equipment problems that could affect deliveries to customers, (15) changes in the costs to reclaim mining areas, (16) costs to pursue and develop new mining, mitigation, oil and gas and solar development opportunities and other value-added service opportunities, (17) delays or reductions in coal or aggregates deliveries, (18) the ability to successfully evaluate investments and achieve intended financial results in new business and growth initiatives, (19) disruptions from natural or human causes, including severe weather, accidents, fires, earthquakes and terrorist acts, any of which could result in suspension of operations or harm to people or the environment, and (20) the ability to attract, retain, and replace workforce and administrative employees. 66 Table of Contents Item 7A.
The Company believes the move to require utilities to generate a greater portion of energy from renewable energy sources could create imbalances in the existing electric grid if fossil-fuel power plants are retired faster than renewable sources are developed resulting in electrical grid disruptions and outages.
The Company believes the move to require utilities to generate a greater portion of energy from renewable energy sources could create imbalances in the existing electric grid if fossil-fuel power plants are retired faster than renewable energy sources are developed resulting in electrical grid disruptions and outages.
Long-Term Growth and Diversification Outlook The Company is pursuing growth and diversification by strategically leveraging its core mining and natural resources management skills to build a strong portfolio of affiliated businesses. Management continues to be optimistic about the long-term outlook. In the Minerals Management segment, as well as in the Company's Mitigation Resources business, opportunities for growth remain strong.
The Company is pursuing growth and diversification by strategically leveraging its core mining and natural resources management skills to build a strong portfolio of affiliated businesses. Management continues to be optimistic about the long-term outlook. In the Minerals Management segment, as well as in the Company's Mitigation Resources business, opportunities for growth remain strong.
The NACoal Facility provides the ability to make loans, dividends and advances to NACCO, with some restrictions based on maintaining a maximum debt to EBITDA ratio of 1.50 to 1.00, or if greater than 1.50 to 1.00, a Fixed Charge Coverage Ratio of 1.10 to 1.00, in conjunction with maintaining unused availability thresholds of borrowing capacity, as defined in the NACoal Facility, of $15.0 million.
The Facility provides the ability to make loans, dividends and advances to NACCO, with some restrictions based on maintaining a maximum debt to EBITDA ratio of 1.50 to 1.00, or if greater than 1.50 to 1.00, a Fixed Charge Coverage Ratio of 1.10 to 1.00, in conjunction with maintaining unused availability thresholds of borrowing capacity, as defined in the Facility, of $15.0 million.
Certain states have enacted, and others are considering enacting, mandatory clean energy standards requiring utilities to meet certain thresholds of renewable and/or carbon-free energy supply. The current presidential administration has made climate change a focus, including consideration for legislation on clean energy standards and GHG emission, and the Company expects that to continue.
Certain states have enacted, and others are considering enacting, mandatory clean energy standards requiring utilities to meet certain thresholds of renewable energy sources and/or carbon-free energy supply. The current presidential administration has made climate change a focus, including consideration for legislation on clean energy standards and GHG emission, and the Company expects that to continue.
The Company believes funds available from cash on hand, the NACoal Facility and operating cash flows will provide sufficient liquidity to meet its operating needs and commitments arising during the next twelve months and until the expiration of the NACoal Facility in November 2025.
The Company believes funds available from cash on hand, the Facility and operating cash flows will provide sufficient liquidity to meet its operating needs and commitments arising during the next twelve months and until the expiration of the Facility in November 2025.
The goal is to construct a high-quality diversified portfolio of oil and gas mineral and royalty interests in the United States that deliver near-term cash flow yields and long-term projected growth. The Company believes this business will provide unlevered after-tax returns on invested capital in the mid-teens as this business model matures.
The goal is to construct a high-quality diversified portfolio of oil and gas mineral and royalty interests in the United States that delivers near-term cash flow yields and long-term projected growth. The Company believes this business will provide unlevered after-tax returns on invested capital in the mid-teens as this business model matures.
The Company will continue to monitor the progress of these initiatives and assess the potential impacts they may have on its financial condition, results of operations and disclosures. SEGMENT RESULTS COAL MINING SEGMENT FINANCIAL REVIEW See “Item 2. Properties" on page 28 in this Form 10-K for discussion of the Company's mineral resources and mineral reserves.
The Company will continue to monitor the progress of these initiatives and assess the potential impacts they may have on its financial condition, results of operations and disclosures. SEGMENT RESULTS COAL MINING SEGMENT FINANCIAL REVIEW See “Item 2. Properties" on page 31 in this Form 10-K for discussion of the Company's mineral resources and mineral reserves.
NACoal is a party to certain guarantees related to Coyote Creek. The Company believes that the likelihood of NACoal’s future performance under the guarantees is remote, and no amounts related to these guarantees have been recorded. See Note 16 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company's guarantees.
The Company is a party to certain guarantees related to Coyote Creek. The Company believes that the likelihood of future performance under the guarantees is remote, and no amounts related to these guarantees have been recorded. See Note 16 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company's guarantees.
The NACoal Facility contains restrictive covenants, which require, among other things, NACoal to maintain a maximum net debt to EBITDA ratio of 2.75 to 1.00 and an interest coverage ratio of not less than 4.00 to 1.00.
The Facility contains restrictive covenants, which require, among other things, maintaining a maximum net debt to EBITDA ratio of 2.75 to 1.00 and an interest coverage ratio of not less than 4.00 to 1.00.
The Company believes that Mitigation Resources can provide solid rates of return as this business matures. The Company also continues to pursue activities which can strengthen the resiliency of its existing coal mining operations.
