Arch Land, LLC and Arch Resources, Inc. (together “Arch”)
Statement of Coal Resources and Reserves for the
Leer South Complex in Accordance with
United States SEC S-K1300 Standards as of December 31, 2023
Barbour, Harrison, and Taylor Counties,

West Virginia (USA)

Table of Contents

Title Page

Statement of Use and Preparation

Table of Contents

1Executive Summary‌8

1.1Property Description‌8

1.2Ownership‌10

1.3Geology‌10

1.4Exploration Status‌10

1.5Operations and Development‌10

1.6Mineral Resource‌10

1.7Mineral Reserve‌11

1.8Capital Summary‌13

1.9Operating Costs‌13

1.10Economic Evaluation‌14

1.10.1Sensitivity Analysis‌16

1.11Permitting‌16

1.12Conclusion and Recommendations‌17

2Introduction‌17

2.1Registrant and Terms of Reference‌17

2.2Information Sources‌17

2.3Personal Inspections‌18

2.4Updates to Previous TRS‌18

3Property Description‌19

3.1Location‌19

3.2Titles, Claims or Leases‌20

3.3Mineral Rights‌21

3.4Encumbrances‌21

3.5Other Risks‌21

4Accessibility, Climate, Local Resources, Infrastructure and Physiography‌22

4.1Topography, Elevation, and Vegetation‌22

4.2Access and Transport‌22

4.3Climate and Length of Operating Season‌23

4.4Infrastructure‌23

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5History‌23

5.1Previous Operation‌23

5.2Previous Exploration‌24

6Geological Setting, Mineralization and Deposit‌26

6.1Regional, Local and Property Geology‌26

6.1.1Lower Kittanning Seam Distribution‌26

6.2Deposits‌27

6.2.1Lower Kittanning Seam‌28

7Exploration‌28

7.1Nature and Extent of Exploration‌28

7.2Non-Drilling Procedures and Parameters‌32

7.3Drilling Procedures‌32

7.4Hydrogeology‌32

7.5Geotechnical Data‌33

7.5.1Occurrence of Hard Roof and Floor Conditions‌33

8Sample Preparation Analyses and Security‌34

8.1Prior to Sending to the Lab‌34

8.2Lab Procedures‌35

8.3Opinion of Qualified Person‌36

9Data Verification‌36

9.1Procedures of Qualified Person‌36

9.2Limitations‌37

9.3Opinion of Qualified Person‌37

10Mineral Processing and Metallurgical Testing‌37

10.1Testing Procedures‌37

10.1.1Lower Kittanning Product Compositing‌38

10.2Relationship of Tests to the Whole‌39

10.3Lab Information‌39

10.4Relevant Results‌40

10.5Opinion of the Qualified Person‌40

11Mineral Resource Estimates‌41

11.1Assumptions, Parameters and Methodology‌41

11.1.1Geostatistical Analysis for Classification‌42

11.2Qualified Person’s Estimates‌46

11.3Qualified Person’s Opinion‌46

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12Mineral Reserve Estimates‌47

12.1Assumptions, Parameters and Methodology‌47

12.2Qualified Person’s Estimates‌48

12.3Qualified Person’s Opinion‌49

13Mining Methods‌50

13.1Geotech and Hydrogeology‌50

13.2Production Rates‌50

13.3Mining Related Requirements‌51

13.4Required Equipment and Personnel‌52

13.5Life of Mine Plan Maps‌52

14Processing and Recovery Methods‌53

14.1Description or Flowsheet‌53

14.2Requirements for Energy, Water, Material and Personnel‌54

15Infrastructure‌55

16Market Studies‌55

16.1Market Description‌55

16.2Price Forecasts‌56

16.3Contract Requirements‌57

17Environmental Studies, Permitting and Plans, Negotiations or Agreements with Local Individuals‌57

17.1Results of Studies‌57

17.2Requirements and Plans for Waste Disposal‌57

17.3Permit Requirements and Status‌59

17.4Local Plans, Negotiations or Agreements‌60

17.5Mine Closure Plans‌60

17.6Qualified Person’s Opinion‌61

18Capital and Operating Costs‌61

18.1Capital Cost Estimate‌61

18.2Operating Cost Estimate‌62

19Economic Analysis‌63

19.1Assumptions, Parameters and Methods‌63

19.2Results‌65

19.3Sensitivity‌67

20Adjacent Properties‌68

20.1Information Used‌68

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21Other Relevant Data and Information‌68

22Interpretation and Conclusions‌69

22.1Conclusion‌69

22.2Risk Factors‌69

22.2.1Governing Assumptions‌70

22.2.2Limitations‌70

22.2.3Methodology‌70

22.2.4Development of the Risk Matrix‌71

22.2.4.1Probability Level Table‌71

22.2.4.2Consequence Level Table‌72

22.2.5Categorization of Risk Levels and Color Code Convention‌74

22.2.6Description of the Coal Property‌74

22.2.7Summary of Residual Risk Ratings‌75

22.2.8Risk Factors‌75

22.2.8.1Geological and Coal Resource‌75

22.2.8.2Environmental‌76

22.2.8.3Regulatory Requirements‌77

22.2.8.4Market and Transportation‌77

22.2.8.5Mining Plan‌78

22.2.8.5.1Methane Management‌78

22.2.8.5.2Mine Fires‌79

22.2.8.5.3Availability of Supplies and Equipment‌79

22.2.8.5.4Labor‌80

23Recommendations‌81

24References‌81

25Reliance on Information Provided by Registrant‌81

Figures (in Report)

Figure 11: Leer South Complex Property Location Map‌9

Figure 12: CAPEX‌13

Figure 13: OPEX‌14

Figure 14: Sensitivity of NPV‌16

Figure 31: Leer South Complex Property Location Map‌20

Figure 61: Generalized Stratigraphic Column for the Northern Appalachian Basin (not to scale)‌27

Figure 71: Drill Hole Location Map‌30

Figure 72: Generalized Leer South Cross-Section‌31

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Figure 111: Histogram of the Total Coal Thickness for the Lower Kittanning Seam Present in the Leer South Complex‌43

Figure 112: Scatter plot of the Total Coal Thickness for the Lower Kittanning Seam Present in the Leer South Complex‌43

Figure 113: Variogram of the Total Coal Thickness for the Lower Kittanning Seam Present in the Leer South Complex‌44

Figure 114: Result of DHSA for the Lower Kittanning Seam Present in the Leer South Complex‌45

Figure 131: Lower Kittanning LOM Map‌53

Figure 141: Leer South Preparation Plant as Viewed from Coarse Refuse Conveyor‌54

Figure 151: Leer South Surface Facilities‌55

Figure 171: Downslope Coarse Refuse Placement on Leer South Impoundment (Photograph provided by Arch)‌58

Figure 172: Coarse Refuse Stacker and Stockpile Area at Leer South (Photograph provided by Arch)‌59

Figure 181: CAPEX‌62

Figure 182: OPEX‌63

Figure 191: Sensitivity of NPV‌68

Tables (in Report)

Table 11: Coal Resources Summary as of December 31, 2023‌11

Table 12: Coal Reserves Summary (Dry Basis) as of December 31, 2023‌12

Table 13: Summary of Quality (dry basis)‌12

Table 14: Key Mine Statistics‌15

Table 51: Summary of Previous Exploration‌25

Table 101: Comparison of Core Hole and Shipped Quality (Metallurgical Market)‌39

Table 102: Summary of Wash Recovery Assumptions‌40

Table 111: General Reserve and Resource Criteria‌42

Table 112: DHSA Results Summary for Radius from a Central Point‌45

Table 113: Coal Resources Summary as of December 31, 2023‌46

Table 121: Coal Reserves Summary (Dry Basis) as of December 31, 2023‌49

Table 122: Summary of Quality (dry basis)‌49

Table 131: Leer South Summary of Production by Year (Moist Tons x 1,000)‌51

Table 161: Average Product Quality‌56

Table 171: Course and Fine Refuse Facility Capacities at Leer South‌58

Table 172: Leer South Mining Permit‌60

Table 181: Estimated Coal Production Taxes and Sales Costs‌63

Table 191: Life-of-Mine Tonnage, P&L before Tax, and EBITDA‌66

Table 192: Leer South After-tax Cash Flow Summary ($000)^*‌66

Table 221: Probability Level Table‌72

Table 222: Consequence Level Table‌73

Table 223: Risk Matrix‌74

Table 224: Risk Assessment Matrix‌75

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1.2	Ownership

Since 1974, the Property has been controlled by various mining companies including (in chronological order: Republic Steel Corporation, Old Ben Coal Company, Black Diamond Energy Inc., Anker Mining Company (Anker), International Coal Group (ICG), and Arch Coal Inc. (Arch) in 2011, prior to the current owner, Arch Resources, Inc. (name changed in 2020). Mine development in the Clarion seam was started by ICG in 2006, and expansion into the Lower Kittanning seam was begun by Arch in 2018.

1.3	Geology

Operations at the Leer South Complex extract coal from the Lower Kittanning seam by continuous miner and longwall mining methods. Strata of economic interest for this TRS belong to the Pennsylvanian-age Allegheny Formation. Due to the high value of these coals, the Lower Kittanning seam has been extensively mined in the region. The seam is situated below drainage throughout the Property and is accessed by existing mine slopes/shafts.

1.4	Exploration Status

The Property has been extensively explored, largely by drilling using continuous coring methods and rotary drilling, as well as obtaining coal measurements at mine exposures, ongoing drilling associated with degas activities, and by downhole geophysical methods. The majority of the data was acquired or generated by previous owners of the Property. These sources comprise the primary data used in the evaluation of the coal resources and coal reserves on the Property. MM&A examined the available data and incorporated all pertinent information into this TRS.

Ongoing exploration has been carried out by Arch since acquiring the Property, and Arch-acquired exploration data has been consistent with past drilling activities.

1.5	Operations and Development

Due to its coal reserve and seam characteristics, Leer South operates using longwall mining methods. Resource and reserve models were therefore generated with longwall mining constraints in mind for Leer South’s underground resources. The mine produces coal that is suitable for the high-volatile metallurgical coal markets and also produces a middlings product for consumption in thermal markets.

Leer South underground infrastructure and its associated preparation plant are upgraded as needed to accommodate the production from the longwall. Processes are typical of those used in the coal industry and are in use at adjacent coal processing plants.

1.6	Mineral Resource

Mineral resources, representing in-situ coal in which a portion of reserves are derived, are presented below. A coal resource estimate, summarized in Table 1-1, was prepared as of December 31, 2023, for

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property controlled by Arch. As reflected in the table below, no resources exclusive of reserves have been considered or analyzed in this TRS.

Table 1-1: Coal Resources Summary as of December 31, 2023

	Coal Resource (Dry Tons, In Situ, Mt)
Seam	Measured	Indicated	Inferred	Total
Lower Kittanning Rider
Inclusive of Reserve	2.34	0.15	0.00	2.49
Exclusive of Reserve	0.00	0.00	0.00	0.00
Total	2.34	0.15	0.00	2.49
Lower Kittanning
Inclusive of Reserve	73.08	30.89	0.00	103.96
Exclusive of Reserve	0.00	0.00	0.00	0.00
Total	73.08	30.89	0.00	103.96
Grand Total
Total	75.41	31.04	0.00	106.45

Note 1: Coal resources are reported on a dry basis. Surface moisture and inherent moisture are excluded.

1.7	Mineral Reserve

Reserve tonnage estimates provided herein report coal reserves derived from the in-situ resource tons presented in Table 1-1 which are classified as “Inclusive of Reserve”. Proven and probable coal reserves were derived from the defined coal resource considering relevant mining, processing, infrastructure, economic (including estimates of capital, revenue, and cost), marketing, legal, environmental, socio-economic and regulatory factors. The Resource estimate has been used as the basis for this Reserve calculation, which utilizes a reasonable Preliminary Feasibility Study, a Life-of Mine (LOM) Mine Plan and practical recovery factors. Production modeling was completed with an effective start date of October 1, 2023. It is important to note that the LOM plan is based on information provided by the company and does not contemplate development of contiguous reserves the company currently controls or could acquire in the future (neither of which have been assessed as part of this TRS), nor does it assume any improvements in productivity, technological innovations, or operating efficiencies that the company has achieved historically.

The Leer South property is unique in that it produces both a metallurgical coking coal product and a middling thermal blend product. As such, reserve tabulations include a breakdown of each respective product. It is of important note that qualities presented in Table 1-3 which correspond which each respective market placement (metallurgical and thermal) are based upon exploration information at prescribed density cut points. These quality estimates should be viewed as predictive—actual produced quality will vary based upon a multitude of factors, including, but not limited to plant operating practices and associated efficiency; plant equipment circuitry; plant feed quality and size distribution; and contractual product specifications. Over the past 2 years, produced thermal based tonnages have had lower ash percentages than those projected in thermal reserve classifications herein. Further, the relative ratio of thermal tons to metallurgical tons produced at the operation has been lower than projected in this TRS. One can reasonably expect this ratio and quality parameters to vary in accordance with market demands. Thermal reserve tons make up a relatively small portion of the projected revenue stream expressed in this TRS and for the operation.

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Factors that would typically preclude conversion of a coal resource to coal reserve, include the following: inferred resource classification; absence of coal quality; poor mine recovery; lack of access; geological encumbrances associated with overlying and underlying strata; seam thinning; structural complication; and insufficient exploration have all been considered. Reserve consideration excludes those portions of the resource area which exhibit the aforementioned-geological and operational encumbrances.

Proven and probable coal reserve were derived from the defined in-situ coal resource considering relevant processing, economic (including technical estimates of capital, revenue, and cost), marketing, legal, environmental, socioeconomic, and regulatory factors. The proven and probable coal reserves on the Property are summarized below in Table 1-2.

Table 1-2: Coal Reserves Summary (Dry Basis) as of December 31, 2023

	Demonstrated Coal Reserves (Dry Tons, Washed or Direct Shipped, Mt)									LOM Wash Recovery (%)
	By Reliability Category			By Product		By Control Type
Seam	Proven	Probable	Total	Met ~1.50 Float SG**	Thermal ~1.50 x 1.70 SG**	Owned	Leased	Partially Owned	Partially Leased
Lower Kittanning Rider	1.43	0.01	1.44	1.27	0.17	0.05	1.11	0.00	0.28
Lower Kittanning	43.23	17.97	61.19	52.69	8.51	51.66	7.01	1.59	0.94
Total	44.66	17.98	62.63	53.95	8.68	51.70	8.12	1.59	1.22	44%

Uncontrolled*	2.53	0.37	2.90	2.51	0.38

*Uncontrolled tons are reported for informational purposes only and are not part of the reserves. Uncontrolled tonnages are contained within small mineral tracts which must be acquired for execution of the life-of-mine plan. As such, uncontrolled tonnages are included in the LOM financial model. See appendix for maps which show details of mineral control. Mine plan includes a total of 2.9 Mt of adverse tons and was adjusted for approximately 0.26 Mt of depletion.

**Metallurgical tonnages and thermal tonnages (and associated quality) are respectively based upon an approximate 1.50 float and 1.50 x 1.70 specific gravity, as this represented the most consistent coal quality data. In reality, Arch’s actual plant operating gravities vary depending upon required product specifications. See “Mineral Processing and Metallurgical Testing” chapter of report for more detailed explanation on derivation of product yields. Exploration coal quality commonly varies from saleable product quality. Over the past 2 years, thermal ash and the ratio of thermal to met tons have been lower than projected in this TRS.

*** Coal Reserves are based upon sales assumptions provided to MM&A by Arch and were relied upon by MM&A. Financial modeling assumes sales prices of approximately $162.32 per ton (FOB-mine) in 2024, stabilizing to a long-term price of approximately $150.56/ton. See Chapter 16 for further details on marketing assumptions.

Table 1-3: Summary of Quality (dry basis)

	Met				Thermal
Seam	Ash	Sulfur	Vol	Btu/lb.	Ash	Sulfur	Btu/lb.
Lower Kittanning Rider	8.3	1.3	35	14,240	31.9	4.3	10,184
Lower Kittanning	8.8	1.3	34	14,180	34.5	2.6	9,587
Total	8.8	1.3	34	14,181	34.5	2.6	9,599

*Metallurgical tonnages and thermal quality (and associated tonnages) are respectively based upon an approximate 1.50 float and 1.50 x 1.70 specific gravity, as this represented the most consistent coal quality data. See “Mineral Processing and Metallurgical Testing” chapter of report for more detailed explanation on derivation of product yields.

**Qualities presented which correspond with each respective market placement (metallurgical and thermal) are based upon exploration information at prescribed density cutpoints. These quality estimates should be viewed as predictive—actual produced quality will vary based upon a multitude of factors, including, but not limited to plant operating practices and associated efficiency; plant equipment circuitry; plant feed quality and size distribution; and contractual product specifications. Over the past 2 years, produced thermal ash percentages have been lower than projected in Table 1-3.

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discounted cash flow analysis presented herein is based on an effective date of December 31, 2023. On an un-levered basis, the NPV of the project cash flow after taxes represents the Enterprise Value of the project. The project cash flow, excluding debt service, is calculated by subtracting direct and indirect operating expenses and capital expenditures from revenue.

Cash flow after tax, but before debt service, generated over the life of the project was discounted to NPV at a 10% discount rate, which represents MM&A’s estimate of the constant dollar, risk adjusted WACC for likely market participants if the subject reserves were offered for sale. On an un-levered basis, the NPV of the project cash flows represents the Enterprise Value of the project and amounts to $1.870 billion. The pre-feasibility financial model prepared for the TRS was developed to test the economic viability of each coal resource area. The NPV estimate was made for the purpose of confirming the economics for classification of coal reserves and not for purposes of valuing Arch or its Leer South assets. Mine plans were not optimized, and actual results of the operations may be different, but in all cases, the mine production plan assumes the properties are under competent management.

Table 1-4 shows LOM tonnage, P&L, and EBITDA for Leer South.

Table 1-4: Key Mine Statistics

	LOM Plan
ROM Tons Produced (x 1,000)	155,805
Clean Tons Produced, Moist Basis (x 1,000)⁴	72,803
Preparation Plant Yield (%)	47%
Coal Sales Realization ($/ton)²	$150.30
Direct Cash Costs ($/ton)	$65.07
Other Cash Costs ($/ton)	$10.92
Non-Cash Costs ($/ton)	$5.27
Total Costs of Sales ($/ton)	$81.26
Profit/(Loss)	$69.04
EBITDA	$74.31
CAPEX ($/ton)	$5.42

Note 1: The LOM Economic Model was developed based upon mine faces as of October 1, 2023, whereas reserves were calculated as of December 31, 2023. As such, the economic model includes a small portion of tonnages not included in the reserve estimate. Additionally, the LOM model includes tonnages contained within uncontrolled tracts which are not included in reserve estimates.

Note 2: Realized coal prices are based upon a combination of thermal (middlings) and high-volatile A coking coal products. Realized coal prices incorporate HCC indices, adjustments from metric tons to short tons, adjustments for transportation costs and assumed prices for thermal products.

Note 3: The LOM model and associated economic analysis is intended to prove the economic viability of the subject coal tonnage, allowing controlled tons to be classified as “reserve”. The exercise should not be construed to represent a valuation of Arch’s holdings. Long-term cash flows incorporate forward-looking market projections which are expected to vary over time based upon historic volatility of coal markets.

Note 4:

LOM plan includes variances from reserves based on the LOM plan tons being 1) moist basis; 2) inclusion of non-reserve adverse tracts and 3) slight variances between production faces effective 12/31/23.

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West Virginia (USA)

1.12	Conclusion and Recommendations

Sufficient data have been obtained through various exploration and sampling programs and mining operations to support the geological interpretations of seam structure and thickness for coal horizons situated on the Leer South Property. The data are of sufficient quantity and reliability to reasonably support the coal resource and coal reserve estimates in this TRS.

The geological data and preliminary feasibility study, which consider mining plans, revenue, and operating and capital cost estimates are sufficient to support the classification of coal reserves provided herein.

This geologic evaluation conducted in conjunction with the preliminary feasibility study concludes that the 62.6 Mt of marketable underground coal reserves identified on the Property are economically mineable under reasonable expectations of market prices for metallurgical coal products, estimated operation costs, and capital expenditures. In order to successfully recover the aforementioned controlled reserves, additional properties must be acquired by Arch. Such properties contain an estimated additional 2.9 Mt of recoverable coal.

2 Introduction

2.1	Registrant and Terms of Reference

This report was prepared for the sole use of Arch Land, LLC and Arch Resources, Inc. (together “Arch”) and its affiliated and subsidiary companies and advisors. The report provides a statement of coal resources and coal reserves for Arch, as defined under the United States Securities and Exchange Commission (SEC) SK-1300 standards.

The report provides a statement of coal reserves for Arch. Exploration results and Resource calculations were used as the basis for the mine planning and the preliminary feasibility study completed to determine the extent and viability of the reserve.

Coal resources and coal reserves are herein reported in the U.S. system of measurement and are rounded to millions of short tons.

2.2	Information Sources

The technical report is based on information provided by Arch and reviewed by professionals employed by Marshall Miller and Associates.

Arch engaged MM&A to conduct a coal reserve evaluation of the Arch coal properties as of December 31, 2023. For the evaluation, the following tasks were to be completed:

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instruments pertinent to the subject resources. Arch has represented to MM&A that it controls the mining rights to the reserves as shown on its property maps, and MM&A has accepted these as being a true and accurate depiction of the mineral rights controlled by Arch. The TRS assumes the Property is developed under responsible and experienced management.

3.3	Mineral Rights

Arch supplied property control maps to MM&A related to properties for which mineral and/or surface property are controlled by Arch. While MM&A accepted these representations as being true and accurate, MM&A has no knowledge of past property boundary disputes or other concerns, through past knowledge of the Property, that would signal concern over future mining operations or development potential.

Property control in Appalachia is often intricate. Coal mining properties are typically composed of numerous property tracts which are owned and/or leased from both land-holding companies and private individuals or companies. It is common to encounter severed ownership, with different entities or individuals controlling the surface and mineral rights. Mineral control in the region is typically characterized by leases or ownership of larger tracts of land, interspersed with surface control generally comprised of smaller tracts, particularly in developed areas.

Legal mining rights may reflect a combination of fee or mineral ownership and fee or mineral leases of coal lands through various surface and mineral lease agreements. There is also a relatively small amount of area where the coal is partially owned and/or partially leased on a limited number of individual tracts.

Control of the surface property is necessary to conduct surface mining but is not necessary to conduct underground mining. Given that the Property has had active mining operations dating back to the 1970’s, Arch, and its predecessors, have a successful history of obtaining any necessary rights and the associated permits to mine.

3.4	Encumbrances

No Title Encumbrances are known. By assignment, MM&A did not complete a query related to Title Encumbrances.

3.5	Other Risks

There is always risk involved in property control. Arch’s land division and legal teams continually examine critical properties and associated deeds and title control in order to minimize the risk. MM&A is not aware of any historical property control challenges related to Leer South’s operations.

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West Virginia (USA)

4 Accessibility, Climate, Local Resources, Infrastructure and Physiography

4.1	Topography, Elevation, and Vegetation

The Leer South mine is located on the Appalachian plateau of northern West Virginia. The topography of the Property consists of rolling terrain with slopes rising from the Tygart River and associated tributaries. The Tygart River Valley extends from Pocahontas County, West Virginia, north through Randolph, Barbour, Taylor and Marion Counties. The Leer South mine is located to the west of the Tygart River northwest of the town of Philippi, West Virginia. The upper elevations consist of sinuous ridgelines of elevations rising up to 1,900 feet.

The terrain drops off from the higher elevations with steep slopes down to Foxgrape Run, Little Hackers Creek, Hackers Creek and Shooks Run to the south. The drainages of Stewart Run, Spaw Lick and Brushy Fork are found to the southwest. Pleasant Creek, Simpson Creek, Camp Run, Stillhouse Run, Bartlett Run and Beards Run are located to the north. There are scattered areas of relatively flat lying pastureland on the river and stream floodplain terraces. Maximum relief of the Property is approximately 900 feet. Elevation ranges from 1,000 feet on Simpson Creek to the north and up to 1,905 feet on a knob located between Stewart Run and the head of Simpson Creek.

The surface of the Leer South mine property consists mostly of unmanaged forestland and pastureland. The forestland consists of typical West Virginia Forest species with Oak/Hickory as the dominant forest-type group with a lesser percentage of Maple/Beech/ and Birch Forest.

4.2	Access and Transport

The Leer South mine office is located off of US Route 119, near the town of Philippi in Barbour County, West Virginia. The nearest cities are Clarksburg and Bridgeport, West Virginia, approximately 17 miles to the northwest. The city of Buckhannon, West Virginia is located 26 miles to the south of the mine. The property can be accessed from Clarksburg/Bridgeport via West Virginia Route 76 and US Route 50. The property can be accessed from Buckhannon via US Route 119 to Philippi.

The nearest airport to the mine is the North Central West Virginia Airport (CKB) which is located in Bridgeport, West Virginia. The North Central West Virginia Airport is 17 miles from the mine office. The Morgantown Municipal Airport (MGW) is located 43 miles to the north in Morgantown, West Virginia.

The Leer South mine transports coal to the CSX Railroad (CSX) via the Appalachian and Ohio Railroad (A&O). A&O operates 158 miles of shortline from Cowen, West Virginia to Grafton, West Virginia. CSX operates the Mountain Subdivision from Cumberland, Maryland through Grafton, West Virginia. CSX operates a rail yard at Grafton, West Virginia.

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4.3	Climate and Length of Operating Season

The climate of the Leer South mine property is classified as a humid continental climate. This entails hot, humid summers and moderately cold winters. Climate conditions vary greatly in the state of West Virginia due to the influence of rugged topography. Average high temperatures range from 82 to 87 degrees Fahrenheit in the summer with average ranges from 15 to 25 degrees Fahrenheit for the lows in winter. Average yearly rainfall measured in Philippi, West Virginia is 52 inches per year. The Leer South mine operates year-round.

4.4	Infrastructure

The Leer South Complex has sources of water, power, personnel, and supplies readily available for use. Personnel have historically been sourced from the surrounding communities in Barbour, Harrison, and Taylor counties, and have proven to be adequate in numbers to operate the mine. As mining is common in the surrounding areas, the workforce is generally familiar with mining practices, and many are experienced miners. Water is sourced locally from local streams overlying and proximal to Arch’s property. The mine also utilizes ground water from an old, abandoned mine. Electricity is sourced from MonPower, a First Energy Company. Additionally, water is sourced from the toe of the refuse impoundment for various uses in the mine and plant. The service industry in the areas surrounding the mine complex has historically provided supplies, equipment repairs and fabrication, etc. The Arch-owned Leer South Preparation Plant services the mine via a slope conveyor system which transports extracted coal from an underground bunker to the surface facility. The Appalachian and Ohio rail line serves as the main means of transport from the mine.