The Company believes that Mitigation Resources can provide solid rates of return on capital employed as this business matures. The Company also continues to pursue activities which can strengthen the resiliency of its existing coal mining operations.
The Company utilizes letters of credit to support commitments made in the ordinary course of business. As of December 31, 2022 and 2021, outstanding letters of credit totaled $33.7 million and $29.8 million, respectively. ENVIRONMENTAL MATTERS The Company is affected by the regulations of numerous agencies, particularly the Federal Office of Surface Mining, the U.S. Environmental Protection Agency, the U.S.
The Company utilizes letters of credit to support commitments made in the ordinary course of business. As of December 31, 2023 and 2022, outstanding letters of credit totaled $34.9 million and $33.7 million, respectively. ENVIRONMENTAL MATTERS The Company is affected by the regulations of numerous agencies, particularly the Federal Office of Surface Mining, the U.S. Environmental Protection Agency, the U.S.
NORTH AMERICAN MINING ("NAMining") SEGMENT FINANCIAL REVIEW Aggregate tons delivered by the NAMining segment were as follows for the years ended December 31: 2022 2021 Total tons delivered 54,223 52,796 60 Table of Contents Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
NORTH AMERICAN MINING ("NAMining") SEGMENT FINANCIAL REVIEW Aggregate tons delivered by the NAMining segment were as follows for the years ended December 31: 2023 2022 Total tons delivered 56,655 54,223 60 Table of Contents Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
The Company remains focused on managing coal production costs and maximizing efficiencies and operating capacity at mine locations to help customers with management fee contracts be more competitive. These activities benefit both customers and the Company's Coal Mining segment, as fuel cost is a significant driver for power plant dispatch. Increased power plant 65 Table of Contents Item 7.
The Company remains focused on managing coal production costs and maximizing efficiencies and operating capacity at mine locations to help customers with management fee contracts be more competitive. These activities benefit both customers and the Company's Coal Mining segment, as fuel cost is a significant driver for power plant dispatch.
At December 31, 2022, NACoal was in compliance with all financial covenants in the NACoal Facility. The obligations under the NACoal Facility are guaranteed by certain of NACoal's direct and indirect, existing and future domestic subsidiaries, and is secured by certain assets of NACoal and the guarantors, subject to customary exceptions and limitations.
At December 31, 2023, the Company was in compliance with all financial covenants in the Facility. The obligations under the Facility are guaranteed by certain direct and indirect, existing and future domestic subsidiaries, and is secured by certain assets and the guarantors, subject to customary exceptions and limitations.
Contractual Obligations, Contingent Liabilities and Commitments Pension and postretirement funding can vary significantly each year due to plan amendments, changes in the market value of plan assets, legislation and the Company’s decisions to contribute above the minimum regulatory funding requirements. The Company does not expect to contribute to its pension plan in 2023.
Contractual Obligations, Contingent Liabilities and Commitments Pension and postretirement funding can vary significantly each year due to plan amendments, changes in the market value of plan assets, legislation and the Company’s decisions to contribute above the minimum regulatory funding requirements.
While the Company realizes the coal mining industry faces political and regulatory challenges and demand for coal is projected to decline over the longer-term, the Company believes coal will be an essential part of the energy mix in the United States for the foreseeable future.
While the Company realizes the coal mining industry faces political and regulatory challenges and demand for coal is projected to decline over the longer-term, the Company believes coal should be an essential part of the energy mix in the United States for the foreseeable future. 65 Table of Contents Item 7.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) FORWARD-LOOKING STATEMENTS The statements contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere throughout this Annual Report on Form 10-K that are not historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
FORWARD-LOOKING STATEMENTS The statements contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere throughout this Annual Report on Form 10-K that are not historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Reclaimed mining properties offer large tracts of land that could be well-suited for solar and other energy-related projects. These projects could be developed by the Company itself or through joint ventures that include partners with expertise in energy development projects.
The Company is working to utilize these skills through development of utility-scale solar projects on reclaimed mining properties. Reclaimed mining properties offer large tracts of land that could be well-suited for solar and other energy-related projects. These projects could be developed by the Company itself or through joint ventures that include partners with expertise in energy development projects.
Future investments are expected to be accretive, but each investment's contribution to near-term earnings is dependent on the details of that investment, including the size and type of interests acquired and the stage and timing of mineral development.
In 2024, Minerals Management is targeting additional investments of up to $20 million. Future investments are expected to be accretive, but each investment's contribution to near-term earnings is dependent on the details of that investment, including the size and type of interests acquired and the stage and timing of mineral development.
These improvements were partially offset by a reduction in revenue at Caddo Creek as the scope of final reclamation activities declined. The following table identifies the components of change in operating profit for 2022 compared with 2021.
These improvements were partially offset by a reduction in mine reclamation revenue at Caddo Creek. The following table identifies the components of change in operating profit for 2023 compared with 2022.
These decreases are expected to be partly offset by higher earnings at Coteau. The Company's contract structure at each of its coal mining operations eliminates exposure to spot coal market price fluctuations. However, fluctuations in natural gas prices and the availability of renewable power generation, particularly wind, can contribute to changes in power plant dispatch and customer demand for coal.
The Company's contract structure at each of its coal mining operations eliminates exposure to spot coal market price fluctuations. However, fluctuations in natural gas prices, weather and the availability of renewable power generation, particularly wind, can contribute to changes in power plant dispatch and customer demand for coal.
During 2022, the Company implemented a voluntary retirement program for employees who met certain age and service requirements to reduce overall headcount. As a result of this program, operating profit in 2022 includes a charge of $0.8 million related to one-time termination benefits. The increase in selling, general and administrative expenses was primarily due to higher employee-related costs.
During 2022, the Company implemented a voluntary retirement program for employees who met certain age and service requirements to reduce overall headcount. As a result of this program, operating profit in 2022 included a charge of $0.8 million related to one-time termination benefits.
NACCO also expects to make payments related to its other postretirement plans of approximately $0.2 million per year from 2023 through 2032. Benefit payments beyond that time cannot currently be estimated. All other pension benefit payments are made from assets of the pension plan. NACCO has asset retirement obligations.
Benefit payments beyond that time cannot currently be estimated. NACCO also expects to make payments related to its other postretirement plans of approximately $0.2 million per year from 2024 through 2033. Benefit payments beyond that time cannot currently be estimated. NACCO has asset retirement obligations.
RECENTLY ISSUED ACCOUNTING STANDARDS See Note 2 to the Consolidated Financial Statements in this Form 10-K for a description of recently issued accounting standards, if any, including actual and expected dates of adoption and effects to the Company's Consolidated Financial Statements. 66 Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
RECENTLY ISSUED ACCOUNTING STANDARDS See Note 2 to the Consolidated Financial Statements in this Form 10-K for a description of recently issued accounting standards, if any, including actual and expected dates of adoption and effects to the Company's Consolidated Financial Statements.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) The results of operations for the NAMining segment were as follows for the years ended December 31: 2022 2021 Total revenues $ 85,664 $ 78,944 Reimbursable costs 52,935 51,028 Revenues excluding reimbursable costs $ 32,729 $ 27,916 Revenues $ 85,664 $ 78,944 Cost of sales 79,842 73,649 Gross profit 5,822 5,295 Earnings of unconsolidated operations (a) 4,715 4,754 Selling, general and administrative expenses 8,260 6,610 Loss on sale of assets 75 55 Operating profit $ 2,202 $ 3,384 (a) See Note 16 to the Consolidated Financial Statements in this Form 10-K for a discussion of the Company's unconsolidated subsidiaries, including summarized financial information. 2022 Compared with 2021 Total revenues increased 8.5% in 2022 compared with 2021 primarily due to an increase in customer requirements as well as reimbursable costs, which have an offsetting amount in cost of sales and have no impact on operating profit.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) The results of operations for the NAMining segment were as follows for the years ended December 31: 2023 2022 Total revenues $ 90,532 $ 85,664 Reimbursable costs 56,611 52,935 Revenues excluding reimbursable costs $ 33,921 $ 32,729 Revenues $ 90,532 $ 85,664 Cost of sales 83,719 79,842 Gross profit 6,813 5,822 Earnings of unconsolidated operations (a) 5,361 4,715 Selling, general and administrative expenses 8,308 8,260 Loss on sale of assets 518 75 Operating profit $ 3,348 $ 2,202 (a) See Note 16 to the Consolidated Financial Statements in this Form 10-K for a discussion of the Company's unconsolidated subsidiaries, including summarized financial information. 2023 Compared with 2022 Total revenues increased 5.7% in 2023 compared with 2022 primarily due to: • An increase in reimbursable costs at Sawtooth, which have an offsetting amount in cost of sales and have no impact on operating profit; • An increase in customer requirements and tons delivered at the consolidated quarries; and • Higher dragline part sales.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) Compliance with these increasingly stringent regulations could result in higher expenditures for both capital improvements and operating costs. The Company’s policies stress environmental responsibility and compliance with these regulations.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) Compliance with these increasingly stringent regulations could result in higher expenditures for both capital improvements and operating costs. The Company’s policies stress environmental responsibility and compliance with these regulations. See Item 1 in Part I of this Form 10-K for further discussion of these matters.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) Expenditures are expected to be funded from internally generated funds and/or bank borrowings.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC. AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) Expenditures are expected to be funded from internally generated funds and/or bank borrowings.
During the year ended December 31, 2022, the average borrowing under the NACoal Facility was $2.0 million. The weighted-average annual interest rate, including the floating rate margin, was 2.54% and 4.50% at December 31, 2022 and December 31, 2021, respectively.
The commitment fee was 0.34% on the unused commitment at December 31, 2023. During the year ended December 31, 2023, the average borrowing under the Facility was $6.2 million. The weighted-average annual interest rate, including the floating rate margin, was 6.06% and 2.54% at December 31, 2023 and December 31, 2022, respectively.
Fluctuating natural gas prices and availability of renewable energy sources, such as wind and solar, could affect the amount of electricity dispatched from coal-fired power plants.
Increased power plant dispatch results in increased demand for coal by the Coal Mining segment's customers. Fluctuating natural gas prices, weather and availability of renewable energy sources, such as wind and solar, could affect the amount of electricity dispatched from coal-fired power plants.
Tons of coal delivered by the Coal Mining segment were as follows for the years ended December 31: 2022 2021 Unconsolidated mines 25,236 27,759 Consolidated mines 3,215 3,025 Total tons delivered 28,451 30,784 The results of operations for the Coal Mining segment were as follows for the years ended December 31: 2022 2021 Revenues $ 95,204 $ 82,831 Cost of sales 89,670 72,596 Gross profit 5,534 10,235 Earnings of unconsolidated operations (a) 52,535 56,089 Contract termination settlement 14,000 10,333 Selling, general and administrative expenses 30,049 27,363 Amortization of intangible assets 3,719 3,556 Gain on sale of assets (8) (46) Operating profit $ 38,309 $ 45,784 (a) See Note 16 to the Consolidated Financial Statements in this Form 10-K for a discussion of the Company's unconsolidated subsidiaries, including summarized financial information. 2022 Compared with 2021 Revenues increased 14.9% in 2022 compared with 2021 primarily due to a higher per ton sales price and an increase in customer requirements at MLMC. 59 Table of Contents Item 7.