5 History

5.1	Previous Operation

The area north of Philippi, West Virginia along the Tygart River has had mining in the Lower Kittanning seam since the early 1900’s. The West Virginia Geologic and Economic Survey (WVGES) and the West Virginia Department of Environmental Protection (WVDEP) show the following companies and mines operating in the area along the Tygart River near the Leer South property:

>	Midland Coal and Coke No. 1 Mine (1905)

>	Bar-Jay Coal Company, Morral No. 1 and No. 2 Mines (1957)

>	Ketchum Coal Company, Mine No. 1 (1964)

>	Johnson Coal Company (1974)

>	Pittston Coal Group / Badger Coal Company, Mines No. 13 and 14 (1974, 1984)

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Table 5-1: Summary of Previous Exploration

Company	No. of Drill Holes	Quality Lab	Years Drilled
Simpson Creek Collieries	1	None	1955
Badger Coal Company	4	None	1965
Island Creek Coal Company	1	Island Creek Co. Lab	1967
Badger Coal Company	3	Badger Coal Co. Lab	1968
Mountaineer Coal Company	3	None	1968
Badger Coal Company	3	Badger Coal Co. Lab	1969
Hillman Coal and Coke Company	4	None	1970
Badger Coal Company	8	Badger Coal Co. Lab	1970
Badger Coal Company	9	Badger Coal Co. Lab	1971
Hillman Coal and Coke Company	2	Unknown lab	1972
Hillman Coal and Coke Company	18	Unknown lab	1973
Republic Steel Corporation	1	None	1973
Tygart West Inc./Hillman Coal Co.	2	Unknown lab	1973
Tygart West Inc. /Hillman Coal Co.	4	Unknown lab	1974
Badger Coal Company	14	Pittston Coal Group Lab	1975
Bethlehem Mines Corporation	1	Bethlehem Mines Corp. Chemical Lab	1975
Badger Coal Company	23	Pittston Coal Group Lab	1976
Badger Coal Company	1	Pittston Coal Group Lab	1977
Consol Energy, Inc.	1	None	1977
Badger Coal Company	6	None	1978
Consol Energy, Inc.	1	None	1978
Republic Steel Corporation	32	Republic Steel Chemical Lab	1978
Petroleum Development Corp.	1	None	1979
Republic Steel Corporation	31	Republic Steel Chemical Lab	1979
Hillman Coal Company	10	Unknown Lab	1980
Republic Steel Corporation	3	Commercial Testing and Engineering Co.	1980
Hillman Coal Company	3	Unknown Lab	1981
Republic Steel Corporation	11	Commercial Testing and Engineering Co.	1981
Republic Steel Corporation	3	None	1982
Kitt Energy Corporation	9	None	1983
Kitt Energy Corporation	1	None	1983
Hillman Coal Company	3	None	1987
Anker Energy Corporation	2	None	1990
Anker Energy Corporation	3	Coal Operators Analytical Lab	1998
Anker Energy Corporation	2	None	1999
Anker Energy Corporation	1	None	2001
Anker Energy Corporation	2	None	2002
Ryanstone Coal Company	3	Standard Laboratories, Inc.	2002
CDX Gas, LLC	5	Unknown Lab	2004
Anker Energy Corporation	1	None	2005
CDX Gas, LLC	6	Unknown Lab	2005
CDX Gas, LLC	10	Unknown Lab	2006
International Coal Group, LLC	21	Coal Operators Analytical Lab	2006
CDX Gas, LLC	6	None	2007
CDX Gas, LLC	8	None	2008
International Coal Group, LLC	2	None	2009

Arch has continued ongoing exploration efforts on the Property with approximately 125 core holes drilled between 2011 and 2023; the most recent analytical testing has been conducted by Standard Laboratories, Inc. located in Belington, West Virginia.

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6Geological Setting, Mineralization and Deposit

6.1	Regional, Local and Property Geology

The strata of the Tygart Valley in Taylor and Barbour Counties, West Virginia consists of Pennsylvanian age sedimentary strata of the Monongahela Group, the Conemaugh Group, and the Allegheny Formation. The gently dipping layered strata consists of shale, sandstone, claystone, fireclay, and coal seams. At present, economic sedimentary deposits are limited to coal.

The Monongahela Group includes the Sewickley, Redstone, and Pittsburgh coal seams. The Pittsburgh seam has been heavily surface-mined and deep-mined at higher elevations in the Tygart region.

The Conemaugh group coal seams include the Elk Lick, Harlem, Bakerstown and Brush Creek coal seams. These seams are generally thin and discontinuous on the Leer South property. No known mining has taken place in the Conemaugh group coal seams in the Leer South mine area.

The Allegheny Formation includes the Upper and Lower Freeport coal seams, Johnstown Limestone, Upper and Lower Kittanning coal seams, the Clarion and Brookville coal seams. The Upper Kittanning, Lower Kittanning and Clarion seams have been deep mined in the Leer South area. All other coal seams of the Allegheny Formation in the area occur in limited areal extent and are of insufficient thickness for mining. The Upper Kittanning coal seam has had limited mining in the area, often hampered by soft floor strata and high sulfur content. Leer South is currently mining the Lower Kittanning seam. It should be noted that WVGES applies the name “Middle Kittanning”, rather than “Lower Kittanning” to this coal bed within this area.

6.1.1

Lower Kittanning Seam Distribution

The Lower Kittanning seam has been extensively mined in the region, with mine operators and mine names changing over time. The Leer South Lower Kittanning reserve is situated near Philippi, West Virginia, in the south and extends north to Rosemont, West Virginia. The reserve extends from US Route 119 on the east side to Glade Run on the west side of the Property. The reserve is approximately 9.5 miles in length (northwest to southeast) and approximately 5.9 miles wide, (northeast to southwest).

The Lower Kittanning seam consists primarily of a dual-bench horizon (tagged as 4600) with a thin boney coal or carbonaceous shale parting between the two benches, (typically less than 1 foot in thickness). An overlying Rider seam (tagged as 4650) is present primarily within the southern portion of the mine plan that can add an additional 2.7 feet of coal to the Lower Kittanning seam. Drill holes show the seam thickness within the reserve boundary ranging from 0.0 to 6.6 feet, (10.9 feet including the rider). The Lower Kittanning seam thins to less than 3.0 feet to the west of the Leer South mine plan.

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6.2.1

Lower Kittanning Seam

The 4650 (Rider) and 4600 (Main seam) benches are splits of the Lower Kittanning horizon present on the Property and within the projected mining areas. Due to variations in the splitting and merging characteristics of these coal beds, two mining configurations are present within the Lower Kittanning horizon.

Main seam only (4600 bench), ranging from 0.00 feet to a maximum of 9.00 feet, typically from 4.50 to 5.00 feet within the longwall panel areas. The Lower Kittanning seam consists primarily of a dual-bench horizon (tagged as 4600) with a thin boney coal or carbonaceous shale parting between the two benches, (typically less than 1 foot in thickness). Main seam only mining occurs where the Rider is either not present or is located above the assumed 7.00-foot average cutting height of the longwall shearer.

Main seam with overlying Rider seam (4600 + 4650), or Full seam. Mining of the two benches occurs where the Rider is located within the 7.00-foot average cutting height of the longwall shearer. Under this scenario, the parting between the two benches ranges typically from 1.00 to 2.00 feet, and the resulting maximum mining height (assuming that the full extent of the Rider seam is excavated) approaches 10.90 feet.

The Lower Kittanning seam is situated below drainage throughout the Property and is accessible by existing slopes and shafts. Within the current longwall mine plan area, overburden thicknesses range from approximately 425 feet to more than 1,300 feet.

Composition of the mine floor varies across the projected mine area, consisting primarily of shale, sandy shale, and occasionally shaley fireclay. The lithologic composition of the immediate roof strata exhibits greater variability due to the presence (or absence) of the Rider seam but consists primarily of dark gray to black shale which coarsens upward to sandy shale. As noted above, the Rider seam can locally occur within 1-foot of the top of the Main seam where it is included within the mineable section however, it may occur more than 15 feet above the Main bench elsewhere.

7 Exploration

7.1	Nature and Extent of Exploration

All Arch Resources exploration pertaining to long-range planning and reserve definition-based work consists of core drilling. No other forms of exploration have been carried out on the Leer South mine property, with the exception of channel sampling which is utilized for short term planning and quality projections.

Since 2011 Arch Coal Inc./Arch Resources Inc. has drilled approximately 130 core holes for the Lower Kittanning seam in the Leer South mine reserve. All drill holes are cored; coal samples typically are sent

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surface topography for surface-mineable areas), the data point was not honored for geological modeling. Others with apparently minor variances were adjusted and then utilized by MM&A.

Surveying of the underground and surface mined areas has been performed by the mine operators and/or their consulting surveyors. By assignment, MM&A did not verify the accuracy or completeness of supplied mine maps but accepted this information as being the work of responsible engineers and surveyors.

MM&A compiled comprehensive topographic map files by selecting the best available aerial mapping for each area and filling any gaps with digital USGS topographic mapping.

7.2	Non-Drilling Procedures and Parameters

Exploration work associated with long term mine planning predominantly consists of core drilling. Additionally, short term mine planning and quality projections utilize channel sampling obtained from existing mine workings. No other forms of exploration have been carried out on the Leer South mine property.

7.3	Drilling Procedures

Arch Land exploration consists of continuous core drilling using contract drilling companies. HQ core (3.76-inch diameter drill hole yielding 2.5-inch core samples) is normally used in the Leer South Mine property. Exploration drilling provides core samples of roof strata, the coal seam and floor strata. Roof and floor strata samples are typically sent for geotechnical strength testing. Coal seam cores are sent to certified laboratories for quality analyses; and some coal cores are placed in sealed canisters to determine gas content and gas composition. Upon completion of each site, the drill holes are geophysically logged where caliper, density, gamma, resistivity, and sonic logs are run. In accordance with Arch Land’s procedures and standards for exploration, each drill site location is surveyed.

Geologic logs were provided to MM&A as part of a geological database. MM&A geologists were not involved in the production of original core logs but did perform a basic check of information within the provided database. Where geophysical logs for such holes are available, they were used by MM&A geologists to verify the coal thickness and core recovery of seams.

7.4	Hydrogeology

Mining in Leer South in the Lower Kittanning coal seam is below surface drainage. In general, the hydrogeologic system for Leer South is similar to that of longwall mining in the Leer Mine to the north (see Figure 6-1 above). As such, longwall mining in the Lower Kittanning seam in Leer South is expected to involve stream undermining, undermining of aquifers, and mining through coalbed methane wells. In addition, longwall mining in Leer South will occur beneath previous above-drainage mining in the Pittsburgh coal seam; however, with an average interburden thickness of approximately 800 feet

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between the Lower Kittanning and the Pittsburgh seams, the potential for adverse interaction is not expected.

MM&A has provided predictive longwall subsidence modeling for Leer South to facilitate planning of post-mining hydrogeologic conditions. Based upon the successful history of the operation at Leer Mine, and the generally similar nature of hydrogeologic conditions at Leer Mine and Leer South, MM&A assumes that the Leer South engineering personnel have the knowledge and experience to minimize and mitigate any potential hydrogeologic issues.

7.5	Geotechnical Data

Mining plans for potential underground mines were developed by Arch and reviewed by MM&A for applicability to the resource. Pillar stability for longwall operations in the Lower Kittanning seam was checked by MM&A using the Analysis of Coal Pillar Stability (ACPS) program. ACPS integrates the older Analysis of Retreat Mining Pillar Stability (ARMPS), Analysis of Longwall Pillar Stability (ALPS), and Analysis of Multiple Seam Stability (AMSS) software packages (originally developed by the National Institute for Occupational Safety and Health [NIOSH]) into a single pillar design framework. MM&A reviewed the results from the ACPS analysis and considered them in the development of the LOM plan.

MM&A has conducted a mine visit in October 2020 to observe mine conditions. During the visit, MM&A observed conditions and in the main entries in the Lower Kittanning seam. Evidence of horizontal stress was noted in the mains and in the right rib of three working faces in the Lower Kittanning seam. The ground control system included steel wire mesh with eight-foot fully grouted bolts, cable bolts, truss bolts and rib bolts. MM&A verified appropriate orientations of the Leer South mine plans using Analysis of Horizontal Stress in Mining (AHSM).

7.5.1

Occurrence of Hard Roof and Floor Conditions

During the course of mine development, the mine has encountered roof and/or floor conditions that have adversely impacted longwall advance within areas where the combined thickness of cuttable roof, coal, and floor are less than 7 feet (average longwall cutting height); these are also referred to as “pinch points”. Where distribution of this condition has occurred more broadly, panels have been shortened or left undeveloped.

Arch’s engineering staff has addressed this issue through mapping the composition of the immediate roof and floor strata enclosing the Lower Kittanning seam. Through analysis of recently acquired (2023) geological logs and mine measurements, two general categories of immediate roof strata have been identified within the mine plan area: cuttable roof strata, consisting of soft, dark gray to black shales with an average compressive strength (UCS) of 5,800 pounds per square inch (PSI); and uncuttable hard sandy shale (10,900 PSI) to sandstone (16,600 PSI) strata.

Floor strata have been similarly categorized into two classes: cuttable soft fireclays (2,800 PSI); and uncuttable hard shales (4,200 PSI) or sandy fireclays (9,700 PSI).

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The mapped distribution of pinch points (less than 6 to 6.5 feet of cuttable strata including the Lower Kittanning seam) is utilized by Arch’s engineering staff as a tool for mine planning purposes, as noted, through shortening panels or not developing them. Where longwall panels are planned by Arch to mine through more localized pinch points, MM&A has applied a 50 percent reduction in mine recovery within those areas to account for potentially reduced coal recovery.

8 Sample Preparation Analyses and Security

8.1	Prior to Sending to the Lab

Prior to Arch’s acquisition of the Property, the protocol for preparing and testing samples varied over time and has not been fully documented for the older holes drilled. Typical core-drilling sampling methods for coal in the United States involves drilling through the seam, removing the core from the barrel, describing the lithology, wrapping the sample in a sealed plastic sleeve and placing it lengthwise into a covered core box, and carefully marking hole ID and depth intervals on each box and lid, allowing the core to be delivered to a laboratory in correct stratigraphic order, and with original moisture content. This process has been the norm for both historical and ongoing exploration activities at the Leer South Property.

This work is typically performed by the supervising driller, geologist, or company personnel. Samples are most often delivered to the company by the driller after each shift or acquired by company personnel or representatives. MM&A did not participate in the collection, sampling, or analysis of the core samples. However, it is reasonable to assume, given the consistency of quality from previous operators, that these samples were generally collected and processed under industry best practices. This assumption is based on MM&A’s familiarity with the operating companies and the companies used to perform the analyses.