Tons of coal delivered by the Coal Mining segment were as follows for the years ended December 31: 2023 2022 Unconsolidated mines 20,741 25,236 Consolidated mines 2,931 3,215 Total tons delivered 23,672 28,451 The results of operations for the Coal Mining segment were as follows for the years ended December 31: 2023 2022 Revenues $ 85,415 $ 95,204 Cost of sales 108,760 89,670 Gross (loss) profit (23,345) 5,534 Earnings of unconsolidated operations (a) 44,633 52,535 Contract termination settlement — 14,000 Selling, general and administrative expenses and asset impairment charges 89,971 30,049 Amortization of intangible assets 2,998 3,719 Gain on sale of assets (339) (8) Operating (loss) profit $ (71,342) $ 38,309 (a) See Note 16 to the Consolidated Financial Statements in this Form 10-K for a discussion of the Company's unconsolidated subsidiaries, including summarized financial information. 2023 Compared with 2022 Revenues decreased 10.3% in 2023 compared with 2022 primarily due to a reduction in customer requirements at MLMC. 59 Table of Contents Item 7.
The table below demonstrates such volatility with the average price as reported by the United States Energy Information Administration for the twelve months ended December 31: 2022 2021 West Texas Intermediate Average Crude Oil Price $ 94.79 $ 67.99 Henry Hub Average Natural Gas Price $ 6.42 $ 3.91 Revenues and operating profit increased in 2022 compared with 2021 primarily due to substantially higher natural gas and oil prices, increased production due in part to income generated from newly developed wells on Company leases during 2022, as well as $2.1 million of settlement income recognized during 2022.
The table below demonstrates such volatility with the average price as reported by the United States Energy Information Administration for the twelve months ended December 31: 2023 2022 West Texas Intermediate Average Crude Oil Price $ 77.64 $ 94.79 Henry Hub Average Natural Gas Price $ 2.54 $ 6.42 Revenues and operating profit decreased in 2023 compared with 2022 primarily due to substantially lower natural gas and oil prices, as well as lower settlement income.
This business model can deliver higher average operating margins over the life of a reserve than traditional oil and gas companies that bear the cost of exploration, production and/or development.
This business model has the potential to deliver higher average operating margins over the life of a reserve than traditional oil and gas companies that bear the cost of exploration, production and/or development as these costs are borne entirely by third-party exploration and development companies that lease the minerals.
The applicable margins, effective December 31, 2022, for base rate and LIBOR loans were 1.23% and 2.23%, respectively. The NACoal Facility has a commitment fee which is based upon achieving various levels of debt to EBITDA ratios. The commitment fee was 0.34% on the unused commitment at December 31, 2022.
Borrowings bear interest at a floating rate plus a margin based on the level of debt to EBITDA ratio achieved. The applicable margins, effective December 31, 2023, for base rate and Secured Overnight Financing Rate loans were 1.23% and 2.23%, respectively. The Facility has a commitment fee which is based upon achieving various levels of debt to EBITDA ratios.
The long-lived assets, which included land, prepaid royalties and capitalized leasehold costs, were written off during 2022 and resulted in non-cash asset impairment charges of $3.9 million.
The long-lived assets, which included land, prepaid royalties and capitalized leasehold costs, were written off in 2022 and resulted in non-cash asset impairment charges of $3.9 million. In addition, operating profit in 2023 decreased due to a $2.4 million gain on the sale of land related to legacy operations recognized during 2022.
Operating Profit 2021 $ 3,384 Increase (decrease) from: Selling, general and administrative expenses (1,413) Voluntary retirement program charge (769) Earnings of unconsolidated operations (39) Net change on sale of assets (20) Gross profit 1,059 2022 $ 2,202 Operating profit decreased $1.2 million in 2022 compared with 2021 primarily due to an increase in selling, general and administrative expenses and a voluntary retirement program charge, partially offset by an increase in gross profit.
Operating Profit 2022 $ 2,202 Increase (decrease) from: Voluntary retirement program charge 769 Earnings of unconsolidated operations 646 Gross profit 459 Net change on sale of assets (443) Selling, general and administrative expenses (285) 2023 $ 3,348 Operating profit increased $1.1 million in 2023 compared with 2022 primarily due to the absence of a voluntary retirement program charge, as well as increases in the earnings of unconsolidated operations and gross profit.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) Minerals Management Outlook The Minerals Management segment derives income from royalty-based leases under which lessees make payments to the Company based on their sale of natural gas, oil, natural gas liquids and coal, extracted primarily by third parties.
Minerals Management Outlook The Minerals Management segment derives income primarily from royalty-based leases under which lessees make payments to the Company based on their sale of natural gas, oil, natural gas liquids and coal, extracted primarily by third parties. Changing prices of natural gas and oil could have a significant impact on Minerals Management’s operating profit.
There were no borrowings outstanding under the NACoal Facility at December 31, 2022. At December 31, 2022, the excess availability under the NACoal Facility was $116.3 million, which reflects a reduction for outstanding letters of credit of $33.7 million. NACCO has not guaranteed any borrowings of NACoal.
At December 31, 2023, the excess availability under the Facility was $105.1 million, which reflects a reduction for outstanding letters of credit of $34.9 million. NACCO has not guaranteed any borrowings of its subsidiaries.
Expenditures for property, plant and equipment and mineral interests Following is a table which summarizes actual and planned expenditures (in millions): Planned Actual Actual 2023 2022 2021 NACCO $ 71.5 $ 54.4 $ 44.6 Planned expenditures for 2023 are expected to be approximately $39 million in the NAMining segment, $21 million in the Minerals Management segment, $10 million in the Coal Mining segment and $1 million at Mitigation Resources.
Expenditures for property, plant and equipment and mineral interests Following is a table which summarizes actual and planned expenditures (in millions): Planned Actual Actual 2024 2023 2022 NACCO $ 69.0 $ 82.1 $ 54.4 Planned expenditures for 2024 are expected to be approximately $32 million in the NAMining segment, $20 million in the Minerals Management segment, $13 million in the Coal Mining segment and $4 million in Unallocated Items. 57 Table of Contents Item 7.
As an owner of royalty and mineral interests, the Company’s access to information concerning activity and operations with respect to its interests is limited. The Company's expectations are based on the best information currently available and could vary positively or negatively as a result of adjustments made by operators, additional leasing and development and/or changes to commodity prices.
The Company's expectations are based on the best information currently available and could vary positively or negatively as a result of adjustments made by operators, additional leasing and development and/or changes to commodity prices. Development of additional wells on existing interests in excess of current expectations, or acquisitions of additional interests, could be accretive to future results.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) LIQUIDITY AND CAPITAL RESOURCES Cash Flows The following tables detail the change in cash flow for the years ended December 31: 2022 2021 Change Operating activities: Net income $ 74,158 $ 48,125 $ 26,033 Depreciation, depletion and amortization 26,816 23,085 3,731 Deferred income taxes (8,471) (3,553) (4,918) Stock-based compensation 7,541 5,561 1,980 Gain on sale of assets (2,463) (60) (2,403) Other contract termination settlements (15,552) — (15,552) Asset impairment charges 3,939 — 3,939 Other (345) 1,973 (2,318) Working capital changes (17,888) (256) (17,632) Net cash provided by operating activities 67,735 74,875 (7,140) Investing activities: Expenditures for property, plant and equipment and acquisition of mineral interests (54,447) (44,561) (9,886) Proceeds from the sale of assets 2,837 633 2,204 Proceeds from the sale of private company equity units 18,628 — 18,628 Other (170) (219) 49 Net cash used for investing activities (33,152) (44,147) 10,995 Cash flow before financing activities $ 34,583 $ 30,728 $ 3,855 The $7.1 million decrease in net cash provided by operating activities was primarily due to a decrease in cash provided by working capital partially offset by an increase in cash provided by net income adjusted for non-cash items.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) LIQUIDITY AND CAPITAL RESOURCES Cash Flows The following tables detail the change in cash flow for the years ended December 31: 2023 2022 Change Operating activities: Net (loss) income $ (39,587) $ 74,158 $ (113,745) Depreciation, depletion and amortization 29,387 26,816 2,571 Deferred income taxes (21,114) (8,471) (12,643) Stock-based compensation 5,157 7,541 (2,384) Loss (gain) on sale of assets 221 (2,463) 2,684 Inventory impairment charge 7,514 — 7,514 Other contract termination settlements — (15,552) 15,552 Long-lived asset impairment charge 65,887 3,939 61,948 Other 1,473 (345) 1,818 Working capital changes 5,552 (17,888) 23,440 Net cash provided by operating activities 54,490 67,735 (13,245) Investing activities: Expenditures for property, plant and equipment and acquisition of mineral interests (82,122) (54,447) (27,675) Proceeds from the sale of assets 561 2,837 (2,276) Proceeds from the sale of private company equity units 3,574 18,628 (15,054) Equity method investment (3,464) — (3,464) Other (146) (170) 24 Net cash used for investing activities (81,597) (33,152) (48,445) Cash flow before financing activities $ (27,107) $ 34,583 $ (61,690) The $13.2 million change in net cash provided by operating activities during 2023 compared with 2022 was primarily due to a decrease in cash provided by net income adjusted for non-cash items, partially offset by a favorable change in cash provided by working capital.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) MINERALS MANAGEMENT SEGMENT FINANCIAL REVIEW The results of operations for the Minerals Management segment were as follows for the years ended December 31: 2022 2021 Revenues $ 60,242 $ 31,003 Cost of sales 3,935 2,988 Gross profit 56,307 28,015 Selling, general and administrative expenses and asset impairment charges 6,623 2,004 Gain on sale of assets (2,530) (69) Operating profit $ 52,214 $ 26,080 During 2022, the oil and natural gas industry experienced continued improvement in commodity prices compared with 2021, primarily due to: • Higher demand as the impact from COVID-19 abates; • Changes in domestic supply and demand dynamics as well as increased discipline around production and capital investments by oil and gas companies; and • Instability and constraints on global supply, particularly with respect to instability in Russia and Ukraine.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) MINERALS MANAGEMENT SEGMENT FINANCIAL REVIEW The results of operations for the Minerals Management segment were as follows for the years ended December 31: 2023 2022 Revenues $ 32,985 $ 60,242 Cost of sales 3,969 3,935 Gross profit 29,016 56,307 Selling, general and administrative expenses and asset impairment charges 9,556 6,623 Loss (gain) on sale of assets 42 (2,530) Operating profit $ 19,418 $ 52,214 During 2023, the oil and natural gas industry experienced a decline in commodity prices compared with 2022.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC. AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) dispatch results in increased demand for coal by the Coal Mining segment's customers.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC. AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) The Company continues to look for ways to create additional value by utilizing its core mining competencies which include reclamation and permitting.