Subsequent to acquisition of the Property by Arch, routine exploration procedures have included the placement of target coal seams from the core barrel into a plastic lined wooden core box. The coal seam is then measured and described by the geologist. The coal sample is then covered in plastic with the wooden box sealed. Cardboard dividers and foam tubing are used to tightly pack and cushion the coal sample within the wooden box. The coal core boxes are transported to the Arch Land core storage shed at Tucker Run where they are locked in a secure building.

The Arch geologist’s seam thickness measurements are checked against the geophysical logs for thickness accuracy and to confirm core recovery. Within two weeks of completion of the core hole, the coal samples are removed from the wooden core boxes and placed in sealed plastic bags. The samples are coded and labelled with sample identification numbers based on drill hole id (DT2001), sample sequence (A, B, C, etc..), and sample number, (1, 2, 3 etc..). (Example DT2001A1 = first sample of first seam in drill hole DT2001.)

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8.2	Lab Procedures

Coal-quality testing has been performed over many years by operating companies using different laboratories and testing regimens. Some of the samples have raw analyses and washabilities on the full seam (with coal and rock parting layers co-mingled) and are mainly useful for characterizing the coal quality for projected production from underground mining. Other samples have coal and rock analyzed separately, the results of which can be manipulated to forecast underground mining quality. Care has been taken to use only those analyses that are representative of the coal quality parameters for the appropriate mining type for each sample. Unlike many Appalachian properties, Leer South has interest in only a single seam, the Lower Kittanning seam.

Standard procedure upon receipt of core samples by the testing laboratory is to: 1) log the depth and thickness of the sample; then 2) perform testing as specified by a representative of the operating company. Each sample is then analyzed in accordance with procedures defined under American Society for Testing and Materials (ASTM) standards including, but not limited to washability (ASTM D4371); ash (ASTM D3174); sulfur (ASTM D4239); Btu/lb. (ASTM D5865); volatile matter (ASTM D3175); Free Swell Index (FSI) (ASTM D720).

Subsequent to acquisition of the Property by Arch, quality samples were bagged and labelled, and samples were initially delivered to Standard for quality analyses. Quality samples go to Standard Lab in Bellington, West Virginia for sample preparation (crushing, splitting, and sizing), Proximate, Washability, Ash Fusion, Ultimate, Ash Mineral Analyses, Dilatometer and Plastometer (coking) analyses and Trace Elements analyses. Standard then ships splits of the samples to the SGS North America Inc. (SGS) lab in Sophia, West Virginia for petrographic analyses.

Standard and SGS are contracted for performing quality analyses for Arch Resources; each of these is a certified coal quality testing facility.

According to Arch’s protocols, quality control procedures are followed by its geologists to protect sample integrity and to ensure core samples are always under their control. Once core samples have been analyzed, field geologists scrutinize the resulting quality data for accuracy; when satisfied that the data reports are accurate, the quality analyses are entered into a CoalAccess database. Upon data entry completion, Arch’s modelling geologist exports the data and inspects the data for variance from expected norms. If any data shows outside the norm for the Property, the data is checked against lab results to ensure proper data entry. Quality data is gridded by Arch’s in-house staff and mapped; and anomalous data (or “bullseyes”) in the data mapping is investigated. If the anomalous data is accurate, those items are brought to the attention of the mine engineers and sales staff.

Arch Land procedures for quality analyses provide a full range of coal quality analyses so that engineers and sales staff working with the data have a complete listing of the coal seam quality for each drill hole completed by Arch Land.

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Companies engaged in coal mining typically have their own parameters for coal core quality analyses. Many of these tailor their quality analyses procedures for specific coal seams, properties, and preparation plants. Arch Land’s analytical testing is designed to provide its engineers and sales staff with an extensive catalog of coal quality analyses.

8.3	Opinion of Qualified Person

Based upon the consistency of quality information derived from multiple historical and ongoing exploration campaigns, MM&A finds the security protocols of past an ongoing exploration to be sufficient for resource and reserve documentation. Arch’s geology staff reports that it currently manages all exploration-based logistics, including core/channel sampling logging, transportation of material to the requisite laboratories, and the population/security of samples and appropriate laboratory forms. Currently, Standard Lab and SGS North America Inc. handle the majority of coal analytical procedures related to exploration.

Procedures utilized by Arch are aligned with typical protocols used in the coal industry.

9 Data Verification

9.1	Procedures of Qualified Person

All data generating procedures undertaken by Arch Land geologists have redundant data processing steps designed to ensure all data generated and used is checked and cross checked for accuracy.

Drill hole locations are surveyed to ensure accurate locations. Drill holes are e-logged to ensure seam thickness and interburden thickness recorded by drillers and geologists are accurate. All original drill hole, survey, geologic, geophysical, and quality data are scanned and stored on Arch’s server so it can be accessed and checked by any Arch engineering or Sales personnel against the database, modeling and mapping.

MM&A reviewed the Arch supplied digital geologic databases. The database consists of data records, which include drill hole information for holes that lie within and adjacent to the Property and records for numerous supplemental coal seam thickness measurements. Upon completion of the database verification, copies of a subset of records were printed on a test-case basis, and cross referenced to the original document for verification. Once the initial integrity of the database was established, stratigraphic columnar sections were generated using cross-sectional analysis to establish or confirm coal-seam correlations. Geophysical logs were used wherever available to assist in confirming the seam correlation and to verify proper seam thickness measurements and recovery of coal samples.

After establishing and/or verifying proper seam correlation, seam data-control maps and geological cross-sections were generated and again used to verify seam correlations and data integrity. Once the

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database was fully vetted, seam thickness, base-of-seam elevation, roof and floor lithologic information, and overburden maps were independently generated for use in the mine planning process.

9.2	Limitations

As with any exploration program, localized anomalies cannot always be discovered. The greater the density of the samples taken, the less the risk. Once an area is identified as being of interest for inclusion in the mine plan, additional samples are taken to reduce the risk in those specific areas. In general, provision is made in the mine planning portion of the study to allow for localized anomalies that are typically classed more as a nuisance than a hinderance.

9.3	Opinion of Qualified Person

10 Mineral Processing and Metallurgical Testing

10.1	Testing Procedures

Coal core samples generated by Arch Land drilling and channel samples taken within the Leer South mine are subjected to metallurgical testing at Standard and SGS. Metallurgical testing consists of ultimate, sulfur forms, ash mineral analyses, trace element analyses, Gieseler and Arnu (coking analyses) and petrographic analyses.

Arch Land procedures for metallurgical quality analyses include a wide range of coal quality analyses. This provides Leer South mine engineers and Arch sales staff working with the mine a complete listing of the coal quality for each drill hole and channel samples taken by Arch Land.

Separate tabulations have been compiled for basic chemical analyses (both raw and washed quality), petrographic data, rheological data and chlorine, ash, ultimate and sulfur analysis are maintained in MM&A’s files to the extent that such data has been provided.

Available coal-quality data were tabulated by resource area in Microsoft® EXCEL workbooks provided by Arch, and the details of that work are maintained on file at the offices of Arch and MM&A. These tables also provide basic statistical analyses of the coal quality data sets, including average value; maximum and minimum values, and the number of samples available to represent each quality parameter of the seam. Coal samples that were deemed by MM&A geologists to be unrepresentative were not used for statistical analysis of coal quality, as documented in the tabulations.

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The projected mine plans presented for the Lower Kittanning seams were examined and quality borings were selected for examination in order to accurately characterize the coal resources. Sampled interval information from the float sink analyses of each selected sample was correlated against MM&A developed geologic strip logs. This process determined what geologic strata was sampled in each analysis. Samples were individual analyzed, or as combinations of the Lower Kittanning Rider, the parting, and the Lower Kittanning seam.

Once the type of sampled material was determined for each float sink analysis, composites were calculated for the metallurgical and thermal products. When the sample material was unsized, by zero, a cumulative float 1.50 specific gravity (SG) product was used to represent the metallurgical product. When a sample contained multiple size classes, a cumulative float 1.50 SG product was used for the coarse and intermediate material. Data for the fine material was generally reported at a cumulative float 1.30 or 1.35 SG product. Appropriate weight percentages were applied to each size class in order to calculate the combined metallurgical product.

A SG cut point of 1.70 was used for determining the thermal product, although the produced quality may vary depending upon specific contract specifications. The incremental data was calculated between the cumulative 1.50 and 1.70 SG products and this information, along with proper weight percentages for each size class, was used to calculate the combined thermal product. When multiple size classes were present, no fine material was included in the thermal product, as is the case for current production and processing at the operation.

10.1.1

Lower Kittanning Product Compositing

A minimum cutting height of 7 feet is used when considering the product for the Lower Kittanning seam. Generally, this resulted in only the metallurgical and thermal product characteristics for the Lower Kittanning seam being reported. Although, in some select areas primarily in the South, the parting between the Lower Kittanning Rider and Lower Kittanning narrows, and a minimum cutting height of 7 feet would begin to intrude on the Lower Kittanning Rider. In these instances, metallurgical and thermal product characteristics for the Lower Kittanning Rider have also been reported.

With few exceptions, coal samples are more often reported on a coal only basis; unsampled parting or rock material have not been added back into the calculations in order to modify the yield.

The amount and areal extent of coal sampling for geological data is generally sufficient to represent the quality characteristics of the coal horizons and allow for proper market placement of the subject coal seams. For some portions of the Property there is an abundance of laboratory data from core samples that are representative of the full extent of the resource area; whereas, for others more limited data is available to represent the resource area. For example, in the active mining area, there may be limited quality data from core holes; however, in those cases the core sampling data is supplemented with channel samples representative of the resource area.

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10.2	Relationship of Tests to the Whole

The extensive sampling and testing procedures followed by Arch typically result in a strong correlation between sample quality and marketable product. Shipped analyses of the coal from Leer South mine were reviewed to verify that the coal quality and characteristics were as anticipated from core hole data.

Table 10-1 below compares the metallurgical quality characteristics from: (1) core samples within the central reserve area where longwall mining is currently being conducted, and: (2) Leer South coal shipments during the years 2022 and 2023. Three quality parameters are compared: clean Ash, Sulfur, and Volatile Matter. Variances between the theoretical (cores) and actual produced coal shipments may be attributable to contract specifications that target specific qualities, such as lower ash and lower sulfur content.

Table 10-1: Comparison of Core Hole and Shipped Quality (Metallurgical Market)

	Ash %	Sulfur %	Volatile Matter %
Core Samples (~1.50 Float)	8.5	1.23	33.82
Variance from Core Sample Quality % Range
Shipments (2022)	9%	12%	6%
Shipments (2023)	20%	14%	3%

Note: Dry Basis

10.3	Lab Information

Core and channel sample quality samples are bagged and labelled; the samples are delivered to Standard for quality analyses. Quality samples go to Standard Labs in Bellington, West Virginia for sample preparation (crushing, splitting, and sizing), Proximate, Washability, Ash Fusion, Ultimate, Ash Mineral Analyses, Dilatometer and Plastometer (Gieseler and Arnu coking) analyses and Trace Elements analyses. Standard Labs ships splits of the samples to the SGS lab in Sophia, West Virginia for petrographic analyses.

Standard and SGS are contracted to perform quality analyses for Arch, both of which are certified analytical testing laboratories.

Each sample is reportedly analyzed in accordance with procedures defined under ASTM standards including, but not limited to the following (Note: not all analytical tests identified in this list have been run on each sample):

>	ASTM D 4371 – Test Method for Determining Washability Characteristics of Coal

>	ASTM D 3174 – Method for Ash in the Analysis Sample of Coal and Coke

>	ASTM D 4239 – Test Methods for Sulphur in the Analysis Sample of Coal and Coke Using High-Temperature Tube Furnace Combustion Methods

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>	ASTM D 5865 – Test Method for Gross Calorific Value of Coal and Coke

>	ASTM D 3175 – Test Method for Volatile Matter in the Analysis Sample of Coal and Coke

>	ASTM D 3176 – Standard Practice for Ultimate Analysis of Coal and Coke

>	ASTM D 3178 - Test Method for Carbon and Hydrogen in Coal and Coke

>	ASTM D 3179 - Test Method for Nitrogen in Coal and Coke

>	ASTM D 720 – Test Method for Free-Swelling Index (FSI) of Coal

>	ASTM D 5515 - Test Method for Determination of the Swelling Properties of Bituminous Coal Using a Dilatometer (Arnu)

>	ASTM D 2639 – Test Method for Plastic Properties of Coal (Gieseler)

>	ASTM D 3683 – Trace Elements in Coal and Coke Ash by the Atomic Absorption Method

>	ASTM D 1857 – Standard Test Method for Fusibility of Coal and Coke Ash

>	ASTM D 2798 – Microscopical Determination of the Reflectance of Vitrinite in a Polished Specimen of Coal

10.4	Relevant Results

Coal seam recovery estimates are based on washability analyses performed on coal cores and channel samples. Ash, sulfur, volatile matter, and yield data from multiple washability fractions are modelled and mapped. Grids and mapping from Arch’s in-house staff are provided to Leer South mine engineers for calculation of mine recovery. Mine recovery takes into account washability yield, mining method and preparation plant performance.

10.5	Opinion of the Qualified Person

Wash recovery factors estimates on a LOM basis are included, reflective of dilution material, are summarized in the table below.

Table 10-2: Summary of Wash Recovery Assumptions

Seam	Wash Recovery
Lower Kittanning LOM	44%

The Qualified Persons finds that the metallurgical and mineral processing information derived from historical and ongoing exploration campaigns is adequate to document mineral resources and reserves presented herein. The distribution of quality information has been considered in measured and indicated resource status, and subsequently in probable and proven reserve status. Arch’s ongoing drilling campaigns are addressing short-term and long-term quality projections.