Acquisitions of additional mineral interests, an improvement in the outlook for the Company's largest Coal Mining segment customers and securing contracts for Mitigation Resources and new NAMining projects could be accretive to the Company's outlook. Additional business development expenditures will be incurred as part of this growth and would provide a partial offset to the additional income.
Acquisitions of additional mineral interests, an improvement in the outlook for the Company's largest Coal Mining segment customers, and securing contracts for Mitigation Resources and new NAMining projects should be accretive to the Company's outlook. The Minerals Management segment continues to pursue acquisitions of mineral and royalty interests in the United States.
NACCO maintains one supplemental retirement plan that pays monthly benefits to participants directly out of corporate funds and expects to pay benefits of approximately $0.4 million per year from 2023 through 2032. Benefit payments beyond that time cannot currently be estimated.
The Company does not expect to contribute to its pension plan in 2024 and any settlements will be paid out of pension plan assets. NACCO maintains one supplemental retirement plan that pays monthly benefits to participants directly out of corporate funds and expects to pay benefits of approximately $0.4 million per year from 2024 through 2033.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) The following table identifies the components of change in operating profit for 2022 compared with 2021: Operating Profit 2021 $ 45,784 Increase (decrease) from: Gross profit (4,701) Earnings of unconsolidated operations (3,554) Selling, general and administrative expenses (2,686) Amortization of intangibles (163) Net change on sale of assets (38) Contract termination settlements in 2022 and 2021, net 3,667 2022 $ 38,309 Operating profit decreased $7.5 million in 2022 compared with 2021.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) The following table identifies the components of change in operating profit for 2023 compared with 2022: Operating (Loss) Profit 2022 $ 38,309 Increase (decrease) from: Long-lived asset impairment charge (60,832) Gross profit, excluding inventory impairment charges (21,365) Contract termination settlement in 2022 (14,000) Earnings of unconsolidated operations (7,902) Inventory impairment charges (7,514) Selling, general and administrative expenses 910 Amortization of intangibles 721 Net change on sale of assets 331 2023 $ (71,342) Operating (loss) profit changed unfavorably by $109.7 million in 2023 compared with 2022.
The Company is committed to maintaining a conservative capital structure as it continues to grow and diversify, while avoiding unnecessary risk. Strategic diversification will generate cash that can be re-invested to strengthen and expand the businesses. The Company also continues to maintain the highest levels of customer service and operational excellence with an unwavering focus on safety and environmental stewardship.
In 2023, NACCO formed ReGen Resources to pursue such projects, including the development of a solar farm on reclaimed land at MLMC. The Company is committed to maintaining a conservative capital structure as it continues to grow and diversify, while avoiding unnecessary risk. Strategic diversification will generate cash that can be re-invested to strengthen and expand the businesses.
UNALLOCATED ITEMS AND ELIMINATIONS FINANCIAL REVIEW Unallocated Items and Eliminations were as follows for the years ended December 31: 2022 2021 Operating loss $ (22,739) $ (19,838) 2022 Compared with 2021 The operating loss increased during 2022 compared with 2021 primarily due to higher employee-related costs. 62 Table of Contents Item 7.
AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) UNALLOCATED ITEMS AND ELIMINATIONS FINANCIAL REVIEW Unallocated Items and Eliminations were as follows for the years ended December 31: 2023 2022 Operating loss $ (21,561) $ (22,739) 2023 Compared with 2022 The operating loss decreased during 2023 compared with 2022 primarily due to higher earnings at Mitigation Resources and lower employee-related costs.
The decrease in gross profit was primarily due to an increase in the cost per ton delivered at MLMC, due in part to an increase in the cost of diesel fuel.
The decrease in gross profit was primarily due to an increase in the cost per ton delivered at MLMC. The increase in cost per ton delivered at MLMC is due to costs associated with establishing operations in a new mine area and a reduction in the number of tons severed.
This decrease is primarily driven by current market expectations for natural gas and oil prices, an anticipated reduction in volumes as existing wells follow their natural production decline and modest expectations for development of new wells by third-party exploration and production companies.
The forecasted reduction in profitability is primarily driven by current market expectations for natural gas and oil prices and modest expectations for development of additional new wells by third-party lessees. Lower operating expenses are expected to partially offset the anticipated profit decline.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC. AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) NACCO Industries, Inc. Outlook Coal Mining Outlook In 2023, the Company expects coal deliveries to decrease from 2022 levels.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC. AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) The change in net cash provided by (used for) financing activities was primarily due to debt borrowing during 2023 compared with debt repayments during 2022, partially offset by share repurchases during 2023.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC. AND SUBSIDIARIES (Tabular Amounts in Thousands, Except Per Share and Percentage Data) Financing Activities Financing arrangements are obtained and maintained at the subsidiary level. NACoal has a secured revolving line of credit of up to $150.0 million (the “NACoal Facility”) that expires in November 2025.
Financing Activities Financing arrangements are obtained and maintained at the subsidiary level. The Company has a secured revolving line of credit of up to $150.0 million (the “Facility”) that expires in November 2025. Borrowings outstanding under the Facility were $10.0 million at December 31, 2023.
The NACoal Facility allows for the payment to NACCO of dividends and advances under certain circumstances. Dividends (to the extent permitted by the NACoal Facility) and management fees are the primary sources of cash for NACCO and enable the Company to pay dividends to stockholders.
Dividends (to the extent permitted by the Facility) and management fees paid by NACCO subsidiaries are the primary sources of cash for NACCO and enable the Company to pay dividends to stockholders. The Facility has performance-based pricing, which sets interest rates based upon achieving various levels of debt to EBITDA ratios, as defined in the Facility.
At maturity, this contract is expected to deliver fee income similar to a mid-sized management fee coal mine. Mitigation Resources continues to expand its business, which creates and sells stream and wetland mitigation credits and provides services to those engaged in permittee-responsible mitigation as well as provides other environmental restoration services.
New contracts and contract extensions are central to the business' organic growth strategy, and NAMining intends to be a substantial contributor to operating profit over time. Mitigation Resources continues to expand its business, which creates and sells stream and wetland mitigation credits, provides services to those engaged in permittee-responsible mitigation and provides other environmental restoration services.
Capital Structure NACCO's consolidated capital structure is presented below: December 31 2022 2021 Change Cash and cash equivalents $ 110,748 $ 86,005 $ 24,743 Other net tangible assets 329,045 276,733 52,312 Intangible assets, net 28,055 31,774 (3,719) Net assets 467,848 394,512 73,336 Total debt (19,668) (20,710) 1,042 Closed mine obligations (21,214) (21,686) 472 Total equity $ 426,966 $ 352,116 $ 74,850 Debt to total capitalization 4 % 6 % (2) % The $52.3 million increase in other net tangible assets was primarily due to an increase in Property, plant and equipment including mineral interests and investments at Mitigation Resources, an increase in Inventories and an increase in Trade accounts receivable at December 31, 2022 compared with December 31, 2021.
Capital Structure NACCO's consolidated capital structure is presented below: December 31 2023 2022 Change Cash and cash equivalents $ 85,109 $ 110,748 $ (25,639) Other net tangible assets 349,934 329,045 20,889 Intangible assets, net 6,006 28,055 (22,049) Net assets 441,049 467,848 (26,799) Total debt (35,956) (19,668) (16,288) Closed mine obligations (22,753) (21,214) (1,539) Total equity $ 382,340 $ 426,966 $ (44,626) Debt to total capitalization 9 % 4 % 5 % The $20.9 million increase in other net tangible assets was primarily due to a favorable change in Deferred income taxes.
The change in operating profit was primarily due to a decrease in gross profit, a decrease in the earnings of unconsolidated operations and an increase in selling, general and administrative expenses.
The change in operating profit was primarily due to: • A long-lived asset impairment charge; • A decrease in gross profit; • The non-recurrence of $14.0 million recognized in 2022 related to the contract termination settlement with GRE; and • A decrease in the earnings of unconsolidated operations.
The anticipated lower earnings at the unconsolidated coal mining operations is expected to be driven primarily by temporary price concessions at Falkirk effective May 2022 through May 2024. This will result in a reduction in the per ton management fee for 12 months in 2023 compared with eight months in 2022.
An increase in 2024 earnings at the unconsolidated coal mining operations is driven primarily by an expectation for increased customer requirements at Coteau and Falkirk, as well as a higher per ton management fee at Falkirk beginning in June 2024 when temporary price concessions end.
Changes to customer power plant dispatch would affect the Company’s outlook for 2023, as well as over the longer term. NAMining Outlook Full-year 2023 operating profit at NAMining is expected to decrease significantly primarily because final mine reclamation activities at Caddo Creek were substantially completed in 2022.
Changes to customer power plant dispatch would affect the Company’s 2024 outlook, as well as outlook over the longer term. NAMining Outlook In October 2023, NAMining executed a 15-year contract to mine phosphate at a quarry in central Florida. Production is expected to commence in the first half of 2024 once relocation of a dragline is complete.
Subsequent to 2023, the Coal Mining segment expects increased profitability compared with 2023 expectations due in part to improvements at Falkirk and MLMC. At Falkirk, the temporary price concessions end in June 2024.
Operating profit is expected to be higher in the second half of 2024 compared with the first half due to anticipated improvements at MLMC, increased demand at the unconsolidated coal mining operations and the end of the Falkirk price concessions in June 2024. Capital expenditures are expected to be approximately $12.5 million in 2024.
The Company expects an effective income tax rate between 2% and 5% in 2023. Mitigation Resources of North America ® continued to build on the substantial foundation established over the past several years and ended 2022 with eight mitigation banks and four permittee-responsible mitigation projects located in Tennessee, Mississippi, Alabama and Texas.
Mitigation Resources Mitigation Resources continues to build on the substantial foundation it has established over the past several years. Mitigation Resources currently has nine mitigation banks and four permittee-responsible mitigation projects located in Tennessee, Mississippi, Alabama and Texas. In addition, Mitigation Resources is providing ecological restoration services for abandoned surface mines, as well as pursuing additional environmental restoration projects.
The decrease in earnings of unconsolidated operations was primarily due to a reduction in the per ton management fee at Falkirk as well as a reduction in earnings as a result of the Bisti contract termination as of September 30, 2021. These decreases were partially offset by a contractual price escalation and an increase in customer requirements at Coteau.
This resulted in an increase in the cost per ton sold and $7.5 million of inventory impairment charges to write down coal inventory to its net realizable value. The decrease in the earnings of unconsolidated operations was primarily due to a reduction in customer requirements at Coteau and Falkirk.