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11 Mineral Resource Estimates

MM&A independently created a geologic model to define the coal resources at Leer South. Coal resources were estimated as of December 31, 2023.

11.1	Assumptions, Parameters and Methodology

Geological data are imported into Carlson Mining^® (formerly SurvCADD^®) geological modelling software in the form of Microsoft^® Excel files incorporating drill hole collars, seam and thickness picks, bottom seam elevations and raw and washed coal quality. These data files were validated prior to importing into the software. Once imported, a geologic model was created, reviewed and verified- with a key element being a gridded model of coal seam thickness. Resource tons were estimated by using the MM&A seam thickness grid based on each valid point of observation and by defining resource confidence arcs around the points of observation. Points of observation for Measured and Indicated confidence arcs were defined for all valid drill holes that intersected the seam using standards deemed acceptable by MM&A based on a detailed geologic evaluation and a statistical analysis of all drill holes within the projected reserve areas as described in Section 11.1.1. The geological evaluation incorporated an analysis of seam thickness related to depositional environments, adjacent roof and floor lithologies, and structural influences.

After validating coal seam data and establishing correlations, the thickness and elevation for seams of economic interest were used to generate a geologic model. Due to the relative structural simplicity of the deposits and the reasonable continuity of the tabular coal beds, the principal geological interpretation necessary to define the geometry of the coal deposits is the proper modeling of their thickness and elevation. Both coal thickness and quality data are deemed by MM&A to be reasonably sufficient within the resource areas. Therefore, there is a reasonable level of confidence in the geologic interpretations required for coal resource determination based on the available data and the techniques applied to the data.

Table 11-1 below provides the geological mapping and coal tonnage estimation criteria used for the coal resource and reserve evaluation. These cut-off parameters have been developed by MM&A based on its experience with the Arch property and are typical of mining operations in the Central Appalachian coal basin. This experience includes technical and economic evaluations of numerous properties in the region for the purposes of determining the economic viability of the subject coal reserves.

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Table 11-1: General Reserve and Resource Criteria

Item	Parameters	Technical Notes and Exceptions*
• General Reserve Criteria
Reserve Classification	Reserve and Resource
Reliability Categories	Resource (Measured, Indicated, and Inferred) Reserve (Proven and Probable)	To better reflect geological conditions of the coal deposits, distance between points of observation is standard USGS (in feet), respectively, for measured and indicated.
Effective Date of Resource Estimate	December 31, 2023
Effective Date of Reserve Estimate	December 31, 2023	Financial modeling was conducted based off of mine faces as of October 1, 2023
Seam Density	Variable, dependent upon seam characteristics (based on available drill hole quality).
• Underground-Mineable Criteria
Map Thickness	Total seam thickness
Minimum Seam Thickness (Resource)	3.0 feet or 50% Estimated Visual Recovery
Minimum Seam Thickness (Reserve)	3.0 feet for the Lower Kittanning Seam
Minimum Mining Thickness	7.0 feet for the Lower Kittanning Seam
Minimum In-Seam Wash Recovery	50 percent
Wash Recovery Applied to Coal Reserves	Based on average yield for drill holes within specified reserve areas.
Out-of-Seam Dilution Thickness for Run-of-Mine Tons Applied to Coal Reserves	Based upon the delta between seam height and minimum mining criteria.	2.3 SG used for dilution tonnage estimate
Mine Barrier	Not applicable
Adjustments Applied to Coal Reserves	No moisture addition for coal reserves—reserves reported as dry basis.

Note: Exceptions for application of these criteria to reserve estimation are made as warranted and demonstrated by either actual mining experience or detailed data that allows for empirical evaluation of mining conditions. Final classification of coal reserve is made based on the pre-feasibility evaluation.

1 – Face locations of 10/1/2023 used in production modeling. Depletion for Q4 2023 was backed out of the production forecast for financial modeling and any difference between actual and forecasted production for this period is considered incidental.

11.1.1

Geostatistical Analysis for Classification

In 2022, MM&A completed a geostatistical analysis on drill holes within the reserve boundaries to determine the applicability of the common United States classification system for measured and indicated coal resources. As exploration data has not materially changed resource or reserve delineation, results of the 2022 geostatistical analysis are reported herein. Historically, the United States has assumed that coal within ¼-mile of a point of observation represents a measured resource whereas coal between ¼-mile and ¾-mile from a point of observation is classified as indicated. Inferred resources are commonly assumed to be located between ¾-mile and 3 miles from a point of observation. Per SEC regulations, only measured and indicated resources may be considered for reserve classification, respectively as proven and probable reserves.

MM&A performed a geostatistical analysis test of the Leer South data set using the Drill Hole Spacing Analysis (DHSA) method. This method attempts to quantify the uncertainty of applying a measurement from a central location to increasingly larger square blocks and provides recommendations for determining the distances between drill holes for measured, indicated, and inferred resources.

To perform DHSA the data set was processed to remove any erroneous data points, clustered data points, as well as directional trends. This was achieved through the use of histograms, as seen in Figure

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Figure 11-4: Result of DHSA for the Lower Kittanning Seam Present in the Leer South Complex

Table 11-2: DHSA Results Summary for Radius from a Central Point

Model:	Measured Radial Distance (10% Relative Error)	Indicated Radial Distance (20% Relative Error)	Inferred Radial Distance (50% Relative Error)
Model:		(Miles)	(Miles)	(Miles)
Gaussian:	0.60	1.09	2.59
Spherical:	0.57	1.06	2.56
Exponential:	0.55	1.02	2.44

Comparing the results of the DHSA to the historical standards, it is evident that the historical standards are more conservative than even the most conservative DHSA model with regards to determining measured resources. The Exponential model recommends using a radius of 0.55 miles for measured resources compared to the historical value of 0.25 miles.

With respect to indicated resources, historical standards are once again more conservative than the DHSA recommendations. The Exponential model recommends using a radius of 1.02 miles, while the Gaussian and Spherical models recommend a radius of 1.09 and 1.06 miles, respectively. These values exceed the historical radius of 0.75 miles. These results have led the QP’s to report the data following the historical classification standards, rather than use the results of the DHSA.

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11.2	Qualified Person’s Estimates

Mineral resources, representing in-situ coal in which a portion of reserves are derived, are presented below. Based on the work described and detailed modelling of the areas considering all the parameters defined, a coal resource estimate, summarized in Table 11-3, was prepared as of December 31, 2023, for property controlled by Arch.

Pricing data as provided by Arch is described in Section 16.2. The pricing data assumes a weighted average domestic and international FOB-mine price of approximately $162 per ton for calendar year 2024. The weighted-average price stabilizes at approximately $151 per ton over the LOM.

Table 11-3: Coal Resources Summary as of December 31, 2023

	Coal Resource (Dry Tons, In Situ, Mt)
Seam	Measured	Indicated	Inferred	Total
Lower Kittanning Rider
Inclusive of Reserve	2.34	0.15	0.00	2.49
Exclusive of Reserve	0.00	0.00	0.00	0.00
Total	2.34	0.15	0.00	2.49
Lower Kittanning
Inclusive of Reserve	73.08	30.89	0.00	103.96
Exclusive of Reserve	0.00	0.00	0.00	0.00
Total	73.08	30.89	0.00	103.96
Grand Total
Total	75.41	31.04	0.00	106.45

Note 1: Coal resources are reported on a dry basis. Surface moisture and inherent moisture are excluded.

11.3	Qualified Person’s Opinion

While there is some level of stratigraphically controlled seam-thickness variability the Lower Kittanning coal seam at Leer South demonstrate reasonable thickness consistency according to the classification system of measured (0 – 0.25 miles), indicated (0.25 to 0.75 miles), and inferred (0.75 to 3.0 miles). MM&A geologists and engineers modeled the deposit and delineated mineable regions to reflect the nature of the seam and the practicality of mining constraints. Based on MM&A‘s geostatistical analysis, it would be possible to extend the measured arcs slightly beyond historically accepted practices due to consistent geological settings. These results have led the QP’s to report the data following the historical classification standards, rather than use the results of the DHSA.

Based on the data review, the attendant work done to verify the data integrity and the creation of an independent geologic model, MM&A believes this is a fair and accurate representation of the Leer South coal resources.

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12 Mineral Reserve Estimates

12.1	Assumptions, Parameters and Methodology

Coal Reserves are classified as proven or probable considering “modifying factors” including mining, metallurgical, economic, marketing, legal, environmental, social, and governmental factors.

Proven Coal Reserves are the economically mineable part of a measured coal resource, adjusted for diluting materials and allowances for losses when the material is mined. It is based on appropriate assessment and studies in consideration of and adjusted for reasonably assumed modifying factors. These assessments demonstrate that extraction could be reasonably justified at the time of reporting.

Probable Coal Reserves are the economically mineable part of an indicated coal resource, and in some circumstances a measured coal resource, adjusted for diluting materials and allowances for losses when the material is mined. It is based on appropriate assessment and studies in consideration of and adjusted for reasonably assumed modifying factors. These assessments demonstrate that extraction could be reasonably justified at the time of reporting.

Upon completion of delineation and calculation of coal resources, MM&A confirmed the applicability of the LOM plan for Leer South. The footprint of the LOM plan is shown on the resource map in Appendix C. The Mine plan was generated based on the forecast mine plan and permit plan provided by Arch with modifications by MM&A where necessary due to current property control limits, modifications to geologic mapping, or other factors determined during the evaluation.

Carlson Mining software was used to generate the LOM plan for Leer South. The mine plan was sequenced based on productivity schedules provided by Arch. MM&A judged the productivity estimates and plans to be reasonable based on experience and current industry practice.

At the Leer South Mine, a minimum mining height of 7 feet was used due to the longwall mining method being employed. For coal seams thinner than the assigned mining height, the difference between the coal seam height and assigned mining height is out-of-seam (OSD). Mine recovery is generally 40 percent for continuous mining areas, and 100 percent for longwall. Plant recovery is a function of in-seam recovery, OSD and plant efficiency factor, which is set at 95 percent.

Raw, ROM production data outputs from LOM plan sequencing were processed into Microsoft^® EXCEL spreadsheets and summarized on an annual basis for processing into the economic model. Average seam densities were estimated to determine raw coal tons produced from the LOM plan. Average mine recovery and wash recovery factors were applied to determine coal reserve tons.

Coal reserve tons in this evaluation are reported as a dry product, exclusive of inherent and surface moisture.

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Pricing data as provided by Arch and is described in Section 16.2. The pricing data assumes a thermal sales realization (FOB-mine) of approximately $51 to $54 per ton and a coking coal sales realization of approximately $146 to $162 per ton. Realized coal prices are based upon a combination of thermal (middlings) and high-volatile A coking coal products. Realized coal prices incorporate HCC indices, adjustments from metric tons to short tons, and adjustments for transportation costs and assumed prices for thermal products. Based on projections provided by Arch, both coking and thermal products are expected to stabilize via a short-term decline.

The coal resource mapping and estimation process, described in the report, was used as a basis for the coal reserve estimate. Proven and probable coal reserves were derived from the defined coal resource considering relevant processing, economic (including technical estimates of capital, revenue, and cost), marketing, legal, environmental, socio-economic, and regulatory factors and are presented on a moist, recoverable basis.

As is customary in the US, the categories for proven and probable coal reserves are based on the distances from valid points of measurement as determined by the QP for the area under consideration. For this evaluation, measured resource, which may convert to a proven reserve, is based on a 0.25-mile radius from a valid point of observation.

Points of observation include exploration drill holes, degas holes, and mine measurements which have been fully vetted and processed into a geologic model. The geologic model is based on seam depositional modeling, the interrelationship of overlying and underlying strata on seam mineability, seam thickness trends, the impact of seam structure, intra-seam characteristics, etc. Once the geologic model was completed, a statistical analysis, described in Section 11.1.1 was conducted and a 0.25-mileradius from a valid point of observation was selected to define Measured Resources.

Likewise, the distance between 0.25 and 0.75 of a mile radius was selected to define Indicated Resources. Indicated Resources may convert to Probable Reserves.

There are negligible Inferred Resources (greater than a 0.75-mile radius from a valid point of observation) at Leer South.

12.2	Qualified Person’s Estimates

The reserve tonnage estimates provided herein report coal reserves derived from the in-situ resource tons presented in Table 11-3, and not in addition to coal resources. Proven and probable coal reserves were derived from the defined coal resource considering relevant mining, processing, infrastructure, economic (including estimates of capital, revenue, and cost), marketing, legal, environmental, socio-economic and regulatory factors. The coal reserves, as shown in Table 12-1, are based on a technical evaluation of the geology and a preliminary feasibility study of the coal deposits. The extent to which the coal reserves may be affected by any known environmental, permitting, legal, title, socio-economic, marketing, political, or other relevant issues has been reviewed rigorously. Similarly, the extent to

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which the estimates of coal reserves may be materially affected by mining, metallurgical, infrastructure and other relevant factors has also been considered.

Table 12-1: Coal Reserves Summary (Dry Basis) as of December 31, 2023

	Demonstrated Coal Reserves (Dry Tons, Washed or Direct Shipped, Mt)									LOM Wash Recovery (%)
	By Reliability Category			By Product		By Control Type
Seam	Proven	Probable	Total	Met ~1.50 Float SG**	Thermal ~1.50 x 1.70 SG**	Owned	Leased	Partially Owned	Partially Leased
Lower Kittanning Rider	1.43	0.01	1.44	1.27	0.17	0.05	1.11	0.00	0.28
Lower Kittanning	43.23	17.97	61.19	52.69	8.51	51.66	7.01	1.59	0.94
Total	44.66	17.98	62.63	53.95	8.68	51.70	8.12	1.59	1.22	44%

Uncontrolled*	2.53	0.37	2.90	2.51	0.38

Table 12-2: Summary of Quality (dry basis)

	Met				Thermal
Seam	Ash	Sulfur	Vol	Btu/lb.	Ash	Sulfur	Btu/lb.
Lower Kittanning Rider	8.3	1.3	35	14,240	31.9	4.3	10,184
Lower Kittanning	8.8	1.3	34	14,180	34.5	2.6	9,587
Total	8.8	1.3	34	14,181	34.5	2.6	9,599

The results of this TRS define an estimated total of 62.6 Mt (dry basis) of marketable coal reserves, at Leer South, as of January 1, 2024. Of that total, 71 percent are proven, and 29 percent are probable. There are 51.7 Mt of owned coal reserves and 8.1 Mt of leased coal and 2.8 Mt of partial control reserves. Of the 62.6 Mt of marketable reserves, approximately 86-percent are associated with metallurgical coal markets, and all of the Leer South reserves are assigned to existing infrastructure.