The Company’s non-cash items primarily include Depreciation, depletion and amortization, Deferred income taxes, Stock-based compensation, Gain on sale of assets, Other contract termination settlements and Asset impairment charges. 2022 2021 Change Financing activities: Net reductions to long-term debt and revolving credit agreements $ (3,828) $ (25,801) $ 21,973 Cash dividends paid (6,012) (5,617) (395) Other — (1,755) 1,755 Net cash used for financing activities $ (9,840) $ (33,173) $ 23,333 The change in net cash used for financing activities was primarily due to fewer repayments as a result of a reduction in borrowings under the Company’s revolving line of credit during 2022 compared with 2021. 56 Table of Contents Item 7.
The Company’s non-cash items primarily include Long-lived asset impairment charge, Other contract termination settlements, Inventory impairment charge, Deferred income taxes, Depreciation, depletion and amortization, Stock-based compensation, and Loss (gain) on sale of assets. The favorable change in working capital was mainly the result of a decrease in Trade accounts receivable during 2023 compared with a significant increase during 2022.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
These improvements were largely offset by the absence of earnings associated with Caddo Creek reclamation activities. 61 Table of Contents Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
The settlement relates to the Company’s ownership interest in certain mineral rights. In addition, operating profit includes a $2.4 million gain on the sale of land related to legacy operations during 2022. The Company regularly performs reviews of potential future development projects and identified certain legacy coal assets where future development is unlikely.
See Note 9 to the Consolidated Financial Statements in this Form 10-K for further information on the impairment analysis. The Company regularly performs reviews of potential future development projects and identified certain legacy coal assets where future development is unlikely.
Removed
The $17.6 million decrease in net cash provided by working capital was primarily due to a decrease in accounts payable during 2022 compared with an increase in accounts payable during 2021 due to timing of purchases and payments.
Added
In addition, a significant reduction in the Federal income tax receivable during 2023 compared with an increase during 2022 also contributed to the favorable change in working capital. 2023 2022 Change Financing activities: Net additions (reductions) to long-term debt and revolving credit agreements $ 11,023 $ (3,828) $ 14,851 Cash dividends paid (6,452) (6,012) (440) Purchase of treasury shares (3,103) — (3,103) Net cash provided by (used for) financing activities $ 1,468 $ (9,840) $ 11,308 56 Table of Contents Item 7.
Removed
The NACoal Facility has performance-based pricing, which sets interest rates based upon NACoal achieving various levels of debt to EBITDA ratios, as defined in the NACoal Facility. Borrowings bear interest at a floating rate plus a margin based on the level of debt to EBITDA ratio achieved.
Added
On November 7, 2023, the Company's Board of Directors approved a stock purchase program providing for the purchase of up to $20.0 million of the Company’s outstanding Class A common stock through December 31, 2025. See Note 12 to the Consolidated Financial Statements in this Form 10-K for a discussion of the Company's stock repurchase programs.
Removed
In the NAMining segment, 2023 capital expenditures are primarily related to the acquisition of equipment to be used at the Thacker Pass lithium project. Sawtooth is the contract miner for the Thacker Pass project.
Added
During the fourth quarter of 2023, intangible assets, net, decreased by $22.0 million, primarily because the Company recorded a non-cash, long-lived asset impairment charge. See Note 9 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company's impairment analysis.
Removed
Under the terms of the contract mining agreement, the customer will reimburse Sawtooth for these capital expenditures over a five-year period from the equipment acquisition date. 57 Table of Contents Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC.
Added
On December 18, 2023, MLMC received a force majeure event notice from its customer related to an issue that began on December 15, 2023 and impacted one of two boilers at the Red Hills Power Plant. The notice did not provide a timeline for resolution of the issue.
Removed
Inventories increased in the Coal Mining segment as MLMC is developing a new mine area and building inventory and in the NAMining segment due to an increase in supplies inventory. Trade accounts receivable increased due to higher customer requirements at MLMC.
Added
The Company determined the anticipated reduction in customer demand caused by this issue was an indicator of potential impairment. The Company recorded a non-cash, long-lived asset impairment charge of $65.9 million in 2023.
Removed
Based on current information, management does not expect compliance with these regulations to have a material adverse effect on the Company’s financial condition or results of operations. See Item 1 in Part I of this Form 10-K for further discussion of these matters.
Added
The $65.9 million relates exclusively to MLMC; however, $60.8 million and $5.1 million were recorded on the Coal Mining segment and the Minerals Management segment, respectively, as certain MLMC land assets were recorded within the Minerals Management segment. See Note 9 to the Consolidated Financial Statements in this Form 10-K for further information on the long-lived asset impairment charge.
Removed
The increase in selling, general and administrative expenses was primarily due to higher employee-related costs and professional service expenses. The decreases in operating profit were partially offset by an increase in contract termination settlements. The $14.0 million contract termination settlement from GRE was recognized during 2022. The $10.3 million payment related to the Bisti contract termination was recognized during 2021.
Added
The reduction in severed tons was due to adverse mining conditions during 2023, as well as operational inefficiencies related to final mining activities at the existing mine area. Fewer tons severed caused a decrease in tons held in inventory since more tons were delivered than produced during 2023.
Removed
The increase in gross profit was primarily attributable to water sales at Caddo Creek as well as an increase in earnings at Sawtooth Mining for the Thacker Pass lithium project, partially offset by a decrease in gross profit from the active operations mainly due to an increase in employee-related costs. 61 Table of Contents Item 7.
Added
A reduction in the per ton management fee at Falkirk, effective May 2022 through May 2024, to support the transition of the Coal Creek Station Power Plant to Rainbow Energy also contributed to the 2023 decrease in earnings.

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