12.3	Qualified Person’s Opinion

The estimate of coal reserves was determined in accordance with the SEC S-K1300 standards.

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The LOM mining plan for Leer South was prepared to the level of preliminary feasibility. Mine projections were prepared with a timing schedule to match production with coal seam characteristics. Production timing was carried out from current locations to depletion of the coal reserve area. Coal reserve estimates could be materially affected by the risk factors described in Section 22.2.

Based on the preliminary feasibility study and the attendant economic review, MM&A believes this is a fair and accurate calculation of the Leer South coal reserves.

13 Mining Methods

13.1	Geotech and Hydrogeology

The hydrogeologic conditions to be encountered by mining at Leer South are expected to be generally similar to those at other Leer operations. The Leer South mine is located below drainage and involves the undermining of surface streams and groundwater aquifers. The Leer South mine is also undermining previous above-drainage mine workings in the Pittsburgh coal seam; however, with the average interburden between the Lower Kittanning and the Pittsburgh seams being approximately 800 feet, the potential for interaction is considered minimal. MM&A did not observe any adverse hydrogeologic conditions in the existing portion of Leer South during an October 2020 mine visit. In addition, MM&A completed predictive longwall subsidence modeling for the Leer South mine in December 2023 to continue to assist Arch with planning for post-mining hydrogeologic conditions.

The mine plans for Leer South were developed by Arch and reviewed by MM&A. Pillar stability in the Lower Kittanning seam was checked by MM&A using the ACPS program, which integrates the original NIOSH-developed ARMPS, ALPS, and AMSS software packages into a single pillar design framework. MM&A also utilized AHSM (developed by NIOSH) to check the orientation of the proposed mining in relation to available principal horizontal stress directions for the region. Historical knowledge of mining in the area and observations from an October 2020 mine visit by MM&A indicate that horizontal stress conditions are likely to be present during mining in Leer South. As observed by MM&A, current Leer South operations are taking steps to mitigate the horizontal stress, including enhanced ground control measures and strategic mine layout orientation.

13.2	Production Rates

The Leer South mine is active with six continuous mining sections and one longwall section currently operating in the Lower Kittanning Seam. Longwall Mining began producing at Leer South in 2021. The mine plan and productivity expectations reflect historical performance and efforts have been made to adjust the plan to reflect future conditions. MM&A is confident that the mine plan is reasonably representative to provide an accurate estimation of coal reserves. Mine development and operation have not been optimized within the TRS.

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Longwall production is scheduled for approximately 343 to 363 days each year, which represents production on seven days per week with allowances for holidays and longwall moves. On each day, the continuous mining sections and longwall produce coal on two shifts with an idle maintenance shift. The sections are configured as regular sections with one continuous miner available for production on each section. During mains development, two production units are brought together to work as a Super Section arrangement (two CM units operating on the same conveyor belt feeder). Productivity is planned at the rate of 100 feet of advance per shift of operation for the single continuous miner sections, 180 feet of advance per shift of operation for the Super Section miner sections and 50 feet per day of longwall retreat. Productivities are expected to increase moderately over time and reasonable ramp up expectations to increase productivity are included in the Arch model.

Carlson Mining software was used by Arch and reviewed by MM&A to generate mine plans for the underground mineable coal seam. Mine plans were sequenced based on productivity schedules provided by Arch, which were based on historically achieved productivity levels. All production forecasting ties assumed production rates to geological models as constructed by MM&A’s team of geologists and mining engineers.

As shown in Table 13-1, the areas planned for underground production continue until 2042. Clean coal production varies directly with coal thickness and the number of continuous miner units operating during a calendar year.

Table 13-1: Leer South Summary of Production by Year (Moist Tons x 1,000)

Mine Name	2024	2025	2026	2027	2028	2029	2030	2031
Kittanning Deep Mine (LW)	3,625	4,518	3,978	3,672	3,965	4,057	3,848	3,862

Mine Name	2032	2033	2034	2035	2036	2037	2038	2039
Kittanning Deep Mine (LW)	3,550	3,978	4,169	4,015	4,270	3,395	3,426	3,823

Mine Name	2040	2041	2042	2043	2044	2045	2046	2047
Kittanning Deep Mine (LW)	3,857	3,914	2,882	0	0	0	0	0

13.3	Mining Related Requirements

Although the Continuous Miner Sections are significantly more expensive to operate on a cost-per-ton basis, they are necessary to develop areas of the mine for longwall production. At the time of this study Leer South had six (6) operating continuous miner stations that were used to develop main entries and gate roads in preparation for the longwall operations in the Lower Kittanning Seam. As the mine develops, this number will reduce as CM development gains on the longwall move times.

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13.4	Required Equipment and Personnel

The Leer South Mine is an operating longwall mine in the Lower Kittanning seam. Equipment for the longwall mining unit has been acquired and the continuous miner units will provide longwall panels for the longwall unit to mine.

The longwall shearing machine is used for extraction of coal at the production face. A chain conveyor is used to remove coal from the longwall face for discharge onto the conveyor belt which then ultimately delivers it to an underground storage bunker. Development for the longwall is conducted by the extraction of coal from the production faces using continuous miners and haulage using shuttle cars to a feeder-breaker located at the tail of the section conveyor belt. The feeder-breaker crushes large pieces of coal and rock and regulates coal feed onto the mine conveyor. Roof-bolting machines are used to support the roof on the development sections of the longwall mines. Roof-bolting machines are used to install roof bolts, and battery scoops are available to clean the mine entries and assist in delivery of mine supplies to work areas. Other supplemental equipment such as personnel carriers, supply vehicles, etc., are also used daily.

Mine conveyors typically range in width from 42 inches to 72 inches. Multiple belt flights are arranged in series to deliver raw coal to the underground storage. Along the main and sub-main entries and panels, a travel way is provided for personnel and materials by rubber-tired equipment or on rail. Leer South utilizes a slope belt in order to transport ROM coal from the Lower Kittanning seam level underground storage bunker through a haulage slope to the underlying Clarion Seam workings and then through the Clarion Seam slope to the surface where the coal may be sampled, crushed and washed in the preparation plant and stockpiled to await shipment.

Surface ventilation fans are installed as needed to provide a sufficient volume of air to ventilate production sections, coal haulage and transport entries, battery charging stations, and transformers in accordance with approved plans. High-voltage cables deliver power throughout the mine where transformers reduce voltage for specific equipment requirements. The Mine Improvement and New Emergency Response Act of 2006 (MINER Act) requires that carbon monoxide detection systems be installed along mine conveyor belts and that electronic two-way tracking and communications systems be installed throughout underground mines. Water is required to control dust at production sections and along conveyor belts, and to cool electric motors. Water is available from nearby sources and is distributed within the mine by pipelines as required. A maximum total of 556 salary and hourly employees will be assigned to the Lower Kittanning Seam operation.

13.5	Life of Mine Plan Maps

Figure 13-1 below depicts the approximate LOM boundary utilized for mine planning in the Lower Kittanning seam.

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make a secondary, high ash product for thermal market consumption. Quality data from exploration supports assumed market placement.

High volatile coking coal is currently in high demand. Favorable market conditions for coking coal are expected in the near and long term.

Sales of high-ash, high-sulfur thermal blend coals represent a smaller portion of Leer South’s revenue stream. Market influence from neighboring producers has the potential to oversupply markets for such a product. High ash, high sulfur coals are generally not consumed on a stand-alone basis, and require premium quality, low-ash, low-sulfur coals for blending to meet market specifications. Current typical met quality specifications for Leer South products are as shown in Table 16-1.

Table 16-1: Average Product Quality

	Leer South
Moisture (%)	7.26%
Ash (%, dry basis)	8.49%
Sulfur (%, dry basis)	1.17%
Volatile Matter (%, dry basis)	33.97%

16.2	Price Forecasts

Arch provided MM&A with price forecasts for the Leer South operation. Arch’s price outlook incorporates in-house knowledge of applicable rail transportation charges, ocean freight charges and port charges. Concurrent with the active operation, Leer South’s production is assumed to enter coking and thermal coal markets. Pricing provided by Arch assumes applicable quality adjustments.

Realized coal prices are based upon a combination of thermal (middlings) and high-volatile A coking coal products. Realized coal prices incorporate HCC indices, adjustments from metric tons to short tons, adjustments for transportation costs and assumed prices for thermal products.

Short-term forecasts for thermal blend products assume FOB-mine prices of approximately $38 per ton, increasing to $54 per ton in the short term, and stabilizing around $51 per ton over the long term. Short term forecasts for coking products assume prices of approximately $170 per ton, decreasing to $157 per ton over the long term. Long-term blended (combined thermal and metallurgical) realizations are equivalent to approximately $151 per ton.

Forecasts provided by Arch are largely aligned with typical coal industry expectations of coking coal markets. In comparison to short term spot markets, Arch’s estimations of realizations are somewhat conservative. Long term forecasting of metallurgical coal prices is difficult to predict. Arch’s assumed long range metallurgical prices are largely aligned with typical historical averages.

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new permits to maintain its planned mining operations within the context of current regulations. Necessary permits are in place to support current production on the Property, but future permits are required to maintain and expand production. Portions of the Property are located near local communities. Regulations prohibit mining activities within 300 feet of a residential dwelling, school, church, or similar structure unless written consent is first obtained from the owner of the structure. Where required, such consents have been obtained where mining is proposed beyond the regulatory limits.

Arch has obtained all mining and discharge permits to operate its mines and processing, loadout, or related facilities. MM&A is unaware of any obvious or current Arch permitting issues that are expected to prevent the issuance of future permits. Leer South, along with all coal producers, is subject to a level of uncertainty regarding future clean water permits due to United States Environmental Protection Agency (EPA) involvement with state programs.

The active Mining permits currently held by Leer South are shown in Table 17-1.

Table 17-2: Leer South Mining Permit

Type	Permit ID	Permit Name	$ Bond	Current Status	Issued Date	Expiration Date	Acres	NPDES No.
Reclamation	U-15-83	Leer South	$368,880	Active	8/11/1983	1/24/2027	193.6	WV0043273
Reclamation	O-113-83	Leer South Refuse	$1,199,900	Active	8/11/1983	6/28/2028	461.73	WV0043273

17.4	Local Plans, Negotiations or Agreements

MM&A found no indication of agreements beyond the scope of Federal or State Regulations.

17.5	Mine Closure Plans

Applicable regulations require that mines be properly closed, and reclamation commenced immediately upon abandonment. In general, site reclamation includes removal of structures, backfilling, regrading, and revegetation of disturbed areas. Sediment control is required during the establishment of vegetation, and bond release generally requires a minimum five-year period of site maintenance, water sampling, and sediment control following mine completion. This requirement is reduced to two years for certain operations involving re-mining. Reclamation of underground mines includes closure and sealing of mine openings such as portals and shafts in addition to the items listed above.

Estimated costs for mine closure, including water quality monitoring during site reclamation, are included in the financial model as provided by Arch. MM&A found ARO estimations to be reasonable. As with all mining companies, an accretion calculation is performed annually so the necessary Asset Retirement Obligations (ARO) can be shown as a Liability on the Balance Sheet.

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Table 18-1: Estimated Coal Production Taxes and Sales Costs

Description of Tax or Sales Cost	Basis of Assessment	Cost
Federal Black Lung Excise Tax - Underground	Per Ton	$1.10
Federal Reclamation Fees – Underground	Per Ton	$0.12
West Virginia Reclamation Tax – Underground	Per Ton	$0.74
West Virginia Severance Tax	Percentage of Revenue	5.0%
West Virginia Severance Tax	Per Sold Ton	$0.02
Royalties	Percentage of Revenue	3.5%

Projected operating costs are shown below in Figure 18-2.

Figure 18-2: OPEX

As shown above, Leer South Mine’s average cash cost ranges between approximately $60 and $65 per ton for most of the operating period.

19 Economic Analysis

19.1	Assumptions, Parameters and Methods

A pre-feasibility LOM plan was prepared by MM&A for the Leer South operations. MM&A prepared mine projections and production timing forecasts based on coal seam characteristics and incorporated Arch’s LOM projections with adjustments to reflect current property constraints and geological

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interpretations. Production timing was carried out from 2024 to depletion (exhaustion) of the coal reserve areas, which is projected for the year 2042. All costs and prices are based on 2024 constant United States dollars.

The Mine plan, productivity expectations and cost estimates generally reflect historical performance by Arch and efforts have been made to adjust plans and costs to reflect future conditions. MM&A is confident that the mine plan and financial model are reasonably representative to provide an accurate estimation of coal reserves.

Capital schedules were developed by MM&A for mine development, infrastructure, and on-going capital requirements for the life of the mine. Staffing levels were prepared, and operating costs estimated by MM&A. MM&A utilized historical cost data provided by Arch and its own knowledge and experience to estimate direct and indirect operating costs.

The preliminary feasibility financial model, prepared for this TRS, was developed to test the economic viability of the coal reserve area. The results of this financial model are not intended to represent a bankable feasibility study, required for financing of any current or future mining operations, but are intended to prove the economic viability of the estimated coal reserves. All costs and prices are based on 2023 constant United States dollars.

On an unlevered basis, the NPV of the project cash flows after taxes was estimated for the purpose of classifying coal reserves. The project cash flows, excluding debt service, are calculated by subtracting direct and indirect operating expenses and capital expenditures from revenue. Direct costs include labor, drilling and blasting, operating supplies, maintenance and repairs, facilities costs for materials handling, coal preparation, refuse disposal, coal loading, sampling and analysis services, reclamation and general and administrative costs. Indirect costs include statutory and legally agreed upon fees related to direct extraction of the mineral. The indirect costs are the Federal black lung tax, Federal and State reclamation taxes, property taxes, local transportation prior to delivery at rail or barge loading sites, coal production royalties, sales and use taxes, income taxes and State severance taxes. Arch’s historical costs provided a useful reference for MM&A’s cost estimates.

Sales revenue is based on the metallurgical coal price information provided to MM&A by Arch.

Projected debt service is excluded from the P&L and cash flow model in order to determine Enterprise Value.

The financial model expresses coal sales prices, operating costs, and capital expenditures in current day dollars without adjustment for inflation. Capital expenditures and reclamation costs are included based on engineering estimates for each mine by year. The Arch division’s existing allocations of administrative costs are continued in the future projections.

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Arch will pay royalties for the various current and projected operations. The royalty rates vary by mining method and location. The royalty rates for Leer South are estimated to be 3.5% of the sales revenue.

The projection model also includes consolidated income tax calculations at the Arch level, incorporating statutory depletion calculations, as well as state income taxes, and a federal tax rate of 21%. To the extent the mine generates net operating losses for tax purposes, the losses are carried over to offset future taxable income. The terms “cash flows” and “project cash flows” used in this report refer to after tax cash flows.

Consolidated cash flows are driven by annual sales tonnage, which at steady-state level ranges from a peak of 4.5 million tons in 2025 to a low of 3.4 million in 2037. Projected consolidated revenue ranges from $643 million to $511 million at a steady state. Revenue totals $10.9 billion for the project’s life.

Consolidated cash flow from operations is positive throughout the projected operating period, with the exception of post-production years, due to end-of-mine reclamation spending. Consolidated cash flow from operations peaks at $266 million in 2036 and totals $4.2 billion over the project life. Capital expenditures total $395 million over the project’s life.

Coal price forecasts for coal products were prepared by Arch for its active operations. Such prices were used for the revenue input into the financial model. Sales variable costs such as production royalties and severance taxes were based upon the revenue input.

19.2	Results

The pre-feasibility financial model, prepared by MM&A for this TRS, was developed to test the economic viability of each coal resource area. The results of this financial model are not intended to represent a bankable feasibility study, as may be required for financing of any current or future mining operations contemplated but are intended to prove the economic viability of the estimated coal reserves. Optimization of the LOM plan was outside the scope of the engagement.

Table 19-1 shows LOM tonnage, P&L, and EBITDA for Leer South.

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Table 19-1: Life-of-Mine Tonnage, P&L before Tax, and EBITDA

(000s)	LOM Tonnage	LOM Pre-Tax P&L	P&L Per Ton	LOM EBITDA	EBITDA Per Ton
Kittanning Deep Mine (LW)	72,803	$5,026,181	$69.04	$5,410,192	$74.31

Note 4:

As shown in Table 19-2, the Leer South Mine shows a positive EBITDA. Overall, the Arch consolidated operations show positive LOM P&L and EBITDA of $69.04 per ton and $74.31 per ton, respectively. After Tax Cash Flows were developed in order to calculate the NPV for this Property. The NPV is estimated to be $1,870 million at a discount rate of 10%. A summary of the Leer South after-tax cash flow is shown in Table 19-2.

Table 19-2: Leer South After-tax Cash Flow Summary ($000)^*

		YE 12/31	YE 12/31	YE 12/31	YE 12/31	YE 12/31	YE 12/31
	Total	2024	2025	2026	2027	2028	2029
Production & Sales tons	72,803	3,625	4,518	3,978	3,672	3,965	4,057
Total Revenue	$10,942,415	$588,484	$657,402	$602,368	$552,856	$597,065	$610,770
EBITDA	$5,410,192	$294,921	$339,904	$306,358	$252,062	$279,102	$300,212
Net Income	$3,937,222	$236,705	$255,547	$225,767	$181,064	$198,252	$212,045
Net Cash Provided by Operating Activities	$4,321,233	$244,538	$203,127	$251,778	$214,490	$221,125	$238,242
Purchases of Property, Plant, and Equipment	($394,952)	($41,296)	($47,058)	($38,007)	($30,260)	($25,069)	($12,197)
Net Cash Flow	$3,926,281	$203,243	$156,069	$213,771	$184,230	$196,056	$226,045

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	YE 12/31	YE 12/31	YE 12/31	YE 12/31	YE 12/31	YE 12/31	YE 12/31
	2030	2031	2032	2033	2034	2035	2036
Production & Sales tons	3,848	3,862	3,550	3,978	4,169	4,015	4,270
Total Revenue	$579,415	$581,378	$534,505	$598,845	$627,668	$604,550	$642,848
EBITDA	$291,415	$284,127	$237,157	$301,139	$311,374	$301,408	$336,719
Net Income	$202,288	$200,159	$168,363	$219,048	$229,082	$222,245	$248,025
Net Cash Provided by Operating Activities	$236,520	$230,119	$200,950	$229,795	$246,594	$242,436	$261,149
Purchases of Property, Plant, and Equipment	($17,250)	($16,515)	($15,241)	($18,787)	($13,729)	($14,073)	($18,512)
Net Cash Flow	$219,270	$213,604	$185,710	$211,008	$232,866	$228,363	$242,637

	YE 12/31	YE 12/31	YE 12/31	YE 12/31	YE 12/31	YE 12/31	YE 12/31
	2037	2038	2039	2040	2041	2042	2043
Production & Sales tons	3,395	3,426	3,823	3,857	3,914	2,882	0
Total Revenue	$511,082	$515,848	$575,546	$580,674	$589,246	$391,866	$0
EBITDA	$215,045	$234,937	$299,801	$320,183	$328,041	$180,142	($1,994)
Net Income	$155,735	$170,322	$219,189	$234,422	$239,923	$126,754	($3,988)
Net Cash Provided by Operating Activities	$196,189	$186,434	$227,747	$250,878	$258,521	$207,914	($11,446)
Purchases of Property, Plant, and Equipment	($15,098)	($15,745)	($16,622)	($17,103)	($13,744)	($8,646)	$0
Net Cash Flow	$181,091	$170,689	$211,125	$233,775	$244,776	$199,268	($11,446)

	YE 12/31	YE 12/31	YE 12/31	YE 12/31	YE 12/31	YE 12/31	YE 12/31
	2044	2045	2046	2047	2048	2049	2050
Production & Sales tons	0	0	0	0	0	0	0
Total Revenue	$0	$0	$0	$0	$0	$0	$0
EBITDA	($1,191)	($264)	($199)	($126)	($55)	($27)	($0)
Net Income	($2,381)	($527)	($398)	($253)	($109)	($54)	($0)
Net Cash Provided by Operating Activities	($12,096)	($1,022)	($1,055)	($969)	($380)	($345)	$0
Purchases of Property, Plant, and Equipment	$0	$0	$0	$0	$0	$0	$0
Net Cash Flow	($12,096)	($1,022)	($1,055)	($969)	($380)	($345)	$0

* The LOM model and associated economic analysis is intended to prove the economic viability of the subject coal tonnage, allowing controlled tons to be classified as “reserve”. The exercise should not be construed to represent a valuation of Arch’s holdings. Long-term cash flows incorporate forward-looking market projections which are expected to vary over time based upon historic volatility of coal markets.

19.3	Sensitivity

Sensitivity of the NPV results to changes in the key drivers is presented in the chart below. The sensitivity study shows the NPV at the 10% discount rate when Base Case sales prices, operating costs, and capital costs are increased and decreased in increments of 5% within a +/- 15% range.

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22Interpretation and Conclusions

22.1	Conclusion

This geologic evaluation conducted conjunction with the preliminary feasibility study is sufficient to conclude that the 62.6 Mt of marketable underground coal reserves identified on the Property are economically mineable under reasonable expectations of market prices for metallurgical coal products, estimated operation costs, and capital expenditures.

22.2	Risk Factors

Risks have been identified for operational, technical and administrative subjects addressed in the Pre-Feasibility Study. A risk matrix has been constructed to present the risk levels for all the risk factors identified and quantified in the risk assessment process. The risk matrix and risk assessment process are modelled according to the Australian and New Zealand Standard on Risk Management (AS/NZS 4360).

The purpose of the characterization of the project risk components is to inform the project stakeholders of key aspects of the Arch projects that can be impacted by events whose consequences can affect the success of the venture. The significance of an impacted aspect of the operation is directly related to both the probability of occurrence and the severity of the consequences. The initial risk for a risk factor is herein defined as the risk level after the potential impact of the risk factor is addressed by competent and prudent management utilizing control measures readily available. Residual risk for a risk factor is herein defined as the risk level following application of special mitigation measures if management determines that the initial risk level is unacceptable. Initial risk and residual risk can be quantified numerically, derived by the product of values assigned to probability and consequence ranging from very low risk to very high risk.

The probability and consequence parameters are subjective numerical estimates made by practiced mine engineers and managers. Both are assigned values from 1 to 5 for which the value 1 represents the lowest probability and least consequence, and the value 5 represents the highest probability and

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greatest consequence. The products which define the Risk Level, are classified from very low to very high.

Risk Level Table (R = P x C)

Risk Level (R)

Very Low (1 to 2)

Low (3 to 5)

Moderate (6 to 11)

High (12 to 19)

Very High (20 to 25)

Risk aspects identified and evaluated during this assignment total 12. No residual risks are rated Very High. One (1) residual risk is rated High. Seven (7) of the risk aspects could be associated with Moderate residual risk. Four (4) of the risk aspects were attributed to Low or Very Low residual risks.

22.2.1

Governing Assumptions

The listing of the aspects is not presumed to be exhaustive. Instead that listing is presented based on the experiences of the contributors to the TRS.

1.	The probability and consequence ratings are subjectively assigned, and it is assumed that this subjectivity reasonably reflects the condition of the active and projected mine operations.

2.	The Control Measures shown in the matrices presented in this chapter are not exhaustive. They represent a condensed collection of activities that the author of the risk assessment section has observed to be effective in coal mining scenarios.

3.	Mitigation Measures listed for each risk factor of the operation are not exhaustive. The measures listed, however, have been observed by the author to be effective.

4.	The monetary values used in ranking the consequences are generally accepted quantities for the coal mining industry.

22.2.2

Limitations

The risk assessment proposed in this report is subject to the limitations of the information currently collected, tested, and interpreted at the time of the writing of the report.

22.2.3

Methodology

The numerical quantities (i.e., risk levels) attributable to either “initial” or “residual” risks are derived by the product of values assigned to probability and consequence ranging from very low risk to very high risk.

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R = P x C
Where:	R = Risk Level
	P = Probability of Occurrence
	C = Consequence of Occurrence

The Probability (P) and Consequence (C) parameters recited in the formula are subjective numerical estimates made by practiced mine engineers and managers. Both P and C are assigned integer values ranging from 1 to 5 for which the value 1 represents the lowest probability and least consequence, and the value 5 represents the highest probability and greatest consequence. The products (R = P x C) which define the Risk Level, are thereafter classified from very low to very high.

Risk Level Table

Risk Level (R)

Very Low (1 to 2)

Low (3 to 5)

Moderate (6 to 11)

High (12 to 19)

Very High (20 to 25)

Very high initial risks are considered to be unacceptable and require corrective action well in advance of project development. In short, measures must be applied to reduce very high initial risks to a tolerable level.

As shown and discussed above, after taking into account the operational, technical, and administrative actions that have been applied or are available for action when required, the residual risk can be determined. The residual risk provides a basis for the management team to determine if the residual risk level is acceptable or tolerable. If the risk level is determined to be unacceptable, further actions should be considered to reduce the residual risk to acceptable or tolerable levels to provide justification for continuation of the proposed operation.

22.2.4

Development of the Risk Matrix

Risks have been identified for the technical, operational, and administrative subjects addressed in the TRS. The risk matrix and risk assessment process are modelled according to the Australian and New Zealand Standard on Risk Management (AS/NZS 4360).

22.2.4.1

Probability Level Table

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Table 22-2: Consequence Level Table

Correlation of Events in Key Elements of the Project Program to Event Severity Category
Category	Severity of the Event	Financial Impact of the Event	Unplanned Loss of Production (Impact on Commercial Operations)	Events Impacting on the Environment	Events Affecting the Program's Social and Community Relations	Resultant Regulatory / Sovereign Risk	Events Affecting Occupational Health and Safety
1	Insignificant	< USD $0.5 million	≤ 12 hours	Insignificant loss of habitat; no irreversible effects on water, soil and the environment.	Occasional nuisance impact on travel.	-	Event recurrence avoided by corrective action through established procedures (Engineering, guarding, training).
2	Minor	USD $0.5 million to $2.0 million	≤ 1 day	No significant change to species populations; short-term reversible perturbation to ecosystem function.	Persistent nuisance impact on travel. Transient adverse media coverage.	-	First aid – lost time. Event recurrence avoided by corrective action thought established procedures.
3	Moderate	USD $2.0 million to $10.0 million	≤ 1 week	Appreciable change to species population; medium-term (≤10 years) detriment to ecosystem function.	Measurable impact on travel and water/air quality. Significant adverse media coverage / transient public outrage.	Uncertainty securing or retaining essential approval / license.	Medical Treatment – permanent incapacitation Avoiding event recurrence requires modification to established corrective action procedures.
3	Moderate	USD $2.0 million to $10.0 million	≤ 1 week					Change to regulations (tax; bonds; standards).
4	Major	USD $10.0 million to $50.0 million	1 to 2 weeks	Change to species population threatening viability; long-term (>10 years) detriment to ecosystem function.	Long-term, serious impact on travel and use of water resources; degradation of air quality; sustained and effective public opposition.	Suspension / long-delay in securing essential approval / license.	Fatality. Avoiding event recurrence requires modification to established corrective action procedures and staff retraining.
4	Major	USD $10.0 million to $50.0 million	1 to 2 weeks					Change to laws (tax; bonds; standards).
5	Critical	>USD $50.0 million	>1 month	Species extinction; irreversible damage to ecosystem function.	Loss of social license.	Withdraw / failure to secure essential approval / license.	Multiple fatalities. Avoiding event recurrence requires major overhaul of policies and procedures.
5	Critical	>USD $50.0 million	>1 month		Loss of social license.	Withdraw / failure to secure essential approval / license.

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The lowest rated consequence is assigned the value of 1 and is described as Insignificant Consequence parameters include non-reportable safety incidents with zero days lost accidents, no environmental damage, loss of production or systems for less than one week and cost of less than USD $0.5 million. Increasing values are assigned to each higher consequence, culminating with the value of 5 assigned to critical consequences, the parameters of which include multiple-fatality accidents, major environmental damage, and loss of production or systems for longer than six months and cost of greater than USD $50.0 million.

Composite Risk Matrix R = P x C and Color-Code Convention

The risk level, defined as the product of probability of occurrence and consequence, ranges in value from 1 (lowest possible risk) to 25 (maximum risk level). The values are color-coded to facilitate identification of the highest risk aspects.

Table 22-3: Risk Matrix

P x C = R			Consequence (C)
						Insignificant	Minor	Moderate	Major	Critical
						1	2	3	4	5
Probability Level (P)	Remote	1	1	2	3	4	5
		Unlikely	2	2	4	6	8	10
		Possible	3	3	6	9	12	15
		Likely	4	4	8	12	16	20
		Almost Certain	5	5	10	15	20	25

22.2.5

Categorization of Risk Levels and Color Code Convention

Very high risks are considered to be unacceptable and require corrective action. Risk reduction measures must be applied to reduce very high risks to a tolerable level.

22.2.6

Description of the Coal Property

The Leer South Mine Complex is located in Barbour County, West Virginia and plans to begin operating a longwall section with the existing supporting continuous mining sections. Operations are projected to continue in the present mode until reserves are depleted in 2038.

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22.2.7

Summary of Residual Risk Ratings

Each risk factor is numbered, and a risk level for each is determined by multiplying the assigned probability by the assigned consequence. The risk levels are plotted on a risk matrix to provide a composite view of the Arch risk profile. The average risk level is 7.5, which is defined as Moderate.

Table 22-4: Risk Assessment Matrix


Consequence	Critical	>$50 MM	9, 10
		Major	$10-50MM			1,2	6
		Moderate	$2-10 MM	12	4	3	7
		Minor	$0.5-$2 MM			13	5	8
		Low	<$0.5 MM			11
			<10%	10-30%	30-60%	60-90%	>90%
			Remote	Unlikely	Possible	Likely	Almost Certain

22.2.8

Risk Factors

A high-level approach is utilized to characterize risk factors that are generally similar across a number of the active and proposed mining operations. Risk factors that are unique to a specific operation or are particularly noteworthy are addressed individually.

22.2.8.1

Geological and Coal Resource

Coal mining is accompanied by risk that, despite exploration efforts, mining areas will be encountered where geological conditions render extraction of the resource to be uneconomic, or that coal quality characteristics disqualify the product for sale into target markets.

Offsetting the geological and coal resource risk are the massive size of the controlled property which allows large areas to be mined in the preferred mine areas sufficiently away from areas where coal quality and mineability may be less favorable. This flexibility, combined with the extensive work done to define the reserve, reduces the risk at Leer South below that of other mine properties.

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Table 22-5: Geological and Coal Resource Risk Assessment (Risks 1 and 2)

Aspect

Impact

Control Measures

Initial Risk Level

Mitigation Measures

Residual Risk Level

Recoverable coal tons recognized to be significantly less than previously estimated.

Reserve base is adequate to serve market commitments and respond to opportunities for many years. Local adverse conditions may increase frequency and cost of production unit relocations.

Previous and ongoing exploration and extensive regional mining history provide a high level of confidence of coal seam correlation, continuity of the coal seams, and coal resource tons.

Optimize mine plan to increase resource recovery; develop mine plan to provide readily available alternate mining locations to sustain expected production level.

Coal quality locally proves to be lower than initially projected.

If uncontrolled, production and sale of coal that is out of specification can result in rejection of deliveries, cancellation of coal sales agreements and damage to reputation.

Exploration and vast experience and history in local coal seams provide confidence in coal quality; limited excursions can be managed with careful product segregation and blending.

Develop mine plan to provide readily available alternate mining locations to sustain expected production level; modify coal sales agreements to reflect coal quality.

22.2.8.2

Environmental

Water quality and other permit requirements are subject to modification and such changes could have a material impact on the capability of the operator to meet modified standards or to receive new permits and modifications to existing permits. Permit protests may result in delays or denials to permit applications.

Environmental standards and permit requirements have evolved significantly over the past 50 years and to-date, mining operators and regulatory bodies have been able to adapt successfully to evolving environmental requirements.

Table 22-6: Environmental (Risks 3 and 4)

Aspect

Impact

Control Measures

Initial Risk Level

Mitigation Measures

Residual Risk Level

Environmental performance standards are modified in the future.

Delays in receiving new permits and modifications to existing permits; cost of testing and treatment of water and soils

Work with regulatory agencies to understand and influence final standards; implement testing, treatment and other actions to comply with new standards.

Modify mining and reclamation plans to improve compliance with new standards while reducing cost of compliance.

New permits and permit modifications are increasingly delayed or denied.

Interruption of production and delayed implementation of replacement production from new mining areas.

Comply quickly with testing, treatment and other actions required; continue excellent compliance performance within existing permits.

Establish and maintain close and constructive working relationships with regulatory agencies, local communities and community action groups. Prepare and submit permits well in advance of needs.

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22.2.8.3

Regulatory Requirements

Federal and state health and safety regulatory agencies occasionally amend mine laws and regulations. The impact is industry wide. Mining operators and regulatory agencies have been able to adapt successfully to evolving health and safety requirements.

Table 22-7: Regulatory Requirements (Risk 5)

Aspect

Impact

Control Measures

Initial Risk Level

Mitigation Measures

Residual Risk Level

Federal and state mine safety and health regulatory agencies amend mine laws and regulations.

Cost of training, materials, supplies and equipment; modification of mine examination and production procedures; modification of mining plans.

Participate in hearings and workshops when possible, to facilitate understanding and implementation; work cooperatively with agencies and employees to facilitate implementation of new laws and regulations.

Familiarity and experience with new laws and regulations results in reduced impact to operations and productivity and improved supplies and equipment options.

22.2.8.4

Market and Transportation

Most of the current and future production is expected to be directed to domestic and international metallurgical markets. Historically the metallurgical markets have been cyclical and highly volatile. A secondary middlings product will be sent to the domestic power generation market. While this product could be considered as a byproduct with high ash and high sulfur, the economics indicate that selling the middlings product produces a minimal positive cash flow.

Table 22-8: Market and Transportation (Risk 6 & 7)

Aspect

Impact

Control Measures

Initial Risk Level

Mitigation Measures

Residual Risk Level

Volatile coal prices drop precipitously.

Loss of revenue adversely affects profitability; reduced cash flow may disrupt capital expenditures plan.

Cost control measures implemented; capital spending deferred.

High-cost operations closed, and employees temporarily furloughed.

Domestic middlings coal prices drop precipitously.

Loss of revenue adversely affects profitability; reduced cash flow may disrupt capital expenditures plan, product may require disposal in refuse area.

Cost control measures implemented.

High-cost operations closed, and employees temporarily furloughed.

Occasional delay or interruption of rail, river and terminals service may be expected. The operator can possibly minimize the impact of delays by being a preferred customer by fulfilling shipment obligations promptly and maintaining close working relationships.

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Table 22-9: Market and Transportation (Risk 8)

Aspect

Impact

Control Measures

Initial Risk Level

Mitigation Measures

Residual Risk Level

Rail or river transport is delayed; storage and shipping access at river and ocean terminals is not available.

Fulfillment of coal sales agreements delayed; limited coal storage at mines may increase cost of rehandling; production may be temporarily idled.

Provide adequate storage capacity at mines; coordinate continuously with railroad and shipping companies to respond quickly and effectively to changing circumstances.

Provide back-up storage facility along with personnel, equipment and rehandle plan to sustain production and fulfill sales obligations timely.

22.2.8.5

Mining Plan

Occupational health and safety risks are inherent in mining operations. Comprehensive training and retraining programs, internal safety audits and examinations, regular mine inspections, safety meetings, along with support of trained fire brigades and mine-rescue teams are among activities that greatly reduce accident risks. Employee health-monitoring programs coupled with dust and noise monitoring and abatement reduce health risks to miners.

As underground mines are developed and extended, observation of geological, hydrogeological and geotechnical conditions leads to modification of mine plans and procedures to enable safe work within the mine environments.

Highlighted below are selected examples of safety and external factors relevant to Arch operations.

22.2.8.5.1

Methane Management

Coalbed methane is present in coal operations below drainage. Often the methane concentration in shallow coal seams is at such low levels that it can be readily managed with frequent testing and monitoring, vigilance, and routine mine ventilation. Very high methane concentrations may be present at greater depths. High methane concentrations may require degasification of the coal seam to assure safe mining. The adjacent Leer Mine has operated safely for many years in the same coal seam as Leer South without coal degasification issues. Thus, it is expected that Leer South Mine will experience similar conditions in terms of methane management. Additionally, the presence of multilaterally drilled horizontal wells to drain methane in the subject coal beds and favorably low gas content testing results increases the confidence associated with minimal methane issues.

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Table 22-10: Methane Management (Risk 9)

Aspect

Impact

Control Measures

Initial Risk Level

Mitigation Measures

Residual Risk Level

Methane hazard is present in mines operating below drainage.

Injury or loss of life; possible ignition of gas and mine explosion; potential loss of mine and equipment temporarily or permanently; additional mine fan, mine power, ventilation, monitoring and examination requirements.

Low to moderate levels can be managed with frequent examinations, testing and monitoring within the mine ventilation system. Excellent rock dust maintenance minimizes explosion propagation risk should an ignition occur.

Very high-level methane concentrations may require coal seam degasification and gob degasification if longwall or pillar extraction methods are employed.

22.2.8.5.2

Mine Fires

Mine fires, once common at mine operations, are rare today. Most active coal miners have not encountered a mine fire. Vastly improved mine power and equipment electrical systems, along with safe mine practices, reduce mine fire risks. Crew training and fire brigade support and training improve response for containment and control if a fire occurs. Spontaneous combustion within coal mines, which is the source of most fires that occur today, is not expected to occur at Leer South.

Table 22-11: Mine Fires (Risk 10)

Aspect

Impact

Control Measures

Initial Risk Level

Mitigation Measures

Residual Risk Level

Mine fire at underground or surface mine operation.

Injury or loss of life; potential loss of mine temporarily or permanently; damage to equipment and mine infrastructure.

Inspection and maintenance of mine power, equipment and mine infrastructure; good housekeeping; frequent examination of conveyor belt entries; prompt removal of accumulations of combustible materials.

If spontaneous combustion conditions are present, enhanced monitoring and examination procedures will be implemented; mine design will incorporate features to facilitate isolation, containment and extinguishment of spontaneous combustion locations.

22.2.8.5.3

Availability of Supplies and Equipment

The industry has periodically experienced difficulty receiving timely delivery of mine supplies and equipment. Availability issues often accompanied boom periods for coal demand. Any future delivery of supplies and equipment delays are expected to be temporary with limited impact on production.

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Table 22-12: Availability of Supplies and Equipment (Risk 11)

Aspect

Impact

Control Measures

Initial Risk Level

Mitigation Measures

Residual Risk Level

Disruption of availability for supplies and equipment.

Temporary interruption of production.

Force majeure provision in coal sales agreements to limit liability for delayed or lost sales.

Work closely with customers to assure delayed coal delivery rather than cancelled sales; monitor external conditions and increase inventory of critical supplies; accelerate delivery of equipment when possible.

22.2.8.5.4

Labor

Work stoppages due to labor protests are considered unlikely and are accompanied by limited impact should it occur. Excellent employee relations and communications limit the exposure to outside protesters. Loss of supervisors and skilled employees to retirement is inevitable; the impact can be lessened with succession planning and training and training and mentorship of new employees.

Table 22-13: Labor – Work Stoppage (Risk 12)

Aspect

Impact

Control Measures

Initial Risk Level

Mitigation Measures

Residual Risk Level

Work stoppage due to strikes, slowdowns or secondary boycott activity.

Loss of production and coal sales; damaged customer and employee relations; reputation loss.

Maintain excellent employee relations and communications; maintain frequent customer communications.

Develop plan for employee communications and legal support to minimize impact of secondary boycott activities.

Table 22-14: Labor – Retirement (Risk 13)

Aspect

Impact

Control Measures

Initial Risk Level

Mitigation Measures

Residual Risk Level

Retirement of supervisors and skilled employees.

Loss of leadership and critical skills to sustain high levels of safety, maintenance and productivity.

Monitor demographics closely and maintain communications with employees who are approaching retirement age; maintain employee selection and training programs.

Maintain selection of candidates and implementation of in-house or third-party training for electricians and mechanics; develop employee mentoring program.

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	MCY
Coarse Refuse
Phase 1 (Side Hill Fill) Remaining	6.2
Phase 2 (Full Hollow Fill)	39.6
Optional (In-Hollow Fill Upstream)	0.6
Impoundment (Stage 15)	58.9
Abandonment (Final Config)	5.2
Total	110.5

Fine Refuse
Fines (through Stage 7) Remaining	12.1
Additional (Stage 7-15)	10.1
Total	22.2